We believe in the power of web3 grants programs to fairly and transparently fund the initiatives communities care about. In analyzing the current landscape, there's an opportunity for more robust and effective tooling solutions to emerge. Read on to learn about our findings and our latest product, Gitcoin Grants Stack.
Grants play a crucial and unifying role in the web3 ecosystem, yet the adoption and scalability of decentralized grants programs is directly dependent on their operating and management platforms. Many of the current offerings in the emergent landscape lack efficiency, requiring multiple workflows and manual processes. This article explores the current grants tooling landscape, focusing on the areas of automation potential and specificity of needs, to illuminate areas of opportunity for more integrated solutions, which will be necessary to increase the impact of web3 grants programs.
Grants are a powerful way to unite the web3 ecosystem around shared priorities, from supporting early-stage projects to funding niche areas of interest. They help teams maintain sovereignty while building new initiatives and attract talent by offering opportunities for developers and creatives to work on exploratory ventures. By providing monetary incentives for specific areas, grants can provide immense value for niche communities and serve as a form of signaling within an ecosystem. Grants offer financial support to projects that may not have access to other funding sources, allowing builders to take risks in developing new technologies and projects that might not fit conventional investment paradigms.
Grants programs work best when they are customized to fit the specific needs and goals of a particular ecosystem. By understanding their community's concerns and priorities, program managers can attract relevant projects and more effectively manage their grants rounds.
However, finding the right tooling solution can be challenging and time-intensive in the current landscape.
Most web3 grants programs today use a combination of onchain and offchain stand-alone tools for workflows, stitched together with manual handoffs. For example, the application process for some of the most well-known web3 grants programs lacks standardization and ranges from custom forms and survey tools, to governance forums and Github. Despite the intensiveness, it is essential to develop more robust tooling for grants programs for three key reasons:
Grants programs need the right tools to simplify processes and minimize manual work. This boosts efficiency and productivity, allowing program managers to concentrate on important tasks like evaluating applications and engaging stakeholders. Additionally, quality tools help standardize procedures and maintain consistent decision-making criteria, fostering transparency and the equitable assessment of all applicants.
Thoughtfully-developed tools enhance the program experience for applicants by making it easy to submit applications, track progress, and receive updates. Clear communication channels and automated notifications keep applicants informed, thereby increasing their engagement and satisfaction with the grants program.
Effective tools allow for a data-driven approach to evaluating project outcomes, monitoring financial performance, and measuring program impact. These metrics enable program managers to assess the health of their grants program and make informed decisions with the data. Additionally, utilizing tools with open and accessible data reduces the likelihood of improper fund usage and other non-compliance issues.
Web3 grants programs often have to accommodate a wide range of requirements, from adhering to community governance and open-source collaboration principles to possessing the expertise needed to assess more unconventional, riskier projects. When considering a tooling strategy for your web3 grants program, we suggest evaluating your core requirements on two scales, which range from low to high:
In the diagram below, we map ten high-level requirements commonly found in web3 grants programs according to the above criteria. Please keep in mind that the mapping is relative and may differ depending on the size and scope of each grant program. The rest of the article dives into each quadrant and evaluates the characteristics of four different approaches to tooling: Protocol-based, Bolt-on, Blended and Community Insights-Driven.
Protocol-based tools can help simplify communication between different systems and reduce the complexity of building software applications, encouraging a healthy balance between standardization and flexibility. With a high potential for automation and requirements considered to be relevant across the ecosystem (low specificity), the following requirements are well-suited to run over a protocol. This will enable the protocol to support the abstraction of technical details, while the tools running on top of it can cater to the needs of the entire ecosystem.
For example, grants programs must decide how to allocate funds 一 they have a spectrum of options from centralized decision-making to leveraging participation from the community. Toolsets should be flexible enough to accommodate program managers based on the preferred level of decentralization.
Bolt-on tools can be easily integrated with a grants program’s current data sources and processes. With a high potential for automation and requirements considered to be unique to the program (high specificity), the following requirements prioritize existing infrastructure while aiming to reduce manual labor and prevent errors. For example, bolt-on tools can make it easier for program managers to access onchain data, which can be used to understand donation patterns in community-driven grants programs.
Blended tools are best-suited for grants programs that have many manual processes and particular needs that could benefit from flexibility and speed. With a low potential for automation and requirements considered to be unique to the program (high specificity), blended tooling can bring more efficiency to a grants program's operations. An analysis of the current manual processes in place can help identify areas that could be streamlined by automation. For example, grants programs often need a plurality of mechanisms to serve program managers, supporters and grantees 一 ranging from Requests for Proposals (RFPs) for direct grants to quadratic funding for community-focused initiatives. Toolsets should aim to accommodate the breadth of a grants program’s needs in order to be more effective at driving the intended impact.
Community Insights-Driven tools will be beneficial for this category of requirements that call for a deep understanding of the subject matter, as well as unique insights from the community based on past experiences across the ecosystem. With a low potential for automation and requirements considered to be relevant across the ecosystem (low specificity), the input of the community will drive the success and relevance of these tools, at least in the near term. However, protocol-based solutions may emerge in the future as learnings from community intelligence improve. For example, visibility into data such as onchain project registry, milestone information, grant sources and grant amount history fosters an ecosystem of open impact evaluation that current and future supporters can utilize to inform their funding decisions.
Here are some recommendations as you evaluate a tooling strategy for your grants program.
We believe in the power of web3 grants programs to fairly and transparently fund the initiatives communities care about, but this fast-moving ecosystem can make it challenging to keep up with the latest tools available to boost your grants program. Many gaps still exist in the current landscape, creating an opportunity for more robust and effective tools to emerge. With these insights in mind, we’ve developed Gitcoin Grants Stack, a protocol-enabled solution that enables any community to create, manage and grow a grants program. Grants Stack utilizes three core apps, plus an integration with Gitcoin Passport to make it possible to manage, discover, donate to and participate in grants programs.
Interested in trying Grants Stack? Book a demo with our team.