ARC: Aave Community Grants Program

Co-authored with Shreyas Hariharan (@HelloShreyas)

UPDATE – May 28, 2021
The proposal was ratified on-chain earlier this month, the grants DAO has been funded and we’ve started receiving applications.

Proposal: Aave - Open Source Liquidity Protocol
Aave Grants DAO home page and application portal: https://aavegrants.org/

UPDATE – April 20, 2021
Nick Cannon (@inkyamze) and Calvin Chu (@calchulus) have agreed to join the committee as the last two reviewers! We were thrilled to receive a lot of interest in helping out and will be mindful of who applied and try to loop them in to contribute where possible.


Summary

We want to start a community-led grants program to fund ideas submitted by the Aave protocol’s community, with a focus on empowering a wider network of community developers. We would like to share our proposal and receive feedback from the community.

ARC Rationale

Aave has an ecosystem reserve of ~$1.1B or ~3m AAVE as of 4/9/21, which is available to fund growth and community initiatives, part of which could be used to fund grants. However, it is currently not easy for the community to allocate from the reserve to fund proposals.

To promote inclusivity and a more visible and transparent avenue for funding development in the Aave ecosystem, while maintaining the decentralized nature of the ecosystem, we propose a community-led grants program. We are still looking for a good name (if you have fun suggestions in the spirit of Aave, please suggest it!), but for the purpose of this ARC, we’ll refer to it as Aave Grants Program or AGP.

The goal of the program is to provide resources to grow the Aave ecosystem in a way that can scale over time. There are many great ideas for improving the Aave protocol bubbling up in the Discord, community forum and other places. We hope to initiate a community-led, transparent process for connecting those developers/creators/innovators with resources needed to go from idea to funded development.

Given the difficulty of decentralizing grants administration, we propose establishing a committee which has the power to administer grants on a discretionary basis. The focus will be on disbursing grant funding effectively and quickly to individuals and teams working to improve the Aave ecosystem.

Proposal Description

Our proposal is inspired by the Compound and Uniswap grants programs, which have both received approvals to deploy $1m and $750k per quarter, respectively.

We propose to run the pilot grants program over two quarters. We request a max grants budget of $2m and a max operating budget of $250k. The operating budget will be used to pay the lead, reviewers, lawyer, and other administrative costs to set up the grants program.

There will be two types of grants that the grants committee can approve:

  • Rapid grants: <$100k
    • Simple process to apply for a grant to AGP
    • Grant decision expected within 10 days
  • Community grants: $100k-$500k
    • Applicants post a proposal on Aave’s governance forum
    • Based on feedback and discussion, the committee can decide to approve these grants

Contributors can also seek grants over $500k but they will not go through the committee. They will have to be posted on Aave’s governance forum and approved through an on-chain vote.

The expenses will be priced in USD terms at the beginning of each quarter. The reviewers will ensure that all unspent funds will be returned to the Ecosystem Reserve at the conclusion of the pilot. If the program is underfunded because AAVE’s token price falls significantly, the committee may request the underfunded amount from governance. After running the pilot program for two quarters, the community can vote to continue, modify, or discontinue the program.

Applications will be reviewed and funded on a rolling basis. The applications approved and funded within each quarter will form a funding round which will be tracked, supported and documented.

Documentation of results will be made available to the community at the end of each round, at which point we will solicit feedback from the community. The idea is to start with a rough MVP and evolve through community feedback. We expect to learn a lot about how to do this right in the first 2 quarters and anticipate making changes to the grants program over time through subsequent proposals.

Committee Members

We propose a committee of 8 members: 1 lead and 7 reviewers. The lead will be the organizational backbone of the program and ensure that things move smoothly and efficiently. The lead will likely dedicate a significant amount of time to the program.

Reviewers will process applications, ensure that the lead is acting in good faith and is effective in their role, and will operate a 4 of 7 multisig which disburses funds to grantees. The reviewers will also hold the program accountable to its goals and objectives and return any excess funds to the Aave Ecosystem Reserve. Reviewers are likely to dedicate a smaller amount of time to the program.

