RFC-XX: Hop Grants Committee Renewal and Redesign

[jengajojo]

Thanks for highlighting the challenges with the current grants process @Kene_StableLab Given the fact that majority of the tokens haven’t been distributed yet, a redesign seems appropriate. I am personally not a fan of token-weighed voting for selecting members since the outcome is always a result of plutocracy. An alternative could be to drop SBTs to active members and contributors and run an election based on those inputs.

On the other hand, I do wonder if a traditional grants program will have any different results as compared to any other DAO grants program, especially since it only caters to convex decision making Additionally, all grants programs need rapid iteration in order to succeed.

Hence, I’d like to split the budget into 2 parts, where the first part can be allocated via convex decision making as you have listed but the iteration duration should be maximum 6 months long. The second part should be a concave decision done either via Quadratic Funding on Grants Stack or a side round in the formal Gitcoin rounds.

Finally, I’d like to request including the education and onboarding domain as a category in the convex decision making program.

[max-andrew]

$500/month seems generous given the amount of proposals the DAO receives. Your number for disbursements doesn’t include those in process so it’s a bit misleading as well. I’m also massively skeptical that a weighted vote will lead to the best outcome for selecting technical members of the community suited for this role. I wonder if we wouldn’t want to specifically target/recruit people both within and outside of the DAO for this. I’m also not sure what purpose the grant categories serve and I’m unclear on what the renewed budget will be. Still 750K HOP? What if this cap is used up during a cycle, are we forced to wait for a new one?

With respect to the builders call, while I’m in favor of more technical support broadly and think that’s an important element missing from other projects, I think Hop currently does a good job of addressing these questions on existing community calls and in the dev Discord channel. I think it might be better to determine if there is a need for this first and create a separate proposal for it if so.

I think there’s a lot of seemingly reasonable moves here, but I question if a lot of them are solving real needs or just adding complications. I think the best thing we could do is keep the process really simple and only fix what’s broken. In my experience with the process I’ve only really noticed two issues. First, not all the signers are active. Compensation may help (and is separately justified and well deserved), but a framework for swapping out a committee member would be even better. Secondly, the per-project cap is too low for certain involved, technical projects.

I agree this program should absolutely be renewed, but I think this draft is incomplete and misses some of the key areas that need improvement.

[0xjack]

I agree with a lot of what Max said in his above comment. I have been one of the more active signers in the Grant DAO AFAIK and I think $500/month is overly generous. The hourly commitment has been ~1hr/mo due to how few grant applications we received. I agree that the two main issues I’ve seen with the grant process to date are:

1. Some signers are not active, which means payment disbursements take too long
2. The max grant amount was too low

If someone wanted to apply for a grant that set up more marketing and education for Hop Developers, I would be all for it, but that feels out of scope for a lightweight community grants mechanism.

I’m also all for the program being renewed as well, since we have funded a couple of nice grants and came in way under the allocated budget with little to no overhead to the DAO, but I don’t see the need to add complexity. It seems like the best next steps for renewal of the program would be

1. Increase the per project caps
2. Reclaim the seats of non-active signers and replace them with other technical folks that will be more active in their role

[kaereste]

The below response reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking and ideation of the two.

Following the recent Community Call, we’d like to bring the Grants Committee renewal discussion back to the delegates attention.

We agree that the Hop Grants Committee should be revived and renewed and we’d like to get involved with the process of not only reactivating the committee, but also attracting proposals for it to fund.

What we believe would help propel more proposals to the DAO, and hopefully more growth for Hop as a whole, would be a more direct approach when it comes to the direction or purpose of the projects applying for grants. The categorisation proposed by Kene is a step in the right direction.

Requests For Proposals (RFPs) could be a good approach, as they identify a specific thing we want to work toward and then invite the community to submit proposals on how to tackle it. However, RFPs come with a big overhead for the DAO as we need to identify a very specific thing, design an RFP that can clearly communicate the desired result in order to attract aligned proposals, and then assess each proposal not only on its own merit, but also based on how it helps with the identified issue.

As an alternative, we think that something similar to Intents and Missions from season 4 on Optimism would help attract proposals that help the DAO achieve its longer term goals and move in that direction with the help of the community. We can introduce a series of well thought-out and discussed intents and then

On occasion of this post, we’d like to take the opportunity and point out that there’s definitely room for improvement when it comes to content, awareness and education around Hop protocol. For example, a quick google search of “Hop Protocol Grants” yields no actionable results for a team looking to build something on top of Hop. There can be more communication and documentation around Hop DAO grants. On top of that, there could be more educational material around Hop, and introducing an intent, or a grants category around content and education could help to that end.

