The content of the original post has been moved to 0x Protocol Treasury Grants Lifecycle
Thanks for putting this together @nikita - super helpful imo to have this post that defines in one place, the lifecycle for grant proposals.
Migrating a discussion point that @fig started here about the role of grants to this thread since it feels more appropriate.
The sustainability of direct-to-the-forum (and treasury) Grant requests… IMO it is dilutive, shifting the purpose of Governance towards a grants program vs. product development, finance, and sustainability.
I agree that in the long term, direct-to-the-forum grant requests is not the most sustainable and other teams have had success with separating out this responsibility to not overburden voters with every request. That being said, I think that that is true when there’s a higher amount of grant proposals than we see with 0x Protocol right now which I certainly hope to see come true!
Other teams have segmented this responsibility, allowing Governance to focus on more high-value, contentious proposals… Even then, I am not convinced of the need for Grants in this stage of the protocol’s maturation.
The purpose of 0x protocol is to provide trade settlement for swaps - not to be Gitcoin.
Let’s focus on that goal instead.
I have a differing opinion here that actually at this current stage of 0x Protocol’s maturation, that a Grants program is particularly needed! There’s a lot of things happening in the crypto space but a limited amount of builder’s attention - from my POV, one thing 0x Protocol is lacking to have more high-value, contentious proposals is a overall mindshare/attention/awareness of the protocol that is needed to get to those conversations. There’s a lot of different ways to increase that mindshare/attention/awareness and I think that grants is one decently effective way of doing that.
I personally agree with you that the purpose of 0x Protocol is to be the settlement layer, not to be Gitcoin. That being said, I think we first need more people to build on 0x Protocol and make it better to achieve that goal.
It may be worth establishing some sort of guidelines:
- any treasury request above 50k goes to Governance directly
- anything less - goes to a sub-committee focused on Grant distribution
Totally agree with you here, but again, I think that setting up a sub-committee will be most justified when there is a higher amount of grant applications (major shoutout here to the 0xEVE folks who have been serving this role pro-bono bono for a while - doing that kind of work for free should not be the expectation)
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Appreciate this note here Nikita! We’re very excited at the prospect of putting up a proposal, and these updates all make sense.
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Jumping in here from another thread -
Thanks for your willingness @ericwong to continue this discussion.
Great to see more organizations being posted about the process for requesting and awarding grants to deserving teams.
I’d probe the community with their willingness to continue the Grants program.
Some other results may be investing this spend in key roles, such as Developer Relations, UX / UI Design, general growth, and strategy. Or eliminating this spend altogether.
Let’s continue practicing austerity within treasury management - not sure a ~$4,500,000 treasury merits a grant program to teams replicating this request elsewhere.
Let’s take a look at some notable grants:
$950,000 (!) for trader.xyz a project still in Beta almost two years later
https://twitter.com/usetrader - only 1,500 followers on Twitter.
This one was theft.
400,000 ZRX for 0xEVE - 10% of the treasury.
@SonofPegasus - only activity was before and during the proposal, never since.
Is there more context here so that the community may better understand?
In my opinion, Grants pollute the Governance process - it often is a way to build discussion volume in the absence of other meaningful proposals.
Delegate teams focused on growth, BD, and sustainability transform into audit firms focused on the size of the ask and evaluating the team’s character.
If the community decides Grants are pivotal “to the DNA” of 0x it may be worth isolating this process or creating a threshold for when these stakeholders become involved.
Other potential areas to consider:
- Retroactive grants or only grants for future builds; grant eligibility
- RFPs or a “wish list” curated by the community, 0xLabs, and 0xEVE team
- Reporting and monitoring of pasts grants allocated by the 0xEVE
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hey @fig, I agree with all of your sentiments but I think they’re most applicable to a future state of 0x Protocol where we’ve achieved more of that mindshare/attention/awareness that I previously mentioned. I think of where we are right now as akin to a startup where people who are involved in governance are involved in all things that could be governed which could be growth, sustainability, engineering, and grants.
Certainly interested to think through what other ways the treasury funds can be utilized such as DevRel, strategy, general growth, UX/UI, etc. And I think that grants can bring helpful insights into these areas - I think that grants have historically (across the whole ecosystem) been for integrations or marketing purposes but in my perhaps naiive view, are not just synonymous with that. What I mean by that is that when I think of grants, I think of funds being used for audits for smart contracts that could extend 0x Protocol, or to update the toolchain of the github repo, or build a governance portal as examples. Perhaps that is better fit for one of the potential areas of consideration that you mentioned of “RFPs” or a “wish list”.
