Gitcoin × Octant Yield-Powered Matching Pilot
Summary
This proposal seeks approval for a longer term experiment with the goal of deploying an approved amount into a Gitcoin vault deployed on Octant v2 (matched by Octant), with the generated yield being used towards matching for Gitcoin Grants. Octant would not only provide vault infrastructure, but is also a co-design partner for the round where yield is being spent, while Gitcoin governance retains final authority over allocation decisions.
Gitcoin would deploy a pre-approved portion of Matching Pool (gitcoin.eth) assets into Octant’s non-custodial, audited vault infrastructure, routing yield (and only yield) into Gitcoin Grants matching pool. Octant has committed to matching Gitcoin’s deployed capital up to $2M, alongside co-branding and signaling support.
The goal is to evaluate an experimental low-risk yield strategy that can underwrite meaningful matching at Gitcoin scale while preserving principal. Gitcoin sets the strategy at our own discretion.
Motivation
Gitcoin Grants has historically relied on surplus treasury funds and episodic sponsorships. This model does not compound and becomes fragile as treasury constraints tighten.
Yield-powered matching offers a different primitive:
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Principal is preserved
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Funding scales with time, not one-off decisions
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Incentives align around long-term stewardship of capital
Octant provides an existing coordination layer that routes yield from established DeFi protocols toward public goods, without introducing leverage, custody risk, or bespoke financial engineering. This pilot tests whether that model is compatible with Gitcoin’s risk tolerance and governance standards.
How do the vaults work?
Octant vaults are non-custodial yield-routing vaults built on the ERC-4626 standard and Yearn v3 architecture. Octant does not generate yield itself. Vaults deploy assets into DeFi protocols that the depositor selects based on its own risk profile (such as large lending markets or ETH staking systems), and separate principal from yield at the smart contract level.
Principal always remains owned by the depositor and can be withdrawn at any time. Only realized yield produced by the underlying DeFi protocols is routed to a designated allocation address, in this case the Gitcoin Grants matching pool.
Unlike traditional yield vaults, Octant vaults do not compound returns back to depositors. All yield is automatically redirected for funding purposes, turning standard DeFi yield into a capital-preserving funding mechanism.
The underlying vault and strategy architecture follows battle-tested Yearn v3 patterns, with Octant acting as a coordination and routing layer rather than a yield generator.
For readers who want a deeper technical explanation of the vault architecture, strategies, and allocation mechanisms, a full explainer is available here.
Asset Class
The asset being deployed would be either USDC or USDS. The USDS yield comes from Sky’s native Savings Rate (SSR), which is user-accessible here. The SkyCompounder strategy programmatically deposits USDS into the same Sky savings contracts.
As an example, with a yield of 4.5%:
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$1M from each ($2M total) = $32k per quarter in accumulated yield
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$2M from each ($4m total) = $64k per quarter in accumulated yield
Proposed Structure
- $1M deployed from gitcoin.eth, matched by Octant, totalling $2M.
Octant will match by deploying their funds to their own vault, sending the yield to the same address.
After 4-6 months, we will consider adding another tranche of up to $1M (matched by Octant), after the initial experiment has been tested.
Round Focus & Brand
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Scope will be co-defined but the final round structure remains with Gitcoin governance.
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The round the yield is deployed to will include Gitcoin × Octant co-branding.
Risks & Mitigations
Smart contract risk
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Octant vault framework has undergone external review (Spearbit audit).
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The yield-generating DeFi protocol will be selected also with a view on previously conducted audits and implemented security mechanisms.
Strategy risks and Yield volatility
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Should the strategy incur a loss, Octant’s vault architecture is designed to protect principal: unharvested yield is used to absorb losses first, ensuring principal remains protected as long as possible.
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No yield guarantees.
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Matching size is explicitly variable and conservative.
Note: Gitcoin retains full custody and control of its principal at all times. Funds deployed into the vault are not time-locked, can be withdrawn at any point, and strategies can be changed if desired. This proposal is scoped to a single pilot round; any continuation, scaling, or reuse of accumulated yield beyond the pilot would require separate discussion and approval.
Success Criteria (Pilot-Specific)
This pilot is successful if:
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Principal is preserved (no loss).
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Yield is successfully harvested and used for GG26 and onwards matching.
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Operational processes (deployment, harvesting, withdrawal) function as expected.
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Governance can clearly assess whether:
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yield-powered matching is worth repeating
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the risk/return profile is acceptable
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the mechanism meaningfully improves funding sustainability
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Clear failure signals include:
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Loss of principal
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Excessive operational overhead
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Yield insufficient to justify complexity
Decision
Yes - Deploy $1M into the Octant vault from gitcoin.eth
No - Do not move forward
Abstain - Choose not to vote on this proposal
This proposal is an experiment in making public goods funding more structural rather than episodic, without compromising Gitcoin’s treasury discipline.