[DRC] dYdX Ecosystem Development Program (fka dYdX Grants Program)

[ecosytem_dev_program]

dYdX Ecosystem Development Program

Summary

• We are requesting $12M in DYDX tokens from the community treasury to fund the dYdX Ecosystem Development Program (“DEP”), an evolution of the dYdX Grants Program (“DGP”). Based on anticipated funding needs, we project this will support an additional 24 months of support for the Program.
• The DEP’s primary goal is to serve as a partnerships and funding arm of dYdX, helping support infrastructure, chain services, protocol development, and growth. The DEP will collaborate with other individual contributors, entities, and subDAOs including dYdX Trading, dYdX Foundation, and the dYdX Operations subDAO, to identify impactful areas of support.
• We propose continuing the Strategic Initiative and Community-Initiative buckets.
• The DEP will also assist with the creation of longer-term initiatives (E.g. dYdX MEV Committee), for any areas that require longer-term, recurring contributions.
• The DEP’s day-to-day operations will be overseen by six contributors, five trustees, and one enforcer.

Why the name change? Now that dYdX Chain is open-sourced, a new chapter unfolds for dYdX contributors. Contributors can dig into the weeds of the protocol’s underlying infrastructure, getting a much better understanding of the dYdX Chain and how it all comes together. For the first time, contributors can integrate their ideas directly into the protocol. This evolution supports rebranding the current ‘dYdX Grants Program’ to the ‘dYdX Ecosystem Development Program’ (DEP), reflecting the broadened mission to cultivate a vibrant ecosystem comprising protocol contributors and strategic partners. The DEP is designed to foster innovation, collaboration, and growth within the dYdX community, aligning with the evolved objectives and capabilities of the open-source software.

Below, we’ll explore the historical activities of the dYdX Grants Program, what the new dYdX Ecosystem Development Program’s design includes, and what the funding priorities for the next 24 months look like today.

Background

The dYdX Grants Program was launched in January 2022 for an initial six-month term and has since been renewed four times for additional terms, totaling over two years of dYdX contributions. The current term, running a version dubbed “v1.5” for its improved structure of the original program, expires on March 1st, 2024.

The DGP’s mission was to grow the dYdX protocol through community contributions. Growing the protocol comes in different shapes, including onboarding top-tier contributors, building new tools and services for dYdX users, researching new areas of development, supporting core protocol infrastructure, and boosting community engagement. Ultimately, grants were disbursed with the goal of maximizing positive impact on the dYdX protocol in whatever way possible.

Throughout its two years of operation, the DGP approved 144 grants with over $5.6 million in funding. Grants were disbursed to 106 unique contributors, many of which continue to participate in the ecosystem today. The average funding amount was $39,000, ranging from small community grants at $300 to core protocol infrastructure services at $365,000. 116 of the funded grants have been completed, representing a 92% success rate on final milestones so far.

Previous Grants

Below, we’d like to highlight some of our most impactful projects. We believe these grants highlight the breadth of contributions made to dYdX through the DGP. Our full set of approved grants can be found here.

Protocol Growth

• Chaos Labs launched a six-month, $20M incentives program to improve the transition and adoption of the dYdX Chain launch. As of today, Chaos has already distributed $5M of DYDX from the community treasury to early users of the protocol. Overall, the program has seen overwhelming success in engaging new users and attracting more volume.
• Coinbase is adding IBC forwarding for direct USDC transfers to and from dYdX across all Coinbase Exchange products. We anticipate a growth in deposits stemming from easier accessibility between centralized exchanges and dYdX v4.
• Xenophon Labs conducted research on the dYdX v3 rewards program, which resulted in major revisions to the distribution formula. These revisions improved the efficiency of rewards distributed, maximizing the return on investment for the community. The proposal is expected to have increased protocol revenue by roughly 20%, or over $3M per month.
• Xenophon Labs conducted research on two dYdX v3 staking modules, ultimately sunsetting both programs through their analysis. The modules proved inefficient, and an unnecessary expenditure for the community. Thanks to the successful sunsetting proposals (1, 2), the community saved 19,220,392 DYDX from the Liquidity Module and 19,710,061 DYDX from the Safety Module. At current prices, this research saved over a $100M DYDX from inefficient spending, redirecting it to the treasury instead for future use.

Infrastructure

• Imperator launched the first testnet instance of the dYdX Indexer to support the development and eventual launch of dYdX Chain. Imperator are now responsible for the mainnet indexer support through the dYdX Operations subDAO, a service that came about as a result of our grant.
• Strangelove Labs developed a Noble CCTP relayer used to deposit funds into dYdX Chain. We anticipate a growth in deposits and participation by improving the onboarding experience for non-Cosmos users. A few months in, millions in USDC have already been transferred through this relayer.
• Numia improved the accessibility of dYdX Chain on-chain data with consistent indexing for SQL queries, which includes mempool CheckTX level data. Their dashboard is also actively used to review and monitor adoption of dYdX v4.
• AllThatNode added support for testnet RPC and Node services to support testnet development and usage.
• Cosmostation is supporting dYdX Chain on Mintscan with custom features and analytics, improving the accessibility to users.
• RockawayX Labs is supporting dYdX on its Observatory product, giving the community access to in-depth data of the validator set.
• Contributors built multiple new trading SDKs across popular languages, including C++ (v4), Rust (v3), and C# (v3), with more to come for dYdX Chain.
• Wallets added support for dYdX Chain native-DYDX, including Forest and Keplr multisig.

Research and development

• Skip Protocol researched methods for quantifying MEV on dYdX Chain, and launched a custom dashboard for tracking proposer MEV activity, allowing us to accurately measure MEV.
• Chorus One explored in-depth MEV opportunities on dYdX and the cross-chain ecosystem, improving our understanding of the problem.
• Skip Protocol accelerated the development of VoteExtensions technology in the CosmosSDK, which will be implemented across different dYdX protocol functions.
• Chaos Labs explored opportunities to develop permissionless markets on dYdX Chain.
• The MEV council is proactively investigating and responding to malicious and inefficient block proposers on behalf of the community, improving the product’s trading experience. Recently, the Council identified and helped resolve issues related to a validator, improving the overall trading experience for users.

Community Initiatives

• Content creators have repeatedly promoted dYdX across different languages, distribution networks, and crypto communities – including China (in-process), Japan, Korea, France, Belgium, Germany (in-process), and Mexico.
• Toyoji launched the dYdX Merch program to promote the brand and enhance community engagement. The merch has received overwhelmingly positive feedback across the ecosystem, and is used as a powerful incentive mechanism to engage users and promote participation.
• 0xCLR shared monthly reports on the state of dYdX and the community’s financials. These reports play an important role for community awareness of the protocol’s financial state and ongoing expenditures.
• Multiple contributors worked together to launch a dYdX Academy page (which has since been taken down in favor a new page)
• Ar00 developed dydx.vote, a gasless voting portal popular for voting on v3 proposals. This became the most popular voting tool on v3, increasing the number of voters for on-chain proposals.
• Shipooor launched @dYdXInfo on Twitter, regularly updating the community and ecosystem with stats on dYdX.
• Chainspaces designed a custom dYdX Gather town space for community gatherings and events. The space was popular among community members, used weekly for gatherings and discussions.

