Author: Tristan, LXDAO

In the later stages of the last bull market, many projects had ample cash flow to develop and expand their ecosystems, giving rise to numerous Grants projects. However, we found that some Grants were only for marketing services, while others were more like Bounties, providing payment for contributions to the project. This has led to some discrepancies in understanding between the project party and the funded party.

The Grants we are discussing here are more focused on the project party providing early or ongoing support for projects that are temporarily not profitable but are very important for ecosystem development.

It looks like a set of opposite investment models compared to VC, the latter expecting sufficient returns in mature business models in the future, while the former is more of a necessity for ecosystem development.

I. Current mainstream categories of Grants:

Prospective Grants:

Usually appear in the early stages of the ecosystem, as an open funding model to attract more Proposals and more Builders. It can even occur earlier than traditional VC's angel round, and sometimes a good Proposal can receive corresponding Grants. However, the amount of these Grants is usually relatively small and tends to be encouraging.

RFP Grants:

If the project already has a clear development path, they tend to favor this form of funding. All funded projects need to be able to solve real problems on the project roadmap and are more suitable for Builders who deeply cultivate the ecosystem.

Retroactive Grants:

Mainly targeted at ideas that have already been implemented, are running continuously, and have made good contributions. The ecosystem provides funding to help them further expand their influence and scale.

Quadratic Funding:

A new donation and governance model that uses crowdfunding to donate and decides the direction of these donations through democratic governance.

Research Grants:

Funding for more basic underlying technology and cutting-edge theoretical research, focusing on long-term returns.

II. Case Sharing

1. Ethereum Foundation (EF)
Types of funding:

• Prospective Grants
• Retroactive Grants
• Research Grants

Organizational background:

EF is the oldest organization in the crypto field, created to support the Ethereum ecosystem. Over the years, they have tried various support methods, forming the current Ecosystem Support Program (ESP) and funding programs operated by other teams within EF (supported by ESP as needed).

They have developed a "layered" model to effectively allocate resources:

• ESP: They provide three levels of support for applicants, offering two different levels of funding based on the scale of the project.
• EF Teams: Internal groups that directly contribute to the Ethereum ecosystem. Other teams within EF also allocate and manage grants to achieve their ecosystem goals.
• Technical specific areas: They collaborate with external groups for funding in specific areas such as zero-knowledge technology and developer experience.
• Third-party funding: Directly provide funds to external groups such as 0xPARC, Nomic Foundation, and ETHGlobal, enabling them to make allocation decisions.

Application system:

• ESP application process: ESP Application Process
• For small donations less than 3WU, the decision time is generally within two weeks (application + review).
• For applications greater than 3WU, the decision time is 2-3 months, and there is currently no funding limit.
• After the funding work is completed, the funded party delivers the completed work to the designated evaluator. (No specific delivery format)

Related requirements and impact measurement standards:

• The scope of ESP funding is relatively broad, with no strict regulations, and the funding period is relatively open.
• EF has not established impact standards for projects, and there has never been any public disclosure for the review team. They encourage and hope to hear more ideas, so they also spend more time in internal continuous discussions and evaluations.
• However, EF values the project's own established Roadmap, and continuously monitors Milestones to ensure project completion.

Past funding and transparency references:

• Past funding disclosure: Ethereum Blog (includes community activities and various sponsorships, such as conferences, hackathons, etc.)
• EF currently has no plans to provide detailed disclosure of their past funding, only disclosing fund allocation through quarterly reports.
• In the first half of 2023, a total of 113 projects were funded, totaling 2200WU, averaging 20WU per project.

2. Solana Foundation (SF)
Types of funding:

• Prospective Grants
• RFP Grants

Organizational background:

SF was founded in 2019 to support the Solana ecosystem. SF not only does some traditional Grants, but also does some convertible Grants (Mint) and venture capital investments (VC). Although SF announced the first wave of grants in November 2020, it has now transitioned to supporting rolling grant applications.

