Compound Grants Program Renewal

[harsha]

Compound Grants Program (CGP) Renewal Thread

First and foremost, thank you to @allthecolors, @cylon, @Doo_StableLab, @Michigan_Blockchain, and @pauljlei for dedicating your time and effort to meticulously evaluate the proposal and provide detailed, constructive feedback. We have integrated your insights into this draft, which we are now sharing with the community for further input. Fellow community members, we have ensured to include comprehensive details about the proposals approved during the grants season, so please take the time to review them thoroughly. We’re more than happy to address any additional feedback or questions right here in this thread.

Summary

After successfully running Compound grants for the past 12 months, the Compound Grants team proposes to renew the proposal with a budget of $1.375M for another period of 12 months. The first two iterations ran from January to May 2023 and November 2023 to May 2024.

During the previous grant programs, our focus has been sourcing and funding high-quality proposals aligned with the domain-specific RFPs ratified by the Compound community. Moreover, we have received great feedback from the community, builders, and domain allocators regarding renewing CGP and are grateful for their valuable input.

Program Overview

During the Compound grants periods, we have also made sure to update the community every month and over the community calls about the progress of Compound Grants. We also led Demo Days to showcase the grantee projects with the community.

In our efforts to fund only the most impactful projects that align with Compound’s RFPs, we have strongly emphasized the quality of the proposals received. As a result of this increased selectivity and focus on excellence, our proposal acceptance rate has decreased by half compared to previous iterations of the grants program.

Overall, we received 92 proposals over two quarters and accepted 23, with an acceptance rate of 25%. The CGP team allocated ~$489,000 and disbursed $249,000 to projects from both iterations. A summary of the previous iteration and the details of funded proposals can be found below.

A detailed overview of each accepted proposal across both iterations can be viewed here.

P.S: We are not optimizing for the quantity of the proposals or the higher acceptance rate, but optimizing for the quality of the proposals in the grants program. On the same lines we’re also launching the Questbook builder profile feature on Questbook, where you could verify developer credentials.

Wins and Impact of Funded Proposals

Perps on top of Compound v3

https://contango.xyz/
@Contango_xyz

Integration with Comet enables Compound markets to be a liquidity source for traders using leverage on Contango. Since the integration was shipped, there has been over $3m in volume, and there is currently an open interest of over $500k, with Arbitrum being the most used chain.

Overall data on Contango can be found here.

Understanding & Improving the Governance Participation at Compound

https://deepdao.io/
@DeepDAO_io

DeepDAO delivered a thirteen-page report analyzing governance participation within the Compound DAO. TLDR: Much work remains to improve voter participation within the Compound community, and DeepDAO offers some recommendations on targeting missing voters, voters from previous years, incentivization programs, education grants, and more.

Full Report here

Economic Risk Simulation Engine for Compound v3
https://www.chainrisk.cloud/
@chain_risk

The Chainrisk team has been developing a realistic testing environment to simulate a variety of risks (Liquidation, Counterparty, Oracle, etc.) to Compound in one engine with low latency, high throughput, and high fidelity. Users can choose whatever inputs they want, and the engine will return a detailed analysis of the scenario and its impact on Compound.

Compound v3 Multi-chain User Portfolio Tracker
Paperclip Labs
@PaperclipLabs

Paperclip Labs shipped a cool application that allows users to track and monitor their positions across all positions in Compound. Metrics include PnL, balances, weighted APR across all positions, and a list of all transactions. Users can also see more granular data related to specific positions, such as health factors, collateral breakdowns, etc.

Check it out here

Improved Chain Technical Risk Checklist for New Market Proposals
https://defisafety.com/
@DefiSafety

This proposal will incorporate Defisafety’s chainscore and Chainanalysis process into Compound’s multichain deployment checklist. Defisafety has already completed its first report on Linea, ZkSync, and Blast.

You can read all the checklists here.