The dYdX Grants Program

Launched as a dYdX community-funded program, the DGP has operated as an extension of the community treasury with the goal of sourcing and funding contributors that deliver growth to the protocol. To accomplish this goal, the team has repeatedly iterated over its structure and processes to improve our success. This includes establishing a legal entity, refining our screening process, leveraging KPIs, and improving transparency. Below, we explore a few of these measures to highlight the work done in the past two years.

dYdX Grants Trust

Soon after launching, the DGP established a Guernsey purpose trust structure – the dYdX Grants Trust – to formalize our role in the community. A purpose trust gives the community control and ownership of the program while explicitly defining its goals, which, as our agreement states, is to “make distributions to such persons identified by the Trustees in furtherance of the dYdX protocol and ecosystem.” The community can govern the DGP, its contributors, and its purpose(s) through the dYdX DAO, voting on legally binding proposals to continue, change, or cancel the program.

The trust structure also provided the program with a legal entity, allowing us to engage with professional service providers through off-chain legal agreements. The scope of our program grew tremendously as a result, giving us an opportunity to improve impact with better partnerships and engagements. The DGP was among the first to embrace this entity type, which has since been adopted more widely across DAOs. We’re proud of the innovative step taken towards normalizing DAO operations in an off-chain setting.

Our Process

The DGP has continuously iterated on its processes to improve the contributor experience. Given the abundant grant opportunities for talented crypto contributors, our goal is to ensure a smooth experience for prospective and current dYdX contributors, increasing incoming applications, repeat applicants, and contributor satisfaction. Since the DGP’s launch, we’ve funded multiple recurring contributors who have repeatedly delivered high quality products, and are now regular contributors to dYdX. For example, Skip led the research into MEV on dYdX v4, helped build methods for measuring discrepancies, and is now an active contributor to MEV monitoring. Xenophon Labs has also served as a leader in protocol research and new developments, submitting multiple grants-funded proposals to improve the protocol’s parameters and modules.

Over time, we’ve iterated on the best approach to identify high-impact initiatives, recruit quality contributors to manage them, and allow them to continuously improve the protocol. Our current focus is on releasing targeted RFPs, quick response times, and direct, short feedback cycles. We regularly release detailed RFPs to guide applicants toward specific projects we aim to fund, outlining clear requirements and qualifications. Our target is to respond within a week to maintain enthusiasm and engagement. We speak with applicants directly via email or chat, fostering a connection with potential contributors. If applicants aren’t a fit for the RFP, we encourage them to explore new opportunities and offer other areas of interest.

If an applicant is a good fit, we follow a quick onboarding process that minimizes bureaucracy while still adhering to best practices (including KYC, grant agreements, and necessary approvals). The goal is to make them an active contributor as quickly as possible, with little overhead.

Throughout the grant lifecycle, the team proactively seeks updates and progress reports from our grantees. In these discussions, we also serve as an initial sounding board for feedback and ideas, helping them maximize the impact of their work. The DGP acts as a support system, aiding contributors with improvements and necessary resources. Our overarching goal is to enhance the experience, encouraging contributors to re-apply and participate beyond the grant’s initial scope.

For more information, a detailed breakdown of our application process can be found here. A similar breakdown of the grant lifecycle can be found here.

Funding Buckets

In our last term, the DGP introduced funding buckets to our application process. Two buckets, Strategic Initiatives and Community Initiatives, separate application screening and funding objectives among DGP contributors. Our experience running the program demonstrated the importance of having different workflows between smaller, community-oriented grants and larger-scale, long-term projects. The former can be acted on quickly, responding to community needs and developments to foster a productive ecosystem. The latter, on the other hand, needs prolonged discussions and long-term planning to find the most impactful scope, sometimes taking months to complete.

By funneling applications to their relevant buckets, the DGP assigns contributors with relevant expertise to focus on accomplishing the goal of their respective category. We found this very helpful in streamlining the application process, allowing for quicker feedback and responses to all applicants.

We plan on continuing this system with the same two buckets described below:

1. Strategic Initiatives

Focus on larger scale projects that contribute to the development, growth, and improvement of the dYdX protocol. We will build on the demonstrated success in partnerships with long-term contributors to deliver services and development to dYdX.

Objectives:

• Enabling the development and integration of new features.
• Onboarding proven individuals and service providers as dedicated long-term contributors to the protocol.
• Researching new areas of improvement and development, in collaboration with other dYdX stakeholders.
• Growing the adoption and use of dYdX Chain.

2. Community Initiatives

Focus on projects that build the dYdX ecosystem, foster community satisfaction, grow the dYdX brand, and onboard new protocol contributors.

Objectives:

• Onboarding and incentivizing active contributors to the ecosystem.
• Fostering community engagement.
• Promoting the dYdX brand and ecosystem through international media partnerships, amongst others.
• Building tools and resources for protocol participants.

Transparency

As a community-funded program, the DGP holds itself accountable to the dYdX community. Our goal is to make our activity accessible to community members and to maintain open lines of communication for ongoing feedback.

The DGP is proud of the work it has done to maintain high standards of transparency, which includes:

1. Monthly updates shared on our blog and the forums that include our funded grants, monthly expenses, conflicts of interest, and financial standings.
2. Hosting AMAs with grantees and attending all Foundation town hall meetings to answer questions.
3. A live dashboard that includes all applications received, grants funded, and a breakdown of every payment issued from the DGP multisig.
4. A feedback form that publishes all entries to our public dashboard, with no screening or interference on our behalf.
5. We encourage Grantees to publish their work and ongoing projects on the forum for active discussion.
6. Soliciting feedback for new initiatives and RFP plans through the forum. We have also started pushing larger initiatives through additional governance proposals to align the community prior to grant approval.
7. Making ourselves available for discussions and feedback on our Discord channel, forum posts, and DMs.

KPIs and Success

When assessing the performance of a grant, we take a holistic approach and explore the overall impact delivered to the protocol. If we can comfortably say that a grant has had some tangible impact on the dYdX protocol, we consider it a success. Naturally, the scale of impact will vary with each grant. We find that a power law dynamic applies to grant distributions – where a handful of grants deliver an outsized impact on the protocol such that they account for a majority of the program’s success. These grants may not always carry individual KPIs for quantifying their success, but the impact is undeniable.

As an example, Imperator’s testnet indexer grant paved the way for a dYdX Chain mainnet launch and its required mainnet implementation of the dYdX indexer. Without this grant, it’s hard to say if dYdX Chain could have launched in time. Similarly, Noble’s work on the CCTP relayer has reshaped the onboarding experience for new users, allowing dYdX to access a whole new set of eligible depositors. Skip pioneered the research and development for MEV measurements on dYdX Chain, allowing the community to completely reimagine the existence of negative externalities from block proposers. Other research grants like Xenophon’s work to revise reward programs and staking modules have also had tremendous impact on the protocol, saving the community hundreds of millions in unnecessary expenditure.

However, we’re also able to deliver meaningful impact at a smaller scale. Not every grant needs to be protocol-shaping for it to have value to the community. Our community initiatives aim to improve the community’s experience and onboard a smaller set of region-specific participants. For example, 0xCLR’s monthly reports have provided invaluable insights on the performance and financial health of our protocol. The overall impact on the dYdX protocol is lower, but so are the funding amounts. The ratio of funding to impact makes them successful in their own ways.

Our goal is always to evaluate grants such that the funding amount is reasonable for the expected level of impact delivered. Still, not all funding decisions will be winners, but every now and then we’ll work with a contributor that knocks it out of the park to deliver exceptional impact. We set ourselves up to look for these funding opportunities, and double down on productive contributors to maximize our likelihood of success.

