Request for Continuation of the Arbitrum DDA Program Request
Summary
As we near the end of allocating the initial grant budget (link to proposal), where through the Arbitrum Grants Program 14 run via the Delegated Domain Allocation model by Questbook, $912k has already been allocated to over 60 proposals. Based on the overwhelming response and number of quality proposals the grant program has received, we propose to start a new program for the Arbitrum Grants via DDA through Questbook with a budget of $4,000,000 spread across 4 domains over the next two quarters. We have received great feedback and support from the community, builders, and domain allocators for requesting additional budget and continue funding projects through the delegated domain allocation model.
Background and Progress
The Arbitrum grants 14, administered via DDA by Questbook and 4 domain allocators, (Cattin, Adam, Juandi and JoJo) went live on the 5th of October with a total grants budget of $800k 6 spread across four domains. Since the launch of the grants program, the Arbitrum domain allocators approved proposals requesting $912k and disbursed a total of ~$394,000 to accepted proposals from a pool of 201 proposals. These domain allocators were elected from the community and by the community. 3 The specific information regarding the accepted proposals and the funded teams can be found here 14.
As previously stated in our initial proposal, Questbook launched the grants program to further scale it based on proposal volume and learnings from the first ever grants program in the Arbitrum Ecosystem. The Arbitrum Grants run through DDA has received overwhelming response, receiving over 200+ proposals since launch.
Please find below the Arbitrum DDA Grant Programs funding breakdown of relevant metrics and insights and proposed improvements going forward.
Program Overview
- Total Proposals: 201
- Total Proposals approved: 60
- Proposals by domain
- Approved Proposals by domain (81/193 milestones completed)
- Gaming: 16
- 18/44 Milestones Complete
- New Protocol Ideas: 15
- Dev Tooling: 12
- 17/38 Milestones Complete
- Education, Community and events: 15
- 38/62 Milestones Complete
- Grant Amounts committed by domain ($) - $912k allocated , 394k Paid out
- Gaming: 249K
- New Protocol Ideas: 264k
- Dev Tooling: 166k
- Education, Community and events: 234k
Overview of Accepted and Funded Proposals with DA Report
New Protocol Ideas Domain
- Clique & On-Chain Gaming Identity - Growing Arbitrum’s Gaming Identity Layer 2
- Funding approved for: 15k
- 0/2 Milestones Complete
- RFQ-API manager for Pear Protocol 2
- Proposal to Enable critonopix for Arbitrum Projects 1
- Amelia the Arbitrum AI Copilot - Chat Based Assistant 3
- Smilee LP & IG Simulator with IL Hedge
- Funding approved for: 8k
- 0/2 Milestones Complete
- Deploy and grow Mountain Protocol USDM on Arbitrum
- Arbitrum Governance Tracker 3
- Sweep n Flip | NFT Dex
- One Click Crypto: Aribtrum Public Yield Explorer
- Funding Approved for: 22k
- 0/4 Milestones Complete
- Giveth 2
- Funding Approved for: 7.5k
- 0/2 Milestones Complete
- Smart Contract and Address Labeling System for Arbitrum One
- Funding Approved for: 23.7k
- 0/3 Milestones complete
- Hunt NFT—NFT Cross-chain Raffle Marketplace, to be NFT Hub !
