Compound Grants Program

tl;dr: We (Larry, Jesse, Getty, Aparna, Monetsupply, Ken, Sam, and Ryan) want to start a grants program to provide funding to Compound’s community. The purpose of this thread is to share our proposal and receive feedback from the community. If the feedback from the community is positive, we will share an address you can delegate votes to.


Summary

We propose to start a program called the Compound Grants Program (“CGP”), which will provide funding to projects, ideas, and events that benefit Compound and its stakeholders. If approved, funding for the program will come from Compound’s treasury, which currently holds ~200k COMP (~$95mm as of 03/01/21). As a reminder, the treasury currently accrues 0.5 COMP per block, spends 0.352 COMP per block on liquidity incentives, and saves the balance of 0.148 COMP per block for governance by tokenholders.

The program will be a pilot. For this reason, we believe it’s prudent to limit the program’s dollar value to $1mm per quarter and the length to two quarters for a cost of $2mm (4,444 COMP) over six months.

Since it’s not practical to solicit a community vote for every disbursement, we propose forming a small and nimble committee that has the power to administer the grants at its own discretion (limited by the aforementioned dollar and length caps). We suggest forming a committee of eight members: one lead member to head the program and seven reviewing members to review the lead’s work and assist with program operations. The committee will operate with a 4 of 7 multi-sig (only reviewers will be part of the multi-sig).

As compensation for administering the program, we propose the lead be paid $5k upfront and $100 per hour thereafter with a cap of 30 hours per week for a maximum compensation of $83k (184 COMP). In total, we are asking for a maximum of ~5,000 COMP to fund the grants (4,444 COMP), program setup and operational costs (444 COMP), and compensation for the program lead (184 COMP). All unspent funds will be returned to the community treasury at the conclusion of the CGP.

Purpose

Decentralized projects are living and breathing communities with a variety of stakeholders. These stakeholders include project team/contributors, tokenholders, users, partners, and for certain projects, liquidity providers. The goal for the CGP is to nurture Compound’s ecosystem to benefit all of these stakeholders. To be more specific, the grants program aims to:

  • Grow Compound’s ecosystem by funding development happening on top of it. Funding development focused on helping Compound grow is critical to the project’s long-term success.

  • Fund ideas that benefit Compound that would otherwise not receive funding. Many good ideas are left unexplored because they fail to receive funding. We intend to make sure as few good ideas as possible are underfunded or unfunded.

  • Strengthen goodwill by providing funding for community-led ideas. Funding projects, ideas, and events brought forth by community members will encourage more active participation by the community. It will have the added benefit of nourishing goodwill. A well-nourished goodwill keeps community members loyal and happy, which in turn, encourages new members to join what they see is a thriving community.

Program Scope

The CGP was heavily inspired by the Uniswap Grants Program (“UGP”), which received approval from the community to deploy a maximum of $750k per quarter for two quarters. It’s difficult to deploy a meaningful amount of money to ecosystem grants without compromising on quality. While we believe all of these ecosystems will be enormous in the future, it’s important for us to be practical today by matching the grants budget to the size of the ecosystem.

To that end, the pilot program will deploy a maximum of $1mm per quarter and run for two quarters. We have no way of knowing whether this amount of money is overshooting or undershooting the needs of the ecosystem — we will only find out after running the experiment. For example, if we find out $2mm is not enough money to fund all of the high quality opportunities, we as a community may decide we need to create a larger allocation for grants. On the flipside, if we find out $2mm is too much, all unspent funds will be returned to the community treasury for use at a later time.

As part of the program, our intention is to fund projects, ideas, and events that directly benefit Compound and its stakeholders. While there may be opportunities to fund projects, ideas, and events that indirectly benefit Compound, these opportunities fall outside the scope of this program.

