Vision for the Grants Committee, and for subDAOs

[0xcchan]

As dYdX enters v4 into a new phase of decentralization and since the subDAOs are top on the agenda for governance, we can establish this model with the Grants Committee by firstly decentralizing it within the community, before introducing it to other subDAOs.

1. Structure of the Grants Committee

Sub-Committees within the Grants:

• Given each member’s specialization, 2 sub-committees will be formed within the Grants Committee to focus on specific areas – Growth and Marketing, Research and Development.
• This enables the committee to be focused on the individual applications based on their subject matter expertise and efficient responses with this division of labour.

2. Election of the Grants Committee

• Grants Playbook on the objectives and OKRs (Ref: Optimism Grants Aims)
• Members of the Grants Committee should be elected in by DYDX token holders (based on 6 months) and rotated per period.
• Nominees should pitch similar to SNX’s nomination process.
• The top 5 nominees will be voted in as a member of the Committee
• Allocation for funding to each sub-committee will be done internally within the Committee based on a majority rule.

3. Grants Proposal Timelines

• Clear Guidelines

  • Metrics that each subcommittee is looking for when evaluating each proposal (Reference: Optimism Grants Council)

• Timeline of each wave

  • Submission Phase

    • Open calls for Grants will be opened for the first 2 weeks of each wave
    • This will be done on Github where applicants will fill in the template and submit a PR
    • All applications will be open sourced and tracked in public.

  • Review Phase

    • The sub-Committees will be actively vetting through the applications and review in accordance with the metrics and will publish the results by the end of the 3rd week of each month. This includes clear results if the proposal were
      • Rejected / Passed to Vote
        • Reasons for rejection will have to be provided based on the metrics
        • During this review period, members of the sub-Committees will be reaching out to grantees to refine the proposals where necessary.
      • Accepted proposals will be subjected to the Community Vote thereafter in the last week of the month. The Grants Team will add their feedback for each proposal.

  • Voting Phase

    • Voting will be subjected to a quadratic model, similar to Gitcoin grants structure.
    • This will cap the votes for big players being able to sway the vote outcome of specific grant applications, attempting to level the playing field.
    • This structure has been used to fund public goods across the Ethereum ecosystem and has been more recently adopted by Axelar in their validator’s voting power.

  • Announcement Phase

    • At the end of the vote, the sub-Committees will determine the final pool of grants by selecting the proposals with the highest number of votes.

    • The cut-off will be indeterminate based on the funding amounts of each and the budget allocated for each cycle

    • The results will then be officially announced on the public website and all grantees will be informed

4. Milestone Tracker

• For every successful Grant application, these will be added to an overall tracker to ensure that the milestones are visible and known by the community.
• Following the successful completion, an AAR will be released, highlighting the impact based on the guidelines as earlier mentioned.
• Retroactive grants for outstanding work will be considered and these will be voted on within the Grants-Committee based on a majority vote.

5. Reflection Period

• Members of the Grants Committee will then share their reflections based on the rubric and create a forum for public discourse on the performance. This will be done on the last wave of each Grants Cycle to ensure sufficient time for community feedback before the next Voting Phase.
• Eg. Season 2 Feedback Thread - 🏛 Governance - Optimism Collective
• For ongoing grants, these will be carried over to the next Committee who will continue incubating them.

Summary of Parameters and Timeline

Here’s my vision for the Grants Committee based on my observations and a step towards decentralisation. Happy to discuss with the community.

References:
SNX Grants DAO
Optimism Grants Council
Gitcoin Quadratic Funding
Jump Crypto’s Square Root Voting
Fox Labs’s Forum Post

[RealVovochka]

Hello @0xcchan , your idea is quite impressive, although certain details such as the length of committee members’ terms and their rotation could benefit from further discussion.
Perhaps the community could have a vote and one project in every wave could be granted a “wildcard” from community if there is substantial support.
Overall, we must revamp the DAO structure to ensure that it is a truly decentralized autonomous organization.

[0xcchan]

Thanks everyone for the feedback! I’ve changed it to 6 months, aligned with the current DGP Cycle. A summary of relevant parameters and timeline have been added as well for visualization.

In my opinion, the objective here is to facilitate a smooth transition to a decentralized structure, which has been done by many other leading protocols / networks. However, there may be legal, operational and financial intricacies involved and I believe Reverie should continue playing a core part of this committee as well to support the process and Grants Programme. After all, they’ve helped to set up the DGP from scratch and def have invaluable expertise and experience in this area.

A simple experiment of this structure can be conducted on the Community Cauldron as a testbed, before scaling it up to evolve the general Grants Model.

[RealVovochka]

Greetings, @0xcchan

I must confess, I find it difficult to grasp your concept. How might one attain decentralisation when Reverie functions as a centralised bottleneck and a single point of failure ubiquitously?

• Firstly, it appears that they are employing a strategy of feigning ignorance and avoiding communication on Discord, thus hindering any possibility of constructive dialogue.

• Secondly, you referred to the Grants Cauldron as a test bed; might I request further elucidation on how it is intended to operate in conjunction with these ideas?

Without a transparent assessment of the prior work completed by DGP and an open discourse with Reverie, the attainment of the desired outcome seems rather unfeasible.

[0xcchan]

Hey @RealVovochka

To clarify, given Reverie’s expertise and track record in financial, ops and legal areas, I believe that they can be a great help to support this initial transition and establish the necessary structures where applicable. (as mentioned, not a subject matter expert here on what might be needed and hence, wont give much comments).
But yes, the ultimate goal should be decentralization - all members in the Committeewill be elected based on the community vote.

