Author: Chunzhen
Web3 Grant can be understood as a protocol that allocates a portion of its income or native tokens to incentivize protocols, projects, or research that are beneficial to the entire Web3 ecosystem or a specific ecosystem. For projects, Grants not only provide financial support but also imply endorsement and diversified support; for large protocols, Grants help retain developers, thereby promoting the development of the entire ecosystem.
This article selects the most representative 4 Grants, namely the Ethereum Foundation's Ecosystem Support Program (ESP), Gitcoin Grants, Optimism RetroPGF, and Uniswap Foundation Grants, attempting to find "hidden gems" from their 2023 donations and research.
Ethereum Foundation's Ecosystem Support Program (ESP)
The Ecosystem Support Program (ESP) is a branch of the Ethereum Foundation, focusing on providing financial and non-financial support to teams in the entire Ethereum ecosystem.
In April 2015, the Ethereum Foundation launched DEVgrants, aiming to provide value for key components of Ethereum's core software, its development process, or critical parts of the ecosystem (public services, APIs, ABIs). In March 2018, the Ethereum Foundation launched Ethereum Foundation Grants to expand support for projects that excel in scalability, practicality, and security. In November 2019, the Ethereum Foundation launched the new Ecosystem Support Program (ESP), shifting from focusing on the developer ecosystem with DEVgrants to funding with a focus on scalability, towards general support for building tools, infrastructure, research, and public goods.
ESP 2023 Funding Rounds:
Q1: 63 projects, $12,910,616.53
Q2: 56 projects, $9,218,158.34
Q3: 98 projects, $8,945,982.74
Q4: Not disclosed
Spotlight: Projects Receiving Funding More Than Twice
In terms of the number of donated projects, the "Community & Education" category has the most projects, which is in line with the overall maturity of Ethereum's technology and the focus on ecosystem development. The next focus is on "Cryptography & Zero-Knowledge Proofs," with multiple long-term projects and research receiving ESP funding.
The following are the projects and individuals that received at least two ESP funding in 2023:
Gitcoin Grants
Gitcoin was founded in 2017 with the initial goal of supporting the development of open-source projects and monetizing open-source software through bounty programs. In 2018, one of Gitcoin's founders, Vitalik, released a paper on Quadratic Funding, where the more donors there are, the more funds the project receives from the donation pool. In 2019, Gitcoin launched Gitcoin Grants and became the first project to implement Quadratic Funding. The amounts raised for public goods by Gitcoin Grants from 2019 to 2022 were $700,000, $2.8 million, $13.2 million, and $21.4 million, respectively.
Gitcoin Program Alpha Round and Gitcoin Program Beta Round are two testing rounds for Gitcoin to test its decentralized and customizable donation solution Allo protocol to build the Gitcoin Grants Stack. Gitcoin Grant 18 and Gitcoin Grant 19 are regular funding rounds for 2023, with some rounds taking place in the Public Goods Network. Gitcoin Grants mainly focus on Web3 open-source software, Ethereum infrastructure, climate solutions, and Web3 community and education.
Gitcoin 2023 Funding Rounds:
Gitcoin Grant 19: 471 projects, $1.09 million
Gitcoin Grant 18: 480 projects, $1.68 million
Gitcoin Program Beta Round: 468 projects, $1.857 million
Gitcoin Program Alpha Round: 150 projects, $1.667 million
Spotlight: Public Goods Network
The Public Goods Network (PGN) was launched by Gitcoin, dedicated to creating sustainable and recurring funding for public goods on L2. PGN is built on Optimism's OP Stack and plans to use the majority of sequencer fees for public goods projects. This means that PGN does not rely on external donations but is self-sufficient based on the internal fees generated by user interactions in the network.
Of note, the PGN plan will utilize Contract Shared Revenue (CSR) in the future to meet developers' need for sustainable income sources. The Contract Shared Revenue (CSR) protocol EIP-6969, proposed by Slingshot CTO zkCole, aims to incorporate economic incentives for developers at the protocol layer. EIP-6969 proposes a new Gas fee allocation mechanism based on EVM on L2, allowing a portion of Gas fees to be used as rewards for contract developers. Once EIP-6969 is included in a future Ethereum upgrade, PGN may achieve significant development through economies of scale.
The PGN mainnet was launched in July 2023, and L2BEAT data shows that the current TVL of the PGN network is $1.57 million, with a total of 4200 addresses, still in a very early stage of development. According to the official plan of PGN, after 6 months of operation on the mainnet, fees will be evaluated and allocated based on cumulative data. More data and allocation rules are expected to be disclosed.
Optimism RetroPGF
Retroactive Public Goods Funding (RetroPGF) is a funding program that encourages projects related to Optimism. RPGF creates a startup-like funding cycle for public goods projects through protocol-generated revenue (profits from sequencers), retroactive public goods funding, and a results oracle. The core of RPGF is the retroactive viewpoint proposed by Vitalik, which means: it is easier to reach consensus on what was useful, rather than what will be useful.