Not all opportunities applying for grants will benefit the Compound ecosystem equally. To help us prioritize which ideas to fund, we propose the following buckets:

High priority

  • Protocol and parameter development. Apart from acts of stewardship and generosity, there is little to no incentive for community members to propose technical updates to the protocol. With no carrot with which to motivate community members to propose changes, the protocol isn’t able to innovate as quickly as it should be innovating in a dynamic and competitive market. We should note that in a minority of cases community members did receive payment for work done (for example, see the work done by Gauntlet on the COMP Contributor Grants proposal), although here too, the incentive to contribute was not well-designed since it required Gauntlet to front audit and development costs before knowing the proposal to pay them would pass. To encourage community members to propose changes, the CGP will fully or partially pre-fund development and audit costs. In doing so, we hope to encourage more proposals, which will lead to more innovation and as a result, a far better Compound for all of us.

  • Code audits. Making technical updates to the protocol is risky business: smart contracts are immutable and control billions of dollars in user funds. An error in a technical update can have serious consequences. Because of this, it is considered best practice to have an auditor review the proposed update for soundness prior to its submission. Unfortunately, these audits are expensive, particularly for individual contributors who need to pay for them out of pocket. We intend to provide grants that pre-fund audit costs for soon-to-be proposals. We hope this will encourage more individual contributors to propose technical updates to the protocol.

  • Business development / integrations. A greater amount of liquidity makes Compound a better product for all users. To grow liquidity, Compound should be integrated with as many applications as possible. To that end, we aim to fund integrations that grow usage of Compound. In funding integrations, we will effectively be funding the business development function for the protocol.

  • Advertising and sponsorships. It will be important to get the word out there about this program. The more people there are that know about the CGP, the more applications we should expect to receive. To spread the word about the program, we will spend funds to advertise the CGP on podcasts, newsletters, and other mediums that attract the audience we want to attract.

Medium priority

  • Hackathons. It’s very likely that there exist uses for Compound that haven’t been explored yet. Hackathons are a fantastic way to explore design spaces, and the CGP intends to sponsor them.

  • Bounties. This one speaks for itself: bug fixes and minor protocol updates will be covered by the CGP.

Low priority

  • Miscellaneous improvements. It’s difficult to know ahead of time all of the grant applications that will come through. Just because an application does not fit neatly into one of the above buckets doesn’t mean it’s not valuable to the Compound ecosystem. So long as an application benefits Compound directly, we will consider it for a grant.

  • Applications for miscellaneous improvements to Compound fall into this bucket. Because the scope of this bucket is broad, we consider it to be low priority compared to the narrowly scoped buckets above.

While we did our best to prioritize items among each of the three buckets, we are confident that the above list is not all-inclusive. We expect to receive grant applications for phenomenal ideas that we simply can’t think of today. The committee asks the community for the right to exercise discretion to fund ideas that are beneficial to Compound but are not part of the scope outlined above.

Process and Timeline

If approved, the program will begin shortly after this proposal passes and end six months following the start of the program. (In other words, if the proposal passes on 3/15/2021 and begins on 3/22/2021, it will end on 9/22/2021). The program will run on a rolling process: we will welcome applications at any point in time during the program length! We will stop accepting applications two weeks before the end of the program (during these two weeks, we will start wrapping the program up, which will include evaluating the last of the applications and returning unspent funds to the treasury).

We will source potential grants via an applications process. (We will be sharing the application soon after this proposal passes).

Once an application is received, CGP committee members will discuss the application and evaluate it in the context of its benefit to Compound and its stakeholders. If the committee approves the application, funds will be paid out to the receiving party on the timely basis. If the committee does not approve the application, the soliciting party will be notified as to why the application was not approved and, if applicable, what steps need to be taken to have the application approved in the future. All approved grants and their amounts will be disclosed to the community publicly and on a timely basis.

A simplified diagram of the grants approval and disbursement process can be found below.

Finally, a member of the CGP committee will participate in the bi-weekly Compound community developer calls. We will attend the call, listen to what the community thinks should be funded, and present some of the newly funded grants.

Committee Members

The CGP committee will consist of eight members: one lead and seven reviewers. We believe the best committees share two features: first they must be capable, and second they must be motivated to actively participate. We believe this committee shares these two vital features.