Bonadocs
https://bonadocs.com/
@bonadocs

The Bonadocs grant streamlined Compound smart contract integration by implementing a custom widget allowing users to call Compound’s contract logic directly inside its documentation. This created a more seamless developer experience, as developers did not have to switch to etherscan or other tooling. Devs can query various functions inside the compound documentation and get a response. Bonadocs recently released an early version of the tool (demo).

Cross Chain Explorer
https://chaoslabs.xyz/
@ChaosLabsXYZ

Chaos Labs delivered a multichain risk application for Compound to allow community members to monitor risk and market changes within the protocol. The application supports all EVM deployments. The application also includes a set of customized alerts based on certain trigger events that have significance to protocol utilization and risk (liquidity alerts, supply/borrow increases, risks of liquidation, etc.). The alerts are available via discord bots and the cross-chain notification center in the application.

You can try out the application here.

Compound Academy by Layer 3
https://app.layer3.xyz/quests
@layer3xyz

Layer 3 created a collection of quests and streaks to onboard, engage, and retain users on Compound. The grant funds went directly toward compensating the users who participated in the various quests and streaks on Layer 3. Each quest was divided into three stages, targeting three objectives: Onboard, Engage, and Retain. Initially targeting 30,000 participants, Layer3 received over 44,000 participants in the program. You can check out other Layer3 programs here.

Github Crawler for Compound
@ElectricCapital

A GitHub crawler was developed for this project. The crawler utilizes Github’s API to identify and analyze projects that have integrated Compound. It uses metrics such as Compound API usage, NPM packages, and contract integrations and runs at monthly scheduled intervals. The crawler is live and has identified over 300 projects integrating the Compound stack.

You can check out the crawler here.

zkGraph & zkAutomation: Upgrading Indexing and Automating Liquidation
@HyperOracle

Hyperoracle delivered a subgraph alternative for the indexing infrastructure of Compound smart contracts and its own implementation of a Compound protocol liquidation keeper.

Learnings and Further Improvements

1. Keeping the application process during the inactive period led to a longer application review pipeline.

In the previous iteration of the Compound Grants Program, which concluded on June 30th, 2023, the application process remained open even after the program’s conclusion. While our primary focus during this time was to gather input from the community, keeping the application process open resulted in a substantial backlog of proposals that needed to be reviewed when the program was renewed, often leading to longer review TATs.

To address this issue, we closed the application process immediately upon the conclusion of the current iteration of the grants program on May 30th, 2024. By doing so, we aim to ensure a more efficient and streamlined review process for future grant proposals, allowing us to allocate our resources effectively and provide timely responses to applicants in the next iteration.

2. Minimizing the gap between milestone payout transaction queue and execution leads is essential to ensure price fluctuation in payouts.

While we have tried to minimize the time between initiating and executing the payout transactions for the completed milestones, there have been instances where proposers have yet to receive the exact amount initially committed due to fluctuations in the value of COMP and transaction execution delays. To mitigate this issue, the CGP team will execute the payout transactions as soon as the milestone transaction has been initiated. We’re also arranging a weekly time that works for the domain allocators, during which we will actively collaborate with the CGP lead.

3. Including the acceptance rationale for accepted proposals as part of the monthly reports

In line with our commitment to transparency and community engagement, we have consistently provided monthly reports throughout the previous iteration. We will maintain this practice in the future to keep the community informed about the progress and developments within the Compound community. Furthermore, in response to feedback from several community members, we will introduce a dedicated section to provide additional insights into the rationale behind the acceptance of each proposal. By sharing the reasoning that led to the approval of specific proposals, we aim to offer the Compound community greater visibility and understanding of the decision-making process. The rationale for acceptance/rejection of each proposal is available on Questbook.

Proposal

We propose renewing the Compound grants program for the next iteration with a budget of $1.375 M for twelve months.

