Crypto Payments

How To Run A Crypto Grant Program: A Step-by-Step Guide for DAOs and Foundations

Discover how to establish and manage a successful crypto grant program in this comprehensive guide. From setting up processes and evaluating funding to leveraging automated solutions for secure operations, get everything you need for setting up crypto grants.

July 10, 2023

Crypto grants can make or break the growth of any DAO, or blockchain foundation trying to grow their ecosystem and community.

In this guide, we’ll present a step-by-step framework for establishing and efficiently managing a crypto grant program.

What are crypto grant programs?

Crypto grant programs play a pivotal role in nurturing the development and expansion of blockchain projects. Their primary objective is to foster innovation, promote collaboration, and facilitate the widespread adoption of blockchain technology. 

They are often used to incentivize teams who are developing useful applications on top of various blockchain networks. Notably, the Aave Grants DAO has distributed over $4 million to various projects, with funding amounts ranging from a few thousand dollars to $100k. 

These grant programs serve as vital initiatives, providing funding, resources, and support to projects within the blockchain ecosystem. 

Where can I find other crypto grant programs?

When evaluating your own crypto grants program - project teams can look to others for inspiration and learning. 

Here are some of the best websites that aggregate all the crypto grants programs out there: 

1. Blockworks’ Grantfarm 

Blockworks' Grantfarm is the largest real-time directory list dedicated to facilitating funding for blockchain-based projects. It collates numerous crypto grants, serving as a bridge between grant seekers and grant providers, and makes it easier for the crypto-community to find relevant funding opportunities.

It holds an extensive database of crypto grants from various sectors, making it a one-stop solution for finding the right grant. Grantfarm ensures that all information remains current, with real-time updates on new grants and changes to existing ones.

2. Blockchain Grants

Blockchain Grants focuses on providing comprehensive information on crypto grants. The platform is dedicated to fostering growth and innovation within the blockchain community. 

The platform encourages the community to add and update grant information, fostering a dynamic and continually refreshed platform. The user-friendly design of the website allows for easy navigation and quick access to relevant information.

3. Alpha Growth

Alpha Growth is a platform that collates and lists numerous crypto and Web3 grants. It provides a dynamic ecosystem for innovators to find suitable grants to fund their projects. 

By tracking over 10 billion in grants available, it list grants across a diverse range of categories including DeFi, Web3, NFTs, and more. Users are also encouraged to contribute by suggesting new grants or updating the information of existing ones. 

4. Web3 Native

Web3 Native is a specialized platform that provides a list of grants focused on Web3 projects. It aims to foster innovation and growth in the Web3 space by making funding opportunities easily accessible.

The website makes it easy for users to find relevant grants with filter on grant range, tags, and supported ecosystem. The information on its site is up-to-date, providing users with reliable and current grant listings.

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How to start a crypto grant program

Step 1: Define the scope and establish outcome expectations

To start, it’s vital to outline your grant program's goals and specify the type of work you intend to support within the blockchain ecosystem. Creating a focused mission is like setting your compass - it points your grant-making efforts in the right direction.

For example, the Ethereum Foundation has a clear mission to promote and support the Ethereum ecosystem and base layer research, development, and education. This clarity helps applicants understand if their project aligns with the foundation's goals.

It’s essential to lay out clear goals and milestones for your grantees. Give them a timeline (usually around six months) to enable effective progress tracking and impact assessment of the funded projects.

Consider the available resources and the objectives you've set out before determining the funding amount for distribution. 

Step 2: Set up a grant process

Setting up a grant program usually involves a multi-step process designed to identify promising projects. Here's a general overview of how such a process tends to pan out:

Grant application: The grant process usually starts with the submission of the application form by the projects. This document contains crucial details about the team members and their proposed business idea. It provides your grant program with preliminary insights into the applicant's vision, qualifications, and proposed contribution to the ecosystem. 

You will then evaluate the project's alignment with its mission and objectives to determine if it fits the criteria for further consideration.

Discovery meeting: If the project passes the initial screening, a discovery meeting is set up. This is an opportunity for you to delve deeper into the team's background, expertise, and business proposal.