We’d love to help facilitate a discussion around renewing the Grants Committee as well as discuss the future of Hop with interested members of the community. Therefore, we’d like to extend an invitation to L2BEAT’s office hours for Hop, every Friday at 3pm UTC/11am EST. You can add L2BEAT’s Governance Calendar to get the respective link.

[Kene_StableLab]

With the feedback from the last community call, the following proposed edits are proposed to be made to this proposal.

• There shall be 5 Grants Committee members, with one uncompensated seat reserved for @cwhinfrey
• Two Committee members shall be elected from within the Hop Community and will be compensated $250/month to be paid out in HOP tokens.
• There shall be two external Committee Members who shall be compensated $500/month to be paid in HOP tokens. The external committee members will be recruited leveraging Authereum Labs resources.
• There shall be no builders call
• The funding cap per project should be increased by 50%
• There shall be a process for removing inactive Committee Members.

@max-andrew @0xjack @jengajojo

[max-andrew]

I think on the whole this is taking good shape.

I’d just clarify a few things. I like the idea of recruiting external members and think increased budget for them could make sense. I don’t know if I think this should be a sole responsibility of Labs, though I’m sure there would be contribution to it regardless. I wonder if this could be a good fit for ambassadors actually.

Also I haven’t seen the need for a separate builders call yet and think this can be addressed by the Discord #dev channel and existing community calls. That said, I would definitely love to get to the point where it becomes necessary and will definitely advocate for one once we reach it.

[francom]

This important discussion has been stagnant for some time and I would like to reignite it because the Grants Committee is a very important part of the Hop DAO.

There were good suggestions made by @max-andrew @0xjack and @jengajojo and I believe the grants committee redesign is ready for a snapshot vote but would like to give some more time for any additional suggestions from community members before moving to a snapshot vote.

[francom]

This is the most recent iteration of the grants committee redesign based on feedback from community members.

1. There shall be 5 Grants Committee members, with one uncompensated seat reserved for @cwhinfrey

2. Two Committee members shall be elected from within the Hop Community and will be compensated $250/month to be paid out in HOP tokens.

3. There shall be two external Committee Members who shall be compensated $500/month to be paid in HOP tokens. The external committee members will be recruited leveraging Authereum Labs resources.

4. There shall be no builders call

5. The funding cap per project should be increased by 50%

6. There shall be a process for removing inactive Committee Members.

If you have any questions, concerns, or suggestions please share them in this thread so that the proposal can be fine tuned before going up for a snapshot vote.

[takeabreath]

I think a final draft of the renewed Grants committee and Grants program design proposal is close at hand, but I would like to highlight some open questions from this thread:

• Should we seek alternatives to weighted voting for selecting the committee?

• Are the categories of projects/proposals the DAO intends to fund clearly defined?

• Are committee members incentivized well enough to be multisig signers?

• Should there be an established framework for finding and selecting Grants (RFPs, Missions/Intents, etc.)?

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For the first question, I really like @jengajojo’s suggestion of distributing SoulBound Tokens as voting power for committee selection. I also wouldn’t be against using Snapshot’s Quadratic Voting implementation.

For the second question: Why not try to broaden the horizons of what can be funded by Hop DAO?

What if the DAO were to fund an IOT/DePin project that wants to post commitments to data collected to multiple chains in a single block, which Hop could facilitate? Just an example, but maybe DAOs could be a bit more creative in trying to attract a more diverse set of projects which could add value to Ethereum whilst also bringing in revenue for their projects.

Finally, is the amount proposed in the original proposal sufficient for a Grant program? 750k Hop right now is ~$35.4k, is this competitive enough for a Grant program?

[Bob-Rossi]

The Hop DAO Grants Program began on January 10th 2023, with an initial transfer of 750,000 HOP tokens to the Grants Multi-Sig. At the time of writing this proposal, 738,390 HOP tokens remain in the Multi-Sig .

How many grants were reviewed and then how many were actually paid out? Only asking regarding compensation, as I’m wondering how many times a month may go by with no applications. Resulting in the committee getting paid for no activity.

[francom]

This post is a follow up to the Grants Committee Workshop Call that took place on Wednesday 4/10/24 with the following participants; fourpoops, bob-rossi, takeabreath, krystof from L2Beat, and myself.

We discussed the shortcomings of the previous grants committee/program and ways to improve it.