• Extending the program to twelve months versus six will give the community enough time to evaluate the performance of the grants program, striking a better balance between managing program costs and meeting community expectations while allowing us to concentrate more on achieving better program outcomes. It also reduces the burden on voters by reducing the frequency of renewal votes from every five to every eleven months. It reduces the frequency of backlogging the waitlist when the program is active. Furthermore, since many grantees require several months to complete their projects, a longer program timeline would allow us to assess and showcase the program’s impact on the Compound community more effectively.
• Additionally, we suggest slight modifications to the program domains. Following detailed discussions with domain allocators and the community members, we’ve proposed merging the Dev Tooling domain with the New Ideas and Dapps domain due to the fewer applications received in the Dev Tooling domain. We also propose introducing a new domain named "DAO Expenses.” This domain will cover reimbursements for documented expenses personally incurred by DAO members on behalf of the DAO, for example, gas fees, operational costs for off-chain infrastructure, and maintenance expenses for long-term grant projects. We’ve set aside $75,000 in the program budget for these DAO expenses.

RFPs for each domain can be found here:

1. New Dapps and Ideas merged with Developer Tooling - Link
2. Multi Chain and Cross-chain tooling - Link
3. Security Tooling - Link
4. DAO Expenses - Link

Specifications and Implementation

We continue running the grants program using the Delegated Domain Capital Allocation Model with minor changes. Each domain allocator will run their domain on-chain using Questbook for full transparency. The data and performance across key metrics will be visible to the community. Domain allocators can discretionally adjust funding amounts for KPI non-achievement.

The grant funds will be disbursed on-chain from a multi-signature wallet managed by the program manager and the domain allocator. The domain allocator will approve or reject applications based on an evaluation rubric. A Grants SAFE with a 3/4 multi-signature setup will be established, involving the program manager and three domain allocators. Additionally, four separate SAFEs, each with a 2/2 multi-signature between the program manager and a specific domain allocator, will be created for each domain. The grants program funds will be transferred from the treasury into the Grants SAFE, which will cover operational costs, committee compensation, and the grants budget. Funds allocated to the proposers will be held in the domain-level SAFEs.

After 12 months, the grants committee and the Compound community shall evaluate the performance of each domain using publicly available data and decide to change the domain, the domain allocator, or the program manager. CGP closed viewing new proposals on May 31st. Upon approval of this proposal, the CGP grants team will evaluate the milestones and initiate payouts for the remaining milestones to the accepted proposals from the allocated budget. Funds left over will be transferred back to Compound’s contract.

KPIs and Expectations

Program Success

• Multiple relevant proposals and at least one funded project for each of Compound’s RFPs
• Increase in milestone and proposal completion rates
• Increase in NPS score from all proposers and grantees
• Lower response turnaround time to delegates’ and community’s queries
• Diversity in projects being funded across technologies, geographies, demographics, etc. We encourage the community members to review the proposals across different domains during community calls regularly
• Timely publishing of a comprehensive monthly grants report outlining the status, progress, and impact of the program, ensuring transparency and accountability

Enhanced Community Involvement

• Increase in community engagement across:
  • Discourse
  • Discord, Telegram
  • Social media (Twitter, Reddit)
• Increase in the community members’ participation to keep domain allocators and program manager accountable (measured by the number of people looking at the dashboard and participating in the program)

Brand Awareness

• Strengthened contributors’ sentiment and word of mouth towards Compound measured through frequent sentiment surveys/ polls to gauge satisfaction.
• Enhanced Compound’s brand recognition and awareness within contributor circles through surveys or social media analytics, tracking mentions, reach, etc.

Contribution of Funded Projects to Compound

• Number of users onboarded by the funded proposals onto their app/protocol
• TVL (if applicable) of the selected proposals
• Number of projects supplying/borrowing on Compound
• Number of new interfaces for supplying/borrowing/governance interactions
• Number of projects that have raised follow-on capital after getting a grant from CGP

Domain Allocator Roles & Responsibilities

• All Domain Allocators and the Program Manager will continue to uphold their designated responsibilities as outlined in the CGP proposal.
• Domain allocators may request an audit for the considered/accepted proposals, particularly those that involve Solidity code being deployed into production and directly impacting Compound. To streamline the code auditing process and avoid potential time-consuming challenges, the domain allocators will assist with the considered/accepted proposals by offering code quality and design feedback.
• Like previous CGP programs, the Program Manager will collaborate with the Compound Labs team and the elected domain allocators to maintain an updated list of RFPs to ensure alignment with Compound’s priorities and roadmap.

