Support to Establish GrantsDAOs

One success metric for the ArbitrumDAO is its ability to embrace an ecosystem of grant programs run by independent organizations who all share the same vision: how to grow the ecosystem of builders and build a better Arbitrum.

To help bootstrap this process, the Arbitrum Foundation will allocate $250,000 USD and support the community to establish alternative frameworks for future grant programs approved by the ArbitrumDAO and as such create a pathway for the creation of multiple GrantDAOs, which can be governed directly by the ArbitrumDAO and operate independently of The Arbitrum Foundation.

We have put forth the motivation below alongside a set of guidelines, but we also encourage the ArbitrumDAO to see this as a stepping stone and it is ultimately up to the DAO to kickstart a long-term initiative to realize it.

Motivation

A decentralized ecosystem ideally has decentralized funding sources. As part of the ArbitrumDAO’s mission to maximize decentralization and reap the benefits of such resilience, it is essential that there are several, non-dependent avenues for builders and contributors to obtain support and funding.

There are currently several ways for builders and contributors to obtain grants in the Arbitrum ecosystem:

  1. Foundation Grants Program, which is administered by the Foundation;
  2. STIP, which is supported by the Foundation;
  3. Plurality Labs, which is supported by the Foundation;
  4. Questbook, which is run independently of the Foundation.

While all of the above grant programs have been approved by the ArbitrumDAO and thus have been established pursuant to a decentralized vote, it should be anticipated that different grant programs will be administered by multiple entities, potentially even competing against one another for the best and most effective approach for administering a grant program as determined by the ArbitrumDAO. Of course, there remains the option for participants to follow the format of Foundation-supported programs, maintaining flexibility for the Arbitrum initiatives that choose to pursue this path.

Guidance and Recommendations

We wish to take this opportunity to provide any eligible group, who may wish to set up their own Grants DAO, some guidance and recommendations that should be considered alongside best practices that are in the best interest of the ArbitrumDAO.

After all, while the Foundation has an obligation to protect the Foundation and ArbitrumDAO from legal and operational risks in respect to any programs which it administers/supports directly, Grants DAOs selected by the ArbitrumDAO would be entrusted with administering grants directly, subject to basic monitoring and reporting requirements.

This is what we would suggest is included in any Grant DAO proposal:

  • Grant DAO Mission
    • What is the purpose of the GrantDAO and what does it mean for it to be successful?
  • Group Structure
    • Role in GrantsDAO,
    • Credentials,
    • Compensation.
  • Type of grants administered by the group seeking to contribute to ArbitrumDAO
    • Audits? Development? Growth?
  • Total grant amount requested (tranches):
    • Startup Assistance Grant: the GrantDAO may propose an amount needed to setup the Grants DAO prior to commencing grant-making activities.
    • Grants Manager Compensation: the GrantDAO should detail what amount of the proposed amounts requested would be compensation for grant managers.
  • Policies and procedures for grant application, approval and disbursement:
    • It should be made clear how grant applications will be reviewed and due-diligence performed, how grant decisions are made and the accompanying appropriate industry standards compliance procedures and documentation implemented by the GrantDAO.

Additionally, we recommend the following key considerations for any new GrantsDAO:

  • DAO Governance. GrantsDAOs would be governed directly by the ArbitrumDAO and operate (and make grant decisions) independently of The Arbitrum Foundation.
  • DAO Oversight. The ArbitrumDAO will monitor all GrantDAOs. A GrantsDAO should cooperate with the ArbitrumDAO to facilitate any necessary monitoring. This may include transparency reports, performance reviews, checking whether the GrantsDAO is enforcing compliance processes, and whether the GrantsDAO is working in accordance with its stated mission.
  • DAO Clawback. The ArbitrumDAO has the authority to forcefully return any unspent funds from the GrantsDAO back to the ArbitrumDAO Treasury for whatever reason it may deem necessary to do so.
  • GrantsDAO Compliance Process. The GrantsDAO will enforce KYC/KYB requirements according to a compliance policy that is formulated with a reputable law firm that is hired to support their legal entity.
  • Smart Wallets. There should be two smart contracts managing the funds:
    • Tranche / Vesting Wallet. Enforces a vesting schedule to release the funds over time.
    • GrantsDAO wallet. Pulls funds from the vesting wallet and enables the eligible group to use the funds for issuing grants.
  • Conditions for Smart Wallets. The Arbitrum Foundation may claw back funds from the Tranche/Vesting Wallet if instructed by the ArbitrumDAO (or if illegal activity is detected that poses a material risk to the ArbitrumDAO). All grants issued from the GrantsDAO wallet should be subject to a time-delay of ~2 days to enable the GrantsDAO to implement a process to clawback/safeguarding of funds, if for example, the GrantDAO’s wallet keys are compromised.
  • Fund transfer. Assuming the GrantDAO proposal passes, then grant funds will be sent differently depending on whether the GrantsDAO is ready (e.g. whether it has formed an entity, completed KYC, and executed a GrantsDAO Agreement):
    • GrantsDAO has already setup a legal entity. From the ArbitrumDAO Treasury directly to the Tranche / Vesting Wallet smart contract wallet for that particular GrantDAO.
    • GrantsDAO has not yet setup a legal entity. From the ArbitrumDAO Treasury to the Arbitrum Foundation, which then transfers the funds into the Tranche / Vesting Wallet Wallet when the GrantsDAO is established.
  • Foundation Compliance. The Foundation will ensure that appropriate KYC and documentation with an authorized signatory satisfactory to the Foundation (e.g. a GrantsDAO Agreement) are completed for any approved GrantDAO, but the Foundation will ultimately defer to the ArbitrumDAO’s own diligence processes and decisions for approving any particular GrantDAO.

