Proposal for Financial Restitution For ArbitrumDAO Grant Winners

Proposals
1

I am introducing a proposal to the ArbitrumDAO for financial compensation for a number of winners that participated in “ArbitrumDAO’s Biggest Minigrants Round Ever.”

This was a grant round with 32 winners over a period of 8 weeks, starting in January 2024. I shared a timeline and summary of the experience on the Arbitrum Forum here:

Thrive Protocol’s team was able to collect the wallet addresses and payout dates of those that were a part of the grant series. These are those dates and # of projects:

1 company (Feb 25th)
12 companies (April 16th)

8 companies (May 17th)
2 companies (June 4th)
4 companies (June 7th)
4 companies (June 19th)
1 company (Aug 1st)

There were 19 projects that received their payouts in May and June. The original payout value was 2500 ARB, or during the contest window before Arbitrum’s 70% token unlock the equivalent of roughly $4,500-$5,700 USD. Due to the extensive delays and large drop in ARB value, many of us received significantly less. The drop in ARB value was not the only damage incurred. As can be read in the comments and testimonials, teams experienced other forms of damages including stress, loss of teammates, and downturns in team and community morale.

I began to step into this grant round as an unpaid advocate in month 4, and tried to help organize the managing parties to send payouts. In this process I reached out and connected to as many of the 18 projects paid out in May or June that I could reach. Of those, 5 are still interested in executing, weren’t able to execute or partially execute, and are still interested and able to move forward now 9 months later from their orginal grant proposals where they were voted on as a winner.

The request is for the losses incurred by the winners that received their payouts in time frames ranging from 3-7 months later after their week’s round closed. We have collected the following data below and have adjusted the price differential to a 2-week post-winning time period, which we believe is a fair payout timing for grantees, and embeds a normal currency fluctuation risk period taken on by grantees.

I would also like to add $5,000 USD for myself as a community advocate for the last 6 months on this grant round, performing the following activities over many hours from:

  • Organizing program managers from Arbitrum, Thrive Protocol, and Fractal into a Telegram group and with phone calls to help streamline communication and move the process along
  • Speaking with numerous grantees in chats and calls over the last months while gathering data and working on my own project
  • Gathering and presenting data to all groups in Telegram, this forum, and on an ArbitrumDAO call.

Hopefully this data is helpful learning as Arbitrum is now updating their incentives processes. I had no plan of being paid. I am a diversity and financial inclusion-focused community leader in Web3, which is why for my focus it has been very important for the winners to have someone voicing their issues to the parties managing this grant, and advocating for them, in addition to myself.

The following projects are all winners from the Minigrants round, are reachable, were paid out in May, June, and/or August, and are interested in executing their project as proposed and are ready to begin or continue immediately. This is the most detailed status update we could acheive together:

please note, it is still unclear why some projects were paid twice as this grant round had a 1 time payout of 2500 ARB

PROJECT 1: SI<3>
Week 3 winner (Feb 2nd): 2500 ARB. ARB value on Feb 16th (two weeks after the February 2nd winning - an equitable time range): $2.08*2500 = $5,200 USD

Payouts:

  1. May 14th (625 ARB * $0.98) = $612 USD
  2. June 4th (1850 ARB * $1.10) = $2,035 USD
    Total payouts in USD for 2500 ARB = $2,617
    Original value $5,200 USD - $2,617 = $2,583 USD lost

Time delay to payout: 4 MONTHS

Project Status Update:
We were able to execute the technical aspects of our proposal, which included finishing the development of our Web3 website publishing system. The four month delay negatively affected the other aspect of our grant winnings which included being able to offer scholarship opportunities to women in Web3 in Africa. We shared with a women in web3 community in Africa we had won this contest and would be able to offer 30 scholarships to their members, but due to the delays this was not able to be executed (5 were given instead of 30 through our applications). With the additional $2,597 USD we will be able to offer the remaining 25 scholarships and bring in women into the future of Web3 identity (the grant category we won first place in out of 30 projects).

Commiting to share project status updates on Karma GAP: Yes

PROJECT 2: RadDreams
Week 1 winner (January 19th): 2500 ARB.
ARB value on Feb 2nd (two weeks after Jan 19th winning date = ($1.76 * 2500 ARB) = $4,400 USD

Payouts:
This project’s payment was never received as it was sent in August to an old wallet that he asked program managers to update on file as it was so many months later, but they never did so no funds were received.
Total funds lost: $4,400

Time delay to payout: 7 MONTHS

Project Status Update:
RadDream will be able to execute its project on ARB which includes adding the ability to auto-deploy NFT collections created and curated by these communities using nothing more than a bot.