Both the lead and the reviewers will serve for a period of two quarters. After two quarters, the grants program and the committee member positions will be up for renewal. This will be put up on the governance forum for a discussion and subsequent on-chain vote.

Members may be replaced during the pilot program, for example, if they find they are not able to dedicate sufficient time to the program. We aim to be as transparent as possible and get feedback on the Aave forum if there are any changes to the committee during the program.

We’ve had some initial discussions with people who have expressed interest in helping and have added 5 reviewers so far (in addition to Shreyas, who will be the lead). We have two open reviewer slots for the committee. If you are interested in being a reviewer, please reply to this thread with your interest with some basic info on yourself, including:

  • Describe your involvement in the Aave ecosystem
  • What skills/experience do you bring to the committee?
  • Can you commit ~5 hours a week?

We would love to have more members on board committed to growing the Aave ecosystem! The committee so far is composed as follows:

Lead: Shreyas Hariharan - Llama

Shreyas is the founder of Llama, which helps DeFi protocols and DAOs manage their treasury. He has actively worked on treasury spending, allocation, and reporting. He is working on a treasury strategy for Uniswap and serving as a reviewer for Uniswap grants. As an Aave community member and token holder, he is excited to help grow the Aave ecosystem through the grants program.

Reviewers:

  1. Aleks Larsen - Blockchain Capital
  2. Jose Maria Macedo - Delphi Digital
  3. Imran Khan - DeFi Alliance
  4. Maggie Love - SheFi
  5. Corbin Page - ConsenSys Codefi
  6. Nick Cannon - Gauntlet
  7. Calvin Chu - Independent

Budget

We request a max grants budget of $2m to distribute grants and a max operating budget of $250k over two quarters to pay the lead, reviewers, lawyer, and other administrative costs to set up the grants program. This will be funded by the Aave Ecosystem Reserve.

Payments to the lead will be approved by the reviewers and made at the end of every month (i.e., if the program begins on 4/20/21, the lead will be paid on 5/20/21, and the again on 6/20/21 and 7/20/21 based on hours worked). Payments to reviewers will also be made every month based on hours worked.

Any changes to the AGP including renewal of the program at the end of 2 quarters, total quarterly budget and committee compensation will require full quorum.

Committee Compensation

We suggest compensation for the lead roughly in line with the initial Uniswap and Compound proposals - $100/hr for a maximum of 40 hrs/week. This compensation will be allocated to the AGP multisig from the Aave Ecosystem Reserve as part of the overall funding for the program.

The time commitment for the reviewers is likely to be far lower. The compensation for reviewers will be $100/hr for a maximum of 5 hrs/week.

Priorities

To help inform the types of grants which are most likely to get funded, we highlight the following target areas:

  • Protocol development (including core Aave protocol development, development of higher layer protocols which use the Aave protocol)
  • Applications and integrations (front-ends and other applications that use the Aave protocol)
  • Developer tooling
  • Community (marketing and educational)
  • Committees, sub-committees, and DAOs that serve the Aave ecosystem
  • Code audits
  • Events and hackathons
  • Bounties

What does success look like?

We will evaluate the success of the program against the following criteria:

Measurable criteria:

  • Growth in the number of grants applications received quarter-over-quarter
  • Growth in the number of projects, ideas, and events funded
  • Growth in community engagement (e.g. increased activity on forums, Discord, etc.)
  • Growth in Aave pools driven by applications funded via grants (e.g. increased TVL, borrow activity, and unique addresses due to apps funded by grants)

Subjective criteria:

  • Improved sentiment and goodwill within the community
  • Improvement to the Aave protocol’s brand and positioning in the market

Timeline / Process

We will organize grant recipients into two 3-month funding rounds. Applications will be accepted on a rolling basis and any grants disbursed during a given 3-month period become part of the corresponding round. Round 1 will be for three months from the day the grants proposal has been approved. For example, if the proposal is approved on 4/21/2021, Round 1 of the grants program will be from 4/21/2021 to 7/21/2021 and Round 2 of the grants program will be from 7/22/2021 to 10/22/2021.