The original grants program allocated 750k Hop tokens to be distributed to successful grants applicants with a max amount of 100k Hop per individual grant. With Hop’s current price of $0.051 (4/12/24), the total grant program amounts to around $38,250 USD with the max grant allocation at $5,100.

To my knowledge there were only two successful grant applicants; Tally’s delegation week being awarded 75k Hop tokens and MaxAndrew’s Hop LP Rebalancer getting 88.6k Hop tokens. Therefore, there is still roughly 584k Hop tokens in the grants committee multisig.

Since the Grants Committee is targeting; cross-chain tooling & infrastructure, research & analytics, marketing & education, and onboarding, the total grant program of 750k Hop tokens seems very low. The max grant allocation of 100k Hop tokens also seems really low which potentially discouraged high quality grantees from applying.

Additionally, the fact that there were few grant applicants demonstrates that there wasn’t enough awareness/knowledge of the grants program to attract applicants. Finally, another issue with the previous program was the lack of incentivization for grant committee members which lead to apathy and lack of focus from some committee members.

With this in mind the following changes are proposed to the grants program and committee;

• Keep the committee at 5 members with each member being paid $500/month.
• Open nominations for anyone within the Hop community and people outside of the Hop community as well.
• Increase the grants program by 3x, therefore the new grants program amount shall be 2.25 million Hop tokens and eliminate the max grant allocation amount.
• Add a marketing push to spread the word about the grants committee and attract applicants. This will be the responsibility of the grant committee members.
• Grant committee members have to share participation and voting metrics with the community. If a grants committee member isn’t voting and communicating in at least 70% of the grants, this committee member can be fired and replaced.
• Approved grants are to be funded based on milestones and payments made periodically.

Please share your thoughts, questions, and concerns so that we can move this proposal to a snapshot vote soon and reignite the grants program.

[Sinkas]

The below response reflects the views of L2BEAT’s governance team, composed of @kaereste and @Sinkas, and it’s based on the combined research, fact-checking, and ideation of the two.

After participating in the Grants Committee Workshop call, as well as the Hop Community Call on 17.4.2024, we wanted to take a minute and summarise our thoughts and share them with the community.

@francom’s comment above perfectly outlines the problems that were discussed and identified, and we want to expand on them as well as provide our perspective on an actionable plan forward.

1. Scope

One of the most important things to do is defining the scope of the grants the DAO wants to give out. A good step towards that is existing stakeholders identifying problems and crafting RFPs (requests for proposals) for potential grantees to apply to. We would suggest hosting a separate DAO-wide call, including people from the Foundation, to workshop this.

2. Committee Compensation

For any grants committee to have a meaningful impact, it needs active and heavily involved members. We find the proposed compensation of $500/mo to be very low to achieve the goal of incentivising committee members to do meaningful work. Grant programs have a lot of overhead, including creating a rubric, building and maintaining a pipeline, processing applications, overseeing the execution of grants, following up with grantees, and providing support. We’d suggest significantly increasing the compensation to account for all the work that needs to be done.

Having said that, we recognize that Hop Grants program might have less traffic to justify as much overhead and therefore as much spending. To that end, we’d suggest 1) reducing the number of committee members from 5 to 3, and 2) somehow associating the compensation with the committee’s workload on a month-by-month basis.

3. Budget and Cap

We agree that the total available budget should be increased and the x3 suggested by Francom sounds reasonable. Removing the cap-per-grant also makes sense.

4. Awareness of the Hop Grants Program

The grants program should be promoted more by the grants committee members with support from other delegates and the Hop Foundation.

Next Steps

To keep things moving forward, we should move this to a Snapshot vote with a general proposal, and we can figure out the exact details (as discussed in the workshop and community call and as outlined above) before the proposal moves to an on-chain vote. That would help us to both move fast and also see that there is a soft consensus that the grants committee renewal is something the DAO wants.

We’d love to participate in another workshop with other interested parties (maybe @francom can facilitate) to nail down the details to finalize the proposal.

[francom]

Based on the previous grant program the overarching goal of this new grants program is to drive high quality application volume. The proposal below is based on the most recent feedback and conversations with community members. Please share your thoughts, comments, concerns, and questions. If there is explicit approval or lack of disapproval, this proposal will be moved to snapshot vote and if passed will be followed up with an election for the new grants committee.