Application system:

• Application submission: SF Application Submission
• The review team conducts preliminary reviews daily, selecting them into the corresponding vertical areas (such as DAO, NFT, DeFi) based on their project type. Then the funding team and technical teams in the vertical areas (SMEs) hold weekly meetings.
• Preliminary screening results are generally replied within a week. If passed, a meeting with relevant members (funding team/expert team) will be arranged in about 10 days, and funding will usually be completed within a month.
• Small scale, decided by SMES; medium scale, decided by Grants team; large scale, decided by the executive committee.

Related requirements and impact measurement standards:

• Grants guidelines: Solana Grants Guidelines
• SF's review is more utilitarian than EF (Ethereum), as they focus on whether the funded projects meet the urgent needs of the Solana ecosystem's priority applications, so they also have corresponding measurement standards (non-quantitative).

Design of project milestones is reasonable

(1) Milestones are designed from the beginning and are practical.
Assessment of project impact
(1) Defined jointly with the funded party
(2) The funding team assesses whether their performance is below, meets, or exceeds expectations.
Positive externalities
(1) How useful is the output of this grant to others in the Solana ecosystem?
(2) Does it solve problems beyond the specific problems of the funded party?
Sustainability
(1) Is the funded party still on Solana?
Is the funded party still raising funds?
(1) Is the project still going beyond the initial scope of funding?
Cost-effectiveness of funding
(1) Can others generally achieve this, and can others do it faster/cheaper?

Past funding and transparency references:

• There is currently no consistent process for reporting results to the community or more publicly. They are working on submitting quarterly grant reports to the community early this year.
• Past funding situation: 5K+ grants, 300+ funded projects, 6% approval rate, committed grants: 16WU (unlocked by milestone)

3. Uniswap Foundation (UNI)
Types of funding:

• Prospective Grants
• RFP Grants
• Research Grants

Organizational background:

• The Uni Foundation was established in August 2022 and shortly after approval, created the UF Grants program (previously had a two-year UGP funding program, but with less funding).
• Although the mission of Uni's grant program is not reflected on the official website, it is focused on the development and success of the Uniswap ecosystem based on behavioral judgment.

Application system:

• Application submission address: UF Grant Application (currently, the V3 version has been suspended, and the V4 Grants are still in the preparation stage, so the application is currently suspended).
• The review process includes: proposal submission, proposal evaluation, decision/approval.
• UF is not particularly clear about the construction and responsibilities of the management team (currently UF is recruiting a Grants-related person), so all reviews are still completed through community proposals.
• Current response time: 1-6 weeks, as all Grants requests now need to go through the community.

Related requirements and impact measurement standards:

Developer tools

(1) How much can it improve the efficiency of developers building projects on UNI?

Liquidity provider tools

(1) To what extent can it facilitate liquidity providers to participate or lock funds on UNI?

Governance tools

(1) To what extent can it activate the enthusiasm of community members for governance?

For the RFP Grants section, there were four valid FRPs in 2023 (currently in the preparation stage for V4):

• Provide liquidity widgets (under Liquidity provider tools and resources)
• Open-source design for Uniswap’s LP user experience (under Liquidity provider tools and resources)
• Research - what bad hooks look like (under Developer tools)
• Proof of concept - hooks and developer documentation (under Developer tools)

Past funding and transparency references:

• Past funding disclosure: Funded Grants
• Past funding situation: a total of 176 projects, approximately 980 WU

4. TON Foundation

Types of funding:

• Prospective Grants

Organizational background:

• The original Telegram team developed a layer chain, but the project was terminated due to legal issues. The open-source development team continued the project. The Grants program was launched in May 2022, with a total of 200 million managed by Questbook.
• TON's funding is more inclined towards public welfare. Although their mission is to help TON's core infrastructure and introduce new practical use cases, they provide considerable support for open-source technology projects and collaborative development with other ecosystems.

Application system:

TON currently uses Questbook to manage applications: TON Grant Application

After submitting the application in Questbook, preliminary review is conducted by the funding team members, and if approved, there will be a second review by experts to decide on the disbursement.