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In the next section, we describe our vision for the dYdX Ecosystem Development Program (added in a subsequent comment given character limits).

[ecosytem_dev_program]

The dYdX Ecosystem Development Program

As mentioned earlier, the DEP is an evolution of the dYdX Grants Program, and will continue to perform many of the same activities. The launch of dYdX Chain created a new landscape for contributors, one that has required a few changes. With contributors able to directly contribute to the dYdX protocol, we need to work with a new class of partners and service providers that are comfortable working with counterparties who have long-term funding. It also requires working closely with other dYdX stakeholders on a longer-term strategic plan in order to identify the highest leverage areas to fund.

With these changes in mind, we felt that “dYdX Ecosystem Development Program” better captured the scope and spirit of our focus.

With this shift, we envision redesigning the program to operate at a better and bigger scale. The collaborative nature of an open-source protocol gives us the confidence to increase the scope of our grants, heightening their impact on dYdX. Below, we outline some initials improvements to our process:

1. RFP Design and Applicant Sourcing

RFPs (Request For Proposals) are designed to recruit contributors for specific needs or improvements of the protocol. Previously, the DGP drafted new RFPs based on user feedback and industry standards.

Now, in a more collaborative setting, the DEP can work alongside core contributors such as the dYdX Operations Trust, the dYdX Foundation, and dYdX Trading to deliberately design RFPs targeting specific areas of improvement for the protocol. This transforms RFPs from broad ideas for grants to detailed technical specs with a clear understanding of the objectives and scope.

More specifically, dYdX Trading plans to publish technical specifications outlining opportunities for contributions in areas of their product roadmap. Armed with these detailed specs, the DEP can source the right candidates to deliver an even greater impact on the dYdX protocol. Through this process, core contributors can focus more of their bandwidth on critical areas while the larger roadmap continues to be delivered upon. We also gain the benefit of expanding our contributor base on the protocol and product, growing a healthy ecosystem of talented participants.

With better RFPs, we also receive better applicants. Instead of putting out an open call for ideas, we can focus on the requirements and eligibility criteria needed from a successful contributor. We’ll leverage our collective networks to source the right contributor for the job, improving the RFP turnaround and maximizing the impact of the grant.

2. Service Provider Engagements

Previously, the dYdX v3 protocol’s closed-source development made it harder to engage with professional service providers, which required lengthy agreements and a clear understanding of the protocol’s direction. In the shift to the dYdX Chain open-source software, we can now confidently engage service providers with longer-term agreements, opening up new opportunities for grants and services for the protocol.

Due to their lack of formal entity and structure, engaging with DAOs is a common challenge for service providers. Facing a DAO is not always an option. Instead, the DEP is well positioned to work with these providers, acting as the face of the protocol for agreements. Our presence improves the services and contributors available to the protocol.

These types of agreements were already worked on in previous versions, including grants with providers like Cosmostation, Strangelove Labs, Numia, and Skip. We can leverage our experience of structuring, negotiating, and doing diligence on these agreements to improve the process with the DEP. The lengthier term for this proposal will also give us more confidence and operational flexibility to engage in longer term agreements, which typically improves the terms for us.

3. Longer-term Initiatives

The DGP’s original scope included funding contributors to perform certain functions and projects on behalf of the community, which might eventually scale to subDAOs or working groups.

With dYdX Chain, core functions important to the protocol’s health and success have transitioned to the community. It’s now more important than ever for the community to actively manage the protocol. The DEP will launch initiatives that fund contributors to take on these roles on a more permanent basis for the community, improving efficiency and success. While these initiatives often have full-time grantees responsible for carrying through the core of the execution, the DEP plays a leading role in the ideation and creation of these initiatives, as well as an ongoing, supporting role in the execution and follow-through.

Below are a few examples of initiatives worth highlighting:

Existing Initiatives

1. MEV Protection:

As outlined in previous blog posts, MEV is a potentially existential threat to dYdX Chain, threatening the user experience which is the most important thing for an exchange. We had line of sight into this problem, and have worked with the dYdX Trading team to formulate a strategy against malicious actors. We funded a few industry-leading grantees (Skip Protocol, Chorus One) to work on research, acting as thought partners to provide additional support.

We combined that initial research with a more practical way to mitigate and deter MEV, forming a seven-person MEV council responsible for monitoring, reviewing, and flagging MEV activity on dYdX Chain on behalf of the community. This presents a credible threat to any bad actors that would damage the trading experience. Going forward, we’ll continue to explore new methods of improving the user experience and protocol health with regards to MEV, whether it’s through research, infrastructure, or other implementations.

2. Launch Incentives:

The migration to dYdX Chain from dYdX v3 presented users with a tough hurdle, asking them to bridge funds to a new protocol with changes in the trading experience. To improve the likelihood of early migration and maximize the launch effect of dYdX Chain, we worked with stakeholders to implement a community-run incentive program that would attract more users.

We funded grantees to conduct research on the migration (Xenophon) and explore an efficient program (Chaos) that was approved by the community through a proposal. Chaos is now leading the launch incentives program, allocating $20M of the community treasury to reward early adopters of dYdX Chain. The program is applying a lot of lessons learned from previous research on effective trading behavior, preventing wash trading, and building loyalty. Looking ahead, we’ll explore additional incentives to further growth and user adoption on dYdX Chain as the initial launch hype begins to fade. Our goal is to continue promoting dYdX in an effective manner, allocating the treasury with intention and impact on efficient rewards.

Potential Future Initiatives:

1. A validator and/or staking initiative that is tasked with maintaining efficient distribution of voting power across the active set. Validators play a critical role in maintaining the protocol with governance participation, software upgrades, and network restarts. A low or inefficient distribution of voting will damage resiliency and increase dependency on a few validators. With the launch of liquid staking protocols like Stride, the community can have a say in the delegation of staked tokens in the active validator set – taking ownership of improving validator performances.

2. On dYdX Chain, the community is responsible for different protocol parameters, some of which include risk-related adjustments to dYdX markets. The DEP may explore ways to help the community govern these parameters more efficiently, protecting the protocol from unforeseen risks. Contributors can conduct regular monitoring, scenario analysis, risk assessments, and build the necessary infrastructure for responding to market environments and attacks on the insurance fund.

3. Incentives, like the launch rewards funded to onboard users to dYdX Chain, may continue to play a role in attracting new users and growing the protocol. As previously researched, rewards programs must be constructed in a thoughtful manner to avoid excessive spending, scan for undesirable activities like wash trading, and prevent gamification from participants. Regularly updating the incentive mechanism is needed to keep rewarding honest, desirable activities only. Contributors could manage these programs to maximize the return on investment for the community.

These are just a few of our ideas today. We expect many more opportunities to develop as the protocol continues to evolve.

We think the DEP will be equipped to take on better and bigger projects that continue to build and promote the dYdX protocol. Though we expect some targets to change as the dYdX Chain grows, we highlight a few immediate focus areas below. For each category, we include project examples and funding ranges. Funding ranges are based on similar projects funded in previous versions.

Protocol Infrastructure and protocol-related services

The DGP has played an important role in supporting protocol infrastructure for dYdX Chain, including projects like CCTP development for bridging USDC, a testnet Indexer service, and now funding Mintscan as the primary explorer. We expect the need for this funding to increase as the protocol’s infrastructure grows and more services are needed to support its needs.