- Funding Approved for: 7.5k
- 0/3 Milestones complete
- Buddy-Guard : Social Safeguard dApp with Attachable NFC Wristband
- Funding Approved for: 22.5k
- 0/3 Milestones complete
- Enhancing Web3 Funding on Arbitrum: AMLOK’s White-Label Liquidity Solution
- Mystic - enabling whitelabel NFT economies on Arbitrum
- Funding Approved for: 13.26k
- 0/2 Milestones complete
- Scattering: Instant Liquidity Market for NFTs(ERC721 & ERC404) on Arbitrum 1
- Funding Approved for: 20k
- 0/2 Milestones complete
- Unitap: Incentivize Arbitrum onboarding & rewarding governance. 2
- Funding Approved for: 25k
- 0/4 Milestones complete
Dev Tooling Domain
- Infrastructure Support for Arbitrum One & NOVA in Dev Tooling Domain
- Laika - Request Builder for Web3 in Dev Tooling Domain
- Agnostic AA for Arbitrum
- Bonadocs
- Bytekode - AI Intent Layer for dApps
- Increase of Arbitrum Exposure in LATAMÂ 2
- Enhancing Arbitrum Ecosystem Analytics with DeFi Teller
- JiffyScan: 4337 UserOp explorer supporting Arbitrum One and Testnets 1
- Arbitrum Python SDK
- Stylus VS Code Extension
- L3MBDA, aka Web3 Zapier
- Scale ENS on Arbitrum 4
- Funding Approved:25k
- 0/3 Milestones Completed
Education, Community Growth and Events Domain
- Onboarding of New developers in Education domain 1
- Arbitrum Academy
- Arbitrum as Official sponsor of Ethereum Mexico
- DeFi Africa - Web3 Buidl Workshop 1
- Metrics DAO: Web3 Analytics within Arb ecosystem
- Blockchain Innovation Hub: 3 month bootcamp for Developers
- Arbitrum STIP Virtual event marathon 1
- Arbitrum Aeturnum Program
- Arbitrum Arabic
- Arbitrum Deep Dive Quest Run 1
- Atoma Project + Arbinauts + Cryptoversidad Collaboration 1
- web3 Warri Arbitrum Universities IRL Events 1
- Arbitrum BUIDL Program
- Arbitrum sponsors LearnWeb3’s Decentralized Intelligence S2 Hackathon 2
- Funding Approved for: 18k
- 0/2 Milestones Complete
- Arbitrum Uni Challenge: Ideate to Build
- Funding Approved for: 16.5k
- 0/3 Milestones Complete
Gaming Domain
- Chess.fish - Chess on the blockchain 1
- FPS: “Frags”
- Smithonia: MMORPG
- Gold Inc: Mobile MMORTS
- ethersource: Realtime idle MMORPG
- Spire: on-chain lore fo rthe web3 gaming era
- Funding Approved for: 17.5k
- 0/3 Milestones Complete
- Gaming Chronicles
- Funding Approved for: 3.3k
- 0/1 Milestones Complete
- Kaiju Cards: RPG, Character Collector and roguelite deckbuilder in one
- Funding Approved for: 22.5k
- 0/2 Milestones Complete
- Land, Labor and Capitol (LLC) - onchain tycoon game
- Sponsorship of the Gaming Startup Collective’s Monthly Calendar of Events
- Chaquer- Fully On-Chain RTS Game
- Waypoint Gaming - Game Night Grant
- Data2073
- Gaming Solution with Prizes
- Fair Gaming Ecosystem
- WorldWarDAO: Onchain Idle-RPG Game
Proposer’s Experience and Comments
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Arbitrum DDA program DA Demo Day PPTs and Reports
PPT links of the meeting of each domain
Challenges and Expected Improvements
- The Price fluctuations of the Arb tokens in the program were of concern for the program, as the overall budget which was denominated in USD kept fluctuating through the term of the grant program. In order to avoid a price fluctuation like that, and based on the feedback received on the Questbook DDA program feedback call from the DAO and delegates, an option is to convert all the Arb received at the time of the proposal passing to Stable coins immediately, to avoid fluctuation.
- As many projects have not completed their milestones yet, and with the milestones not having a due date for completion, a problem we foresee is these funds if the projects do not complete them may be locked for ever, or for an indefinite amount of time. If the projects complete their proposals post the program time, there is no structure in place to have the DAs review them post completion and fund them, as the program would have ended by then. To avoid this, for the next program, fixed deadlines will be set for a grant, where either the proposal can be taken over by a seperate team, or the funds can be clawbacked and allocated to another proposal.
- Work hour restrictions for DAs was limiting their ability to maximise their impact on the program, as they were only allowed to deliver 60 hours of effort a month. Based on the program so far, we realise that a time restriction only inhibits the DA from their ability assess proposals and support them more deeply, and therefore are suggesting a fixed monthly pay for the work a DA and PM does instead of pay on an hourly basis.
- Some of the proposals or conversations projects had with Quesbtook could not be followed on with a funding due to the soft cap established on the program to start with. To tackle this issue, and with the Arbitrum foundation grant ranging from $50-250k, we believe the program should increase its cap to $50k to cover the gap and accept a wider number of proposals.
