Grants Committee Draft and Rationale

A few months ago, @rleshner started asking some fundamental questions about the compound protocol and its underlying economic models.

DAI Market Risk

Distribution Speeds

Reserve Factor Standardization

Many found these issues very perplexing and exciting, but few could come to the drafting board and bring forward a research report on the subject. I believe this is because of the most significant underlying issue. There is no efficient way to reward contributors.

In the past, when a contributor wanted to claim a bounty, they would have to put the grant within the governance proposition itself. Some examples are,

“The last two calls withdraw from the cSAI reserves about $5000 worth of SAI and sends it to Arr00 as a bounty for organizing and implementing this proposal.”, source

“The last two actions take 622 Sai (currently valued at $1200) from reserves and transfer them to Arr00 as a bounty for his work on this proposal.” source

“1. Award ourselves a COMP grant (1000 COMP) to offset development and audit costs.” _grantcomp in Action

See, two of these three self-granting instances came from @arr00, a community member who took time out of his days to develop some smart contracts and better our protocol.

This is amazing! An internet friend of ours could take such a risk, to work on something that has no history of financial reward; that is until he started that precedence. But was it that risky? Not to minimize his contribution, arr00 didn’t have to act like Compound was a full-time job. He is a freelancer of sorts, one who has received grants and has written smart contracts.

Then why is Arr00 the only individual to grant himself Comp in a proposal? It wasn’t always like that.

Publicly speaking, the biggest proposers of governance props were founders and team other entities like Dharma, Gauntlet, Almeda, and BLCK (I will return to that soon). These entities are not financially constrained, similar to students or new potential contributors, with some exceptions. These are VC backed entities with payroll, resources, experience, and knowledge. Besides “testing” out _grantcomp, these entities have not publicly granted themselves a “development fee.”

The larger entities are substantial holders of Comp, it’s no secret. I believe that they deserve it; without these companies and individuals, their support and hard work, DEFI, Compound, and innovation in finance would not be here today.

But at the end of the day, the smaller contributors have not flourished as they should have in DECENTRALIZED finance. In fact, as of September (old data), this paper

has measured COMP token distribution and has computed its GINI, or wealth inequality of COMP, our governance token to being worse than Afghanistan. Wealth Gini

As I stated before, this data is ancient and does not reflect the current efforts to democratize distribution, including delegation, ie. BLCK, CAP’s, or our future grants. It is not like many crypto projects are much better in terms of “equality,” and Compound has been very competent at shifting the balance. Again, this figure is simply the starting point. The founders had to slowly distribute power towards the community, which is precisely part of that process.

So how does BLCK play into this?

Well, he/she has enough Comp delegated to start a proposal, and in the past, a few contributors have “gone through” the account to launch a proposal, including ones with self grants. I do not know where blck gets his or her votes, but one thing for sure is that this account significantly speeds up the process for small contributors and benefits all.

Now, this situation, while very innovative, is not ideal … to get a grant or start a project, a contributor must…

  • Create project/code proposition

  • if not enough Comp to start a CAP or no one with 100k COMP will support you…

  • Reach out to blck / get the COMP to start a CAP

  • “Lobby” for votes

  • Passed, get your compensation

This process does not cover the difficulty and time of actually working on a proposal, which should be where one spends the majority of their time, not lobbying.

But what does blck think? (or how will I project it?)

“i can only think about scales in my country people here working 1 month for 3-4 COMP value”

“in my country regular people work for 8-9 month for that money so it’s just point of view how much is it”

Not to speak for others, but there seems to be unused (cheaper) labor in other countries, where people need jobs, want to contribute and live with wealth inequality, not ERC-20 inequality. (laugh here).

Now according to the Call to action, the Comptroller is growing at over 500 COMP a day (old number) that,

and I quote from @rleshner

“that can be used to expand & improve the Compound protocol”

So two questions

1 How much should be allocated?

2 How do we implement it?

So when it comes to how much, we need to remember where the funds come from. Well, in this passed proposal, (forum) Gauntlet added two functions to the comptroller, _grantcomp and _setContributorCompSpeed. These allow governance to grant COMP and stream COMP to any address. The grant or stream would come from the comptroller address.