If approved, starting immediately after a proposal is ratified, AGP will begin accepting applications on a rolling basis. The grants committee will determine on how funding is to be disbursed (e.g. milestones, upfront, etc.) on a case-by-case basis. In general, the goal will be to align long-term incentives with the interests of the Aave community and AAVE holders.

At the end of each round, the committee is responsible for sharing all the grant recipients along with amounts and descriptions as part of a transparent quarterly review process. The end of the Round 2 marks the end of the pilot. At that point, the community will decide based on the results of the first two rounds whether or not to continue funding AGP (in the same or an amended form).

Most grants will have 1-2 milestones and recipients will receive about half the grant upfront and half on the completion of a milestone. For more complex projects or larger grants, there may be several milestones and payments could be split across these milestones. AGP will get progress updates from teams and assess the completion of these milestones. This ensures downside protection for the AGP in case the project is unsuccessful or needs to pivot.

The grants will primarily be focused on projects working to improve the Aave protocol. However, a small portion of the budget (5-10%) may be allocated to select projects with a wider scope (e.g. ETH scalability).

If AGP has distributed all grants but has more promising projects to fund, it can propose increasing the budget to governance. However, it is entirely up to the Aave community to vote on whether to increase the budget.

Conclusion

If feedback is positive, the AGP will move to a governance proposal and if ratified, will begin accepting applications for grants on a rolling basis shortly after its approval.

Should the pilot be successful, we could scale the program over time to accommodate more capital-intensive grants (including protocol work) so that it can ultimately become a primary engine of funding in the Aave ecosystem.

We are AAVE holders and are committed to the success of AGP and of the Aave protocol. However, this is an experiment. If it does not work, hopefully we’ll have learned how we can implement this better and can help others pursue alternative approaches. We look forward to hearing your comments and questions below.

26 Likes

I am definitely in support of this grants program, I am confident this would result in great tools/projects,etc being built on top of Aave if governance approves this.

11 Likes

yes. YES. I love this proposal in its entirety. Let’s move forward with this.

10 Likes

Big fan of this! Glad to see the community exploring how to use the Ecosystem Fund + paying contributors to run the program.

We’re in favor of launching the grants program as outlined above :fire:_ :fire:

7 Likes

This is a wonderful idea. The way you structured the Grant Program is super efficient and transparent.
I also salute the potential amount destined to the Program. This demonstrates a powerful engagement from the Aave protocol to empower external builders. This move worth thousands words.

While we are detailing solutions to promote external contributions to the Aave ecosystem, I would like to mention the Aave referral program that had been stop after migration from v1 to v2. Some projects will not get a grant from Aave while they already provide value to the ecosystem. I think they should be rewarded for that.

5 Likes

This is an awesome idea and very well put together by @aleks-larsen and @HelloShreyas. I’m honoured to be part of the committee and serve this awesome community

As I expressed privately, I believe grants are a core tool in helping protocols scale their teams and BUIDL faster. At Delphi Ventures, we see a lot of projects that shouldn’t have a token but rather be built on top of existing protocols like Aave. However, there’s no scalable business model for developers wanting to contribute to protocols, especially considering the opportunity cost of skilled devs is starting their own projects or joining an early stage one and owning a lot of the supply.

I think a scaled up grants program could help achieve this goal by giving skilled buidlers a real alternative to starting their own project, with less upside of course but also less risk. In order to do this, grants need to be able to be larger and they also need to be programmable, including granular objective and subjective criteria (with subjective conditions being ratified by the grants committee). This kind of granularity makes it much easier for the community to dispense larger grants while knowing they’ll only have to dispense the entire amount if the team delivers. Grants could be provided for stuff like:

*building out Aave on another protocol
*building leveraged trading functionality on top of Aave
*building out a yield aggregator / yield farming product using Aave for leverage
etc etc

In order to minimize execution risk for these bigger grants, the grants could be vested over time based on specific milestones being achieved. These milestones would be verified by a tokenholder elected and accountable grants committee. For example: For a $1M grant, $200k could be released upfront, $200k upon delivery of product to test-net, $200k upon delivery to main-net and then $400k vesting linearly based on the team continuously maintaining the product (this could be cancelled via multi-sig vote if it was determined team wasn’t adequately maintaining the project)

This is obviously a longer-term vision but just wanted to put out there to get the community’s thoughts. Very bullish on the Aave Grants Program excited to see the current Grants Program in action and also to keep improving it over time :)

6 Likes

Hi All,

Glad to see this proposal and am interested to sign-up as a reviewer.