RPGF 2023 Funding Rounds:
RetroPGF Round 2 (Q1): 195 projects, 10 million OP tokens
RetroPGF Round 3 (Q3): 501 projects, 30 million OP tokens
Spotlight: Protocol Guild
The Protocol Guild, which received the most donations in RetroPGF2 and RetroPGF3 (totaling over 1.22 million OP), was established in 2022. The Protocol Guild is a collective of Ethereum contributors dedicated to enhancing incentive measures for managing core protocols. The Protocol Guild enables ecosystem sponsors to directly fund members and support their work and public interests by maintaining a registry of its members on-chain.
The original intention of the Protocol Guild was to pilot a new donation mechanism to gather all protocol contributors into a financing mechanism and maintain continuous updates. In terms of execution, large donations from the Protocol Guild will be released to members within a year, while small/regular donations can be withdrawn by members at any time. The weight of each member's withdrawal is calculated based on their contribution time to the ecosystem.
As of the 15th of 2024, the Protocol Guild has 161 members and has received a total of over $20.77 million in donations. The Protocol Guild was originally planned to conduct a one-year pilot from May 2022 to May 2023, but there have been few updates on the official website since a mid-term update in December 2022.
It is undeniable that the Protocol Guild provides an attempt at on-chain incentive distribution (mainly at the contract level), but it does not address a fundamental issue: how to evaluate the value of contributions? The Protocol Guild uses a straightforward time factor, but in reality, there is not much difference between members, giving a sense of everyone sharing the same rewards. This also brings difficulty to subsequent evaluations, namely, does economic incentives really promote member contributions? Furthermore, Protocol Guild members are currently limited to Ethereum developer organizations and top ecosystem projects, and whether they can expand to a wider audience, such as independent developers, is also worth considering.
Uniswap Foundation Grants
The Uniswap Grants Program (UGP) was launched in December 2020 after a governance vote, allocating 1.5 million UNI tokens for a duration of 6 months. The initial scope of UGP was narrow, focusing only on MVP, aiming to provide seed support for the developer ecosystem, and later expanded to support governance research, community building and education, and core protocol work. Influenced by the bull market in the crypto market, UGP continued for 18 months, distributing a total of $7 million in grants. In August 2022, the Uniswap Foundation (UF) was established, and UGP evolved into Uniswap Foundation Grants (UFG), with a budget expanded to $60 million, lasting for 3 years.
As a typical ecosystem fund, Uniswap Foundation Grants primarily focuses on the development of the Uniswap ecosystem. Uniswap Foundation Grants Wave 3 mainly focuses on four categories: 1. Protocol growth, including donations to enhance the Uniswap v3 SDK and LP toolkit; 2. Research and development, including research on checkpointless TWAP oracles and dynamic cross-chain MEV market structures; 3. Community development, including support for industry analysis around public goods and live events co-hosted with FWB; 4. Governance management, including research on new governance structures and evaluation of governance information bridges.
Uniswap Foundation Grants Rounds:
Uniswap Foundation Grants Wave 3 (June 2023): 21 projects, $990,000
Spotlight: 3 Projects Highlighted by Uniswap Foundation
The Uniswap Foundation particularly emphasized 3 grants: "Checkpointless" TWAP Oracle, Uniswap v3 SDK Rewrite, and LP University: Uniswap v3 Beginner to Intermediate Course.
Axiom for research and prototype production of "checkpointless" Uniswap v2 and v3 TWAP oracles: Research and development of this type of oracle could reduce the risk of oracle operations and increase the use of on-chain trustless oracles in DeFi applications. The proof of concept eliminates the need for checkpoints in v2 TWAP and the caching overhead of v3 oracles. The Axiom team has extensive expertise in zero-knowledge systems and blockchain infrastructure.
Koray and Florian's Uniswap v3 SDK Rewrite: This will support updates and improvements to the Uniswap v3 SDK, including updating the JavaScript SDK documentation, updating existing v3 SDK code to make the architecture more modern and efficient, and adding a new test suite, among other things. The team has rich technical experience, including creating web3.swift (one of the most widely used crypto development tools on iOS) and reviving web3.js.
LP University created by DoDao: This will be an excellent resource for those who want to learn about LP but don't know where to start. The grant will be used to provide an interactive educational experience for potential new liquidity providers from beginner to intermediate level. The course will cover topics such as AMM introduction, Uniswap v3 basics, active and passive LP strategies, and more. The DoDao team has extensive experience in creating educational content for the crypto ecosystem.
What's Next
This article reviewed the donation situation of mainstream foundations in 2023 and highlighted projects worth paying attention to. In the new year, we will continue to focus on and participate in research and discussions related to major foundations and public goods, including but not limited to:
Definition of public goods: Debate on the attributes of public goods for donated projects, such as discussions on whether financially stable companies like Alchemy should be included in RPGF funding.
Transparency: Disclosure of the entire donation process, foundation finances, and the use of funds for donated projects.
Incentive evaluation: How to properly incentivize projects of different scales/types, and how to evaluate the results of incentives.
New research: Dynamic research on the topic of public goods.
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