Commiting to share project status updates on Karma GAP: Yes

PROJECT 3: Everest Mobility
Week 8 winner (March 7th): 2500 ARB. ARB value March 21st (two weeks after March 7th winning date): $1.67*2500 = $4,175 USD

Payments:

  1. June 7th payout for (2500 ARB *$1.10)= $2,700
    Original value $4,175 USD - $2,700 USD = $1,775 lost

Time delay to payout: 3 MONTHS

Project Status Update:
We were only able to finish initial phase of MVP development with the ride-hailing. It was a major draw back that led to postponement of our deliverables which was suppose to help us meet the timeline partnering with 2 major events to drive initial usability of our product (mvp), by a few thousand people. Not only did this happen, but also lost resourceful engineer whom we were to make initial payment to, via the grant at the time. We also experienced significant emotional/agility/moral down-trend that followed with the grant payment delay. With the additional funds, we will be able to deploy on chain, enable incentivized tokenization and minting rewards, then move on to Digital ID (as SBT) through the drivers KYC onboarding system.

Commiting to share project status updates on Karma GAP: Yes

PROJECT 4: AgroForest DAO
Week 6 winner (Feb 23rd): 2500 ARB. ARB value March 8th (two weeks after Feb 23rd winning date): ($2.25 *2500) = $5,600 USD

Payments:

  1. June 6th payout for 2500 ARB = $1.09*2500 ARB = $2,452
    Original value $5,600 USD - ($0.86 *2250)=$1935 USD = $5600- $1935 = $3,148 USD lost

Time delay to payout: 4 MONTHS

Project Status Update:
AgroforestDAO is onboarding members in their learning journeys and using the ARB to reward them for participating in the sessions, for creating profiles and sharing a design plan and updates in our charmverse workspace. Our project will be able to continue and onboard more members into the learning journeys using ARB.

Commiting to share project status updates on Karma GAP: Yes

PROJECT 5: PLAY2LEARN Games
Week 2 winner (January 29): 2500 ARB. ARB Value on February 12th (two weeks after Jan 29th winning date): $2.06*2,500 = $5,150

Payments were made to us in the following orders:

  1. March 20th (625 ARB *$1.61) =$1,006
  2. June 18, 2024 (1,875 ARB * $0.77) =$1,443
    Total payouts for 2500 ARB = $2,450
    Original value $5,150 - $2,450 = $2,700 lost value

Time delay to payout: 4 MONTHS

Project Status Update:
We were unable to execute any of our plans for the funds as the delay in payment did not reach the amount for the listed activities to be embarked upon. We have held our payout and with the additional funds will be able to execute our gaming experience with ARB in our West Africa region.

Commiting to share project status updates on Karma GAP: Yes

Total funds requested = $14,606 USD (5 grantees) + $5,000 USD (karakrysthal’s community management and advocacy fee for 6 months of program follow-on support) = $19,606 USD.

To note, I have kept this proposal process as open for all grantees to be aware of as possible so as to not miss anyone. This included posting numerous times in our group Telegram chat, and DMing those that I saw had payouts in May, June and August. Many projects were unreachable or no longer building on ARB any more. Without having a system to backtrack every winners detailed payout as this needed to be confirmed by them personally in order to do this detailed status update, it can be estimated that on average $2.5k USD was lost by 32 projects due to the delays or roughly $80,000 USD.

We are hopeful to demonstrate through our status updates the losses incurred, both financially and in the delays and disruption in execution. Our contest winners were not required to submit our projects on Karma GAP, but we are all commiting to do so as we are wanting to deliver value as in our grant proposals to both Arbitrum and our projects. We can also share updates here on this forum as we make progress.

Thank you to this forum’s commenters that have left constructive feedback. We understand the complexities of managing projects with new tools and processes, as this is what we are also experiencing developing our projects. We align with the commenters here that support our perspective that extreme delays in payouts due to organizational bottlenecks should not burden those that have been selected through their own hard work and dedication to executing their projects as proposed.

The goal of the post and proposal was for financial compensation for grantees, and also for open and shared learning to support the DAO in it’s evolution. As with any project, the best results come from alignment of goals and the right tools and processes to support them. For future rounds, an additional point of feedback and what I am seeing with some other grant operators is to partner with ecosystems and communities. This can be from ecosystems with vertical expertise (such as a Gaming DAO), or regional communities. This can support grantors in seeing greater long-term ROI, as the success of the grantees is also important to that vertical/community/region as a whole.

It would also be helpful not to run a grant round in the future right before executing a large token unlock, as this should have been anticipated.