Lead

Larry Sukernik (Sheepshead Bay, LLC)

Reviewer

Getty Hill (Grapefruit Trading)

Reviewer

Aparna Krishnan (Opyn)

Reviewer

Monetsupply (Independent)

Reviewer

Ken Ng (Ethereum Foundation)

Reviewer

Sam Simons (Independent)

Reviewer

Jesse Walden (Variant)

Reviewer

Ryan Yi (Independent)

The lead will be tasked with managing and operating the program while reviewers will have a duty of holding the lead accountable. To guarantee accountability, the committee will operate with a 4 of 7 multi-sig managed by the reviewers (note that the lead is not part of the multi-sig). In other words, four out of seven reviewers will need to sign the transaction for a grant to be approved and disbursed.

Committee Compensation

We propose the lead be paid $5k upfront and $100 per hour thereafter with a cap of 30 hours per week for a maximum compensation of $83k (~184 COMP). Since the majority of the work will be performed by the lead, they will be the only committee member to receive payment as part of the program pilot. Payments to the lead will be approved by the reviewers and made according to the following schedule: $5k upfront, with the balance paid at the end of each quarter (i.e., if the program begins on 3/22/21, the lead will be paid $5k on 3/22/21, and the again on 6/22/21 and 9/22/21 based on hours worked).

The funds for both the program and the lead’s pay will be allocated to the CGP multi-sig from the Compound treasury. Running the CGP will come with setup and operational costs; we will set aside approximately 10% of the CGP budget to cover these costs. All unspent funds will be returned to the community treasury at the conclusion of the CGP.

What Does Success Look Like?

We expect success to come in two forms: one that’s measurable and the other that’s of the “you know it when you see it” type.

Measurable success metrics:

  • Number of projects, ideas, and events funded
  • Community engagement (e.g., increased activity on forums, Discord, and so forth)
  • Increase in number of applications

“Know it when you see it” success metrics:

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

Conclusion

If approved, the CGP will begin accepting applications for grants on a rolling basis shortly after its approval. To assist with the evaluation of potential grants, each grant will be classified into three buckets: high, medium, and low. High priority grants will be funded first; medium priority grants will be funded second; low priority grants will be funded last.

This program is a pilot. As such, we intend to keep the budget lean for a maximum disbursement of ~5,000 COMP over six months across grants, setup and operational costs, and lead compensation. Make no mistake: this is an experiment. If the CGP works, Compound may want to graduate the program from a pilot to a full-time endeavor. If it doesn’t work, we will learn why it didn’t work and what should be done differently. Most of us are COMP holders here. That gives the privilege to try something that’s never been tried before at a meaningful scale: to let the test subjects run the experiments.

We hope to hear your thoughts, comments, and suggestions in the thread below.

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Kudos for taking the initiative and moving forward with this proposal! I’d love to know how y’all ended up reaching the conclusion that a committee is the right solution here. I am actually inclined to think that’s the wrong direction for governance - I would much prefer to see us move in the direction of more radically transparent in all things - and would love to see COMP holders large and small incentivized to ‘stake’ votes of confidence rather than paying a small group of people to make decisions for everyone else.

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Thank you @sukernik and everyone involved in drafting this program. Having a community-organized grants program will grow the ecosystem in dozens of ways that are currently limited by the proposal process (which was originally imagined as autonomous, with the ability to add programs like this down the road).

Presently, there’s not a clear path for the community to propose improvements, have their journey supported, and deliver improvements. I’m extremely excited for this pilot/experiment.

That being said, a few basic questions / areas to clarify:

Membership

  • Why should the community, and COMP token-holders trust you? What are your qualifications, and background? What is your experience in the Compound community to date?
  • What about the other members, that disburse funds?
  • Should the members be active Compound community participants? Some names I don’t recognize from Discord or these forums.
  • Nobody on the list (to my knowledge) has a deep familiarity with the protocol codebase, which might be useful in quantifying grants for technical development.