Product Improvements

During the last iteration of CGP, we made the following enhancements to Questbook. Based on the feedback received from the Compound community members, proposers, and domain allocators, we will continue to improve.

1. Status of each proposal on Questbook

   Community members can now view the status (complete, in-progress, or inactive) of every grant proposal accepted in the current and previous iteration at https://compoundgrants.questbook.app/

2. Adding images to the comments section on Questbook

   All stakeholders can post images in the comments section while discussing the proposed proposal on Questbook.

3. Edit and resubmit the existing proposal.
   All proposers can now edit and resubmit their updated proposals upon resubmit request from domain allocators without the need to submit an entirely new proposal under a different name.

4. Tags for each milestone payout
   Community members can now view tags indicating the payout for each milestone on Questbook as soon as a milestone has been paid out.

5. Dedicated CGP landing page
   Community members can also view comprehensive details related to the current and previous iterations of CGP through a dedicated Compound Grants landing page.

6. Questbook Builder Profile

   We are introducing a Questbook Builder Profile that will deeply connect to the builders’ credentials.

Budget Requested and Breakdown

We propose to renew CGP with a budget of $1.375 M for twelve months. This budget will be allocated as follows:

1. New Dapps and Ideas: $800k
2. Security Tooling Domain: $150k
3. DAO Expenses Domain: $75k
4. Multichain and Cross Chain Domain : $100k

Grants budget that will be allocated: $1.125M

Program Manager & Domain Allocator Compensation

Based on what we learned from the last iteration of CGP, a program manager and domain allocator are expected to dedicate approximately 15 and 12 hours per week, respectively. However, the time commitments may vary depending on the number of proposals received for a domain and the nature of the domain. Moreover, the domain allocators may exceed or work less than the hours committed per week based on the proposal volumes. We propose that the hourly price be the same for the Domain Allocators and the Program Manager, as in the case of the last iteration of CGP.

Role	Weekly Hours	Hourly Cost	Total
Program Manager	12	$100	~$57,600
New Dapps and Ideas, Dev Tooling	12	$80	~$46,080
Security Tooling	12	$80	~$46,080
DAO Expenses	12	$80	~$46,080
Multi-chain and Cross-chain	12	$80	~$46,080
Questbook Platform Fee	NA	NA	~60,000
Total			~255,840

Note:

1. The above figures are calculated based on the assumption of 48 working weeks in a year.
2. Questbook will provide the grants committee its grants orchestration tool at a cost of $5000 per month.

About Questbook

• Questbook (YC-W21) is a decentralized grant orchestration tool currently being/previously used by Solana, TON, Aleph Zero, ENS, Alchemix, Axelar, etc.
• Considering CGP’s achievements and the time commitment and operational expertise necessary for running an effective grants program, Questbook will continue as the Program Manager.

Next Steps

We welcome the community members to participate in the temperature check and share their feedback and comments below.

[cylon]

@harsha - Thank you for the extensive overview and proposal!

The renewal of the Compound Grants Program is long overdue and its absence has already been felt with several urgently needed improvements such as the Alternative Governance Changes requiring funding. As Domain Manager for both Security Tooling and Recurring Funding in this next phase of the program, I greatly look forward to seeing the new work that will be done.

Recurring Funding is a new domain that I’m especially excited for. It will create a formal structure to cover ongoing gas expenses of community initiatives such as comp.vote as well as the operational costs of maintaining past grant projects such as hosting fees and minor maintenance work. This ensures that CGP projects with recurring costs can be supported long past the conclusion of the initial grant funding with a more streamlined structure.

[Contango]

Just an update from Contango’s side regarding the numbers posted:

Since the integration was shipped, there has been over $3m in volume, and there is currently an open interest of over $500k, with Arbitrum being the most used chain.

These numbers have grown exponentially!

At the time of writing:

• Volume for all Compound pairs on Contango is $180m.
• Open Interest for all Compound pairs on Contango is $52M.