Maybe a few months ago, it would have been more evident how much there is to allocate, because recently, with Comptroller Optimizations, and new COMP speeds, the comptroller COMP balance has been “kind of weird.” The Wchanges in COMP balance is calculable, but since the COMP is now manual and distribution speeds are changed, the COMP’s equation at time ‘t’ is now more difficult to calculate.

New conservative COMP distribution speeds have allowed the rate at which comptroller COMP grows to grow (i.e. (dy/dt) >1). The Comptroller is gaining more Comp than it is losing, consistently.

Below is a Time Series of the COMP balance for the Comptroller, where grant funds come from.

To err on the side of caution, a stream of 1/comp a day (to utilize the new stream function) and a 15k COMP one-time grant (can be renewed annually) would be considered reasonable.

In contrast, this (15,365.24) COMP for the year will leave a snapshot buffer of around 150k COMP for the Comptroller, and the grant stream grows at approximately 0.2% the speed of which the Comptroller does.

So what would this “grants” system look like? Let’s look at some other defi Projects for Comparison.

We have… (along with my sarcastic commentary)


  • Synthetix has a very well documented application process, but at the moment, SNX is still highly centralized and does not have an on-chain or formal voting process.


  • So UNI has historically been unable to reach quorum except for the grants system. The grants program has clear responsibilities laid out for committee members and a great purpose and methodology system.

  • Problem I find with their program is the members of the committee. They include @rleshner and other excellent defi CEO’s, and members get paid around $400 an hour, but they have yet to meet or sit through grants (as per last time I asked @rleshner

  • Team members are too busy to deal with this stuff, especially stuff that’s not their platform. I am not sure if they were asked about it before, but this seems like a ceremonial position, which is inefficient.

  • No offense to these CEO’s, but if the grants program is meant for small international contributors, then the UNI committee is not demographically and socioeconomically diverse compared to those applying. Grant committee work is work. It’s tedious, complicated, time-consuming, and mentally draining, and most importantly @rleshner is not our Compound Czar.


  • Similar Problem, heavy hitters, grant committee, with Charlie, Andre, and some others. They have yet to get through with feedback or fill grants.

  • Again, these individuals already have a crazy amount of voting power on Curve, and they are in charge of the grants committee, yet the harvest has not been made, and little progress has come from the little guy.


Balancer 2

  • So balancer took a different path; these grants are for DAOs and companies. AAVE, PIEDAO, ZAPPERFI all got hundreds of thousands of dollars to develop and integrate into balancer.

1.This approach is very business-focused, and while it does make sense, balancer is far from decentralized, and its grants do not directly help the contributor we are trying to reach.


  • Very similar to balancer, but a little closer to the DAO side, Flashboys, aavewatch, collateral swap have all been recipients of grants…

  • They bring quality integration similar to Comp.Vote and are closer to helping the average contributor

An aggregated pros cons list of the comparable grant committees


  • Poor Choice of Committee Members

  • Helping out DAOs and Companies more than the Individuals

*Little transparency on the approval process


*Clear Guidelines for applications

*Clear Committee responsibilities

So what can we learn from their successes and failures?

How can we implement them?

  • Clear Guidelines for applications (fork SNX)

  • Clear Committee responsibilities (fork UNI)


  • Seriously, Having every step of the way on Snapshot is the best thing for democracy.

For example, look how cUNI Snapshot is handled; it is beautiful.

We also tried out a test to see what compensation for should look like. Just imagine what the community would be like if everyone got compensated for the work we did.

For example, take a look at these uncompensated mini projects the community has done, like DAI Liquidation Report, Oracle Solution, WBTC CFactor, and COMP distribution speeds research.

While these projects should be compensated retroactively, we can vote on that later if someone proposes it as a project.