Grants Process

  • In the case of a protocol development, do you envision a grant before work is completed, after it is completed, after it is merged into the protocol? At what stage of development, would somebody apply for a grant? In the workflow, this isn’t made clear.
  • It seems like somebody would (or should) apply before completing development work (or another type of contribution). Would you disburse funds, partially disburse funds (with the remainder at a later stage), or communicate a “provisional” grant/acceptance?
  • Any steps in mind to eliminate potential fraud?

Overall, I see this as providing huge upside to the community, and the ability to participate.

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I think a program like this is just the thing COMP needs to incentivize and scale broader community participation. I believe that a critical component to the success of any protocol’s governance is that it cast as wide a net as possible to incentivize anyone, regardless of their resources, to be able to contribute to a protocol and be compensated on the basis of that contribution’s merit.

To jared’s comment, I believe a program like this can be effective - I believe these are smaller initiatives that do not require full weigh-in from all COMP holders, and can be delegated to a committee. This will ensure things get funded and action is taken, instead of bogged down with potentially onerous procedure.

To rleshner’s comment, I do believe it is important to ensure that the community has faith that this committee is knowledgeable, transparent, and fair.

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I believe these are smaller initiatives that do not require full weigh-in from all COMP holders

I agree that not everything necessarily needs to happen on-chain or as a governance proposal, but I think there’s a huge spectrum of design space in between full governance proposals for everything and delegated to a committee.

Also I agree with the goals here, so I’m glad that we are talking about this.

I support this, but I did not see repairing oracle solutions and compensating damaged users (or at least a statement) among the listed priorities.
I think we should first pay attention to things that don’t work on protocol.
There are several threads that stagnate here in the forum where users of the Compound community mostly share the same opinion and seek change, however there is a lack of technical knowledge to implement the proposals.
I would prefer that the interests of your team be aligned with the interests of the users and that these be priorities. That will be win-win situation.

And i dont like expressions like this because it sounds to me like you’re addressing a board of directors of a joint stock company. The very purpose of the DeFi and DAO concept is for users to manage the protocol, so you can start with that.

https://www.comp.xyz/t/should-compound-retroactively-airdrop-tokens-to-early-users

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I love the thinking around this initiative and props off to everyone coming together for pulling this through. If I was at an earlier stage of my crypto career and looking into this I’d probably not contribute. Why? Well it’s super cumbersome to even get the idea approved before I even work on it.

I can’t think of a structure off the top of my head but one which would be much nicer is if it prioritised autonomy of individuals to contribute and realise that a few thousands might be misallocated but it makes it easy for grass roots contribution to occur.

If I have a $5000 request there’s literally 5 steps and plenty of stakeholders to get through (lead, multisig, community lobbying etc). With programs like this it’s usually well connected folks who can request the most and lobby for the most.

I could probably be entirely wrong with all of this but just my 2c :slight_smile:

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It’s an important question, and one we considered seriously as we were developing the proposal. And I should add: even though we’re one committee, our views on this topic are multiple. I’ll reply with my thoughts, and the other committee members can chime in with theirs if they’d like.

Ideally, 100% of the tokenholders would be active members of the governance process. In that ideal world, people who contribute to Compound would ask tokenholders for a grant, and tokenholders —100% of whom are active members of governance process — would vote to approve or deny the grant request in a reasonable amount of time. While that would indeed be ideal, it’s unfortunately not practical today. Tokenholders are unlikely to have the time to review and approve dozens of small grants, and even if they did find the time, the process would certainly operate far more slowly than the speed of a nimble committee. And speed, I believe, is a critical ingredient for a successful grants program. The more quickly you move, the better the process is for grants applicants. A better process leads to more applicants, which leads to a more successful grants program.

In short, it’s not so much that we wanted to form a committee as a committee happened to be the least-bad option for piloting a small-scale grants program!

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I am glad we could work together on this!

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We’re excited about running this experiment too!

The questions you pose are all very good and the community should get an answer to them. Let’s see if I can do a good job of answering them.

Why should the community, and COMP token-holders trust you? What are your qualifications, and background? What is your experience in the Compound community to date?