The chain with most Volume is Arbitrum, followed by Base, Ethereum, OP Mainnet, Polygon.

The most traded pairs are LSTs and LRTs loops.

Part of this success is recently due to the fact that Compound decided to run its LTIPP campaign directly via Contango (source).

[sharp]

AlphaGrowth supports the renewal of CGP. Working closely with the Domain allocators and Questbook for the past few months, we have been able to push impactful initiatives that will help in the growth of the protocol.

CGP funding for Partners like Sommelier, Volume & Contango directly helped expand partnership integrations for the protocol. Funding the USDT market development for Mainnet was also a highlight of CGP for us. For some time, we have been working to bring a new wave of structured product integrations to Compound. The likes of Cian, dHedge, IndexCoop and more, these products have been heavy hitters on competitor lending protocols. While we create a smooth ramp for their integration, the developer cost covered by CGP for their integration will be crucial for these deals.

The idea of adding DAO expenses domain is going to be a useful part of the CGP as well. As Compound Growth program, we push 3 proposals on chain every week. Most of these proposals are pushed on chain by delegates, this will reimburse their gas fee for launching proposals, plus help maintain crucial websites like comp.vote

One question and suggestion @harsha : this iteration of CGP should have the ability to provide any grants larger than $30K, I ask knowing there are a few parties the growth program intends to push to CPG who are working to develop larger pieces of infrastructure that we’d consider worth up to ~$100K. Of course considering the applications on case-by-case basis but this will encourage projects with bigger dev lift to start Compound Integration as well.

[robinnagpal]

It was great to have worked during the last cycle of CGP. We have worked with a few other DAO grant programs, and CGP is one of the most well-run programs.

[RexShinka]

Working with CGP has been a pleasure and I hope we can continue in this next round.

[bryancolligan]

Happy to support this initiative.

Here are some potential needs the growth of compound and ideas for grants. In no particular order:

Atomic Redemptions(treasuries, vault tokens), Decentralized frontend infra, staked COMP infra, governance mechanism designs, Building rails to institutions(custodians, private wealth platforms, RWAs), automated leverage bots, Liquidity strategy Infra for COMP token (rebalancing, delta neutral, basis trades), Cross chain rebalancing , Zaps for one click cross protocol rebalancing, Maintenance grants for existing infra (paperclip), Structured leverage integrations and ways to verticalize and reduce risk(Gearbox, Juice, Morpho), Fixed rate products on top of Compound, risk assumptions and mechanics for more leverage, leveraged vault products around staked comp, research around token verticals, Deep research content creation with existing distribution.

hopefully this is helpful.

[adam]

I am eager to see a renewal of the Compound Grants Program!

It is a step in the right direction to see the highlighted improvements in iteration two over iteration one that Harsha mentioned in his post. I think that in collaboration with AlphaGrowth, the program can find more talented builders that are attempting to create new and exciting tech in DeFi that uses Compound as infrastructure.

I think the best builders to see in the program are projects that:

1. Can benefit from integration of cTokens and / or borrowing into their protocols and apps
2. Create tools that streamline processes that community members are already doing
3. Help improve governance participation and increase onboarding of new community members

And so far we have seen great examples of these. I am excited to see more projects join the ecosystem through the help of AlphaGrowth and Questbook.

[harsha]

Thank you, @cylon , for your unwavering support throughout the journey of running the grants program. Your insights have been instrumental in guiding the program and ensuring it aligns with the community’s needs. I share your enthusiasm for the introduction of the Recurring Funding domain, as it represents a significant step forward in providing sustained support for community-driven initiatives like comp.vote. This new structure will not only streamline the funding process for ongoing operational costs, such as hosting fees and maintenance, but it will also ensure that projects with recurring expenses continue to thrive beyond their initial grant periods.

I am eager to collaborate with you in this new season to distribute funds more effectively and support the growth of impactful projects within our ecosystem. Together, we can ensure that the grants program continues to evolve and address the community’s most pressing needs.

