The Future of the Grant Proposal Is a Smart Contract

DAO treasuries are static pools of capital managed by slow, subjective governance. Funds are disbursed in large, infrequent tranches with poor accountability for milestone delivery or capital efficiency.

• Manual Review Bottleneck: Proposals drown in forums, causing decision fatigue.
• Misaligned Incentives: Recipients get funds upfront, reducing completion urgency.
• No Real-Time Data: Treasuries lack granular insight into capital deployment velocity or ROI.

Grants become multi-sig escrow contracts that release funds upon on-chain proof of work. This creates a trust-minimized, automated pipeline from proposal to payment.

• Programmatic Disbursement: Funds unlock automatically when pre-defined, verifiable conditions (e.g., contract deployment, TVL threshold) are met.
• Radical Transparency: All milestones, submissions, and payouts are on-chain public records.
• Continuous Funding: Enables retroactive funding models and streaming payments via Superfluid or Sablier integrations.

Legacy grant systems are vulnerable to low-effort proposal spam and Sybil attackers creating multiple identities to extract funds. This dilutes treasury resources and overwhelms legitimate community reviewers.

• Identity Fragmentation: No sybil-resistant way to link reputation across proposals.
• Quality Dilution: High noise-to-signal ratio buries high-impact projects.
• Reputation Debt: Bad actors face no persistent, on-chain reputation penalty.

Integrate verifiable credentials and soulbound tokens to create a persistent, portable reputation graph for builders. Grants can be weighted by an applicant's proven track record.

• Sybil Resistance: Leverage Gitcoin Passport or BrightID to prove unique humanity.
• Portable Reputation: Positive outcomes from one grant (attested on-chain) boost credibility for future applications across any protocol using the standard.
• Automated Triage: Systems can auto-filter or prioritize proposals based on issuer reputation score.

Traditional RFPs define a fixed deliverable upfront, punishing innovation and adaptation. If market conditions or technical challenges change mid-grant, the entire process must be restarted, causing delays and wasted work.

• Brittle Specifications: No mechanism for scope negotiation or iterative development post-funding.
• Outcome Misalignment: Pays for outputs (code written) not outcomes (value created).
• No Market Feedback: Lacks mechanisms to incorporate real-time user demand or usage data.

Smart contracts can be programmed with oracles and KPI options that adjust funding based on real-world metrics. This aligns incentives with protocol growth rather than mere completion.

• KPI-Linked Milestones: Final payout scales with objective success metrics (e.g., user adoption, fee generation, TVL).
• Oracle Integration: Uses Chainlink or Pyth to verify off-chain metrics on-chain for automatic execution.
• Continuous Auctions: Models like pairwise bonding (used by clr.fund) let the community signal fund allocation via quadratic funding rounds in real-time.

Traditional DAO grant committees suffer from human bottlenecks and voter apathy. Decisions are slow, often taking weeks or months, and are vulnerable to social lobbying rather than technical merit.

• Eliminates committee overhead and subjective bias.
• Accelerates decision cycles from months to minutes via on-chain execution.
• Creates a permanent, auditable record of all funding logic and outcomes.

Grants become smart contracts with milestone-based payouts and automatic clawbacks. This aligns incentives perfectly, paying builders for verified delivery, not promises.

• Enforces accountability via conditional logic (e.g., if(milestone_verified)).
• Dramatically reduces grantee default risk by tying capital to progress.
• Enables complex vesting schedules (e.g., linear, exponential) impossible with manual multisigs.

Protocols like Optimism's RetroPGF prove the model: fund what's already proven useful. Smart contracts automate this by scoring contributions via on-chain activity and attestations.

• Shifts focus to measurable impact over speculative proposals.
• Builds portable reputation graphs (e.g., based on EigenLayer AVS contributions).
• Creates a flywheel where proven builders receive automatic, recurring funding.

Grants evolve into a competitive marketplace. Builders post their public goods with attached bounty contracts. Funders and algorithms (like LlamaRisk for risk assessment) compete to allocate capital most efficiently.

• Introduces price discovery for public goods funding.
• Enables specialized grant vaults (e.g., a vault that only funds ZK research).
• Merges with DeFi, allowing grant capital to be yield-bearing until disbursed.