Technical form submission: Once the discovery meeting has concluded positively, you could request for the team to submit a second form. This document is more technically oriented, requiring an in-depth evaluation of the project from a technical perspective. 

It helps you to assess the project team's technical competency, the robustness of their tech stack, and their ability to deliver on the proposed idea.

Technical meeting: With the second form evaluated, the next step is a technical meeting. Here, the finer details of the project are put under the microscope. Everything from the proposed technology, integrations, and development plans are reviewed and discussed in detail. 

This meeting is crucial to verify the project's technical feasibility and the team's ability to execute their plan.

Grant closure: Once all the evaluations and discussions have taken place, and the project is found to meet all the necessary criteria, a final meeting can be arranged. This meeting is designed to close the grant process. It’s where final agreements are made, any remaining queries are addressed, and the grant is officially awarded to the team.

You don’t have to necessarily follow this grant process strictly, as the specifics may vary based on how you want your grant program to be structured. 

Some grant programs include community involvement in their selection process, like how Gitcoin Grant does it. They rely on quadratic funding where community members can fund the grant directly to the projects they vote for, allowing for a more democratic selection process. 

MetaCartel DAO is another grant for DApps and post-hackathon projects that has an open community-run grant process via their community forum

Step 3: Create a grant application template

Now that you have established a grant process, let’s get started on the task deliverables.

First, you’d need to prepare a comprehensive grant proposal template guide for applicants. This guide should clearly lay out the submission format and requirements for their project proposals.

Typically, this involves questions about the project, such as its description, team members, development roadmap, anticipated outcomes, estimated funding needs, and more. For reference, you might want to take a look at the project grants application template provided by the Ethereum Foundation ESP.

Ensure that your guide is both precise and concise, offering applicants a clear picture of the information you require. To further assist them, you might consider providing a sample of an ideal response.

You should aim to make the grant proposal submission process as seamless as possible. Applicants should be able to complete it in under 10 minutes. Tools like Google Forms or Typeform can be valuable assets in keeping the submission process simple and user-friendly. 

Tron DAO’s developer grant application form exemplifies an effective use of Google Form for a streamlined and user-friendly submission process.

Step 4: Evaluate how much each project can receive in funding 

Evaluating the value of each grant involves a detailed review of several factors. You could come up with a weighted assessment framework, based on different evaluation criteria that can serve as a reference for evaluating all the projects.

The Algorand Foundation's grant program provides a good model for evaluating grant amounts. They use a detailed evaluation framework that considers factors such as the project's potential impact on the Algorand ecosystem, the technical feasibility of the project, the team's qualifications, and the project's timeline and milestones. This comprehensive approach ensures that funding is allocated effectively and fairly.

Depending on the emphasis you want to place on each criterion, here's a selection you could incorporate into your evaluation process. 

Percentage completion: Check that the application is thorough, how much work is completed, with all required details and supplementary documents furnished. Examine the clarity of the project's description, goals, and projected results.

Feasibility: Evaluate the extent to which the project aligns with the focus areas of the grant program. Assess the potential impact of the project - whether its solution is applicable in real life, and potential commercial value. 

Team Evaluation: Evaluate the team’s experience working in start-ups, particularly their involvement in successful ventures. Assess the applicant's technical qualifications, such as relevant certifications, qualifications, or expertise.

Innovation: Examine whether the technical solution presented in the project encompasses a level of technical complexity or signifies an innovative breakthrough in the field.

Scalability: Assess the potential scalability of the proposed solution to accommodate future growth or expansion.

Risk Assessment: Consider the stage of the project as an important factor in assessing risk. Evaluate the level of risk associated with projects in the ideation phase, prototype development, or already in operation.

While you don't have to include every single one of these criteria in your grant program, it's beneficial to consider them while appraising project proposals.

Step 5: Prepare a grant agreement template

Setting up a grant agreement is essential to clearly outline the obligations and responsibilities of both parties involved. This template will help ensure that everyone is on the same page about what is expected. 

Take a look at the Web3 Foundation's grant agreement as a reference for a clear and comprehensive document. 