- While all feedbacks, changes and evaluation were timely reported in the Questbook platform, was nonetheless necessary for DA to engage with grantees through chatting systems like Telegram and Google meet. This has generated some questions from the community as a whole regarding inhomogeneous communications ways. We will address this by standardizing both the report frequency, the template used, and especially by setting up a shared discord between all domains. 1:1 calls between DAs and teams will still be needed.
Proposal
Based on the impact and insights derived from Arbitrum DDA program, we propose renewing the Program with a budget of $4M for two quarters. The domain allocators will utilize this budget to fund proposals that align with Arbitrum’s roadmap. After researching, gathering feedback from domain allocators, active community members, and builders, we propose supporting the same domains as the previous program:
DomainDomain AllocatorProposed BudgetNew Protocol IdeasJojo$920,000GamingAdam$920,000Dev ToolingJuandi$920,000Education, Growth, Community and EventsCattin (Seed Latam)$920,000
RFPs, acceptance criteria and specifications for each domain
- New Protocol Ideas - Link 3
- Gaming -Â Link
- Dev Tooling - Link 1
- Education, Growth, Community and Events -Â Link
- We propose increasing the allocated grants budget for all domains equally to a higher budget based on the number of proposals received in the previous round.
- Additionally, in the first round we set a soft cap of $25,000, and we propose increasing the cap to $50,000, with a few more steps for approving a grant that is larger than $25,000, requiring the involvement of two DAs to approve a proposal rather than just the specific domain allocator.
- Considering the previous softcap being half of what is currently proposed, and that for an average of $220,000 for each domain the program was able to run for around 3.5 months before being maxed out, we project that providing 4X the amount of the previous iteration to each domain should allow the program to constantly allocate, at the same rate or even higher, for the full 6 months projected duration
- The increased cap will allow the Questbook Program to keep covering the bootstrap belt of grant between $1,000 to $25,000 while, at the same time, be able to serve larger protocols that inherently might have larger needs.
Specifications and Implementation
Similar to the model implemented in the initial program, the renewed grants program will be run using Delegated Domain Capital Allocation Model 1. Each domain allocator will run their respective domain on-chain for full transparency using Questbook. The data and performance across key metrics will be visible to the community.
While the program has produced, accordingly to preliminary conversation with protocols and delegates, good results, we want to address and integrate the feedbacks so far proposed and partially covered in the previous section, such as:
- have better accountability for the increased soft cap
- define a more robust and structured set of rules for applicants, in regards to providing a timeline for their project(s)
- define a cost for the management and verification of milestones after the program is completed
- define a plan to manage the volatility of funds being distributed by the DAO in ARB token.
The DA will evaluate all the proposals through the rubrics provided for each domain, with the following framework:
- in case of request below or equal to $25,000, the evaluation process will be the same of the previous iteration, with rubrics being evaluated and scored by the specific DA
- in case of request above $25,000, and below the new soft cap of $50,000, the evaluation will involve a second DA, chosen by the first one based on the proximity of the specific expertise and knowledge to that proposal, that will have to publish a second evaluation of the rubrics alongside the score. Assuming N rubrics, scored from 1 to 5, the grant will be approved only if both the DA will give each a scoring equal or above to N*3.
The disbursement of the grant will take place on-chain from a multi-sig wallet controlled by the program manager & the domain allocator. The domain allocator will approve or reject the application based on evaluation rubric. A Grants SAFE, with 3/5 multi-sig, between the program manager and 4 domain allocators will be setup. We will then have 4 SAFEs for each of the domains with a 2/2 between the program manager and the specific domain allocator. The funds for the grants program will flow from the treasury into the Grants SAFE. This SAFE will hold the funds related to operational costs, committee compensation, and the grants budget. Funds that will be disbursed to the proposers will reside in the domain-level SAFEs.
After the end of two quarters, the grants committee and the Arbitrum community shall evaluate the performance of each domain using publicly available data and decide to eventually, renew the program and, if so, change any specification of the domains, the domain allocators or the program manager.
To ensure predictability of the funding of the program and a proper runaway, upon receiving the amount from the DAO, the DAs alongside the PM will convert it in stables. If the protocols request it, specific grants or milestones might be paid in $ARB by converting the needed amount at the moment of payout.
Arbitrum DDA program closed accepting new proposals from mid February. If the program will be renewed in the terms above, the DDA program will take care, alongside the evaluation of new proposal, to keep evaluating the milestones of the previous program, thus allowing for the continuity of the previous iteration in an accountable way for grantees.
