Web3’s tradition of generous grants programs provides a much-needed bulwark for the open web’s dedicated builders: the open source developers, researchers, and thought leaders that allow the ecosystem to thrive.
Web3’s tradition of generous grants programs provides a much-needed bulwark for the open web’s dedicated builders: the open source developers, researchers, and thought leaders that allow the ecosystem to thrive.
Blockchain protocols always seek project proposals to enhance their ecosystems, from nitty-gritty technical updates to community-led media like podcasts and newsletters. There isn’t much restriction, so long as projects can make web3 feel more resilient and participatory and enable protocols to inspire other protocols—i.e., putting collaboration above the competition.
Grants programs keep the innovative and collaborative spirit of open source alive and kicking. What follows is an analysis of the best practices within three programs that have successfully empowered their communities and served as crucial onboarding tools for ecosystem growth.
In December 2020, Jesse Walden of Variant Fund introduced a policy proposal to the Uniswap community, arguing that the most effective approach to scaling the protocol and sustaining it in the long term would be with a recurring grants program.
Walden wrote that the Uniswap Grants Program would act “as a catalyst for growth and [help] to maintain Uniswap as a nexus for DeFi on Ethereum.” The proposal to launch UGP—the first-ever successful proposal on Uniswap—passed with resounding support.
UGP is intended to reward the protocol’s thousands of contributors who have been improving the ecosystem since its launch in 2018 and have been building developer tools to help future generations of contributors. The capital made available through the grants program has attracted talented developers outside of Uniswap’s base of full-time employees.
A maximum of $750,000 is allowed to be made available each “wave” (which occurs each quarter), and more often than not, each wave disperses at least half a million dollars among grantees. According to the UGP website, “no deadlines and no pressure. Just pure innovation.” The fact that the program takes proposals on a rolling basis underscores the importance it places on regularly hearing from the community and the fact that there’s always a need for protocol updates.
UGP follows a committee structure where one individual functions as the Program Lead and five community members act as Reviewers who collectively hold the Program Lead to account for running the grants program responsibly and in good faith. In Walden’s original proposal, he suggested a committee of notable figures from the web3 industry, including himself, Ken Ng of the Ethereum Foundation, and Robert Leshner, Founder, and CEO of Compound Finance.
The committee is up for review on an annual basis, and community members within Uniswap governance can choose to renew or reject the current committee members for subsequent iterations.
Because of its sheer popularity, UGP has faced an overwhelming challenge in its vetting process: the grants committee needed a better structure for efficiently assessing and commissioning a substantial number of contributors and projects practically and credibly neutral.
The committee solved this challenge by teaming up with Gitcoin and joining its eleventh quarterly Grants Round (GR11) in September 2021. Quadratic Funding helped highlight which projects had the most appeal in the ecosystem. On top of that, Gitcoin provided much help with planning, marketing, creating policies, vetting, resolving disputes, distributing payments, and mitigating fraud.
Specific projects that have received funds through the Uniswap Grants Program include:
The Aave Grants DAO is an example of the cultural power a grants program can have in empowering a community and how a grants program—beyond the financial benefits provided to promising new and core builders—can serve as a critical onboarding tool to grow an ecosystem.
Like the UGP, the Aave Grants DAO funds grants which pertain to code development, governance support, and community engagement. While its website specifies that the program focuses specifically on community developers, it also seeks projects which pertain to marketing and governance solutions.
Since its launch in May 2021, the program has dispersed over $4 million among many projects, with individual awards ranging from a few thousand dollars to as high as $100,000.
The Aave Grants DAO is best understood as a sub-DAO, given its placement within the larger Aave DAO. Community members Aleks Larsen and Shreyas Hariharan were responsible for proposing the Grants DAO, and they put forth a structure that was meant to reflect Aave’s commitment to decentralized decision-making.
Larsen and Hariharan wrote that the program should be community-led to “promote inclusivity and a more visible and transparent avenue for funding development in the Aave ecosystem while maintaining the decentralized nature of the ecosystem.”
Like UGP, there is a committee with a team lead and reviewers that is eligible for renewal by governance once a year. But on a similar note, the Aave Grants DAO has run into the challenge of evaluating an overwhelming amount of grants swiftly and accurately.
That’s where the community-led aspect comes into focus. Hariharan explained during a presentation at ETHGlobal that the DAO plans to further decentralize the decision-making process by involving more community members in evaluating grants. He notes that using a reputation system will help discern which community members can be eligible to participate as the program scales over time.
The Aave Grants DAO has funded almost 200 projects. Among them are:
Ethereum boasts a comprehensive grants program to support its prodigious infrastructure for building dApps and running DAOs and its dedicated community distributed worldwide.
Through the Ethereum Foundation, the Ecosystem Support Program directly finances individuals and teams who are committed to building and maintaining the open web on Ethereum. Beyond that, the program funds individual development projects, nonprofits, educators, and academic proposals from accredited and independent researchers.
The Ethereum Foundation has set a fantastic track record of funding IRL events—such as ETH Global and ETH Denver— that have helped ecosystem growth remain strong while engaging the community.
Their decision-making process is fairly standard when it comes to grants programs. According to the ETH Ecosystem Support Program website, the process goes as follows: “a formal application, review, and a decision made by the ESP team with input from technical advisors.”
Unlike other web3 grants initiatives, the Ecosystem Support Program has a much broader definition of what “support” looks like. Given the breadth of Ethereum, the ecosystem has a built-in networking hub at the ready. Alternative forms of support for those who want to get involved in the program include: “visibility; access to a massive collective knowledge base; a creative and dedicated team; connections to leading developers, researchers, and community members.”
One example of this kind of support is Office Hours, where potential grantees can directly interface with Ecosystem Support Program team members to get feedback on their grant applications and learn more about what sort of relevant projects the program is looking to commission at a given point in time.
The Ecosystem Support Program’s Twitter account regularly posts updates and tips and tricks for how interested applicants can excel within the program, as seen in a recent talk they hosted at Devcon V1.
While UGP and Aave have readily available forum posts introducing the proposals for their respective grants programs, there isn’t clear information about how the Ecosystem Support Program was brought to fruition or the logistics behind its decision-making process, namely which people within the Ethereum Foundation are in charge of selecting grantees.
This might be because the grants program is one of the most selective. But despite the seemingly centralized process, the Ecosystem Support Program has been formative in inspiring web3 orgs to form their grants initiatives. Ethereum has always been at the intellectual forefront of how orgs should conduct innovation on-chain, and this grants program is a major example of that.
Ecosystem Support Program grantees include:
As this analysis is straightforward, web3 grants programs come in all different shapes and sizes. There’s a diversity of best practices to choose from if you want to start your grants program. On the one hand, Uniswap resolved its bottleneck in decision-making by collaborating with Gitcoin. On the other hand, Aave solved its bottleneck by working to decentralize and expand the size of its selection committee.
As grants programs continue to evolve and bolster the redistributive tradition of web3, we’re exploring our own decentralized future here at Gitcoin. Stay tuned as we transition to a decentralized, scalable solution that will support many more communities in funding their shared needs!
Do you want to get involved and donate to our Alpha Rounds? Read the announcement, where you will find information and links to participating.