In my last job, I was a Tech executive at a Big-4 consulting firm and have a lot of previous experience with Program & project management, Request-for-proposal (RFPs), Technology proposal assessments, Financial planning and Budget management.

I have been a user of the protocol since last summer and haven’t previously contributed to the Aave Ecosystem before. Would love to change that :)

I can definitely commit the required hours for this.

Paul Merugu

5 Likes

If you are interested in being a reviewer, please reply to this thread with your interest with some basic info on yourself, including:

Calvin Chu (@calchulus)

2 Likes

Excited to have you on board José and great points!

We will have milestone based payments for most grants. For the larger grants in the program ($100k-$500k), we might have multiple milestones and payments split across them. If the pilot program is successful and we are able to scale it further, we can definitely look into implementing vesting schedules for maintenance of projects.

1 Like

Glad to see this proposal and am interested to sign-up as a reviewer.

Appreciate your interest in contributing, @paul.merugu! We’ll keep you posted as we look at others interested too.

1 Like

Amazing initiative ! :ghost:

4 Likes

Awesome proposal! I’m in favor of everything as written.

Definitely support the idea of milestone-based payouts for projects. One idea that may be cool to experiment with in early rounds is performance milestones.

Living on the blockchain allows us to quantify the impact that projects built on top of AAVE have on the underlying protocol. Let’s use this data to our advantage and set tangible goals for projects!

It could maybe start out as bonuses paid to any grant project that achieves a certain deposit/borrow volume or number of users, and if the concept works well it could be worked into the individual grants in the future.

2 Likes

Shreyas and Aleks, great to see this! I am interested in being a reviewer and can commit to the 5 hrs/week.

For the last five years, I’ve been the Strategy Lead for EY Blockchain, working with clients like Coinbase, Gemini, MakerDAO and many others. For additional context, the last project I ran was managing the RFI/RFP response process for a crypto exchange that was integrating with large financial institutions. I recently left this role to focus on DeFi full time and get more involved in protocol governance. Prior to EY, I was an attorney representing early crypto companies like Poloniex and Blockfolio. I would bring corporate governance, diligence and operational finance experience to the Grants Committee.

My direct involvement in the Aave community has been as an avid user for the last year. Indirectly, I’ve been educating banks and fintechs on the importance of DeFi (including Aave) for the last two years. Looking forward to making a more substantive contribution.

Thanks in advance for the consideration!

Twitter: @ajbeal

4 Likes

Yes!

There is SO MUCH that can be built on top of Aave. We need to be aggressive, encouraging and generous.

This is a huge step towards decentralization, and having personally spoken at least to @jose_delphi, the committee looks like it’s in great hands!

100% for the grants program!

As for names…

Graants? aGrants?

I’ll show myself out.

5 Likes

“aGrants” is super cool !!

Also, in addition to my previous comment, I encourage entrepreneur and previous builders to propose themselves as grants reviewer.
We need to avoid the VC bias in the selection that will happen if we only got top firms VC analysts distributing the money.

The best to judge and support someone doing something is those that have done it before.

1 Like

I’m really excited to see this program getting kicked off! Thanks to @aleks-larsen and @HelloShreyas for doing so. I’d like to express my interest in being a reviewer.

For background, I currently lead growth at Gauntlet and am a reviewer for the Compound Grants Program. Behind the scenes I’ve been working with our data scientists on the forthcoming Marker Risk Assessment report for Aave—which we intend to publish later this month. We quantitatively dug into the risks Aave users face and highlight what parameters can be tuned to mitigate catastrophic events to the protocol.

I will bring with me 16 and counting devs and data scientists who are deeply familiar with the protocol and contracts. We can assist with technical due diligence regarding integrations, ETLs, and data visualization. From the non-technical side, we have just initiated grant batch #2 from the Compound Grants Program and there have already been plenty of learnings that would be applicable to a similar program for Aave.

