The success of your grants round depends on the right design and strategy. In this article we break down some of the ways that you can set up your grants round so that you can maximize ROI on your investment and achieve your goals.
When it comes to funding innovation in web3, success starts with the very design of your grants round. Think of it like planning a garden: without thoughtful preparation, you may end up scattering seeds aimlessly, leaving some to thrive while others fail to take root. A well-planned round, however, is like carefully mapping out plots, selecting the right seeds for the soil, and ensuring each plant has the nutrients it needs to flourish. This approach amplifies your goals, attracts the right applicants, and ensures the funding drives meaningful results.
This critical first step aligns incentives to goals and reduces wasteful spending. Over time, a well-thought-out grants program with intentional allocation of funding drives ecosystem reputation with sustained contributions from impactful builders. Our team at Gitcoin is here to share insights that can help program managers take their grants to the next level.
The foundation of any successful grants round lies in a well-crafted strategy. This begins with a clear understanding of your objectives and the specific audience you aim to engage. For example, are you striving to onboard a high volume of new builders, drive growth within a particular vertical, or strengthen infrastructure development?
Every ecosystem is unique, with goals that demand a tailored approach. A one-size-fits-all strategy simply doesn’t generate the ROI to justify your grants spend. By identifying your priorities, you can craft the right grants strategy – from the funding mechanism you select to the KPIs you target.
For example, the mechanism you select will vary based on the stage of funding. Quadratic Funding (QF) serves as a powerful tool for onboarding new builders into an ecosystem, helping to identify high-impact projects, validated by community demand. QF is characterized by smaller funding amounts spread across a number of promising projects. Since QF requires grants applicants to engage outward to build support, it provides a strong signal on projects that have real traction within Web3 communities. Onboarded projects that demonstrate impact deserve further funding, which is enabled by Retroactive funding. This encourages innovation and retains top talent. As projects mature, they become good candidates for Direct Grants with larger investment size and more demonstrable impact.
The success of the Polygon Farcaster Frames program is a strong demonstration of how carefully tailoring strategy to goals delivers outsized results. Polygon wanted to experiment with Farcaster as an innovative marketing channel to drive activity back to the Polygon PoS network, targeting the key metrics of daily active addresses and transaction growth. They collaborated with us to design a targeted 500K MATIC grants program. Gitcoin’s services helped to narrow down the target audience to DeFi and consumer-centric projects, with a spotlight on areas like gamified commerce and NFT innovation.Through milestone-based funding and strict technical requirements including mandatory deployment on both Polygon PoS and Farcaster Frames, the program created direct alignment between funded projects and network growth objectives, leading to measurable impact as documented in weekly forum reports.
Whatever your objectives may be, success begins with the right strategy. For those looking for support, Gitcoin’s expert services are available to help.
In today’s competitive landscape, ecosystems face intense pressure to capture the attention of builders. According to the 2023 Electric Capital Developer Report, 34% of all web3 developers are building for multiple chains. This means ecosystems need to make compelling offers to attract talent.
At Gitcoin, we consistently see that larger grants rounds lead to greater participation, fund more projects, and drive increased community engagement. We analyzed more than 125 QF rounds hosted on Gitcoin for internal and partner programs. The data reveals a significant spike in activity when round sizes increase from $100K to $250K—with nearly twice the number of applications received. To unlock meaningful results and achieve a return on investment (ROI), Gitcoin recommends round sizes of $200K or more.
Interestingly, as round sizes grow, the level of community participation also increases. For QF rounds, crowdfunding contributions as a percentage of the matching pool rise from 27% at $100K to 40% at $250K. This means that for every dollar of matching funding, the community contributes an additional 40 cents. This heightened level of engagement not only generates buzz around the ecosystem but also amplifies the impact of your funding efforts.
Sei experienced the benefit of larger round sizes when they launched their $10M Creator Fund with Gitcoin. When they increased the matching pool from 862K SEI to 1.1M SEI (~30%) between round 1 and 2, they saw nearly 3X increase in number of applications received and nearly a whopping 5X increase in number of unique donors.
While smaller rounds can be effective for testing new strategies, meaningful funding provides the fuel needed to drive long-term success. By investing in larger grants rounds, you can ensure your capital makes a lasting impact and elevates your ecosystem to new heights.
When running QF rounds, Connection-Oriented Cluster Matching (COCM) is a game-changer. It prevents applicants from gaming the system and ensures funding is directed toward projects that the community values most.
COCM analyzes how connected donors are, ensuring that projects with genuine, diverse community support get the most matching funds. This approach brings the most impactful projects to the forefront of funding efforts. By design, QF encourages participating projects to promote their applications amongst their networks. Projects that bring active and engaged communities drive value for the ecosystem, and should certainly be rewarded. However, this funding should be proportional to the breadth of its impact provided.
Our data reveals that COCM reallocates, on average, 30% of the matching pool for rounds up to $100K, increasing to 55% for larger rounds over $250K. This reallocation reflects improved targeting of capital allocation, unlocking greater ROI from your funding initiatives.
For example, in GG22, Gitcoin’s most recent grants round, 44% of the $300K allocated was reassigned using COCM. While certain projects with strong internal marketing saw their funding adjusted downward, others with broader appeal received increased funding to reflect their wider impact. Among these was Viem, a core library used extensively by Ethereum developers, which experienced a 56% funding boost—from $11K to $17K—due to its far-reaching contributions. Similarly, Open Source Observer (OSO), known for providing reliable on-chain metrics that drive meaningful investments into impactful projects, saw its funding double to $7K, reflecting its significant and diverse developer impact.
By implementing COCM, program managers can enhance the legitimacy and credibility of their funding rounds, ensuring outcomes are truly community-driven.
To maximize the return on investment (ROI) of your grants program, consider running a series of rounds rather than a one-off event. Campaigns build momentum, foster long-term engagement, and create a narrative that resonates with your community.
Why choose a campaign approach?
The Sei Grants Campaign is a compelling example of this approach. Over four rounds, Sei distributed $1.3 million to 515 projects, spanning media, NFTs, gaming, and infrastructure. Beginning with 63 projects in its pilot round, Sei saw a 103% increase in participation by Round 4, which supported 198 projects.
Community engagement also grew significantly. Over the campaign, more than 22,000 unique contributors collectively raised $223,000 through crowdfunding. On average, community contributions matched 20% of Sei’s funding pool, meaning that for every $100 invested by Sei, the community contributed an additional $20. This illustrates the power of QF to drive awareness and active participation within the ecosystem.
Gitcoin played a pivotal role in Sei’s success. Our grants experts helped align each round’s scope and targeting with Sei’s goals, conducting thorough reviews after each round to integrate learnings into subsequent efforts. This iterative approach ensured each round built on the previous one, driving exponential growth and impact.
Allocating funds is just one piece of the puzzle. The right strategy, round size, and tools like COCM can ensure your grants program drives real results. By designing your rounds thoughtfully and aligning them with your goals, you can maximize their impact—whether you’re funding public goods or scaling innovative projects.
Want to take your grants program to the next level? Learn about Gitcoin’s services and start building impactful rounds today.
Gitcoin’s expert services can set you up for success.