Suggestion on sharing grants proportionally in the future

[Vaultka]

Suggestion on sharing grants proportionally in the future

As we wrap up the review phase for the first round of Arbitrum STIP, it’s truly heartening to witness over 100 protocols enthusiastically submitting their grant proposals and sparking vibrant discussions within our community.

Nonetheless, based on the 50M budget set by the community voting previously, only a small portion of the proposals will get the funding with the current framework proposed by @tnorm. Funding will be allocated based on the number of votes in favor of the proposal if the 50M budget threshold is exceeded, which means that proposals with the most yes votes will get funded first, and the list keeps going down.

In light of this, for future grants, we suggest a proportional distribution of grants based on the amount requested by each proposal in relation to the overall sum of approved requests. This approach aims to ensure that every project receives a fair share of support, aligning with the community’s intentions and maximizing the impact of our grant program.

Quote from @tnorm in FAQ
We do not expect applications to exceed the funding budget of 50M ARB. However, if requested grants do exceed the allocated budget, funding will be allocated based on the amount of votes in favor of a proposal, and secondly (if there are any exact ties) on a first-come, first-serve basis dependent upon the time the proposal was submitted to the Arbitrum Forum.

Current Situation

As of the figures on 3rd of October, the total grant request from the top 10 projects (According to their grant request size) has already exceeded 50m. Larger protocols are likely to receive all the grant allocation with advantage in receiving more votes and garnering recognition from delegators. Given the current framework, it leaves limited opportunity for smaller scale protocols to benefit from the grant even with much smaller grant requests.

In fact, more than 70% of the protocols are applying for a grant less than 1mil ARB. Each of these protocols introduce innovative solutions and add diversity to the Arbitrum ecosystem. Protocols like GoodEntry and Stella pioneer with new investment strategies and incentive mechanisms for users, and there are numerous more protocols diligently working on innovative solutions, collectively enhancing our ecosystem.

Suggestion

Given the tight schedule and the advanced stages we in, we understand that suggesting a new grant distribution method for the STIP program may not be the most suitable. Nevertheless, looking ahead to future grant proposals, we’d like to suggest an alternative approach: Distributing grants in proportion to the size of each passed-voting applicant’s request.

The voting quorum will serve as a safeguard against malicious actors seeking to receive funds. Applicants would need to strike a balance between requesting substantial amounts in case the total request exceeds the budget, while receiving votes from delegators.

Using the STIP grant as an example, if ultimately there are 80M grant requests passing the minimum voting requirement (71M quorum and over 50% favor votes), where 5mil of that are from smaller scale protocols requesting less than 1m, this suggestion can release 6% (3mil ARB tokens) of the budget to support smaller scale protocols. This would not only foster diversity within the Arbitrum ecosystem but also empower smaller projects, further enriching our community.

We welcome discussions and suggestions from fellow protocols and the community, as we believe in collaboratively strengthening the Arbitrum ecosystem.

[IgnorantC]

Yep what a shit system def doesn’t encourage working on base

[mfer]

Agreed.

The system used this time showed a lot of flaws in its core design which makes it far from fair and inclusive.

In my ow perception reading the forum, this method brought some TOXIC VIBES that were non existent before at this scale, or at least I didn’t notice it. I mean between devs themselves and between community members. Everyone has been witness of significant amount of people spending more time attacking and trying to harm/sabotage other protocols applications rather than supporting and highlighting the qualities of their favorites.
Legit but not beautiful.
‘Limited entry’ policies like in the STIP promote this kind of behavior.

Besides, a handful of big delegates decided the fate of all participants, with the shadow of the conflict of interest always being there. Some delegates are directly involved with some applicants. Some officially, others not. We have to TRUST that delegates can fully separate personal from professional.

Coincidentally most of OG protocols have gotten their proposals approved and passed very quick even asking for significant amounts while their direct competitors from a later gen don’t get the same treatment. This promotes the ESTABLISHMENT and status quo while punishes the progress and innovation in the long term.

Even in some cases I’ve seen protocols being DISCRIMINATED for not being born in Arbitrum. I see the word ‘native’ being used too often I guess. There’s a thin line between patriotism and nazism… I’m just saying we all should be careful with which values we want to embrace and show off as a community. I’d like Arbitrum to be very open to foreigners and new comers. A home for everyone willing to contribute.

Wrapping up…

This STIP distribution method is too arbitrary, too centralized, too wild, and relying too much on trust.

Hey, this is not criticism but just an assessment afterwards from my pov. It is the first enterprise of this kind in this community and it’s absolutely normal to be far from perfect. However it is important that we all are able to learn during the process and improve. That can’t be achieved without constructive criticism and solution proposals. And that’s what this topic is about.

I stand with @Vaultka on their proposal to apply changes. Although I’m not sure if is the best we can come up with, at least it seems better than the current one and improves some aspects. I’d give it a couple tweaks though:

1- Removing quorum treshold. Bad actors mentioned by Vaultka would be filtered out during the prior approval phase. Quorum benefits bigger applicants so much.
2- No votes against. What’s the point of voting against someone if there is no battle royal and everyone will get their piece of the cake in proportion? This will also avoid sabotage practices and bad voting actors. Who am I to vote against someone who I might even don’t know or I didn’t even use? That’s a cancellation culture imo. Let’s focus into vote pro something.
3- No votes abstain. It is not needed if there is no quorum.
4- No min allocations but max allocations. Everyone will eat. I suggest a max allocation of 7% of the total budget to one single applicant. Any vote that surpasses that limit simply won’t be counted.

Formula: [Total votes in favor for a given applicant (cut at max of 7% votes form total votes count, if applies)] divided by [Total votes in favor from all proposals] multiplied by [100].

The result is the percentage of the total budget that will be allocated to that given applicant. Rinse and repeat for every other applicant.

All these measures turn the system into something more:

- Decentralized.
- Non-arbitrary.
- Trustless.
- Inclusive.

In general is more fair thus making more people happy/satisfied, making them feeling part of it and so paying back with POSITIVE energy which always builds the most wholesome and vibrant ecosystems.

[sahijeevan]

I think Arbitrum has fullfill all dreams of Community