ROI of Gateway Drug Sales Approach

Authors: @owocki , @sejalrekhan


The Quadratic Avengers experiment ran sponsored QF rounds for high-quality communities (what we call the “gateway drug sales approach”) and has shown promising results in (1) empowering communities to Fund What Matters (2) creating value for Gitcoin.

As we look forward to the future, it’s crucial to assess the Return on Investment (ROI) for Gitcoin of this initiative and outline how we will continue to track its impact.

While these rounds had positive ROI for the communities they serve, that is not what we are focused on measuring in this post. We are measuring the ROI of this approach as a sales technique for Gitcoin.

Here’s a brief overview of the current status and potential next steps.

Tracking ROI for Gitcoin

Our hypothesis in running these rounds was: As these communities successfully implement and benefit from the Grants Stack, their success stories become testimonials that attract further interest. This creates a virtuous cycle: the more communities that use and advocate for the Grants Stack, the more visibility and credibility it gains, which in turn draws in more customers.

To test this hypothesis, we define Return on Investment (ROI) for Gitcoin roughly as

  • Investment = kevin put $5k into matching for each project + also a 10% service fee.
  • Return = new rounds being run bc we ran the initial round, outside funds being raised by the project, or other positive outcomes which create return for Gitcoin.

To effectively track the return, we will focus on both quantitative and qualitative measures:

  • Quantitative Metrics: This includes tracking the amount of funds raised, the number of projects funded, the growth in community participation, and the number of successful rounds conducted.
  • Qualitative Assessments: We will gather feedback from community leaders and participants, assessing the impact on community growth, skill development, and overall satisfaction.

For each community, we’ve defined a ROI score between 0 and 1 to show whether it met its goal of having a positive return for Gitcoin.

How is ROI calculated? The ROI value will be set to

  1. An expected value of 1 IFF a community has raised outside funding that exceeds the amount Keivn put in.
  2. An expected value of 0 IFF a community has raised no outside funding.
  3. An expected value of 0.5 IFF a community has has a reasonable line of sight to outside funding that exceeds the amount Keivn put in.

Experience and feedback shared by some of these communities can be accessed below.

Name Comment ROI for Gitcoin (0-1)
SheFi Shefi is already in the middle of their next round with Octant. You can find the details here This signifies a positive return, indicating successful engagement and value generation in the first round. 1 Outside Funding of new round They are currently in the process of finalizing the budget for the next rounds in 2024. Their target is to launch the next round in April. 0.5 Potential outside funding of new round
Build Guild They are interested in running an experiment to offer scholarships for EthDenver. This approach diversifies the utilization of funds. 0.5 Potential outside funding of new round
GPN They have scheduled their next round for February with Octant. Details coming out soon. Full Retro 0.5 Potential outside funding of new round
Public Goods Africa They are in the planning phase to raise funds for their next round. While dates are not yet declared, their proactive stance in fundraising efforts showcases the initiative’s capacity to motivate self-sustaining growth in communities. Full Retro 0.5 Potential outside funding of new round
Cult DAO They raised $3k in outside funds. Currently, there are no updates from Cult DAO. Full Retro 0.5 Outside Funding raised for round, but did not exceed Kevin’s contribution.
Average 0.66


So far, we see positive ROI for Gitcoin from running these types of rounds.

While Grants Stack’s market adoption is inchoate, there is positive ROI in running sponsored rounds (what we call the “gateway drug sales approach”) for high value communities. This ROI may change as Grants Stack becomes more saturated in the market (or as we exhaust the most high value communities).

This most positive ROI came from the following interaction patterns.

  1. Once Kevin put up some $$$, it was easy for someone else to match it. Matching on matching on matching is a powerful/fun meme.
  2. When people in these communities saw the ROI of Grants Stack for their own communities, they opted to sponsor another round of matching.

Moving Forward

We may design a second batch of rounds like this in GG20. We would like to enable communities to run Retroactive rounds for their ecosystems.

You can help. We would love to

  1. Get suggestions and warm intros to high value communities
  2. hear more ideas around how we can better measure the ROI for this initiative

If you are a community who would like to be a part of the QA initiative, please fill the form here.