Examples:

• Additional indexers and API services
• Relayers, chain monitoring tools, and full node support
• Explorers, wallets, and staking services
• General improvements to protocol interaction and developer experience.

Funding range per grant: $100,000 - $500,000

Protocol and Cosmos Development

dYdX Chain opens up new possibilities for contributors to participate in the development of the open-source dYdX protocol, either directly or through improvements to the Cosmos stack. We aim to work with talented engineers to focus on areas of development not already covered by core contributors, and that work to strengthen the underlying chain.

Examples:

• Adding new modules to the dYdX protocol (e.g. Cosmwasm)
• CosmosSDK and CometBFT development
• Collaborating with core contributors to ship new protocol features
• Partnering with other protocols to build composable services and add-ons

Funding range per grant: $50,000 - $300,000

Growth Efforts

Growing the protocol, whether it’s through user adoption, increasing liquidity, or improving the accessibility of DYDX, remains a top priority with dYdX Chain. For this phase, we are focusing on longer-term projects and partnerships that continue to promote dYdX as the leading perpetuals exchange.

Examples:

• Liquidity and user incentive programs to drive adoption
• Partnering with major marketing platforms to promote dYdX
• Adding support for DYDX on more platforms and exchanges
• Increasing the adoption of noble USDC in the ecosystem

Funding range per grant: $50,000 - $300,000

Risk and Protocol Maintenance

The launch of dYdX Chain includes with it the transition of protocol parameters, including risk functions like liquidity tiers and margin functions, to community ownership. Maintaining markets, the insurance fund, collateral requirements, and more will all be critical to the success of dYdX.

Examples:

• Market maintenance initiative to govern market listings, updates, and delistings
• Protocol debt monitoring and market volatility protections
• Margin and market parameterization governance

Funding range per grant: $50,000 - $500,000

Community Growth

Fostering an active and productive community remains a critical goal for the DEP. The dYdX community should be a fun and engaging environment that’s welcoming to newcomers and rewarding to loyal participants.

Examples:

• Community events and event attendance sponsorships
• Content creation opportunities
• Promotional campaigns with dYdX Merch and reward incentives
• Contributor loyalty program to reward active participation

Funding range per grant: $2,500 - $50,000

Below, we outline a formal proposal for this new vision of the DEP.

Operational Details

Term

We propose the DEP be approved for up to 24 months of operations. A 24-month operating time frame offers a few benefits to the DEP and dYdX community:

• Flexibility: Allows the DEP to engage in longer-term initiatives and plan over a multi-year timeframe. We strongly believe the most impactful work we do will take place over many months, and having a longer time horizon offers more flexibility in what the dYdX community can achieve.
• Longer-Term Contracts: Having a 24 month operating time frame makes professional vendors and service providers more comfortable working with us. Over the DGP’s existence, we have worked with numerous industry-leading professional service providers (e.g. Chaos Labs, Xenophon Labs, Strangelove Labs, Skip Protocol, Cosmostation, Keplr, RockawayX Labs, Numia, and more). Having a longer-term time horizon allows service providers to engage the DEP with more confidence, making them more likely to collaborate with the DEP on longer-term initiatives.

At any point in the 24 month timeframe, the dYdX Chain governance community can choose to pause or cancel the program.

Structure

In its last term, the DGP introduced a new structure, including more contributors that allowed for specialization across categorical grants and functions. We found success in the program, particularly focusing on different funding opportunities. Community grants can be funded rapidly, while larger service provider engagements take weeks or months to negotiate. Assigning contributors to focus on these areas allows for a more efficient, streamlined funding process.

We propose the following contributors be assigned to manage the DEP:

Grantors

The Grantors are responsible for drafting RFPs, sourcing candidates, submitting grant recommendations, and supporting active grantees with their projects.

Strategic Initiatives

• Reverie:

  • Reverie helped launch the DGP and has served in a lead position since its inception.
  • Reverie has dedicated considerable time and resources to dYdX as a full-time contributor for the past two years. Specific responsibilities have included:
    • Working closely with various dYdX stakeholders (dYdX Trading, dYdX Foundation, validators, users of dYdX Chain, and partners), to formulate a broader strategy for the dYdX ecosystem. We have recurring touchpoints with the dYdX Trading and dYdX Foundation teams to identify focus areas, important RFP opportunities, and strategize on the right partners to bring on.
    • Acting as a strategic partnerships arm for the protocol, helping execute long-term partnerships from inception to follow-through.
    • Managing the grantee workstream, from putting out RFPs to reviewing legal contracts to working with grantees throughout the lifecycle of a grant.
    • Playing a role in specific workstreams.
      • We have led the formation and execution of the MEV Mitigation Council, which has played a role in detecting and mitigating MEV activity on dYdX. Thus far, we have identified a significant discrepancy which was resolved with the Council’s help, improving the user experience for traders.
      • Played a supporting role in dYdX launch incentives, helping design the program and execute its goals.
  • Reverie will dedicate three contributors to dYdX - Carl Bergman, Derek Hsue, and Federico Daffina Minicucci. This represents an increase in scope and commitment compared to v1.5, which is necessary to match the growing scope and impact the DEP plays in the ecosystem.

• RoboMcGobo:

  • Robo served as Community Grantor in the previous term, while also contributing to a number of strategic initiatives. Robo is an active contributor to multiple Cosmos protocols, including dYdX, Osmosis, and Stride.
  • Robo’s participation will include playing a supporting role in the Strategic Initiatives bucket, helping to recruit grantees, release RFPs, and manage the grantee workstream from inception to execution.
  • Robo will also play a supporting role in other workstreams the DEP works on.

Community Initiatives

• Mackay:
  • Mackay served as Community Grantor in the previous term. Mackay is an active contributor to protocols, having previously served as dYdX Ambassador and now serves on the board of directors at the Blockchain Acceleration Foundation.

Operator

The Operator is responsible for payments and financial reporting in the DGP.

• Lemma Solutions: Lemma served as operator in the previous term. Lemma Solutions is a DAO service provider specializing in operational processes and financial workflows.

All Trustees and the Enforcer already sit on the trust, having served in the previous term. We propose no changes to our Trustees or Enforcer.

Trustees

• Felix Lutsch (Lead Trustee): Previously overseeing business operations at Chorus One, Felix is now a strategic advisor to staking protocols and actively contributing to DAOs.
• Abra Tusz: Abra is chief of staff at the Interchain Foundation, working closely with developer teams to foster the right culture throughout the interchain ecosystem.
• Colin Chan (0xCChan): Colin has been an active member of the dYdX community for many years, as both a previous grantee and dYdX Ambassador. Colin is also conducting research on incentives across the crypto ecosystem.
• Bora: Bora manages protocol partnerships at Keplr, giving her a breadth of experience and knowledge of the interchain ecosystem.
• Wintermute Trading: Wintermute is an active market maker and contributor to the protocol. Callen, governance lead at Wintermute, is regularly submitting proposals and contributing to the growth of dYdX.

Enforcer

• Cliffton Lee: Previously worked at the dYdX Foundation where he learned all the ins and outs of the dydx protocol, Cliffton is now leading DAO relations at the Arbitrum Foundation.

Budget

At the time of writing, the DGP has $1M in funding remaining in available funds. To scale the program appropriately for another 24 months, the DEP is requesting an additional $12M in DYDX funding from the community treasury.

This budget takes into account previous spending in the past two years, and factors in the new scope for DEP. The increase in funding will give us the firepower to support impactful grants, engage with multiple providers, and ready the program for any and all new strategic opportunities in the next year.

