tl;dr - Aave Grants has developed our own tools and processes that have resulted in funding close to 250 grants and becoming known as one of the top grants programs across crypto. This proposal increases costs to the DAO while ignoring the work and spend that has gone into Aave Grants, along with current plans to continue decentralizing.
Electing team members is an interesting idea that should be thought through more and properly structured if implemented based on likely consequences and results.
Thanks for the proposal. It’s good to see discussions around Aave Grants starting from community members.
This seems like two different proposals:
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Have elections for team members
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Use Questbook (and pay them 5% of all distributions)
Let’s look at each one.
1. Have elections for team members
Decentralizing Aave Grants (AGD) is something we have thought about since the beginning of AGD and are constantly working towards. The path to decentralization is a long journey.
Proposed Changes
The electoral process
Having an election gives the community a say in who should be on the committee, but it doesn’t decentralize AGD. Decentralizing AGD should focus on empowering the community and giving individual community members a meaningful say in how the grants treasury is distributed. In this proposal, the decisions would still be made by a committee. To truly decentralize AGD the process needs to be decentralized, not the team selection. There are a number of things we currently have in the works to create a decentralized and sustainable AGD, including:
- Grantee Accountability. You may have noticed an influx in grantees (e.g. BEN, Defi Simulator, and Projection Finance) posting directly on the forum to introduce themselves, explain their grant, and keep the community updated as they progress. Most of these posts are the result of an initiative from AGD to better increase grantee accountability and engagement with the community.
- Request for Grants. Introduced a pilot to better direct builders to apply for grants in certain high impact areas.
- Entity Formation. As outlined in our most recent proposal and in our Halfway Update, we have been working towards creating an entity for AGD. This will be a big step for AGD’s maturity. It will give clarity and protection to contributors along with increasing operational effectiveness.
- AGD Values and Best Practices. Created internal guidelines to help align reviewers with decision making.
Politicizing Grants
I am also hesitant about politicizing the process of who should be on the grants team. It is something that should be carefully thought through. Are the best individuals or teams to serve the ones most capable of winning a DAO vote? If implemented, I would recommend that at least the core team roles are longer term so members can better plan and prioritize work.
Proposed Changes
Clearly defined compensation
Compensation is clearly defined in each AGD proposal. We have learned from our experience and changed reviewer’s compensation to be an hourly rate, calculated based on reviews and interviews, as it better incentivizes reviewers and accounts for fluctuations in applications. This may be worth adjusting again in the future.
This proposal would result in AGD increasing compensation as reviewers’ average pay in 2023 has been ~$1,300/month, versus the $6,000/month proposed.
Proposed Changes
Transparent Review Process and Tooling
AGD follows best practices from other grant programs like Ethereum Foundation or Uniswap, where reviews are private while grants are made public, along with clear feedback for why a project was accepted or denied. Importantly, we are in control of this process and are able to modify it. This allows us to make updates based on feedback from the community, reviewers and grantees and to easily experiment with different elements of the program.
If the community wants to see changes to our processes, such as having applications public for the community to provide feedback, then we can integrate this into our current process.
2. Use Questbook (and pay them 5% of all distributions).
This reads more like a sales pitch for Questbook to me. I’m actually somewhat familiar with Questbook as we ran a pilot with them earlier in the year. After running the pilot we did not continue with Questbook due to poor results compared with our existing technology stack (Airtable with integrations + automations) and the experience highlighted the value of the set up we had built along with being in control of it.
Review times took longer and we did not see any engagement from the community. With the current amount of applications we receive (~30 a week) the Questbook UX was not a sophisticated enough tool to manage the tracking, reviewing, and interviewing of applications.
Let’s look at each of the proposed benefits outlined:
Aligned allocation of funds
This is currently the case with AGD. You can see a list of all grants we’ve funded on our website, read our monthly updates or follow the Llama dashboard linked to. You may have also seen an increase in grantees posting to the forum, aligning grantees directly with the community.
Increased transparency
AGD does this through the above mentioned links and other updates. While there are reasons AGD has not enabled public applications, if there is demand from the community then we can implement that within our current system.
Increased accountability
This does not appear to be any different than how AGD currently operates.
Pseudonymity / Anonymity
AGD currently welcomes anon builders. There is actually more privacy with our system as applications are only seen by the review committee unless accepted, compared to all applications being public.
Turnaround Time (TAT)
From my experience, this is an odd thing to optimize for. Grants should optimize for effective and impactful grant decisions and support, not record decision time. 48 hours is not realistic for complicated, multi-phased grants that could receive $100,000 in funding. Time is required to properly research, communicate with other reviewers and engage with the team.
Increase in the number of high-quality proposals
Let’s be clear, Questbook would benefit far more by being able to say ‘Aave Grants uses Questbook’ than AGD would from any increased traffic.
If AGD starts using Questbook, then they will leverage the relationship to start working to manage other protocols’ grants programs. If AGD is on Questbook, our grants and applications would suddenly be alongside other protocols and grants.
To highlight a few things with our current system:
- Created and iterated on a process over the past 2+ years - usually making several changes each month in response to applicant, reviewer and community feedback.
- Have an experienced team in place to make changes quickly - see the integration of RFGs and introduction of video interviews into our application process as recent examples.
- Processed 1944 applications with an average turnaround time since inception from application submission to grant decision of 9.6 days. This time frame has decreased significantly over time.
- Achieved an NPS score of 83 based on responses from 78 grantees - the average response to “how likely are you to recommend AGD?” is 4.7/5.
A few other important points from my perspective:
- This proposal will increase costs to the DAO. It essentially brings on a new service provider at $9k/month.
- Since inception, AGD has awarded $4,852,753 in grants.
- If Questbook had taken 5% of this, the total cost would have been over $242,000.
- If this progresses to a Snapshot vote, the options need to be better defined and worded. Who in crypto doesn’t want to further decentralize something? No one in crypto wants to be stagnant. The options in the Discourse poll are not an accurate representation of the situation. Given the limited usage of the Discourse poll in Aave governance, this seems like an attempt to quickly gather the illusion of community support.
- AGD will be sharing a new proposal shortly. This will include an update with details on the legal entity we are forming, more of our plans for decentralization and other updates. AGD has been prudent with spending since our last proposal and as such will be asking for a reduced amount to continue the same quality of operations.
This proposal would add more overhead by creating an election and increasing costs (over $100,000 per year in fees plus higher reviewer compensation) without addressing the core issue of how to empower everyday community members.