I spent the last three years investing at Digital Currency Group (DCG). During that time, I invested in 100+ companies and projects (some went on to be very successful, and some, umm…did not go on to be very successful). Early this year, I left DCG to work on something that I think is critically important and all at once underinvested in: network governance. That’s how I find myself here today.

Unfortunately, I didn’t have the time to actively participate in Compound’s community while I was at DCG. Since early this year, however, I have been lurking on the forum and Discord on a daily basis. Going forward, I plan to be a far more active member of the community. (Less lurking and more posting).

What about the other members, that disburse funds?

We tried very hard to make sure members of the committee represent the interests of various stakeholders in the community and/or have experience in providing funding to projects in the space. Jesse is an investor at Variant (and a16z before that). Getty, Monetsupply, and Sam are independent members of the Compound community. Ken has deep experience with the grants process thanks to his work for the Ethereum Foundation. Finally, Ryan works at Coinbase, and before that, was an investor at CoinFund. I’m biased, of course, but I think we have some very high quality committee members!

Should the members be active Compound community participants? Some names I don’t recognize from Discord or these forums.

Active community members are absolutely critical to the success of the program. Few know what areas/people Compound should provide grants to as well as they do. We tried our best to form a committee that’s well-rounded: it has both active community participants as well as folks who know how to provide funding to projects and ideas. Having said that, we’re always open to hear from other community members who’d like to get involved.

Nobody on the list (to my knowledge) has a deep familiarity with the protocol codebase, which might be useful in quantifying grants for technical development.

That’s certainly a weakness of the committee today. We’d absolutely love to hear from people who are familiar with the codebase.

In the case of a protocol development, do you envision a grant before work is completed, after it is completed, after it is merged into the protocol? At what stage of development, would somebody apply for a grant? In the workflow, this isn’t made clear.

This is a question we hope to have an informed answer on after we get data points from running the grants program for several months. Certain applications, for example, would benefit from receiving a grant before the work is completed. Other applications may benefit from receiving a grant after the work is finished. Applications that have several intermediate stages may benefit from a hybrid approach: part of the grant is given upfront, part is given once intermediate stages are completed, and part is given once the work is merged into the protocol. We hope to have a better answer to the question after running the pilot and seeing what works and what doesn’t work. After several months of experimentation, best practices should start to emerge.

Since we don’t have the best practices yet, we’ll want to start with the largest funnel we can to get as many data points as possible. To that end, when we start, we would accept applicants who are at any stage of the development process: those who haven’t started the work yet, those who have completed some of the work but have several more steps to go, and finally, those who have completed the work and merged it into the protocol but haven’t yet received payment for a job well done.

It seems like somebody would (or should) apply before completing development work (or another type of contribution). Would you disburse funds, partially disburse funds (with the remainder at a later stage), or communicate a “provisional” grant/acceptance?

I think the above answer covers this question too.

Any steps in mind to eliminate potential fraud?

Being a victim to fraud is the cost of doing business, particularly in this space. While we will take utmost care in screening out bad actors, mistakes may occur and losses may be incurred. That said, a small potential loss shouldn’t prevent us from doing something that has a chance of delivering a large potential gain to the community.

To keep the probability of loss as low as possible, we will likely need to verify the identity of each applicant prior to disbursing a grant. That is how we can ensure no baddies make it through the grants process. If this is indeed the final approach we take, we will be extremely careful with protecting the identity of applicants (the only people who would see their identity are members of the grants committee). But we’re still thinking this part through, so input from the community would be very welcome!

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Thanks for the comments @dabar90!

…but I did not see repairing oracle solutions and compensating damaged users (or at least a statement) among the listed priorities.

Repairing oracle solutions would certainly fall into the scope of the program (my guess is it would fall into the protocol and parameter development category). As far as compensating damaged users goes — do you think a grants committee should be handling that, or would a separate governance proposal be the better option?

I would prefer that the interests of your team be aligned with the interests of the users and that these be priorities. That will be win-win situation.

We’re in agreement! But at the same time, we want to keep the scope of the program manageable so as not to boil the ocean. We will be listening to user requests closely: if there is something they want to improve on Compound but lack the technical knowledge to do so, we will encourage them to find someone with the technical knowledge, apply for a grant, and make the improvement.

