Proposal to consider pro rata distribution of funds in the future instead of all or nothing cut-off

[Midgetwhale]

In light of the recent STIP vote I think there are a couple takeaways that we should try to improve on for future votes.

One of which is in my opinion the all-or-nothing nature of distribution of funds.
This probably caused significant levels of stress and responsibility for all actors involved, both teams/communities as well as the key delegates.

It also leaves us with a whole slew of good projects that ended up with no incentives just because they only managed to convince one or two top delegates less than some of the projects that did get the full request.
If a project provides great value to Arbitrum and the grant request has a lot of merit to it but it is simply deemed too excessive in the eyes of many delegates, the voting process itself should adjust this concern by just allocating a more proper amount.

Therefore I propose that in the future, funds should get distributed on a pro rata basis.
See the following simplified example of how funds could have gotten distributed instead.

I.e.
Project A asks 10M ARB
Project B asks 7M ARB
Project C asks 3M ARB

Total ask = 20M ARB
Budget = 10M ARB

Project A gets 100M votes
Project B gets 200M votes
Project C gets 50M votes

Now multiply the votes with ARB requested:

Project A: 10 x 100 = 1000M
Project B: 7 x 200 = 1400M
Project C: 3 x 50 = 150M

Total: 2550M

Now divide the budget with the total Vote*ARB:

10M / 2550M = 1/255th

Now multiply this factor with the Vote*ARB request per project:

Project A: 1000M/255 = 3.9216M ARB
Project B: 1400M/255 = 5.4901M ARB
Project C: 150M/255 = 0.5882M ARB

Total distributed is 10M.

This gives every project that reaches quorum and a 50% in favour vote at least some part of the funding.

In addition to this, I would also opt to count the net total of votes (i.e. FOR votes subtracted by AGAINST votes) as otherwise an against vote is mostly useless.

As an example: This is what the distribution of the recent vote would have looked like if distributed as proposed.

[SnF_NFT-Fi_Leo]

This is really interesting and makes a lot of sense, especially considering the current stalemate of the DAO having approved more tokens than the budget it itself approved, which doesn’t make any sense.

A detail that is also impactful is that the projects were asked to make a proposal with great details on how they would spend the budget they were requesting, and if the amount received was a fraction of what they were requesting, this would force the projects to make an adjustment to the initially proposed campaign.

Therefore, I believe a draft should be required for the campaign, and not necessarily with a huge detailing.

However, I also share the view that it is much better to distribute grants in the hands of as many projects as possible and since the budget is finite, this pro rata division is what seems to make the most sense.

By the way, excellent example you used, however I believe we should still leave some room for projects for Round 2.

[padzank]

Really interesting idea. It is a big improvement on current system of hard cutoff based on YES votes, but maybe it requires more optimization because I suspect this method would incentivize projects to over-inflate their ask size. It is on the right track though!

[JoePadawan1]

The asks need to be capped, 1 project getting 12m arb is nonsense. Better to spur growth in 20 projects then 1.