Conditions To Access Bootstrap Funds

The Arbitrum Foundation has allocated $250,000 USD to support the ArbitrumDAO community (including teams that are already building on Arbitrum, new groups seeking to contribute to the ArbitrumDAO, ArbitrumDAO delegates etc.) to set up new and independent GrantDAOs. It will be spent on a first-come-first-serve basis by engaging leading full service law firms (as provided by international reputable directories) alongside miscellaneous costs. This initiative should be viewed as a stop-gap until a larger initiative emerges from the ArbitrumDAO.

The funds can be accessed by prospective GrantsDAO applicants if the following conditions are met:

  • A temperature check vote (snapshot) that has passed and achieved Quorum;
  • There are no suspicions that the GrantsDAO will perform illegal activities; and
  • The GrantsDAO agrees to the guidance and recommendations of this program.
34 Likes

We do need a GrantDAO.

8 Likes

Hi everyone,

In agreement with the GrantsDAO - will definitely have to come down to proper structuring, adequate checks & balances together with internal operational & organisational mechanics that ensure efficiency & transparency.

At Axis Advisory, we’re currently working on a Report detailing how the ArbitrumDAO can establish a Cayman Islands Trust via on-chain governance with the underlying governance mechanisms as established by the ArbitrumDAO Constitution being interoperable with the Trust’s legal mechanics (The Trust Deed).

We look forward to sharing this Report following the new year & hope that it provides the ArbitrumDAO with some much needed clarity re. legal structuring.

Kind regards,
Joseph
Axis Advisory

8 Likes

This is an underrated forum post.

5 Likes

tnorm is right this absolutely is an underrated forum post

7 Likes

Yes i agree totally in need

2 Likes

I don’t understand exactly, is the $250k the amount being distributed by the DAO?

Does that include the overhead of executing on the grants program?

Or is it all overhead for designing and executing on the grants program and the amount to be distributed will be allocated later?

6 Likes

This is a very good and timely initiative by the AribitrumDAO. The need for GrantsDAOs will further boost the AribtirumDAO’s efforts in building an inclusive and propelling Arbitrum Network.
However, i need to understand the following very clearly;

  1. what is the application procedure for the GrantsDAO, thus where can one submit a propose GrantsDAO application?
  2. On the GrantsDAO compostion, (can a group of projects come together to constitute a GrantsDAO)?
  3. Whagt is the minimum and maximum amount that can be requested by a GrantsDAO?
  4. What range of activities should a GrantsDAO propose?
2 Likes

Thanks for sharing these details about the GrantDAO initiative – it’s really exciting to see ArbitrumDAO pushing for a more decentralized ecosystem. I’ve got a couple of thoughts and questions, though:

  1. Existing Grant Programs: How are the current programs going to work alongside these new GrantDAOs? It’d be great to get a clearer picture of their roles to avoid any doubling up of efforts and to make sure resources are used in the best way possible.
  2. Organizational Structure: Is there any sort of chart or visual that shows how all these different grant entities fit together within Arbitrum? A quick glance at something like that would really help in understanding how everyone’s connected.
  3. What Changes for Current Grant Distributors?: With these new GrantDAOs coming into play, what’s going to change for the folks already handing out grants? Are they going to be part of this new setup, or will they keep doing their thing separately?
2 Likes

multiple GrantDAOs is an exhilarating leap forward for the Arbitrum ecosystem! This bold move not only fuels the community’s power to support a wide array of innovative projects but also perfectly captures the spirit of decentralization that Arbitrum stands for. Totally onboard!

2 Likes

Agree with the idea. This approach may set a great precedent on how decentralised structuring in Grants can be scaled to involve more participants

It seems like 250k$ is allocated to the community that creates new types of grant programs but i didn’t get why it should be approved by ArbirumDAO whether this is a different entity

2 Likes

Hey @Griff , the $250,000 will be allocated by the Foundation for DAO-approved grant programs, and will be for legal-related work (as provided by the post) alongside miscellaneous costs to set up GrantsDAOs. It does not include the overhead for executing on the grants program - the GrantsDAO team will still have to go to the DAO Treasury to request for funds to run their grants program as part of their main proposal.