The time commitment won’t be an issue. Gauntlet intends to continue our testing and simulations with Aave regardless and there is always more threads to pull on than we can handle. Hopefully we can inspire and fund an existing and new set of Aave tinkerers and builders.

5 Likes

Hello everyone - my name is Nettra. Glad to be here and to see this!

This is such a great program and looks really well thought through.

My thoughts on this:

  • Aave is quickly becoming a household name, at least among the defi and blockchain-informed.
  • My aspiration is for decentralized, open-source protocols like Aave to fully enter the mainstream, to truly serve and enrich the lives of the mass ‘market’ but better since we know that decentralized finance is actually capable of serving those historically excluded from legacy institutions. In addition to bringing in underrepresented groups, I am also excited for Aave to touch underrepresented industries in this space. This means exploring how decentralized finance can touch industries that did not consider themselves to be financial industries, linked to art, culture, education.

I’d like to do my small part in this by participating in this reviewer group. I believe the reviewer group will do its job better if it includes diverse viewpoints along gender, geography, industry experience and expertise.

Here are some things about me that might address those points.

  • I identify as a woman, I grew up in Cambodia, a country where many are still unbanked and regulation around cryptocurrencies is still unclear.
  • I have lived and worked in the United States (California, Massachusetts, New York, Indiana), France, Switzerland and the United Kingdom.
  • I am also an artist and have sold art on OpenSea.
  • I have worked in technology for 10 years.

I have:

  • served as a mentor, judge and advisor to entrepreneurship programs and startups, including two crypto startups, one as early as 2017 [1]
  • managed a global entrepreneurship network for young changemakers - recruiting + community-building [2]
  • worked with VCs to improve their decision-making processes (conducting experiments, observing 7 consecutive months of investment committee meetings and analyzing five years of dealflow) - I would use this insight to design our decision-making process to be self-improving [3]
  • peer-reviewed research and symposia proposals for management, entrepreneurship and innovation journals and conferences such as eGov-CeDeM-ePart, Technology & Innovation Management (Academy of Management Division), Babson Entrepreneurship Research Conference, Academy of Management Review, Journal of Business Venturing [4]

My involvement with the Aave community:

  • I have deposited funds and borrowed on the Aave app
  • I speak about Aave in my weekly Clubhouse room Crypto Beyond Currency
  • I attend Aave’s Clubhouse events
  • I attend Aave’s weekly Zoom calls
  • I interact on Twitter
  • I am on the Discord

I would very much LOVE to work with the committee to design a process for us that would allow us to achieve our human goals and vision.

Four of them for me would be to:

  1. help usher in a wave of applications for decentralized protocols
  2. contribute to a zeitgeist shift of our rights around sharing in the profits, and being protected from the downsides (data ownership and protection) when we choose to interact with service providers
  3. educate the wider public and developer community about what we can do with the cool aave infrastructure and services by funding co-designing events (including potentially research symposia around the new opportunities around protocol governance)
  4. have fun and make good memes

Five hours a week is hard for me at the moment as I am a Business School lecturer and researcher and have other commitments. But I can start off with 10 hours per month and increase that to 20 hours per month. I also see my research and teaching focus shifting to becoming synergistic with this commitment.

Thank you for your consideration.

Some links, in case they can help:

[1] Examples of startup organizations: MassChallenge, Seedstars, Hello Tomorrow; Venture advisory roles (2) would be fully disclosed.
[2] How a Global Social Network Seeks Connection in Decentralization | Stanford eCorner
[3] http://go.epfl.ch/investorthankyou
[4] Nettra Pan | Publons

8 Likes

Hello guys
Its an amazing project, I working from education area, in blockchain and financial space and I want to contribute with Marketing or Translations, to the portuguese speakers so, if possible, keep me in touch with some news, for example when we can publish the proposals…@aleks-larsen

1 Like

Amazing,
My name is Caio Vicentino and i will try a grant for Aave Community development, i’ve been creating the biggest Latin America community on DeFi for portuguese speakers for the last 2 years with Youtube content creation, the channel goes by Caio Investe. I’m already a MakerDAO’s Ambassador here in Brazil.