The average review time is 7-10 days, and approximately 5 grants are announced monthly.

Related requirements and impact measurement standards:

• TON's grant program focuses on Prospective Grants and generally does not provide additional funding for projects that have already received funding.
• The TON website currently lists the following areas of interest:

• The TON grant program focuses on milestone-based payments. Therefore, the grant disbursement standard is whether the project has reached the first milestone and has achieved all the milestones outlined for that disbursement.
• In addition, the metrics are currently evolving. Although tracking on-chain related statistics such as TVL and active users is a relatively new approach, it is not set in stone, and the funding team is exploring the types of data that can be captured and related metrics.

Past funding and transparency references:

• Past funding disclosure: TON Grants Blog
• The TON grant program not only provides financial support but also occasionally holds Twitter events with the funded parties to share their work. They also provide technical and business expertise to the funded parties and are committed to expanding this support to various relevant contributing organizations in their ecosystem.
• Past funding situation: 138, 100+ funded projects, approval rate 80%+, committed grants: 120WU

5. Aave Grants DAO (AGD)

Types of funding:

• Prospective Grants

Organizational background:

• Originally for ETHLend (serving the ETH ecosystem), mainly helping users borrow and lend cryptocurrencies without intermediaries. AAVE initially only served the ETH ecosystem until 2021 when it released versions on Polygon and Avalanche, expanding the empowerment scope of its ecosystem.
• Initially, AAVE was supported by individual Grants, and due to the increase in adoption, it held two ecosystem donations. In 2021, the community-driven grant program Aave Grants DAO was launched.

Application system:

• Written application-review (segmented by amount): AGD Grant Application
• Below 2WU, fast disbursement, only requiring a review of the application, and if it passes the first review, they will approve and send a confirmation letter within a few days.
• 2WU~8WU, requires an interview and internal review.
• Above 8WU, share the proposal on the AAve forum, AGD cannot have authorization, but they will guide the applicant on how to share the proposal directly on the AAve governance forum, and the final proposal approval is decided by community Snapshot voting.

Related requirements and impact measurement standards:

Impact is measured in various ways, including assessing whether the funded parties have completed their assigned tasks and providing monthly and semi-annual reports. The metrics they focus on include:

• Increasing TVL or other protocol metrics
• Expanding the functionality of the AAve platform and applications
• Providing understandable and novel insights to the community
• Attracting new users and increasing the retention of existing users
• Developing GHO by helping stimulate demand, expanding its utility, and accelerating its transaction speed

Although these are some of the metrics they use, they do not limit the impact or protocol investment return to any single KPI or metric list because they believe that any project can benefit the Aave ecosystem or Aave protocol.

Past funding and transparency references:

• Past funding disclosure:
  Temp Check Aave Grants Continuation Proposal
• Past funding situation: In the past two years, a total of 2097 projects were applied for, 249 projects were approved, with an approval rate of 11.9%, and an average grant of 1.9WU

Conclusion

The above five Grants projects are currently significant ecological cases in terms of funding scale and openness in the market, mainly providing three types of funding: Prospective Grants, RFP Grants, and Research Grants.

As for Retroactive Grants, a well-known case is the Optimism Foundation. With the results of RetroPGF S3 announced, LXDAO is currently conducting more in-depth research. The well-known cases of new Quadratic Funding are Clr Fund and Gitcoin, with previous community sharing, and we will continue to keep a close eye on them.

In addition, regardless of the type of Grants, the current major community divergence lies in the measurement of the impact of funded projects, which is also the focus of LXDAO's continuous attention and in-depth research. As of now, many well-known projects are still exploring in this area.

Reference: The project information is from their respective websites, blogs, and community forums. Key information about the review system, team information, and past screening cycles is based on the "State of Web3 Grants Report" by Eugene Leventhal and Mashal Waqar.

There are currently 95 ongoing Grants Projects, and the summary website is:
Grants Project Summary

LXDAO will continue to pay attention and share valuable information in the public goods field in real time.

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