And i dont like expressions like this because it sounds to me like you’re addressing a board of directors of a joint stock company. The very purpose of the DeFi and DAO concept is for users to manage the protocol, so you can start with that.

I think that’s a completely fair comment. At the same time, I do think the term stakeholder is apt because it captures users who use Compound but aren’t actively managing it. How else do we call these people? Do their interests matter?

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This an extremely important point. We are well aware that most grants programs are annoying to apply to, require some degree of lobbying, and in general, are a dreadful process for the applicant. We want to make the process as quick and easy for applicants as possible.

We’re still finalizing the process, but perhaps I can share some of the details that will hopefully encourage you to apply if the proposal passes.

Applying will be fast. We will ask applicants for only the most important information. The application won’t take more than 30 minutes.

Approvals will be fast. We won’t require applicants to jump through hoops to receive a grant. They won’t need to lobby all of the reviewers. That would stink, and it would prevent applicants from applying ever again. Our default position is applicants are here because they care about improving Compound. With that in mind, we will be optimistic with approvals. (We’re not gatekeepers; rather, our goal is to open as many doors as possible).

You don’t need to be well-connected. But you do need to care about Compound and have the ability to make it better.

Hope that dispels some of your concerns!

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Thanks @sukernik and everyone else involved in bringing this forward. A well-structured COMP grants program should help encourage a broader set of developers and community members to come forward and contribute to the ecosystem. As you note, the need to front audit and other development costs is often a prohibitive barrier to all but the most well-funded development teams. A grants program could help address this issue and bring more diversity and breadth to the ecosystem. It could also fund smaller, one-off “growth” projects that are too small or otherwise not practical to bring through the full governance process.

While delegating authority to a committee does have certain downsides (as @jared notes), I think in this case it’s worth the tradeoff, for a few reasons. First, any updates to the core protocol would still need to be passed through the formal governance process before being merged. The committee itself would only be empowered to disburse funds to help defray some of the upfront development and audit costs. Second, for grants not involving core protocol development, the relatively small size of the budget - together with the 4-of-7 multisig design - further limits the downside risk of bad actors trying to abuse the system. And finally, as discussed above, the program could meaningfully broaden the set of community members who are able to contribute to the protocol, which should in turn enhance overall protocol health. Collectively, these factors weigh in favor of the committee structure for this specific use case, at least on an experimental basis.

Operationally, the program should aim for efficiency while also not becoming overly bureaucratic (per @kermankohli’s comment above). One way to help strike this balance is to scale the amount of reporting, disclosures, etc. that a grantee has to provide alongside the amount of funding requested. For example, it seems reasonable that a project requesting $250,000 should have to provide more robust disclosures and reporting than a project requesting $5,000. A basic tiering system along these lines could help to reduce the risk of fraud while also not over-burdening smaller projects and discouraging them from participating.

Finally, the proposal could ideally aim to quantify the success metrics a bit further. This exercise could be informed by lessons from the Uniswap grants program or from other more long-standing grant programs in the industry (e.g., Ethereum Foundation). Perhaps the program could even include incentives for the committee members that are tied to achieving certain metrics (though perhaps that’s better suited for a v2 of the program).

Overall, this looks like a great first step towards creating a COMP grants program. We look forward to hearing other feedback from the community.

Jeff at a16z.


For disclosures, please see Disclosures - Andreessen Horowitz

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further limits the downside risk of bad actors trying to abuse the system

FWIW I would be more concerned about the filtering bias than malicious behavior, but I’ve found a lot of the points on this thread pretty compelling. And actually, if a record of all the applications for grants are publicly visible, as well as all the decisions (i.e. if its totally transparent), I think it might work pretty well.

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While I believe that a Grants committee would be a new positive to the Compound ecosystem, I think there are a lot of issue which should be addressed with the current proposed program prior to initiating it.

Membership

Firstly, to echo Robert, I find the committee membership questionable. Some of members have never posted on these forums or in the Discord as far as I can tell, and I don’t believe that any member is familiar with the Compound protocol codebase.