Hey @Maltiba , the ‘Proposals’ section on the forum can be used for new GrantsDAO applications. To be explicitly clear, the US$250,000 allocated by the Foundation is only for legal-related work (as provided by the post) alongside miscellaneous costs to set up approved GrantsDAOs. It does not include the overhead for executing on the grants program - the GrantsDAO team will still have to go to the DAO Treasury via a non-constitutional proposal to request funds to run their grants program.

If the Grant Program is already live and is only looking to apply to this initiative for support on legal and miscellaneous fees in setting up a GrantsDAO, then the team can also post on the ‘Proposals’ section of the forum via an informational, non-constitutional proposal that would subsequently go onto a temperature check on Snapshot.

There are no requirements per se on the composition of the GrantsDAO. That said, as a best practice, we would highly recommend for there to be at least 3 members in the GrantsDAO, so that they can be signers to a ⅔ multi-sig address that will receive funding from the DAO Treasury contingent on DAO approval.

There is no definite range as to the amount that can be requested for the GrantsDAO. That said, it is important to clarify that the US$250,000 allocated by the Foundation is only for legal-related work (as provided by the post) alongside miscellaneous costs to set up approved GrantsDAOs. It does not include the overhead for executing on the grants program - the GrantsDAO team will still have to go to the DAO Treasury to request funds to run their grants program. We highly recommend that potential GrantsDAOs reference previous DAO grant program proposals (e.g. Questbook, Pluralistic grants program) as a template for their own proposal.

The range of activities ultimately depends on the expertise of the GrantsDAO.

Hi @NathanVDH , for existing grant programs and new GrantsDAOs (1st question), as well as for changes for current grant distributors (3rd question), there are no policies set in place at the moment across the DAO, and it is possible for an ecosystem of grant programs to emerge, with new GrantsDAOs forming. It is entirely up to the DAO as to whether grant programs should overlap or not. The Foundation is putting together the framework and funds to support the effort, and how each program decides to interact with the other and the wider ecosystem is completely up to the teams, and the wider DAO to decide.

On organizational structure (2nd question), there isn’t a visual just yet. The closest thing we have at the moment is the Arbitrum Grants page, which shows all the different grants programs in one page. Perhaps, this is something that the different grants teams can come together to discuss and create. The Grants Ecosystem at the moment is a flat structure and there are no hierarchies from one grant program to another in the DAO - all are free to apply to any program, and there are no policies nor rules which state which programs are better suited than others.

4 Likes

Great initiative! I have a couple of questions:

  1. Could someone clarify the expected level of participation and support that a GrantDAO should provide? Beyond financial support, what kind of involvement is a GrantDAO expected to have in the development and progress of the projects it funds?

  2. I’m also curious about the financial arrangement between GrantDAOs and the projects they fund. Specifically, does a GrantDAO take any ownership or equity stake in the projects it supports?

2 Likes

Keep LexDAO.org in mind as an organization that can help with law as a public good. Not just open source and standardize structures, but also keep it simple, easy and affordable for users. Imagine an app.kali.gg type experience.

LexDAO’s lawyer and legal engineer directory will be up soon. We’ll have peer review research available soon too.

LexDAO has a grants program. So, assuming LexDAO joins Arbitrum, we could self-reference this a bit where LexDAO offers bounties / grants to the legal community to do the legal work for the various Arbitrum grant programs, including LexDAO, and then public goods productize those solutions.

An innovation here is LexDAO goes beyond a lawyer and legal engineer directory and applies the bounty strategy we use for developers to get work done. Of course this is pending a legal ethics analysis.

3 Likes

Thanks for the clarification, so what it means is that, at the moment the chance is not yet open for grantees to begin the submission of their GrantsDAO application as the Proposers for the GrantsDAO have not concluded on the structure yet?

1 Like

New to this Forum and coming from a lawyer’s perspective, but I believe there will be value accrued to the community in the long-term from two initiatives:

(a) sponsoring projects dedicated to building org structures and legal entity containers which are fit for Web3 environments - a combination of LexDAO and RnDAO working groups including several lawyers/law firms could provide this with a combination of open-source/public goods models and additional services - this type of initiative has been used for the development of model documents for private placement markets for example and is not a new concept; and
(b) for a decentralized grant-giving system, you may consider a DAO incubator model with a series of required steps before the project is allowed to apply for a grant, i.e. the YC approach. This would be a self-sustaining system which would also filter proposals and Web3 contributions via an Innovation Labs model.

3 Likes

hello
This is a very nice and timely initiative by the AribitrumDAO. The need for GrantsDAOs will further boost the Arbitrum DAO’s efforts in building an inclusive and propelling Arbitrum Network.
However, I need to understand the following very clearly;

  1. what’s the application procedure for the GrantsDAO, thus where can one submit a GrantsDAO application?
  2. On the GrantsDAO composition, (can a group of projects come together to constitute a GrantsDAO)?
  3. What’s the minimum and maximum amount that can be requested by a GrantsDAO?
  4. What range of activities should a GrantsDAO propose?
    ths
1 Like

I think the original intention of representative Dao is to better perform his duties, and it is a good proposal to give $ARB appropriate incentives.

2 Likes