3x grant program

No cap per grant

3 grant committee members

Base Salary of $500/month

• Promote grant program to attract grant applications
• Create rfp list
  • Funding things that surround the product like analytics, new frontend, marketing/education
• Create more robust grant application process

Commission based

• If you bring in an applicant, you become the sponsor of the grant and have to see the grant through its application process.
• If the grant gets approved then you have to support the grantee during the life of the grant.
• If grant is successful then the sponsor can get up to a 15% commission of the grant spent.

Grant committee votes and approves grants optimistically but DAO has a 7-day period to veto any approved grants.

[takeabreath]

3x grant program

Don’t quite understand what is meant here, mind elaborating further?

No cap per grant

Not necessarily opposed to it, but mind sharing the rationale for not having a cap?

Commission based

I like this approach, but I do wonder if the three committee members would ever be overwhelmed being a sponsor/supporter for multiple applicants/grantees. What are the responsibilities of a sponsor, what does “support for grantees” entail?

Overall, I think the incentives are fine and the veto + rfp period length may be good enough for the community to monitor collusion between the committee and applicants.

Also, what if none of the committee members “bring” an applicant, but instead an application is seemingly submitted independently? Would sponsors/supporters be assigned to that applicant/grantee at random?

[francom]

Hey @takeabreath ! Appreciate the questions.

The original grants program allocated 750k Hop tokens to be distributed to successful grants applicants with a max amount of 100k Hop per individual grant. With Hop’s current price of $0.044 (5/21/24), the total grant program amounts to around $33,472 USD with the max grant allocation at $4,463.

The max grant allocation might not be competitive enough to attract high quality applicants which could explain the lack of applicants in the previous grants program. The overarching goal of this new grants program is to drive high quality application volume.

I believe it would be helpful to increase the grants program by 3x, therefore the new grants program amount shall be 2.25 million Hop tokens, and eliminating the max grant allocation amount

The sponsor role during the application process would entail constant communication with applicants to make sure they fulfill all requirements on time to increase their probability of success. If the grant application gets approved then the sponsor must continue supporting the grant recipient by making sure the grant funds are used adequately and the grant recipient is periodically reporting progress with the DAO.

Yes. Sponsor would be assigned at random in this scenario. While the $500/month base salary for grant committee members might not seem high, as long as the grants program has several successful grant applicants, the committee members sponsoring them will be able to receive a vested commission of up to 15% of the grant spent as retroactive funding.

[takeabreath]

Great, thanks for clearing things up @francom.

All remarks below do not need to be addressed immidiately, as @Sinkas mentioned above, these can be ironed out after the snapshot vote.

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I don’t mind the rationale for the capless structure of the grant and the commission: even if only a single applicant ends up receiving the entire grant, I think there are cases where Hop can still benefit greatly from this proposal.

In this scenario, however (where there are only < 3 grantees), would the roles of support and sponsor (as well as the 15% commission) be split amongst all three committee members? Just thinking of edge cases right now.

Finally (and the most difficult consideration), KPIs for “success”:

• If grant is successful then the sponsor can get up to a 15% commission of the grant spent.

Would love to discuss metrics for success/flesh out what the DAO hopes to get out of this program at another workshop if possible, or perhaps before the on-chain vote in the forums.

[francom]

Appreciate the additional comments, @takeabreath !

In the scenario where one grantee ends up receiving the entire grant program amount I believe it would make sense for the three grant committee members to be the sponsors and share the responsibilities and commission equally.

KPIs for success will be defined further but for starters a successful grantee could be defined as someone who gets the grant and spends it exactly as was mentioned in the application and during the respective agreed upon time frame.

[lefterisjp]

I think the new program makes sense. I would still apply a cap, but since the DAO does have a veto it’s probably fine to vote YES as it is.

I think the cap is needed so that no single grant monopolizes the entire round.

And now a question from a potential grantee perspective. Would retroactive grants apply? rotki has spent a lot of development power, partly because I am a user and fan of HOP, to implement proper tracking and LP balance detection for HOP across all of the deployed EVM chains. This is in final stages of testing and will be included in next release. Would it be eligible for a retro grant?

[Bob-Rossi]

I will be voting “For” the grant program renewal and redesign as stated. Having been on the workshop call / bi-weekly calls where this has been discussed, I think it’s clear a ton of thought has been put into this. Both learning from the last grant committee ‘round’, as well as just bringing new ideas from outside grant program experiences.

I think the changes proposed largely address the concerns I had with the old committee and look forward to this as it moves forward.

[takeabreath]

I also will be voting “For” this proposal.

I think this proposal is well defined. Further thoughts regarding the specs for this proposal have been expressed in prior posts in this thread.