[Proposal] Ratify Grants Lab Contributor Token Grant Program

[owocki]

Overview

With the introduction of Gitcoin 2.0, we have renewed focus as an organization and have set ambitious goals! We are driving towards $50M in GMV this year and a north star of $1B in GMV through Allo over the next several years.

To hit these goals, we need best-in-class contributor talent that is motivated and aligned with our mission and ambition.

Token grants are a key tool we have to create those alignments. After all – the idea that we can program our values into money to ensure alignment is central to our vision for capital allocation.

Structure

I propose that every contributor to Grants Lab is eligible for a 4-year token grant. These grants will be subject to linear vesting schedules and a 1-year cliff. Contributors who have been at Gitcoin for over a year and have not previously received a token grant will be eligible for an accelerated 6-month cliff, instead of 1 year.

This proposal covers all current contributors to Grants Labs as well as an option pool for future contributors. In total, 3M GTC is requested. This represents 3% of the supply of GTC and is aligned with (or below) industry standards for team allocations. Though team allocations are typically only done at launch, Gitcoin has evolved substantially since the token launch in 2021. Most of the team that was present in 2021 are no longer active contributors, and the vast majority (80%) of current contributors do not have any token grants.

Potential Risks

• Operational overhead
  • This will be part of the Grants Lab budgeting process and we will use available tools on the market (Liquifi or Hedgey or Gnosis Safe) to minimize overhead.
• How can we avoid negative impacts to the organization?
  • Tokens, once earned (including vesting), are wholly owned by the contributor and they have the freedom to do whatever they want with them. This autonomy and ownership are core to the culture we want to build.
  • Additionally, unlocks will occur over a long period of time (4 years) to minimize potential disruption.
• Why now / how is this fiscally responsible?
  • As mentioned above, we’re at a critical juncture in Gitcoin’s ambition. Token grants are a tool we are deploying to ensure the success of our organization through creating a talented and aligned contributor base. (In fact, we believe it’s irresponsible to have a bunch of contributors who are NOT aligned with the long term org!)
• COI?
  • The proposer of this plan (Owocki) will not be a beneficiary of it. Owocki will not be requesting token grants through this program.
• What about individuals who have current token grants?
  • These will be negotiated on an individual basis and may be transitioned to the new structure if the individual consents. This is not a large risk given that there are a small number (3) of current contributors with active token grants.

Feedback welcome.

I welcome feedback from stewards + community members about this plan.

[ZER8]

I think token gated grants are a good idea to ensure long term alignment and are most def needed.

@owocki

propose that every contributor to Grants Lab is eligible for a 4-year token grant. These grants will be subject to linear vesting schedules and a 1-year cliff. Contributors who have been at Gitcoin for over a year and have not previously received a token grant will be eligible for an accelerated 6-month cliff, instead of 1 year.

@owocki

Most of the team that was present in 2021 are no longer active contributors

Haha, I am here ser still believe in Gitcoin, it’s mission and happy to help where I can.

Would like to just share that…Gitcoin has been one of the more special places in web3, IMO it was one of the few DAOs that actually tried to decentralize, which has overall hurt Gitcoin medium term…truth is that people create and also sometimes ruin the things we love.

As a silent observer, loud individual and believer I think that DAOs like Gitcoin should be more careful when onboarding contributors, everybody says they “would love to be here”, but how many actually would love it is the question We will see

[ccerv1]

I think this makes sense. I would be curious to know what the range of grant sizes are and how grants evolve based on performance, tenure, or other variables. However, these aren’t blockers for me to move forward with the proposal.

[deltajuliet]

Supportive of this and looking forward to bringing our contributors closer to Gitcoin ownership and accountability.

[Jeremy]

+1 @ccerv1’s comments that I think a bit more transparency in size and terms would be great. I’m a big fan of driving more alignment between the individuals in the DAO and the token. I’d love for the token allocations to also be driven by impact/outcome and not just unlocked based on time.

[Sov]

I’m supportive of this initiative and appreciate the consideration for core contributors.

[MathildaDV]

I am supportive of this proposal and I appreciate the efforts of bringing more accountability and opportunity to core contributors. I agree with @Jeremy’s comment on including more variables than time alone.

[owocki]

@Jeremy

I’d love for the token allocations to also be driven by impact/outcome and not just unlocked based on time.

@MathildaDV

. I agree with @Jeremy’s comment on including more variables than time alone.

I considered this, but the reason I think its not a good idea is Goodhart’s Law.

Goodharts law states that when a metric is used as a target, it can no longer serve as an effective measure, leading to behavior focused on optimizing that metric at the cost of broader goals.

For example, if we tied Grants Lab token contributor grants to GMV goals, then that measure becomes a target, and that provides an incentive for that metric to become “gamed”. Eg if you gave a contributor a target of $50m Allo GMV to unlock their token grant, then the measure of GMV ceases to become a good measure bc the contributor could just write a script that takes $1k and does 50000 transactions of it through Allo to meet the $50m GMV goal.