Thank you.

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2

Whilst i expressed my support on the original thread, and whilst it should not be a thing necessarily related to the outcome of this proposal, it would be nice to have the full picture about the current status of the grant winners, given your previous comment

Due to major delays on payout timings and resulting ARB value drop, multiple projects were not able to be executed and many half-executed

Most protocols have received the grant between May and June, around 4 months ago.
What’s the latest update?

On the side, i would like to stress again how this execution has been miopic, even ignoring the ethos and quality standards argument and adopting a merely practical standpoint, a timely payout would have costed 2500 $ARB, meanwhile now we are discussing a compensation of the same $ value… but costing almost four times as much in $ARB.
The things that could be avoided by being efficient and timely …

3

Regarding the status updates of all 18 projects that received their payouts in May or June, I dont have all that data but if necessary, can put in the effort of trying to track them all down for updates. Im not a part of any team or DAO that has been hired to help facilitate this grant, but there has been much effort behind the scenes to push this process along. And I realized if this needed to be shared with the DAO, otherwise it could continue to happen in other grant programs (in addition to no retribution for this program’s grantees).

In the previous post linked, I shared updates from three projects (all three werent able to take any action or move forward due to the delays and major ARB value drop). My project was able to execute our technical development as in our proposal, and offer 5 out of the 30 scholarships to women in Web3 in Africa to our membership program (we won 1st place out of 30 submissions in the Future of Web3 Identity category of the contest). So 25 women missed out on the scholarship opportunity as we didnt have the funds to cover that.

Another project, one from Africa, shared in our Telegram group with program organizers he wasnt able to execute his gaming experience due to not enough funds. Another project shared with me in a private TG message this week he had to close his project and couldnt execute.

From the 6 projects out of the 18 I connected with, 5 havent been able to execute and mine has been able to partially execute. I can work on collecting the data from the additional 12 projects and share their updates here, as I am able to reach them (noting this will continue the delays but will work as fast as possible on this).

It is a major bummer the Arb value drop to its original value. However, I think its important we also see the purpose of distributing grants - projects creating value for the chain or protocol offering financial support. If the majority of 18 projects havent even been able to execute or partial execute, that is a loss of 18 potential contributors to ARBs value. So the long term losses here could be greater than the present financial value of this request.

Im adding another point of feedback and consideration for the ArbitrumDAO for future grants. In our experience as winners, in the 5 months of activity in the Telegram group, we were all checking regulary the status updates from the Program Manager who was in communication with the ArbitrumDAO. There were often weeks of gaps of time where the Program Manager was waiting to hear back from Arbitrum on KYC checks and payouts. And then as shared in my timeline summary, there were payouts given of 168 ARB, 625 or 1875 ARB to different projects, instead of the 2500 ARB.

It appears ArbitrumDAO didnt have the bandwith and/or processes organized to distribute the funds in a clear or timely way. As Arbitrum has been very active in a variety of grant rounds, I think it is important that your DAO has the bandwith to manage these properly before partnering with third parties and executing them directly. Im not sure what that entails other than the obvious of more resources being put towards this and slowing down on the grant programs.

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4

I am posting status updates here from projects as requested as they come in (in addition to the ones already mentioned):

“When I received it, it was a few hundred bucks. I was not able to do anything. Also not building on arb anymore. Too much bureaucracy.”

5

You should change the title of the thread, financial retribution means that the arbitrumdao grant winners should be penalized. Financial restitution might be the word you were originally going for.

Delays are part & parcel of the grants game and i don’t think ARB DAO should be in the business of compensating for it, especially since amounts were listed in ARB and not dollars. If we had committed a dollar value to the projects i would be more sympathetic, but given this was not the case i see no benefit to the DAO in passing this proposal.

i don’t see this proposal passing but the beauty of decentralization is you’re free to put it up for a vote

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6

Thank you, I mixed up the words so have changed it.

Much value creation potential lost here for all parties with 130 grant applicants, 32 winners and a handful executed…but it is true there is no guarantee or rules for payout timing for grantees with Arbitrum, as you shared. There are payout timing standards at a number of chains and protocols…what is part & parcel for grant delays with some orgs is not normalized at others.

I agree, it seems unlikely this will pass with Arbitrum but I wanted to share in the aim for feedback and shared learning.

7

The following reflects the views of the Lampros Labs DAO governance team, composed of @Blueweb, @Euphoria, and Hirangi Pandya (@Nyx), based on our combined research, analysis, and ideation.

We empathize with you regarding the delays, costs, and the milestones that remain unachieved. We also appreciate the effort you’ve put into presenting the data, feedback, and this proposal to the DAO.