Compensation
Sourcing, reviewing, funding, marketing, tracking and nurturing proposals requires significant expertise and time commitment from the grants committee members and they should be fairly and competitively compensated for their efforts. Based on the learnings from the previous program specified above, we believe that opting for a fixed payment structure over an hourly paid model may be more impactful for the program. DAs and PMs have months where the work goes above and beyond the work hours mentioned, which does not get compensated accordingly, and there are constraints to work hours and impact a DA can provide within the limited hours provided. This indeed also impacted the turnaround time, alongside some technical difficulties.
We propose the following payment structure for the PM and DAs, with a base salary of $100/h and an increased projected workload of DA by 33% compared to the previous program, in consideration of the fact that DA not only have on average worked more than what initially was expected in the previous program, but also that they will need to spend time to cross evaluate all proposals above $25,000. On the other hand, the compensation of the PM is instead unchanged.
We are also adding overhead for an extra 6 months, equivalent to 20% of full-time salaries, for the Domain Allocators and the PM to keep evaluating the milestones of the grantees after the natural end of the program. This will ensure the proper continuation of the program and the followup with grantees, despite the program potentially not being renewed if so decided by the DAO. In case the program would be renewed with the same structure and people, or in case the milestone verification would come to an end before the due time, any leftover would be given back to the Arbitrum DAO.
RoleMonthly CostTotalProgram Manager and Questbook$10000$60,000*Domain Allocator$8000$192,000Overhead for extra 6 months$8400$50,400Operations Cost, Misc.$10,000Totals:$312,400
- Note: Questbook will provide the grants committee its grants orchestration tool at a cost of $5000 per month, included in the numbers above with the PM’s payment.
As per the above, the current costs to run program would be 7.8% of the overall budget of the grant program.
- We suggest that the grants committee continue with Synapse 1 for KYC services and Docusign for all contractual agreements, as we have been using these services throughout the Arbitrum DDA program 1.
- However, for any specific asks from the grants team in order to run the process more smoothly, Questbook will charge for any additional feature requests based on the development overhead through a retrospective grant proposal from Arbitrum at the end of two quarters.
KPIs and Expectations
Program Success
- Increase in the number of contributors, proposals, and funded projects
- Increase in milestone and proposal completion rates
- Increase in NPS score from all proposers and grantees
- Lower response turn around time to delegates’ and community’s queries
- Diversity in projects being funded across technologies, geographies, and demographics, to name a few. We encourage the community members to review the proposals across different domains during community calls regularly
- Timely publishing of comprehensive monthly grants report, outlining the status, progress, and impact of the program, ensuring transparency and accountability
Enhanced Community Involvement
- Increase in community engagement across :
- Discourse
- Discord, Telegram
- Social media (Twitter, Reddit)
- Increase in the community members’ participation to keep domain allocators and program manager accountable (measured by the number of people looking at the dashboard and participating in the program)
Brand Awareness
- Strengthened contributors’ sentiment and word of mouth towards Arbitrum measured through frequent sentiment surveys/ polls to gauge satisfaction
- Enhanced Arbitrum’s brand recognition and awareness within contributor circles through surveys or social media analytics, tracking mentions, reach etc.
Contribution of Funded Projects to Arbitrum
- Number of users onboarded by the funded proposals onto their app/protocol
- TVL (if applicable) of the selected proposals
- Number of new interfaces for supplying / borrowing / governance interactions
- Number of projects that have raised follow on capital after getting a grant from Arbitrum Questbook program
Domain Allocator Roles & Responsibilities
- All Domain Allocators and the Program Manager will continue to uphold their designated responsibilities as outlined in the Arbitrum DDA Program 1 proposal.
- Domain allocators may request an audit for the considered/accepted proposals, particularly those that involve Solidity code being deployed into production and directly impacting Arbitrum with an high spending cap. In order to streamline the code auditing process and avoid potential time-consuming challenges, the domain allocators will provide assistance to the considered/accepted proposals by offering feedback on code quality and design.
- As an addition to the previous iteration, projects will have to submit a proposed timeline for their project. The maximum time to complete the final milestone will be 1 year from the start of this iteration of the program (equivalent of 6 months after the natural end of it); after this date, all undistributed funds related to grant that did not complete their milestones will be given back to the Arbitrum DAO
- The DAs, alongside the PM, will publish every 45 days in the Arbitrum governance forum a comprehensive report of the current status of the approved applications.