[harsha]

Congratulations to the @Contango team on this remarkable progress! The exponential growth in volume and open interest is truly impressive, especially with Arbitrum leading the way.

It’s exciting to see the success of the LTIPP campaign being channeled directly through Contango, contributing to these outstanding results. I would greatly value any feedback you could provide on how the grants program might further support your efforts beyond financial assistance. Your insights would be invaluable in refining the program to better meet the needs of innovative projects like Contango.

[harsha]

Thank you, @sharp . It has been a pleasure collaborating with you and the AlphaGrowth team. Your contributions have significantly strengthened the program, enabling us to more thoroughly assess proposals that integrate Compound into various ecosystems. Your support has been invaluable in driving the growth of these impactful initiatives.

Regarding the consideration of proposals requesting amounts greater than $25K—particularly those up to $100K—we agree that such cases merit special attention. To ensure thorough evaluation, we propose implementing additional steps, such as requiring these projects to present their work to the broader community during a community developer call or through a forum post. This will allow for greater feedback and ensure that each case is carefully considered on its own merits. We believe this approach will encourage the development of larger, more complex infrastructure projects while maintaining transparency and community involvement.

[harsha]

Thank you, @robinnagpal , for your kind words and continued support. It’s gratifying to hear that you found the CGP to be one of the most well-run programs. We are always looking for ways to improve, so please feel free to share any suggestions on how the CGP can provide additional value beyond just funding. We would love to incorporate your insights into both the program’s operations and the broader product strategy.

[harsha]

Thank you @RexShinka ! We’re pleased to have been able to assist, and we look forward to continuing our collaboration in the upcoming round.

[harsha]

Thank you so much for your continued support, @bryancolligan . The collaborative efforts with the AlphaGrowth team have been incredibly valuable in guiding proposals and fostering the overall growth of the Compound ecosystem. I greatly appreciate your commitment as we move forward together.

The ideas you’ve shared are truly insightful, and I’ve already passed them along to the domain allocators to consider for inclusion in their respective RFPs wherever applicable. Your input is instrumental in shaping the future direction of the grants program, and we look forward to incorporating these suggestions to further strengthen Compound’s growth.

[harsha]

Thank you, @adam , for your ongoing support and commitment, not only to the grants program but also to the smooth operation of the Compound ecosystem on a daily basis. Your insights are greatly appreciated.

We are committed to fostering proposals that focus on the integration of cTokens, the development of tools to streamline processes, and initiatives that enhance governance participation. It’s encouraging to see that these goals align with the program’s current domains. We are excited to continue building and expanding Compound, making it even bigger and better.

[harsha]

Update:

We have returned back all the unallocated funds from this season back to timelock contract. Please find the transaction details here

P.S: Buffer for the price fluctuation has been considered while retaining the funds in the safes as part of the allotted funds.

Also, please find the timesheets for the DAs and the Program manager here:

• Allthecolors
• Doo
• Michael
• Grant Manager

We would be taking this proposal for vote this Monday via @PGov , Happy to take any questions or feedback. We kindly appreciate your support.

[harsha]

Dear Compound Community,

We would like to update you on the Domain Allocators (DAs) for the upcoming cycle of the Compound Grants Program (CGP). After thoughtful discussions, we are pleased to announce that we have invited @PGov to serve as the Domain Allocator for the DAO Expenses domain. @PGov has expressed interest, and @cylon , our current DA, is supportive of this change. Without this update, Michael (@cylon) would need to serve as the DA for two domains, which we believe could benefit from more focused attention.

While we haven’t received additional interest for this role, we welcome anyone who would like to contribute as a Domain Allocator to reach out. Our goal is to ensure that the CGP continues to operate effectively, inclusively, and transparently.

Thank you for your ongoing support and involvement in the Compound Grants Program.

Best regards,
Harsha

[Sherlock]

Congrats to Compound and the CGP for such a terrific and well-run program.

[RexShinka]

I would be interested in helping. Could we connect off line to get a better idea of how I can best help. Note I am a present and hopefully future grant receiver.