Holistically, agree completely that we should always continue to practice austerity with treasury management - a $5.2M (bumped because of arbitrum airdrop 
) treasury is not the most sizable and we should really look for high value add ways to utilize it. I personally think that the community and 0xEVE team has, for the most part, practiced reasonable treasury management.
I’ll let others who have more context about 0xEVE share more about that + SonOfPegasus situation but I do think there’s some conflation between two points referenced of (1) the entirety of the budget that was assigned to 0xEVE to fund its operation and (2) one of the original members needing to step out due to what they say are changes in personal and professional life. I’d like to give the 0xEVE team benefit of the doubt that the budget was utilized properly.
All of this being said, I want to point out that I think there’s two subtly different threads (and my apologies for migrating this conversation to here when I’m realizing it is slightly different from what Nikita’s post is about) that are not mutually exclusive
- Nikita’s post is proposing what the lifecycle of a grant request from the treasury looks like - it’s about process for individuals/teams requesting funding from the community. (I think the potential areas to consider that you share could certainly be considered to be incorporated into the “process”)
- Your comments is more about whether Grants are a good spend of the treasury.
What I’m trying to say here is that I think we should define what a grant lifecycle looks like, regardless of whether or not we ultimately decide if that’s one way that the treasury funds should be deployed.
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Thanks for the feedback @ericwong.
Feels fair to start a separate discussion - just copied some of my original thoughts.
Some things which feel like are missing are the final steps after the Grant is awarded. How often are teams expected to update the community? What is the best medium to do so?
Wold love to see more sustainable practices to ensure the effectiveness of Grants after they have been awarded - and create a positive experience to keep teams engaged and coming back.
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Thanks for posting this @nikita. I had a few comments:
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If you read the document which was published, when Polygon gave $7M worth of Matic, and 0x provided an additional 3.5M worth of 0x tokens, the intent was made clear for the tokens to be used for bringing 1M new users to 0x powered apps on the Polygon network. Hence, the amount in the treasury which was allocated here, has a specific purpose to be exclusively used for the same. It cannot be used for only the benefit of 0x ecosystem while projects build on other ecosystems.
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The $3.5M of 0x token were contributed with the following wording, " That’s why 0x Labs is contributing another $3.5M in ZRX , meaning the DAO, controlled entirely by ZRX token holders, will have a whopping $10.5M in total funds to grow DeFi and the 0x ecosystem on Polygon."
The DAO was tasked with using the funds for:
While ZRX token holders will ultimately vote on how to use the funding, we envision that it likely will be directed towards Polygon-benefiting initiatives, such as:
- User acquisition campaigns and marketing
- Developer acquisition and support efforts
- Adding NFT support and other token standards
- New token economics and governance designs/proof-of-concepts
- Adding Polygon Network support to apps tracking 0x network activity, such as 0x Tracker.
Let me know if something happened in the interim and this objectives changed because as far as Polygon side is concerned, we still imagine the funds to be used for same purposes.
Also, a 5 week period is way too big for micro-grants and if we have multiple of them in a month it is an un-necessary cost for the voters to spend gas fees and chase all grants individually. I believe we can follow a monthly cycle for micro-grants of amounts till 10K per protocol and divide the month based on various stages for ease of everyone.
Another thing I propose here is something which Polygon DAO has already worked on and is massively successful in getting the ROI on grants.
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Creation of a voucher system: Instead of putting all the money for a grant in cash, we can introduce standard vouchers for help. For example: If someone is asking for audit, there is no way for 0x to 100% certify that the money will be used as intended. Polygon can help partner with alot of such partners to get such vouchers created. This not only ensures money being used as intended, a good ROI but also a robust ecosystem around 0x to be built with a plethora of partners being part of it.
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Creation of multisigs and denoting grants in token amounts and not dollar values: If the grants that are being given out have various milestones, we could have a multisig, with 0x DAO, protocols being members of it and only releasing the grants when authentic proofs are submitted. It can be time bound, failing which the money could come back to the DAO treasury ensuring that grant amounts last longer.
We can also used tools like https://questbook.app/ which are already being used by multiple DAO’s like Compound and foundations to disburse grants as proposed above.