- Every 2 weeks, the DAs will host a public office hour for protocols to come in and request information about any detail they might need to understand to apply to the grant program. This public call will also be used to provide general feedback on the ongoing program and will also let delegates and other stakeholders ask for information about it
- Similar to the Arbitrum DDA program 1, the Program Manager will collaborate with the Arbitrum Foundation team and the elected domain allocators to create and list out necessary RFPs in order to ensure alignment with Arbitrum’s priorities and roadmap.
About Questbook
- Questbook (YC-W21) is a decentralized grant orchestration tool, currently being/previously used by Polygon, AAVE, Celo, Solana, TON, Aleph Zero etc.
- Considering the achievements of Arbitrum DDA program, as well as the time commitment and operational expertise necessary for running an effective grants program, Questbook will continue in the role of the Program Manager. Srijith from Questbook will keep his role with the responsibilities of the Program Manager.
Method for converting Arb to Stablecoins
In the process of converting Arb tokens to stablecoins, we are requesting for 30% additional Arb in notional USD terms to make sure that there are $4M in the multisig in the end of the process due to any price actions, and whatever is extra, will be returned back to the DAO post the conversion.
In addition, if there is an important downturn in the value of Arb from the beginning of the Tally vote towards the end which affects the value received in USD terms significantly, we would potentially putup a second vote to re-fund the leftover USD needed as per the original $4M request.
Questbook will work with Aera, in collaboration with Gauntlet, thanks @Matt_Gauntlet for your help with this collaboration.
The following description is from the Aera team on the process of converting the Arb received to stablecoins.
As part of their engagement with the DAO, Questbook will be leveraging Aera to diversify out of the ARB tokens into USDC. Aera has engaged with the DAO previously to create a detailed report on treasury management. This report spoke in-depth about execution dynamics for ARB and specifically around the onchain impact of small and large ARB liquidations, particularly that there was outsized market impact relative to the size of liquidations from having grantees in individuals selling ARB themselves. Aera introduces a concept of Protocol Owned Execution (PoE), where the DAO would own the execution out of the governance token via Aera to achieve better execution on the whole.
In the context of the Questbook proposal, the flow for using Aera looks like the following:
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To clarify how this works:
Questbook multisig will be the owner of the Aera vault. This gives only the Questbook Multisig the ability to withdraw and deposit from the vault at any time, as well as select which assets can be held, and which DeFi protocols can be interacted with.
The Guardian of the Aera Vault will be Gauntlet. Gauntlet acting as a guardian submits rebalance transactions against the vault to sell ARB for USDC.
Execution will be done in batches to prevent a outsized price impact. Furthermore, Aera has the ability to conduct operations under specific slippage requirements, if desired.
The Aera vault has hooks in place that prevent >3% loss per day due to guardian interactions, and it disallows interaction with anything not previously approved by the Owner (Questbook Multisig).
Questbook is looking to generate $4M in USDC from selling ARB. One risk here is that price fluctuations in ARB bring the initial ARB allocation below the needed $4M USDC notional. While there is fundamentally no way to mitigate this entirely (From Mar 13th - 19th the price of ARB dropped >30%), it is possible to hedge this by asking for a sufficient buffer. Given historical drawdowns a 30% additional ARB buffer (in notional USD terms) should be sufficient.
For this proposal of converting the Arb to stablecoins, Aera will be using Bebop as the primary exchange and Uniswap as a fallback. Bebop is an onchain exchange that taps into a solver network. Bebop is critical for this proposal due to its ability to tap into offchain liquidity (which is much deeper than onchain liquidity). In concept, Bebop is similar to CoWSwap in how it taps into an offchain network of solvers. Uniswap will also be enabled as part of the Aera vault, and will be used in a fallback capacity. Uniswap has the deepest onchain liquidity for ARB on Arbitrum, and we will use it as a fallback should Bebop have worse execution.
One important question is why Bebop and Uniswap and not other aggregators or exchanges. In many ways Bebop is an aggregator already, solvers filling orders on Bebop can tap into whatever onchain or offchain liquidity sources they want in order to fill an order. As such Aera doesn’t need to explicitly tap into alternative DEXes or Aggregators to fill orders.