However, when it comes to financial restitution, we share @thedevanshmehta’s perspective. As grantees, receiving ARB tokens carries an inherent risk of price fluctuation, which all projects must account for. Price volatility is a natural part of grant programs, and if the price had increased, it’s unlikely you would have accepted a reduced amount of ARB tokens.

@DisruptionJoe and the Thrive team have thoroughly analyzed the process and highlighted the bottlenecks they encountered. While we all agree that there were inefficiencies, it’s important to recognize that this is a learning experience for everyone. It’s better to refine our processes through smaller grants than to repeat these mistakes with larger ones.

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8

Thank you for your review and response. I am happy the DAO has discovered the bottlenecks and changes will be made so this doesn’t happen to other grantees in the future.

Offering grants in stablecoins would also likely make more sense so projects can execute. Someone mentioned that ARB is meant to be a governance token, not for things like grant distributions. I am not familiar but if anyone could comment on that here, I would like to learn.

9

As an active delegate, I understand your problem perfectly, because the same thing happened with our program and we began to receive 4 times less rewards for our work.

However, instead of asking for additional rewards, the community focused on continuing the program with changes in the amount of ARB and some others.

Therefore, instead of trying to get additional ARB for what has already been done and paid for, I suggest focusing on what can be done with these same projects and trying to get grants for them on new terms.
This will be constructive and useful for all parties - win win.

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10

Thank you for your useful insights and experience with the pathway that you took where value has been created in the end.

I am not a community, ecosystem or program manager for any of the winners other than my own project, as I have mentioned in an earlier thread. The hired program and grant managers for this responsibilities tapered off as people received payment. I started to step in as an unpaid advocate four months in as the program and payments were chaotic and not moving, so I tried to get things moving with the different parties involved. I’ve now been advocating since May, or 6 months.

In this time Ive been connecting with winners and now whats left is a total of 5 that I have been able to reach, werent able to execute at all, and are still interested and able to execute with ARB are ready to go. We have been waiting for 9 months at this point, so if this needs to go through a whole other new round with reviewers, KYC checks, etc etc etc I think this should just be dropped as we need to move forward.

I am new to this process with Arbitrum so am not very clear on the steps, and would appreciate your feedback. I am thinking to edit this proposal and then we would need to find a delegate to put this up on Tally?

Thank you.

11

You can edit the proposal. It will still be discussed here to see if delegates are in favor or have any questions in general. If the proposal makes it to snapshot, it must obtain the minimum number of votes in favor. It is only after that that it goes to Tally for the official vote

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12

just want to put out there that after months of not communicating, the prize we won was sent to the wrong wallet address (after I asked organizers to confirm the address they had on file with no reply). So our prize was totally wasted

13

Ok thanks for letting me know, the proposal has been edited.

14

Can you speak to the $5,000 number? I may be misunderstanding, as in May / June the price of ARB was around $1. So I’m a little confused on:

  1. How you got paid 2,500 ARB worth $1,000 when the price was $1 (so $2,500)
  2. Where the $5,000 ($2 ARB) is coming from.

I’m sympathetic to the situation, but I do partly agree (more on that below) with the notion that getting paid in ARB tokens, not USD, comes with some risk of price appreciation / deprecation. As in, if you did the work in January / February but were not getting paid (in ARB) until post program there should be an acceptance that the price will be different then the actual January / February price. So I would say this — if the value is based on the project’s completion in say February, I’d disagree with using $2 cost basis. This is also doubly unfair to those projects who got paid out in May / June, as they would have been paid out at $1 but these 5 are getting it at $2.

However… I am open to the idea that if most projects were paid at the $1 an ARB price its unfair to punish other projects getting paid out at $0.50. That is assuming (and hopefully someone can answer) these 5 projects delays in payments were due to issues with KYC that were beyond their control. I understand there is a balance between trying to pay everyone out at once and having a few KYC holdouts delaying everyone else, but in those cases I’d contend those failing to KYC should be ‘punished’. Not the people who complied. Basically - set a KYC deadline and if 9/10 are there then 9/10 get paid. the other 1 is then at their own risk. That does not seem to be the case here, and I’m still confused why all these projects were getting paid at random times with random amounts. and why some KYC took so much longer then others (again, assuming full cooperation by the KYC’d entities giving data timely)

Regardless, as a broader DAO discussion something needs to be figured out with how KYC is handled and how payments are made. I’ve now personally (and I say this as I’d imagine this is affecting a lot of people if it’s affected myself 3 times already…) experienced 3 instances where some combination of the KYC process / project manager process has delayed getting me funds at the promised time. To the point I’d argue it’s at a detriment to Arbitrum / the DAO’s reputation. So as someone being paid in tokens I’m fully aware of the price fluctuation risks, but I do have to push back on the notion expressed by others that these entities should have accepted that there was currency risk here. The currency risk is acceptable IMO when it’s a situation of doing the work in January, but knowing you won’t be paid until February. However, the currency risk is NOT acceptable IMO if it’s a situation of where you do the work in January, are promised to be paid in February, but don’t get paid until March.

