Abstract
This post is intended to provide context on, and guide the community to a decision around, grant eligibility criteria as it pertains to projects with tokens.
This post is a Part III follow-up & summary of existing discussions outlined in these two recent governance posts: Novel Situation #1, and Proposed Revision to Grant Eligibility Criteria.
We acknowledge this is a net new policy evaluation happening in the middle of a grants round, seeking to bring near-term resolution to a policy ambiguity, which is not ideal. In doing this evaluation, we have identified the need to craft a longer-term, more deliberate & community-involved process for grants policy definition that spans across workstreams.
Context: Existing Policy
One of Gitcoinâs legacy eligibility criteria reads that, to be eligible for a grant on the Gitcoin platform, a project âshould not have its own token or have raised over $500k in VC fundingâ.
This criteria was put into place in early 2021 before the DAO provided a strong governance model for Gitcoin Grants. The Web3 space has evolved substantially since then, and many early-stage projects now launch governance tokens at inception.
These tokens often have little-to-no economic value at the onset â and, as such, questions have been raised about whether this eligibility criteria should be revised to be more inclusive to these types of projects. Currently, FDD is declining all grant applications that have their own token of any sort.
This includes:
- Projects which currently have a token
- Projects which have any mention of an airdrop or sale on their grant page or any of the links on the grant page including their Twitter, Website, or github.
Bright ID Case
BrightID grant #191 was flagged by a user during GR12 as having a token. This dispute was escalated to the review team which determined that they are ineligible because they do have a token. After GR12, an appeal was raised by the BrightID team on this topic. This appeal relates to their existing grant, which has raised over $150K in Gitcoin Grants funding in prior rounds.
The email outlining the appeal, which can be read in full in this post, served as a catalyst for revisiting & re-evaluating this eligibility criteria, as well as for more clearly defining the FDD Appeals process as a whole (future post to come on this).
Proposed Policy Amendment
After extensive cross-workstream dialogue, as well as public discourse in the comments on the posts mentioned above, PGF & FDD propose revising the criteria as follows:
A project in the Main Round cannot:
- Have a token with a fully-diluted market cap of greater than $20 million
- Have raised over $500k in VC funding
We recognize that these criteria are somewhat arbitrary, but we believe creating an objective starting-point threshold from which we can iterate, rather than maintaining the status quo of nebulous criteria, is a) more scalable for the program long-term, and b) much clearer to current & prospective grantees.
Finally, the verbiage âin the Main Roundâ was specifically included to give us the flexibility to de-couple Ecosystem & Cause Rounds from this logic in the future. Today, all QF-eligible projects on the Gitcoin Grants platform are in the main round â so this applies to all grants for the immediate term â but we may de-couple ecosystem/cause rounds in the future, such that the funding partners of those rounds can make their own decisions around eligibility for their pools.
Grants Policy Definition Process (Longer-Term)
This discourse has led us to the realization that there is not clear accountability or process as to âwho defines grants policy, and how?â â whether itâs PGF, FDD, the community-at-large, or a combination thereof, and how we collaborate and govern policy definition. We certainly want to make this a joint, community-heavy domain, and that is something we need to improve on as we continue to progressively decentralize the running of our grants programs.
As a next step, PGF & FDD will come back to the forum prior to Grants Round 14 with a proposed policy definition process for discussion.
Snapshot Vote
In the interim, on the âProjects with Tokensâ policy, we propose moving to a Snapshot Vote with two options:
1. Maintain âno tokenâ status quo
This would mean that we continue with the ambiguous policy (âa grant should not have its own tokenâ), and leave case-by-case decisions in the hands of FDD.
In this case, the Bright ID decision would be handled centrally by that group and would not continue further through governance.
2. Adopt new $20M market cap threshold
This would mean that we would adopt the new policy to be implemented for all grants as of GR13. Grants previously denied in GR13 for having a token would have an option to either submit a new grant (preferred) or appeal their old grantâs denial.
In this case, the Bright ID decision would be made by this criteria. Given that BrightIDâs FD market cap is $7.6M at the time of writing, and they confirm to have not raised VC funding, they would continue on as a grantee eligible for QF in GR13.
Allowing projects with tokens to not be immediately disqualified does not mean that ALL projects with tokens having a market cap under $20 million will qualify. These grants must still pass all other platform eligibility criteria.
Wrap-Up
Given that this post is a âPart IIIâ follow-on post and that community discussions on this topic started ten days ago, we plan to move this to a Snapshot vote on Tuesday, March 22nd. This will allow us to have the decision ratified prior to the end of the GR13 dispute period.
Thanks to @DisruptionJoe, @David_Dyor, @connor, @seanmac, @M0nkeyFl0wer for your collaboration & input.