I suggest you take a look at what I have created on GitHub regarding how Snapshot will be integrated with this multisig grants committee.

Large Comp Holders: Delegate some Comp to committee members you like, vote in them, be active, please!

Don’t be a

If you have ideas, criticism, want to serve your community, please comment, pm me on discord.



My Proposal on Github


There are great points. Makes me think that there should be a ‘Grant Master’ role in the community to spearhead these efforts (with COMP compensation for his efforts). Budgeting COMPS wisely can generate lots of future growth for the platform and create a much better-engaged community. Few things that come to my mind (just some early thoughts):

  1. Growth capital allocation from treasury - like @massnomis suggested I think there should a periodic budget of COMPS which is considered as ‘growth budget’ taken from the treasury (similar to any organization budgeting for growth). I would suggest it will be divided into R&D (actual development work), Marketing (Research, PR), and Other. I would propose the budget should be ~15-30% of periodic treasury earning due to the early days and growth potential of Compound, but obviously this number should be thought on carefully.

  2. Call for projects - there could be an open list of projects waiting to be fullfiled with a specific grant for each one. I think each community member should be able to vote on adding a project to this list, with the Grant Master managing the whole operation. A selected committee can once in 1-2 months pick ‘winners’ for anyone who will nominate himself to fulfill a grant project.


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I love both ideas, will be part of the next version. thank you so much!

I think this is a great idea. Having trusted individual(s) facilitate certain governance-related processes (“Grants Master,” “Governance Facilitator” etc.) could be hugely beneficial in increasing community involvement and protocol development.

The great thing is we already have several talented community members who would be perfect for these roles, I just think it needs to be formalized in some way.

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Lets name names… Who would you trust? Would you want to be involved?

I think the most obvious candidates would be those who have taken a proactive role in leading some governance related initiatives. @arr00, @getty, and @blck come to mind as individuals with whom I’d trust to hold the torch and act in the best interest of the community at large.

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Noted. Thank you! Your feedback is appreciated.

Thank you, @massnomis, for writing up this idea.

Although I have been somewhat against building a committee in the past, I think I was coming at it from the wrong side. My original stance was that good ideas will get funding with the current state of development in Compound. While I think that is still true, I wasn’t thinking about how the downside versus upside in building a committee that can execute a little faster than full governance. In the grand scheme of the protocol and the COMP that the community has to work with, I think allocating some portion to a committee is worth a shot. I think the downside is significantly smaller than the upside, and I think the worst-case scenario is not bad.

I also believed that Snapshot governance isn’t necessary for this to work, but I’ve changed my mind on that as well. Using the current governance system isn’t inexpensive and can be somewhat cumbersome, and using polling on the forum doesn’t take into account the user’s COMP holding. Using Snapshot as a signal for what COMP holders want to support is a good middle ground. Snapshot is completely gasless, so users shouldn’t be deterred from voting due to fees. I would also like to experiment with giving COMP holders in liquidity pools a say in the protocol. Other protocols have adopted this; for example, Sushi gives 1 vote per SUSHI held and 2 votes to SUSHI in ETH-SUSHI LP.

I have many projects/improvements (small and large) that I would be interested in allocating COMP rewards to. I do think if we could more easily allocate COMP to builders that more improvements would occur.

While I would be happy to be on the committee, I think allocating some rewards to committee members for their involvement and time would be needed. I think this could be done with the _setContributorCompSpeed and a rate of 0.00004. The committee would need to do a lot of work to make this a successful program, but I think it is possible.

One immediate problem that comes to mind is how the committee would deal with rewards/grants to committee members. All of the likely committee members are users who do their own development. I think the simple answer, for now, is that if a committee member wants a reward or grant for work they have done that they need to recuse themself from the process or ideally use a full goverance proposal to be rewarded.

I have more questions and ideas about building this, but I would love to hear what @arr00, @blck, @TennisBowling & @monet-supply say about this idea.