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15

This is one of the cases where the learning process brings not only valuable lessons, but have unwanted consequences that could/should be addressed. The winners can’t be penalized by the issues in our processes.

Despite what was mentioned in the previous thread (that there was not a set date for the prize to be paid) it is common sense that when delays are acknowledged, the situation was not “business as usual” (nothing against the author of that post, btw).

That being said, I don’t completely agree with the amount requested (the FULL expected amount) as, as a matter of fact, the payments were done. One possible path that I would like to suggest is:

  • Identify the payment dates for those 5 projects
  • Propose to grant the difference between what was paid and the expected* value

*it is not clear for me how the payment process was supposed to happen. It seems that it was a weekly payment (4 per week). As we are talking about a 8-week process, the ideal would be getting the average ARB value of the week the project won and multiply per the amount. And check that with what was paid.

I agree that the DAO may not benefit from this proposal passing, but I see enough justification for the request.

2 Likes
16

Thank you James, your points are clear to me and I am working on gathering the full data from projects on their payout dates and status updates and then I think we will have a final, up-to-date and scoped proposal. I will update the proposal with this data in 72 hours.

*there were 8 weeks of 4 grant winners per week, so 32 total. This started the last week in January and ran through March. This was suppose to be a 1 time 2500 ARB payment to each winner, assumed to be paid after they won (but no terms on this). For some reason many of us were paid 1-3 times different ARB amounts but it wasnt clear why.

I will report back with the full data of those projects still engaging in 72 hours.

17

I am not a KYC expert but am understanding that some organizations at the size of Arbitrum have to adhere to KYC checks.

Ideas here that could mitigate future challenges are to share KYC criteria in advance to grant applicants. A number of winners in our grant round are from emerging markets and countries that were on a black or grey list and weren’t able to pass Arbitrum’s KYC. As this list is known in advance by a grant operator, it would be very helpful that this is shared with grant applicants also in advance so they can either not apply or explore alternatives.

For some grant applicants, this is their first time going through KYC, so education on what the process entails would be very helpful so they can start preparing for this as they enter a grant experience. If we set standards for all parties to aim for a 2 week payout timing, for example, we can look at this as an all hands on deck sprint payout period which all parties are prepared for. I believe we should see grantees as extensions of teams if we want to create real value from these programs. Teammates submit documentation, milestones, and their funder commits and adheres to payout timing standards.

Clearly a cross-chain ID pass is something that would be very useful for all organizations so KYC checks arent repeately needed. I’m aware some organizations are exploring and working within this realm. If Arbitrum could be a part of supporting and leading on this (if it’s not in process already) this would create a lot of shared value and turn challenging learning experiences into positive ones.

18

What does everyone think about grantors of a grant program (grant council members) participating as grantees and voting for each other’s projects ?

Does anyone know

  1. how many of these winning projects (32) were floated by grantors ?
  2. did grantors just vote amongst themselves to pick winners (week after week) ?
  3. what’s the status of these "winning projects’?

And if a treasury diversification program tumbled price action volatility of ARB token, should founders delivering food on the side to pay for their team mates be penalized for trusting the “only DAO L2” to pay out the approximate promise ??

Screenshot_20241011-083140
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19

This was another topic that was brought into question by a number of grantees. The other issues as mentioned superceded and clouded this one, so thank you for bringing it up.

I am not sure who could verify this holistically but there were overlaps with grant winners and council members.

Also we still have an active Telegram group going with the grantees and organizers. If anyone wants to be added to that for learning and analysis I can add you (my TG is kara_si3).

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20

Let me suggest a 5 year old’s approach-

  1. Go to jokerace.io
  2. Add winners of all 8 rounds to an excel sheet (4*8=32)
  3. Shade the projects that won the rounds and were floated by grantors
  4. Start adding the voters and the number of votes (if you are skeptical) who voted for these grantor projects
  5. Shade instances were grantors voted for each other in alternate weeks

And voila - we don’t need another telegram group to learn for ourselves.

Sunlight is often the best disinfectant.

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