It outlines the responsibilities of both the grantor and grantee, including the project's scope, deliverables, timeline, payment schedule, and reporting requirements. This level of detail helps prevent misunderstandings and ensures both parties are clear about their obligations.

Tip: You can enhance transparency by hosting your document on Github and consistently updating the document's latest modification date. This approach not only keeps everyone informed about the most recent changes but also fosters a sense of openness and trust within the community, just like how the Web3 Foundation does it: 

While each grant agreement will differ based on the specifics of the grant, the parties involved, and the project at hand, the following components should generally be included:

Parties involved: Clearly identify both the grantor and grantee, including legal names, addresses, and, if applicable, registration numbers.

Preamble: Provide a brief overview of the grantor's mission and the grantee's business or project. This should include a summary of why the grant agreement is being entered into.

Duration: Specify the timeline for the grant, including when the agreement will start and how long it will last.

Expected benefits: Clearly lay out the expected benefits that the grant will bring. Going beyond mere funding, your grant program can provide support such as access to expertise, mentorship, marketing, and other necessary resources. This helps to encourage grantees to share post-mortems on their work, fostering a feedback loop and promoting shared growth among projects. 

Team members: Provide information on the grantee's team, including the number of full and part-time employees and their roles.

Milestones: List the key stages in the project's development, including when they're expected to be completed and what each milestone will entail.

Grant amount and payment schedule: Detail the total amount of the grant and when payments will be made. This could be a lump sum or paid out in installments tied to milestones. One-time grants are great for specific projects while recurring ones can fuel ongoing development or research.

Payment details: Specify the means of payment, currency, and any specific conditions related to payments.

Intellectual Property: Clarify who owns what in terms of intellectual property, and agree on how each party's intellectual property rights will be respected.

Governing law and dispute resolution: Define the law that will govern the agreement and the jurisdiction for any disputes.

Keep in mind that this is just a guide and each agreement will need to be tailored to the specific situation at hand. 

You should always consult with a legal professional when drafting and finalizing a grant agreement. It’s better to be safe than sorry. 

Step 6: Administer grant payouts

Finally, we arrive at a pivotal but cumbersome stage in concluding the grant process: executing grant payouts.

Handing out the grant is often where the true challenge lies in grant programs. The burden of manually tracking payouts, adhering to deadlines, maintaining compliance, and ensuring transparency can quickly become overwhelming. Not to mention, keeping tabs on resource allocation and reporting is a task in itself.

A recent incident involving PeopleDAO sheds light on the risks associated with manual management. They suffered a loss of $120,000 worth of ETH when a payout form link was accidentally shared publicly on a Discord channel, leading to a hacker exploiting this loophole, adding their address for a 76.5 ETH payment, and cleverly concealing this row on the form.

For grant programs, this highlights the potential vulnerabilities and potential theft that could ensue if grantees inadvertently gain access to confidential information. Furthermore, it signifies countless hours spent updating spreadsheets for tracking payouts and deadlines.

Taking these challenges into account, it's not only about ensuring a swift and easy way to disburse grant payouts. Having an efficient grant management system that consolidates all payment-related information pertaining to grants is equally critical.

A system like this helps maintain an accurate record of payment details, streamlines reporting and ensures compliance - fortifying your grant program against both operational inefficiencies and security risks.

How to Securely Automate Crypto Grants using Request Finance

With Request Finance, you can share a pre-filled invoice template that contains your business information with the grantees. Grantees then fill in the remaining details such as their names, wallet addresses, and descriptions directly on the invoice, reducing the chances of human error often associated with manual data entry.

Once you receive the invoices, you can use the batch payment feature to pay all invoices in one click rather than individually processing each one. You also have the option to automate recurring invoice payments by setting up a payment stream for such grant payments.

For enhanced security, you can easily add team members and customize their access levels, thereby safeguarding sensitive data and warding off potential theft.

In terms of tracking your grant payments for seamless reporting, a visual dashboard allows you to monitor the status of your invoices at a glance.

With this, along with careful planning and proficient management, you're all set to successfully launch the next big crypto grant program.  

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