So for that reason my thought was “well lets just keep it simple and do a standard 4 year vest w 1 year cliff”.

Open to feedback on this line of thinking tho! Maybe there are other impact/outcomes that are not subject to this issue?

(Note: for those of you following along at home and want to know how GMV is trending for Gitcoin in 2024, checkout @gtc_goaltracker on twitter )

[MathildaDV]

@owocki

For example, if we tied Grants Lab token contributor grants to GMV goals, then that measure becomes a target, and that provides an incentive for that metric to become “gamed”. Eg if you gave a contributor a target of $50m Allo GMV to unlock their token grant, then the measure of GMV ceases to become a good measure bc the contributor could just write a script that takes $1k and does 50000 transactions of it through Allo to meet the $50m GMV goal.

This actually makes a lot of sense to me, explained in this way. I think if more variables are added, it does actually just add more complexity, esp deciding which variables are fair to add across the board. Very fair point!

[carlosjmelgar]

This feels like Gitcoin racing itself to drain the treasury. I recall a previous Owocki post and several other instances raising concerns about six-figure salaries potentially being unsustainable. This proposal adds substantial amounts to those salaries and reduces runway imo.

@owocki

This proposal covers all current contributors to Grants Labs as well as an option pool for future contributors. In total, 3M GTC is requested. This represents 3% of the supply of GTC and is aligned with (or below) industry standards for team allocations.

What is the total % including the previous allocations to team/ past contributors?

The most recent Tally vote shows that core team made up 3.9M of the 4M votes. Is this also the process for allocating the grants internally? If yes, this can look like a cannibalizing gov attack.

The “community” will inevitably see this as more tokens for insiders to dump on retail buyers. This will hinder new participation in Governance because no one wants to buy a token with 4 years of sale pressure from the core team that’s already absent in the forum and votes.

How I envision GTC core allocating grants to themselves.

@owocki

(In fact, we believe it’s irresponsible to have a bunch of contributors who are NOT aligned with the long term org!)

Alignment should happen before joining Gitcoin core, not bought on top of a salary. This makes me wonder how many team members have market bought GTC and delegated it before joining Gitcoin. That would be a good first read on how aligned contributors are.

Suggestions:
Increase salaries through budget requests and pay salaries in GTC. This could be useful in identifying, not buying alignment through grants.

[owocki]

(responding as an individual w my own limited perspective… none of this is financial advice)

Appreciate you asking critical questions Carlos!

@carlosjmelgar

I recall a previous Owocki post and several other instances raising concerns about six-figure salaries potentially being unsustainable. This proposal adds substantial amounts to those salaries and reduces runway imo.

Im happy to report that Gitcoin has gone from $1.1m/mo in burn to ~ $400k/mo in burn over the last year or so.

The 3m GTC being requested here, vested over 4 years = an additional burn of 62.5k GTC/mo. Adding this to the existing $400k/mo in burn, the burn would be around $450k/mo now. Which is less than half of the previous burn.

Still far from financial sustainability… though we are seeing some promising signs of protocol adoption, which is a first building block imo.

Id say Gitcoin is between stages 2 and 3 rn…

@carlosjmelgar

The most recent Tally vote shows that core team made up 3.9M of the 4M votes. Is this also the process for allocating the grants internally?

This is a screencap from a recent token vote right? Not a vote on this proposal?

FWIW, Rena, Kyle, myself do not receive any tokens from this program. Also Rena works for the foundation. I work for WEST (though am part of Grants Lab now too), and Kyle is part of the now-spunout Passportxyz.

The conflict of interest policy in the gov manual states that ppl may not vote for proposals that have upside for themselves, so I would expect that anyone receiving tokens here will have to abide by that.

Thats not to say that we should be proud of the composition of governance delegations as they stand now. I think there is a lot of room for improvement here.

On the other hand… I will say that upon DAO launch we had a radically good distribution of votes to community and that did not yield much success in market 2021-2023. So we will need to get some upward momentum in market + on the back of that, attempt to progressively decentralize votes again.

@carlosjmelgar

Suggestions:
Increase salaries through budget requests and pay salaries in GTC. This could be useful in identifying, not buying alignment through grants.

I worry that a proposal like this would not make Grants Lab competitive in talent market vs other organizations who may be hiring. I think that ppl do have day to day expenses and its valid that some amount of base salary is paid to cover that. Health insurance, kids tuition, electricity bills, etc. Above and beyond that, I would like to see more alignment with Gitcoin through holding GTC.

@carlosjmelgar

This feels like Gitcoin racing itself to drain the treasury.

IMO the most important thing to do to push against this risk is to accelerate through stages 2/3/4 here.

Once Allo protocol is well adopted, there will be opportunities to reach financial sustainability.

We want to go from a downards spiral to an upward spiral.

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[dssdan]

I fully support this initiative to reward contributors, as it incentivizes them to establish a long-term foundation, helping Gitcoin become the leader in capital allocation technology and services.