Below is a rough breakdown of the DEP’s anticipated focus areas for funding:

Funding Categories

Category	Funding
Infrastructure	$2,500,000
Protocol Services	$2,000,000
Development	$1,000,000
Growth	$2,000,000
Risk and Maintenance	$1,000,000
Ecosystem	$500,000
Total	$9,000,000

A few notes on the Funding Categories:

• This “Funding Categories” breakdown is subject to change based on market needs. As dYdX Chain evolves, certain categories may be more or less emphasized than originally planned.
• Both the” Strategic” and “Community Initiatives” may fund things in each of the categories. There is no maximum funding amount per Strategic or Community Initiatives bucket.

Below, we outline a budget for operating the DEP on a 24-month term:

Compensation
Contributors
Grantors (Strategic Initiatives) (2)	$74,000 / month total (Reverie $70k, Robo $4k)
Grantors (Community Initiatives) (1)	$3,500 / month*
Operator	$2,000 / month
Trust Members
Lead Trustee	$3,000 / month
Other Trustees (4)	$6,000 / month ($1,500 each)
Enforcer	$1,500 / month
Operating Expenses
Legal	$100,000*
Maintenance / Infra	$50,000*
Total Budget (24 months)	$2,310,000

A few notes on this budget:

• The increase in Reverie’s compensation is there to match the increase in workload and contribution since dYdX Chain launch. After dYdX Chain launched, the scope of this subDAO increased dramatically, and there were many new areas Reverie began working on and leading. Examples include the creation of the MEV mitigation council, centralized exchange support, supporting the new rewards program, and planning new asset listings, all of which required extensive preparation, research, and coordination.
  • Typical startup compensation structures involve a combination of cash and upside. But seeing as taking in token upside is not recommended from a legal perspective, we believe the cash-focused compensation model is fair.
  • Three contributors from Reverie will be contributing to dYdX, with two of whom will be spending a majority of their time contributing to dYdX.
  • Ultimately, the DEP is a catch-all vehicle for working on impactful ideas that can improve the protocol. As dYdX Chain continues to mature, we think the number of impactful areas that the DEP can impact will only increase. The pricing reflects Reverie’s commitment to leading the program under the revised scope, as well as having the ability to take on new initiatives that arise.
  • Reverie’s compensation comes out to ~$300k a head, which takes into account salary, benefits, and other overhead (legal, finance, etc) that is a standard part of operating a business. The budget also bakes in a small profit for Reverie, in order to maintain its ongoing operations.
• Legal and maintenance costs are estimated based on previous terms, but are subject to change if new needs arise.
• The Trustees may revise the budget above based on needs and changing environments. This could include rotating personnel, bringing on additional support, and other actions. The Trust must have the operating flexibility to adapt with the evolving dYdX ecosystem. All changes will be disclosed to the dYdX community.
• The DEP may add/remove contributors throughout this term. Any changes to the Trustees and/or Enforcer will be subject to a governance vote in line with the trust agreement. Changes to Grantors or Operator will be conducted by the Trustees and shared with the community.
• The DEP may conduct treasury management operations, which can include diversifying DYDX into stablecoins or staking.

Full Request

The DEP is requesting a total of $12M DYDX to support its operations and funding budget over the next 24 months. Below is a breakdown of this request:

Category	Amount
Funding Budget	$9,000,000
Operations	$2,310,000
Operating Budget	$11,310,000
Volatility Buffer	$690,000
Funding Total	$12,000,000
v1.5 Leftover Funds	$1,100,000
Total DEP Budget	$13,100,000

As seen above, the DEP will have a total buffer (funding request + leftover funds) of $1,790,000. We believe this is prudent to protect the program from market volatility, and to allow for unexpected funding needs throughout the term. Any leftover funds may be returned to the community treasury if needed at the end of this term.

DYDX Amount

The amount of DYDX will be determined using a 7-day trailing TWAP taken on the day of our proposal submission. Information on the calculation process will be shared in the forum prior to the proposal going live.

Changes to the dYdX Grants Trust

As part of this proposal, we would like to receive community endorsement for the following changes to the dYdX Grants Trust:

1. Name Change

The dYdX Grant Trust will change its name to the dYdX Ecosystem Development Trust. Though this change is not strictly necessary, we believe that it’s appropriate for the trust’s name to reflect the activity and namesake adopted by the community. The underlying purposes of the trust will not be changed since they still reflect the activity and goals of the DEP.

2. DGP Multisig Addition

Today, the trust holds all of its assets on an Ethereum-based multisig which is strictly defined in the trust agreement. To account for the transition to dYdX v4, the DEP will also custody funds on a dYdX v4 multisig. We propose adding the following address to the definition of DGP Multisig, which will also be renamed to DEP Multisig, dydx16jll55tag2aj3c4mtysptefn8d274dmdsxvank.

Trustees will use the following dYdX Chain addresses for their dYdX Chain Multisig signatures.

• Bora Nam: dydx1t3ttmn3e005k0rje2kj98vwpmnt0zsdx64n3ey
• Wintermute Trading LTD: dydx17tecxwpqxpe7egk7rpqyte9ffwhyrwtghyrk4n
• Abra Tusz: dydx1l6ggj9dha5m6fvp5699x8tqclenxqzygpjgjv5
• Felix Lutsch: dydx100qmjwhcs0yuadyyla6ryd9ahmp9uxhv5lyt8k
• Colin Chan: dydx1zrr8l2enn7mqjt9f2kgg9l82fma3lhn7xygf2k

The transaction threshold for this wallet is also 3 of 5 approvals.

3. Address Change for Wintermute Trading LTD

Wintermute would like to update the address they use for signing transactions on behalf of the DEP. We propose changing the signing address on Ethereum transactions for Wintermute Trading Ltd from 0x8d8100705Fb6676B97BCaC87617eE4704c5d00F3 to 0xABe7d66c65B2C921B8bdad85ff3Dd7baFaCcdC50

Proposal

We propose launching the dYdX Ecosystem Development Program for 24 months with a new allocation of $12M in DYDX tokens from the community treasury. We look forward to everyone’s thoughts and comments on this proposal.

Proposal Timeline

• Forum Post: 02/13/24
• AMA: 02/15/24
• On-chain vote: 02/19/24

[ecosytem_dev_program]

FAQ

Funding

1. Why is the program requesting $12M for 24 months, having spent only ~$5.6M in the last 24 months?

The increased funding is crucial for supporting protocol development, critical infrastructure, and auxiliary services. Past projects, like the testnet indexer, CCTP support, IBC forwarding, Mintscan, and MEV dashboard have shown the substantial funding needed to support dYdX v4 – these five alone are over 20% ($1.2M) of our total funding. As the protocol grows, we expect the need to fund similar large-scale projects will grow with it. This funding will allow the DEP to attract top-tier talent for these projects, and give us the firepower to respond quickly to emerging needs.

2. Why is the DEP asking for $12m in DYDX in one transaction? Why not divide the payment?

The funds will be held in a multisig controlled by our trustees, acting on behalf of the community through the dYdX Grants Trust. The multisig can be thought of as an extension of the treasury, since the legal construct entitles the community to reclaim the funds through a governance proposal. By sending one payment, the DEP will have the means to more effectively budget its operations and secure USDC funding to work with U.S. based contributors. Operationally, a single payment simplifies the process for everyone, without adding any additional risk.

