Why Your Grant Program Is Funding Cartels, Not Innovators

Projects like Worldcoin and Proof of Humanity use biometrics or social verification to create a global, unique identity layer. This is the foundational primitive for any system that needs to know "one human, one vote."

• Key Benefit: Creates a scarce, non-transferable identity token.
• Key Benefit: Enables direct democracy models for governance and quadratic funding.

Instead of verifying identity, verify unique effort. Gitcoin Passport aggregates decentralized identifiers (DIDs) and on-chain activity. BrightID uses real-time video verification sessions. The cost to replicate at scale becomes prohibitive.

• Key Benefit: Sybil cost scales linearly with attack size.
• Key Benefit: Composable reputation graph for grants (e.g., Gitcoin Grants 2.0).

Static proofs are insufficient. Systems need ongoing validation. Ethereum Attestation Service (EAS) allows for revocable, on-chain attestations of behavior. Otterspace's Badges enable sub-DAO reputation. This moves from a one-time check to a persistent reputation layer.

• Key Benefit: Dynamic reputation that can be lost for malicious acts.
• Key Benefit: Enables delegated voting with accountability (e.g., Optimism's Citizen House).

The privacy-preserving frontier. Projects like Semaphore and Interep allow users to prove membership in a group (e.g., verified humans) or possession of a credential without revealing which one. This solves the privacy vs. Sybil-resistance trade-off.

• Key Benefit: Zero-knowledge proofs enable anonymous, yet Sybil-resistant, actions.
• Key Benefit: Critical for private voting and anonymous airdrops.

AI has broken traditional CAPTCHAs. New crypto-native tests leverage economic or coordination games. Proof of Attendance Protocols (POAP) for IRL events, or unique on-chain action proofs (e.g., holding an NFT during a specific block) create verifiable, costly signals.

• Key Benefit: Leverages native crypto actions as the verification mechanism.
• Key Benefit: Creates immutable, on-chain proof of "liveness" and context.

No single primitive is perfect. The solution is a credential aggregation layer that weights signals from multiple sources (PoP, Passport, EAS). This is the architecture behind Gitcoin Passport and Disco's data backpack. It creates a robust, sybil-resistant score.

• Key Benefit: Defense in depth through multiple attestation sources.
• Key Benefit: Grants programs can customize thresholds (e.g., require Passport score > 20).

Grant committees optimize for easy-to-measure vanity metrics like GitHub commits or transaction volume, not novel research. This creates a professional class of Sybil actors who game the system.

• Result: >60% of grants fund low-value, derivative work.
• Solution: Fund speculative R&D and penalize forked code. Use retroactive funding models like Optimism's RPGF.

Large token-holding "delegates" form voting cartels that direct treasury funds to their own affiliated projects or service providers, stifling independent builders.

• Result: Treasury becomes a political slush fund. Cartel voting participation often exceeds 70%.
• Solution: Implement proof-of-personhood checks, anti-collusion frameworks, and small-grant fast lanes bypassing full governance.

Grants for "ecosystem growth" default to funding dApps on the grantor's own L1/L2, creating a closed loop. This funds complementors, not innovators in core infra like new VMs, DA layers, or intent architectures.

• Result: $100M+ spent replicating existing Uniswap forks instead of funding the next Celestia or Succinct.
• Solution: Allocate a mandatory % of treasury to protocol-level R&D and cross-chain public goods.

Shift from milestone-based grants to result-based funding. Pay for verified on-chain outcomes, audited code, and peer-reviewed research, not proposals.

• Mechanism: Use KPI options or retroactive public goods funding (RPGF).
• Example: Optimism's RPGF rounds fund proven impact, not promises. Protocol Guild ensures sustained funding for core devs.

Design grant distribution to be resistant to cartel formation by enforcing neutrality and transparency at the mechanism level.

• Implement: Anonymous voting for grant committees, lottery systems for small grants, and mandatory disclosure of affiliations.
• Tooling: Leverage Zero-Knowledge proofs for anonymous contribution verification and DAO tooling like Sybil-resistant voting.

Reserve a significant, non-negotiable portion of the treasury for high-risk, high-reward research with no immediate commercial application. This funds the infrastructure of tomorrow.

• Focus Areas: Novel cryptography (FHE, ZK), new execution environments, intent-centric architectures, and decentralized physical infra.
• Precedent: Ethereum Foundation's grants for early ZK-Rollup research, which led to zkSync and Starknet.