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Thanks @nikita for sharing a detailed proposal and Aishwary for recommending Questbook to the community. Questbook is a decentralized grants orchestration tool that is/has been used by some of the most reputed ecosystems such as Compound, Polygon, Aave, Celo, TON, Solana, IoTeX, etc. Having collaborated with numerous ecosystems to run and manage their grants program, please find below our suggestions and comments on the proposal:
1. Decreasing Proposal Evaluation Timeline and Removing Friction Points
Ideally, the process should take approximately 5 weeks from the initial forum post to execution and disbursement (if approved)
2 – Temperature check - a simple, non-binding vote to gauge whether there is sufficient community support to proceed to an onchain vote
3 – Onchain proposal - *a formal, onchain binding vote to decide whether or not to approve and fund the proposal
To initiate a vote, the proposer needs to have at least 10k ZRX.*
The proposed timeline of 5 weeks is significantly long for teams who are awaiting a decision on their proposal, especially when the grant amount requested is relatively small. Inclusion of steps such as temperature check voting and on chain voting extend the proposal evaluation timeline by a significant amount. Moreover, it is unrealistic to assume that every community member or a single individual possesses expertise across all areas identified by the 0x community to be important. Evaluating projects outside of one’s area of expertise can be challenging and inefficient, potentially resulting in missed opportunities for valuable contributions to the 0x ecosystem.
In the case of Compound Grants Program, by delegating capital and decision-making to members who are experts (elected by the community) and actively involved within that area, we have maintained a communication turn around time of ~ 48 hours and proposers receive an acceptance/rejection decision on their proposal within a week’s time.
Additionally, the proposed requirements for proposers to hold 10k and 100k ZRX tokens to initiate a vote introduces considerable friction that could potentially deter proposers from advancing their proposals to the next stage, even if they receive positive feedback from the community.
2. Designing Evaluation Rubric Based on the Identified Focus Areas
Expanding on the original cost/benefit/risk scoring framework used by 0xEVE, the following rubric inspired by the Optimism Grant Council is provided to help voters assess grant proposals. A maximum score of 37 is possible, and we recommend that for a proposal to be funded, it should achieve a minimum score of 22.
We believe that not all proposals should be evaluated using the same evaluation rubric and scoring mechanisms. Instead, reviewers/review team of a particular focus area (domain) should design domain-specific rubrics to suit the needs of each focus area.
For instance, in case of Compound Grants Program, reviewers (domain allocators) have designed their own domain specific rubric. All proposals that fall within the domain of a domain allocator are evaluated using the designed domain specific rubric and anyone from the community can view why a proposal was accepted/rejected in a transparent manner using Questbook.
3. Identifying Key Focus Areas and Funding Thresholds
As rightly pointed out by @fig , and ericwong, it is important for 0x to identify key focus areas (wishlist and RFPs), which can be crowdsourced through community, in order to align the proposers with the current vision of the DAO and increase the quality, relevance of the submitted proposals. We also believe that these proposals should be evaluated by experts (domain allocators) chosen from the community and by the community to address any blind spots individuals/community may have outside their expertise. Community selected experts will source, evaluate proposals and can set a maximum funding thresholds for accepting proposals within their respective focus areas. Proposals that fall below the threshold can be approved directly on Questbook, reducing the burden on the community while reserving the Governance voting process (direct to forum) for proposals that exceed the threshold and require broader community input. By adopting this approach, 0x will be able to achieve a balance between decentralisation and efficiency.
4. Making Milestone-Based Payouts
In order to address the concerns raised by @fig regarding certain proposals, it is important for the DAO to make smaller payouts based on clearly defined milestones. By establishing clear milestones, the DAO can mitigate the risk of upfront capital expenditure and ensure payments are made only upon successful milestone completion. Using Questbook, any reviewer can make milestone based payouts directly from a multi - sig.
While we acknowledge the emergence of retroactive grants as a funding model, it is important to recognize its limitations too. Some of the most promising proposals need access to upfront capital the most and maybe unable to do so because of Retroactive grants. This creates barriers for teams that need immediate access to capital, especially those that make payroll, pay for infrastructure costs, and are crunched for capital.
5. Measuring Impact
It is important for the community to hold the stakeholders running, disbursing grants accountable and measure the impact of the reviewers, funded projects through well defined impact metrics such as number of new contributors entering the ecosystem, value captured, community engagement and growth, brand recall etc.
Grant programs using Questbook are able to track the performance of the domain allocators/reviewers using data rich dashboards. Additionally, any community member can create their own custom dashboards permissionlessly as all the data will be available on chain.
Next Steps
As proposed by Aishwary in his reply, we would love to work with the 0x community in running their grants program on Questbook and welcome any suggestions/questions from the community.