3. What happens if the DEP runs low on funding before the end of the 24 month period?

If the DEP runs low on funding, The DEP may submit a governance proposal to request more funding from the community treasury.

4. What happens if the DEP has leftover funds at the end of the 24 month period?

If the DEP has leftover funds at the end of the 24 month period, funds may be used for a potential continuation of the program, or it can be returned to the protocol treasury.

Program Design

1. Where can I get more information on the DEP and its past activities?

The community can follow the DEP’s activities on its website and Twitter. Additionally, the DEP shares periodic updates on the dYdX forum, and participates in the Foundation’s monthly Town Hall meetings to provide updates and answer questions.

2. How will the DEP provide transparency on the use of funds?

The DEP will release regular, quarterly reports on use of funds and initiatives. See our blog for examples of previous reports. These reports are also available on the forum for discussion, and we cover our spending during Town Hall meetings and regular AMAs.

3. How does this impact other potential SubDAOs, grants programs, etc?

The DEP is one of many stakeholder groups involved in the dYdX ecosystem. Its activities do not impact other potential subDAOs or grants programs in the dYdX ecosystem. Instead, we try to maximize the success and impact of all protocol participants by onboarding new contributors and funding projects used across multiple stakeholder groups.

Contributors

1. How were contributors for the DEP selected?

The trustees and program lead collaborated on identifying and selecting the DEP’s contributors. All members of the DEP have served in the most recent version of the grants program.

2. Will the DEP add additional contributors? How will they be selected?

The DEP may add additional contributors over time, depending on its needs and staff changes. If so, the trustees will collectively identify and select contributors to bring on. Changes and additions to contributors do not require a governance vote, but will be proactively communicated to the community for awareness. Changes to trustees or the enforcer will require a governance vote to be enacted.

Grants

1. How will the DEP identify funding opportunities?

DEP contributors apply a few different strategies to identify and ratify its funding targets. First, we work closely with protocol stakeholders to better understand critical areas of infrastructure and development needed to maintain and grow the protocol. dYdX Trading intends to publish technical specifications outlining opportunities for contributors to participate in protocol development, and the Operations subDAO offers target areas of technical support. This guidance allows the DEP to improve its funding decisions for maximum impact. Contributors also listen to community members for feedback on new features, support, or initiatives that help improve the experience in the ecosystem. Lastly, we do our own research on opportunities, and assess all inbound applications for impactful projects.

2. How will grantors source grantees and decide on funding amounts?

The main goal of the DEP is to attract talented contributors who can become long-term advocates and supporters of dYdX. The DEP will use various strategies to recruit these contributors, including publishing RFPs (request for proposals) on its website, and promoting these opportunities through twitter and other channels. We will also leverage our network of participants and industry partners to find qualified teams or individuals.

Funding amounts are determined using industry standards, previous funding amounts for similar projects, and ultimately decided through negotiations with the potential grantees. Ultimately, an applicant is selected based on an assessment of their qualifications, capabilities to deliver success and impact, and funding request.

3. How will the DEP determine the impact and success of its funded grants?

The goal is to evaluate grants based on their expected impact, recognizing that not all decisions will be winners, but occasional contributors deliver exceptional impact, maximizing overall success. Where appropriate, the DEP may employ industry KPIs and metrics to assess the overall success of a project. However, we prefer to think through the longer term impact an initiative or deliverable has had on the protocol, which should be obvious if large enough.

Operations

1. Are contributors required to disclose conflicts of interest with DEP activities? How are these conflicts shared with the community?

Yes, the DEP has adopted a conflict of interest policy that is enforced on all contributors of the program. All conflicts involving any contributor of the DEP are reported in the earliest report published through our transparency efforts.

2. How are payments distributed for DEP contributors and grantees?

Lemma, through their Operator role, are responsible for initiating all transactions to contributors and grantees. This ensures an additional control on payments and amounts. Lemma works with the Grantors to determine which grantees are eligible for payments. Payments to contributors are initiated at the beginning of every month for work conducted in the preceding month.

3. Are potential grantees KYC’d?

Yes, the DEP uses Persona to KYC all grantees approved for funding. This protects the trust against any unwanted exposure to malicious individuals, and ensures that the individual is who they claim to be.

[RoboMcGobo]

Hey all! Robo here. I just wanted to briefly chime in and say that I have greatly enjoyed working with Reverie, @mgg , and the rest of the dYdX contributors and community over the last six months!

During my time with the DGP, I’ve gotten the opportunity to see the priorities that the various stakeholders (whether they be validators, traders, code / governance contributors, community members, etc) have for the growth of the protocol. I think that this team, led by Reverie and the Trustees, has an extremely strong idea of what dYdX needs to do to grow and capture even more market share over the next 24 months and is also the best positioned to execute on those growth initiatives.

I’m particularly excited about the flexibility that this longer term offers the program to enter into longer-term agreements with vendors, which will allow for negotiation of better terms and less churn. This has been one of the areas where we’ve struggled on high-impact content pushes (just as an example from the community side of things). The terms required to achieve maximum impact were sometimes outside of time ranges that we were comfortable with.

I hope to see this proposal pass, and would love the opportunity to continue serving the community!

[Kam]

Thank you very much for this detailed proposal. With the launch of dYdX v4 and considering the high ambition and broader scope, it makes sense to have an Ecosystem Development Program and necessary to have a team that can take care of, support, and fund the different teams that provide value to the dYdX protocol. The team already has the experience and skills for the job.

Based on our experience with the grant program, the team has always been very supportive and easy to communicate with. In support of this initiative and look forward to seeing the team continue to provide value.

[boratheworld]

As a trustee I was able to communicate with Reverie and other fellow DGP members.
We were able to discuss about every proposal, their impacts on the dYdX ecosystem, and potential collaboration points we could make. Hopefully we can continue to make this happen again this and next year.

I hope this proposal will pass and excited to see what’s ahead of the dYdX community :)! I will of course try my best to contribute to the community along with Reverie and the whole DGP team!

[dYdXFoundation]

We wish to acknowledge the significant contributions made by the dYdX Grants Program to the dYdX ecosystem over the past two years.

The documented achievements, covering areas such as protocol growth, infrastructure enhancement, research and development, and community engagement, underscore the comprehensive and dedicated efforts to propel the dYdX protocol forward.

These initiatives have successfully attracted long-term, committed contributors who are leaders in their respective fields.

The dYdX Foundation encourages active engagement and participation by the dYdX community in this important proposal.

[0xCLR]

Full support for this initiative from me. With dYdX Chain out in the wild, now is the time to be bold and scale the protocol by ensuring that valuable initiatives get funded for the long term. To be the best exchange, dYdX needs the best contributors and this looks like a great way to achieve that.

From my first-hand experiences, I believe no team is better qualified to execute on this ambitious scope. Having worked with dYdX Grants on numerous initiatives, I can say that a significant amount of high-value work is quietly done in the background to deliver value to all stakeholders.

[RealVovochka]

Let us wait until the stream of sweet compliments from those financially dependent on Reverie ceases and then discuss what has been accomplished over the past six months before extending the program for another 24 months.

[Dave]

If we had to summarize our experience of working with the Grant Program so far, it would be characterized by three main qualities:

• Professionalism:
  From the application process to the negotiation & contracting through the adherence to agreed milestones & associated payments, overall a high degree of professionalism, transparency and reliability was always present. This has motivated us to set equally high standards for our collaboration and is certainly also valuable for all future trustees in order to bring structure and effectiveness to the initiatives.