Given that this is a paradigm shift in the current Grants structure and will likely face inertia, this exact same structure can be trialled on the Grants Cauldron, albeit with a much smaller team of maybe 3 candidates in the committee. They will be responsible for the guidelines, metrics, and transparency board etc. basically the segment after election period. This is just to get the community adjusted to another form of Grants Application process so we can learn and adapt, before expanding it to overhaul the present Grants structure.

Hope it clarifies!

[0xcchan]

But before delving further into the model,

1. I would like to leave the conversation open and focussed to discuss on the structure and what might be in the best interests for the protocol

2. Gather feedback from Reverie and stakeholders to iterate on the model and subsequently, ways to ensure a smooth transition
   eg. Trials (if necessary)

[RealVovochka]

I am somewhat perplexed as to the rationale behind selecting Cauldron as a testbed, given its relatively modest $25,000 budget allocated for ten projects over a two-month period. It seems to be a task well-suited for a single individual, with Alexios set to undertake the responsibility.
Is it your suggestion to form a committee for the management of this endeavour?

[0xcchan]

Hey @RealVovochka

Reasons mentioned here given the possible inertia from key stakeholders with the new model.

The Cauldron can be a good starting point to iterate through given its more defined scope
eg. setting up the relevant metrics/guidelines
eg. public milestone tracker, Grants templates through PRs on git etc

But this is just a suggestion and I’m not narrowing down the scope for the transition, great if the overall structure can change too.

[foxlabs]

After reflecting further on your proposal and having discussions with fellow community members, and Matt from Synthetix, we have a few thoughts and suggestions.

1. We agree with the concept of a Grants Committee (council) but suggest a simpler structure. Instead of dividing the committee into two subcommittees, we believe a single Grants Council of five members should suffice. These members should be elected by the delegates with one vote per delegate and for an initial period of six months.
2. We think it’s essential to separate the Marketing, Communication, and Growth Council from the Grants Council. This way, the Grants Council can focus solely on grant allocation and management, while a separate entity can concentrate on growth initiatives.
3. We suggest a compensation of $5,000 per month for the council members. This will ensure that we attract and retain high-quality individuals who are committed to the success of our ecosystem.
4. Regarding the procedures and guidelines for grant proposals and milestones (sections 3 and 4 in your post), we believe these should be developed by the elected Grants Council members. The community elects these individuals because they trust their judgment and expertise to create an effective system.
5. Before implementing a Grants Council, we must first establish a comprehensive governance structure. Right now, it feels like we’re rushing into things without having a solid foundation. We need to set up a Treasury Council, elected by the foundation, to manage the community’s funds. This council would then liaise with the Grants Council to determine the funds allocated for each term.
6. We also propose the establishment of a Risk Management Council, also elected by the delegates with one vote per delegate, to oversee and manage potential risks within grant applications and our ecosystem. This council will be crucial in maintaining the stability and integrity of dYdX’s operations.

We believe these changes will provide a more streamlined and effective governance structure, ensuring that we’re walking before we start running.

[0xcchan]

Thanks @foxlabs for your feedback. Just some initial thoughts:

1. Rather than an overt push to establish more councils, we can work on existing ones before scaling up. Hence, the division into 2 subcomms - growth + r&d.
2. I’m not sure why delegates should be the only group voting since this is a protocol-level decision. Even stratifying token holders based on number of DYDX tokens will need to be carefully modelled.

Overall, while I agree the DAO can accommodate different councils for various functions, we should not introduce too many moving parts to the process and experiment these structures without proper reviews. Nonetheless, agree that the overall direction should be on decentralising and abstracting away functions to the community in the long term.

[foxlabs]

Hey @0xcchan The idea of incorporating Marketing, Communications and Growth within the purview of the Grants Council seems untenable. Marketing, Communications, and Growth represent distinct, substantial functions that demand focused attention and strategy - a separate council devoted to these areas is an absolute necessity.

As I understand it, your proposal suggests that anyone interested in Marketing, Communication, or Growth initiatives would need to apply for a grant each time. This approach seems inefficient and could lead to unnecessary bottlenecks.

Alternatively, the Grants Council could oversee all Marketing, Communications, and Growth activities. However, this would conflate two fundamentally different functions. The primary role of a Grants Council should be to manage the allocation and oversight of grants, not to orchestrate Marketing, Communications and Growth strategies.

We firmly support establishing a Grants Council with a membership of five, focusing purely on grant management. Yet, we strongly advocate for a distinct entity to handle Marketing, Communications, and Growth. These are separate domains, and mixing them could compromise their effectiveness.

Regarding the proposal for Endorsed Delegates to elect council members, I believe you are referring to the discussion about Electing the Trading Council to vote on future proposals. This is the most suitable method to prevent the potential manipulation of votes.

The danger with a token-based voting system is that a person with a significant token holding, or anyone, could create multiple accounts to influence the vote towards their preferred candidates - potentially even themselves.

Endorsed Delegates, on the other hand, will likely have a deep understanding of the protocol and the qualities required in potential council members. Selecting council members is a crucial decision that requires careful consideration and thought.

Allowing Endorsed Delegates to vote ensures a more informed and deliberate selection process. We are confident that this approach will yield the fairest and most effective outcome.