While in a more broad grants committee this may not be problematic, the scope of the committee is defined as the Compound ecosystem. For such a scope, an intimate involvement within the community is a must for each member in my eyes. Also, having at least one person with a strong understanding of the Compound codebase is a must (I would recommend @adambavosa for this role).

Grant Process

There should be a more concrete process defined for the lead and reviewers to commit to follow. Under the current post, there doesn’t seem to be any actual rules by which the grants committee must follow—I don’t see how Governance can entrust $2M to a committee without any predefined process and rules to follow.

Building on the idea of processes, there should be an off-chain method for the community to vote on CGP related issues such as amendment to defined processes and changes to the committee.

Practicality

Something which should be considered is the practicality of distributing $1M per quarter on the Compound Ecosystem. Compared to the broad $750k of the Uniswap grants program, this is a very large influx of spending, which I’m not sure could be done effectively as of now. As one of the main active developers within the community, I think that $1M of spending per quarter within the ecosystem could cause chaos. I would rather see grants spending scale up to a sustainable amount.

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These are really good comments. Thanks @arr00! Responses below.

Firstly, to echo Robert, I find the committee membership questionable. Some of members have never posted on these forums or in the Discord as far as I can tell, and I don’t believe that any member is familiar with the Compound protocol codebase.

Since we posted the proposal, we’ve had a community member reach out and volunteer to join the committee. The company they work for does understand the Compound codebase, which should improve the committee’s grasp of the technical side of things. If you’re reading this, know Compound’s codebase, and want to join the committee too, please don’t hesitate to reach out! (I’m larry#7198 on Discord).

@adambavosa: if you’re interested in joining, let me know!

As far as some of the members not posting on forums/Discord goes — this is something we really went back and forth on. One question I have is should being an active community member be a prerequisite for being on this committee and potentially future grants committees? You can sort of argue both sides. On the one hand, active community members know what the treasury needs to provide funding for better than anyone. On the other hand, someone who is an active community member may not actually be good at running a grants program!

Then there’s this question: what does it mean to be an active community member? Is an investor who owns and thinks deeply about COMP but doesn’t have time to be part of the Discord / forums not an active community member? We certainly don’t have all the answers to these questions, but I think as a community, it’s worth thinking through them to set norms that define how future committees of this nature form.

There should be a more concrete process defined for the lead and reviewers to commit to follow

Absolutely. We didn’t post the process as part of the original proposal to keep it digestible (my sense is the longer it is, the fewer people read it in full). The original plan was to post the proposal, get community feedback, post it for an on-chain vote, and — if the proposal passes — to share a process grants applicants should expect to go through. But since you asked, here is the tentative process! It’s tentative because it hasn’t been tested in practice yet. I’m 100% sure parts of the process will change as we go about administering the program.

Grants Process

  • We want to make this a speedy process for applicants. Apart from the initial ramp-up period, we want to get the time from application submission to grant disbursement to 10 days or less (8 days for lead to review and 2 days for reviewers to vote and disburse the funds)
  • The lead will review every application and send an “approve” or “deny” decision along with a brief explanation to the reviewers. Reviewers are expected to review the lead’s email and reply with an “approve” or “deny” vote as per their independent judgement
  • Depending on the outcome of the reviewers’ vote, the grant will either be denied (no disbursement) or approved (grant is disbursed). If the grant is approved, reviewers should send it to the recipient no longer than 2 days after they first received the lead’s email
  • Multi-sig will require majority vote to pass (4/7 or more votes)

Building on the idea of processes, there should be an off-chain method for the community to vote on CGP related issues such as amendment to defined processes and changes to the committee.

That’s a great idea (I took note of it when you first mentioned it on the Clubhouse community call). We’ll work on setting up an off-chain vote for making small changes to the committee.

Something which should be considered is the practicality of distributing $1M per quarter on the Compound Ecosystem.