• Sense of responsibility
  In the process of the jointly developed grant scope and the associated budget considerations, an extraordinarily high level of cost-benefit awareness was noticeable in the grant team. The program provided a fair and reasonable grant to subsidize work that was defined to become a highly focused initiative for the benefit of the community.

• Community-oriented decision making
  As mentioned in the forum post, we have been working on a data infrastructure that enables deep insights into what is happening on the new dYdX mainnet. What makes this special is that we have not only enabled indexing and SQL access for sophisticated users and developers, but also a public, easy-to-use no-code tool. The grant team has thus ensured that our work provides as fair and equal access to data-driven insights as possible, even if a community member is not familiar with SQL or other data analysis methods.

→ https://datalenses.zone/chain/dydx

Based on this experience, I am very positive about this new proposal and hope that other projects can receive the same support that we have received at Numia.

[FelixLts]

Hi, all Felix here, Lead Trustee of the current DGP program. Want to give my take on working with Reverie and other contributors on the current iteration, as well as my impression of the impact and planned expansion from the perspective of someone active across multiple crypto ecosystems.

First of all, processes and structures instituted by Reverie and the interaction with the team and other parties involved have been extremely efficient and professional. I believe the program is well structured, transparent, and easily rivals many large-scale foundation grant programs while requiring less resources.

All grants that made their way to me and the other trustees have been high value and throughly vetted, with mostly only minor feedback and the occasional slight revision needed. In my opinion, the funded initiatives were highly relevant and Reverie has been able to attract the highest quality of teams with relevant expertise. Many of the teams that have been onboarded are leaders in their respective domains.

The current iteration already established dYdX as a central figure in the wider Cosmos ecosystem supporting initiatives that benefit the ecosystem in addition to very relevant infrastructure for dYdX v4, enabling a better user experience and in other places helping to cut incentives resulting in net savings for the protocol, as elaborated above.

It seems appropriate to me to consider expanding the scope now that the foundation was laid. The derivatives market is a competitive space and the current state of the wider market looks poised to bring in more liquidity. To maintain dYdX’s leading position and form strong partnerships with the highest quality contributors, I support the notion of deploying more resources and repositioning the program as suggested. I believe Reverie has demonstrated the ability to deploy resources effectively supporting dYdX’s growth and is in a place to enable further growth should the dYdX community approve this proposal.

[shellvish]

Hey all! Vishal from Stride Labs here. I wanted to offer my perspective as someone uninvolved directly with the grants program (no organization I’m affiliated with has received money from dYdX Grants), but have worked with other projects that dYdX Grants has funded.

There are two main areas I’ve been able to observe dYdX Grants / Reverie in action. First, Stride launched stDYDX several weeks ago. This was quite a large engineering and strategic effort, and required significant coordination across many parties. Reverie offered truly invaluable advice on how to onboard into the ecosystem, how to structure the product to be useful to DYDX holders, and how to position ourselves at launch. We’ve worked with dozens of teams in the space, and I’m consistently quite impressed with Reverie. I’m fairly confident that without their help, liquid staking for dYdX would have taken at least several more months to launch, and there’s a reasonable possibility it would have taken 1+ year. Reverie (and the rest of the grants infra) made building for dYdX truly so much easier.

The other way I’ve been able to observe dYdX grants in action is as a very active user of much of the products they’ve funded. At Stride Labs, we run a significant number of relayers, data processing tools, and custom indexers. I have not seen any other Cosmos chain with as high-quality public infra as dYdX has. Especially given the bespoke technical setup of the chain (very fast blocks), I’ve been very surprised to see RPC endpoints, relayers, BigQuery data, etc all be maintained extremely reliably. This has allowed us to do quite a bit of custom monitoring/infra for dYdX that we otherwise wouldn’t have been able to, all thanks to the various projects that dYdX Grants supports.

I am incredibly in favor of this proposal. In my opinion, dYdX Grants has build a robust ecosystem around v4 chain in an incredibly short amount of time, and I have full confidence they will continue to deliver on this vision.

[rhymezwitbot]

Samantha here from RockawayX Labs.

We received a grant to build an Observatory Hub for validator monitoring on the DyDX chain. We delivered this product and continue to maintain the global sensor system that powers its real-time data.

From our recipient perch, we believe this grants program is responsibly managed and delivering value to the DyDX community, and we are supportive of its ongoing funding and maturation.

First, in our experience, the funds are being administered smartly and with stringent KPIs set and monitored. What does that mean? We had to provide pretty exacting (appropriate!) details on the breakdown of projected costs and product specs - to ensure that all features were truly additive to the community. There’s also a clear emphasis on scaling contributions (i.e. available tools) to avoid wasted time or resources; we were directed to incorporate tooling others created, rather than duplicating efforts. Our instinct was to ‘build it all’ (not to gouge!) but because we were running at the work and simply weren’t aware of all that came before - the team did a good job spotting where we could leverage others’ work.

Second, at least from our experience, this isn’t a “build it, dump it, and trot off to the next” grant program. There has been ongoing engagement to improve the product (i.e. mainnet scans and platform features) and quick interventions when needed (i.e. halt). Contacts at Reverie / DGP have always been accessible and responsive…and easy to work with.

The experience has been absolutely painless and one we would repeat. That the program’s mandate (across community and strategic initiatives) is so clear helps us to hone our focus - both in expanding upon our first work deliverable and anticipating other contributions we can make.

I’ll end by saying, on a personal level, I’ve had interactions with 12+ grant / ecosystem programs. They have ranged from the totally gimmicky, to the well-intentioned but poorly / lazily designed and executed…to about 2-3 with real, substantive chops and adults in the room. DGP is top among them and I believe that’s an awesome boon for this community.

[mgg]

Hey all, Mackay here from the community grants side. Firstly, we sincerely appreciate all the feedback–it’s always critical to us.

The proposed ecosystem development program for dYdX is an exciting move to better serve all stakeholders in v4. Personally, I want to highlight that the changes proposed allow us to facilitate larger projects which will be imperative to sustaining the dYdX ecosystem as a whole over the coming year(s) as key programs ramp up. The increased categorization for initiatives with the expanded timeline create some really unique advantages; allowing more projects and more contributors to make even larger impacts. This new iteration would solve many of the bottlenecks seen in incumbent grants programs.

After working closely with the core team, trustees, and most importantly, grantees, I am confident that we can continue to build the most vibrant ecosystem in the space!

I am eager to review further feedbacks - looking forward to seeing this come to fruition with new insights, features, and improvements.

[0xcchan]

Hi all, 0xcchan here, a Trustee of the current DGP program. Thank you to everyone for the opportunity to be part of this pioneering committee and I have enjoyed working with the team.

As a long time contributor in dYdX, there has been significant improvements on the overall structure and processes - transparency reports, up to date communications, swift coordination amongst all members in handling the grant apps and disbursements. Furthermore, the team consists of contributors from a diverse set of specialized skills and experiences, bringing a highly unique perspective when we discuss the grant applications. This has resulted in an influx of high quality grants from the Cosmos ecosystem and other data/research powerhouses that have been instrumental in building v4 (as mentioned in the post).

Looking ahead, I am excited about the prospect for the evolution to the DEP, with the longer runway to support more projects and expand our scope to consolidate dYdX’s leading position. Together with the existing group of Trustees, Operator, Enforcer and Grantors, I believe that we will take dYdX to greater heights as we further develop the ecosystem.

[Cliff]

Hey everyone, Cliffton here - I’m the Enforcer of the current DGP program, and an ex employee at the dYdX Foundation.

In my tenure as Enforcer of the Grants Trust, the DGP (Reverie, Robo, Trustees) have been instrumental in supporting the launch of the dYdX Chain, as well as ensuring that high impact grants and contributors are in positions to succeed and contribute to the ecosystem. Some examples (non-exhaustive) include funding:

• The MEV social mitigation committee,
• Mintscan,
• Optimizing the wallet experience (Forest for enterprise and Multi-Sig support via Keplr),
• Coinbase IBC Forward for Noble USDC to allow Coinbase users to use the Coinbase front-end to withdraw directly to dYdX, and other IBC enabled chain, and
• New clients (python, C++) will also be high impact in my opinion in allowing more algorithmic-traders to build strategies and trade on dYdX

Team
The trustees have been very engaged in discussing grant batches, and responsive in making sure that voting is done in a timely manner. I’ve also been very satisfied with how trustees have been proactively declaring potential conflict of interests (COI) to the team, and abstaining on votes where necessary.

On the DEP
I am fully supportive and confident of the program’s transition to the DEP. In order to uphold dYdX’s prominent position in the derivatives space, and establish robust partnerships with top-tier contributors, I fully endorse the idea of allocating a 24 month runway and restructuring the program as proposed. I am confident that Reverie has proven its effectiveness in capital and talent deployment to support dYdX’s growth, and is well-positioned to facilitate further expansion pending approval from the dYdX community for this proposal.

[crypto]

Hi everyone, David from Cosmostation here.

I wanted to share some thoughts as a team that previously engaged with the dYdX Grants team. Interacting with the DGP was a very positive experience in terms their professionalism and rigorous screening process we went through for our grant application.

Our work was primarily with integration of custom features and functionalities specific to the dYdX chain. During the interview/application process, we went through many iterations editing and adding substance to the milestones initially proposed. The DGP collected comprehensive feedback from respective community members and presented a set of milestones and KPIs to prioritize, helping with setting better aligned goals important to dYdX Chain. And as expected, we were requested to provide a very detailed breakdown of costs.

IMO the DGP has been great at pursuing initiatives that benefit the dYdX not only in the short term but in the longer term, fostering relationships with builders that can have a positive impact on the ecosystem.

[dYdX_Ops_subDAO]

The Operation subDAO welcomes the new evolved focus of the DEP. Ecosystem growth and development initiatives are crucial and need a dedicated team within any community.

We look forward to working more closely with the DEP in the future and possibly collaborating on projects related to dYdX Chain core infrastructure.

[RealVovochka]

I would like to express my thoughts regarding the proposal at hand. I believe that any interaction within the community should be aimed at enhancing the functioning of all initiatives.
This is a Request for Comments, not a Request for Praises.

Despite my rocky relationship with Reverie, I will strive to remain objective. I suggest we discuss the highly relevant grants and refrain from delving into the distant past, which has already been extensively commented upon.

Strategic Initiatives

Let me begin with strategic initiatives. I will only describe those which I understand well. I clearly see the benefits of the grant program in such strategic initiatives as:

• Chaos Reward Program
• Numia Bigquery database
• Mintscan integration
• Testnet Indexer
• MEV monitoring
• CCTP relayer

I can’t say how cost-effective these grants are, I can only speak about the end product.

Overall, I believe Reverie has done an excellent job in this part of the grant program, and undoubtedly their expertise and networking enable them to continue this work effectively.

Research

When it comes to funding Research initiatives, assessing results is quite challenging. Some papers were indeed very successful and cost-effective. Notable examples include MEV research by ChorusOne, V4 governance on Cosmos by Flipside, Funding rate bounding research and Risk parameter framework by 0xCLR, along with a few early papers by Xenophon Labs. However, some research papers such as the recent one from XenophonLabs (DYDX Token Design & Protocol Parameters Research) raise significant concerns. At $125,000, this particular research paper seems overpriced by several times compared to others.
I would attribute the opacity of funding for certain grants to an area where I would like to see changes.

Community initiatives

The final and weakest part of this program is the community initiatives. In my opinion, both the community cauldron and community buckets have been completely unsuccessful initiatives in terms of the outcomes achieved. Perhaps these grants do not interest Reverie; they may lack the capacity to manage such grants. The introduction of two new grantors has not changed the situation at all. Part of their work was occupied by grants where Reverie has a conflict of interest (COI).

I concede that the quality of applications may have been insufficient, but I have not seen any discussions in the public domain about what specifically these applications are lacking, whether community members can come together in groups to submit a quality proposal for a potential initiative.
I believe that the current inactivity on the forum is also connected to the general apathy within the community due to the inability to interact effectively with the community initiatives grant program. The period of four months of community cauldron and six months of community bucket are sufficient to draw conclusions and understand that radical changes are required in this domain.

Conclusion

It seems to me that Reverie should continue to handle strategic initiatives, while Robo and Mackay could assist them in this endeavor.

I specifically see the necessity for a parallel program of grants focused solely on community grants, on developing regional presence for dydx, and on creating products that interact with the end users of the protocol - traders.
This program should be managed by different individuals and will concentrate on building a community of builders, educators, and brand promoters all over the world.

These two programs can operate in tandem and yield excellent results.

In the next topic, there is a TEMP CHECK from the Questbook team. With some minor refinement and considering the community’s preferences, this program has the potential to become an excellent candidate in the realm of Community Initiatives.

[CipherLabs]

Our experience with the grants program has been a journey of mixed outcomes. We have navigated through both approvals and rejections, giving us a comprehensive perspective on the program’s workings.

We are sincerely grateful for the opportunity to develop the MVP for a trading journal on V3. The community’s positive response reaffirmed our belief in the indispensable value of a trading journal for traders. The high demand for such a tool was evident.

However, our proposal to upgrade the journal to V4, incorporating community feedback and improvements, was unfortunately not granted the necessary funding. The amount offered was significantly less than our basic expenses for a single developer for a month, rendering the project unfeasible.

Additionally, our proposal to create an innovative tool for traders, focusing on liquidation maps and similar functionalities absent in V4, was not approved.

While we understand the emphasis on protocol development for V4, we believe a balanced focus on trader-centric tools is crucial. After all, dYdX is fundamentally a trading platform, primarily serving traders. Enhancing support for contributors who aim to develop trader-focused tools could significantly benefit the platform’s growth and user satisfaction.

Moreover, the response times within the program are concerningly slow, with approvals taking up to two months. Given the compensation paid to Reverie, we anticipate a more efficient process.

We acknowledge that criticisms of the program may be rare, as many prefer to maintain a positive stance to avoid potential rejections. However, addressing these inefficiencies is essential for the program’s improvement.

We support the program’s core objectives but advocate for significant enhancements in transparency, response times, and community engagement. Open discussions and visibility into the decision-making process are necessary.

Frequent queries about applications and delayed responses, occurring almost weekly, indicate a need for improvement in communication and efficiency.

Lastly, the decision-making process should not rest on a single individual, as this can lead to biased judgments and overlook deserving projects. A more balanced approach, perhaps involving a preliminary review by a small committee before final decisions by the trustees, could offer fairer grant assessments and mitigate personal biases.

In conclusion, while supportive of the program’s goals, we urge for these critical improvements to ensure it serves its community more effectively and equitably.