To your point, it’s hard to know how many applications we will receive before the fact. We may get $250k or $5mm worth of grant applications — the only way to find out is to launch the program and gather data! Our thinking was it’s better to play it safe than sorry: if $2mm is too much, we will simply return the funds to the treasury at the conclusion of the program. The outcome we wanted to avoid is we get something like $1.5mm in fantastic grant applications per quarter, which would require us to go through the governance process once more to ask the community for more funding. That would seriously slow the process down and make it less appealing to grants applicants.

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Fantastic update @sukernik, excited to see this move to a proposal :clap:

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First of all, I would like to express my respect to you for making this proposal.

I also have a lot of respect for the members involved in the proposal.

I would like to share my thoughts on this proposal.

I believe that Compound will collaborate with existing lenders in the future, but only if the governance of Compound remains well-diversified.

A report on Defi from the Bank of St. Louis

https://research.stlouisfed.org/publications/review/2021/02/05/decentralized-finance-on-blockchain-and-smart-contract-based-financial-markets

There is a concern that this proposal may run counter to this.

Even if you get the right people to make the right decisions, it is still “centralized”.

What I think is the best thing about Defi is that it is a system where no one can intentionally manipulate the Compound.

The following is an alternative idea to the current proposal.

・A mechanism to conduct small-scale proposals through an off-chain.

・Include in the proposal the cost of the audit and an estimate of the cost in advance.

If the community agrees to the “Grants Program”, I will follow it.

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Update - 3/8/11
Thank you to everyone who weighed-in on the proposal! The community gave a lot of really good suggestions, a good portion of which we will incorporate into the final proposal. We’ve made the following updates after listening to the community:

Proposal updates

  • Committee membership: to improve the technical sophistication of the committee, we’ve replaced Ken with Nick Cannon from Gauntlet. Gauntlet has successfully passed several technical updates to the protocol. The committee will benefit from having them onboard. We’ve also swapped in Min Teo from ConsenSys and Leighton Cusack from PoolTogether, who will be taking the place of Ryan and Sam (shout-out to @massnomis who posted the original idea for a grants committee). Playing committee Tetris wasn’t fun, but we think it was well-worth the effort — thanks to feedback from the community, the committee is way more well-balanced than before. The final committee will include:

    • Larry Sukernik (Sheepshead Bay, LLC)
    • Jesse Walden (Variant)
    • Getty Hill (Grapefruit Trading)
    • Monetsupply (Independent)
    • Aparna Krishnan (Opyn)
    • Leighton Cusack (PoolTogether)
    • Min Teo (ConsenSys)
    • Nick Cannon (Gauntlet)
  • Grants program amendments: during the community’s first Clubhouse call, @arr00 made a wonderful suggestion. If we need to make changes to the grants program after the proposal passes, it wouldn’t be practical to set up a formal governance proposal just for making small changes (e.g., swapping committee members around). Instead, @arr00 proposed the grants program set up a Snapshot page for the community to vote on amendments to the program. Setting up the Snapshot will require writing a bit of code (querying the amount of COMP delegated to addresses that vote). If the proposal passes, we will provide a grant to any community member who can help write this code and set up the Snapshot! While we’re on the topic of the grants program structure, we’d like to remind everyone that none of the grants program committee members are being elected into permanent roles. Once the pilot program wraps up in six months, the committee will be disbanded, allowing any community member(s) to set up a new committee with a fresh slate of members.

We will be posting the proposal on-chain tomorrow from Gauntlet’s address, 0x6626593c237f530d15ae9980a95ef938ac15c35c. Why are we using Gauntlet’s address? Gauntlet has ~126k COMP delegated to them, allowing us to more quickly post the proposal (as a reminder, Compound governance requires addresses to have 100k COMP to make a proposal). We’re excited about providing grants to the Compound community, so the quicker we can start, the better!

If you are in favor of the proposal, please vote once it’s posted on-chain! (You will see the proposal tomorrow at compound.finance/governance/proposals).

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@sukernik this is great; can you post the address of the multi-sig, and have the members announce their addresses that they will be using (using some social channel, even Discord)? It is a good diligence step to ensure that COMP gets sent to the right place, and that it’s usable / without issues.

4 Likes