The Future of Grantmaking: From Committees to Continuous Auctions

Centralized grant panels are slow, opaque, and politically charged. They create a ~6-12 month decision lag, misallocate capital to well-connected insiders, and lack clear metrics for success.

• Inefficiency: Grants are a ~$1B+ market stuck in manual workflows.
• Opaque Selection: Decisions are made behind closed doors, not on-chain.
• Low Accountability: No mechanism to claw back funds from underperforming grantees.

Replace committees with a smart contract that continuously auctions grant funding for pre-defined, verifiable outcomes. Inspired by retroactive public goods funding and prediction markets.

• Automated Payouts: Funds are escrowed and released automatically upon on-chain proof of delivery.
• Market-Driven Prioritization: Builders bid for work, revealing true cost and competitive pricing.
• Radical Transparency: The entire process—from RFP to payout—is on a public ledger.

Integrate a Gitcoin Grants-style matching pool to democratize funding allocation. Small donations signal community support, which is amplified by a quadratic algorithm to fund the most popular projects.

• Anti-Whale: The algorithm dilutes large donors' influence, preventing capture.
• Community Signal: Turns broad sentiment into a capital allocation engine.
• Composable Layer: Can be stacked on top of continuous auctions for a hybrid model.

The endgame is aligning grantmaking with protocol sustainability. Fund work that directly generates fee revenue or increases TVL, creating a self-sustaining ecosystem. Think Optimism's RetroPGF funding core development.

• Value Capture: Fund builders who enhance the underlying protocol's economic engine.
• Recursive Funding: A portion of generated fees is recycled into the next grant round.
• KPI Options: Grants become milestone-based investments with clear ROI metrics.

Pioneering retroactive public goods funding, where value is rewarded after it's proven. This flips the grant model from speculative bets on promises to verifiable impact.

• Mechanism: $40M+ distributed across 3 rounds via badgeholder voting.
• Key Benefit: Aligns incentives with measurable outcomes, not proposals.
• Key Benefit: Builds a persistent, on-chain reputation graph for contributors.

The canonical implementation of quadratic funding, using small individual donations to signal community preference and allocate matching funds.

• Mechanism: $50M+ in matched funding over 19 rounds, democratizing allocation.
• Key Benefit: Protects against whale dominance via the QF algorithm.
• Key Benefit: Serves as a battle-tested coordination layer for ecosystem grants.

Traditional grantmaking is a black box. Small committees suffer from bias, high overhead, and inability to process high-volume, micro-grants at scale.

• Pain Point: >30 days decision latency and <1% application success rates are common.
• Consequence: Capital inefficiency and missed opportunities for grassroots innovation.
• Analogy: It's a manually curated App Store vs. an algorithmic discovery feed.

The end-state is a sovereign, automated market for public goods funding. Think Uniswap for grants, where capital continuously flows to the highest-signaled projects.

• Mechanism: Projects list funding goals; donors/comittees place bids or bonds; funds release on milestone verification.
• Key Benefit: Real-time price discovery for project value via bonding curves or QF.
• Key Benefit: Radically reduces administrative overhead to near-zero smart contract gas costs.

A zero-knowledge, fully on-chain implementation of quadratic funding. Uses MACI (Minimal Anti-Collusion Infrastructure) to prevent bribery and collusion in voting.

• Mechanism: All coordination and tallying occurs on-chain with cryptographic privacy.
• Key Benefit: Maximizes credibly neutrality and censorship-resistance.
• Key Benefit: Serves as a public good itself, providing infrastructure for others.

Protocols like Octant are experimenting with restaking yield as a funding source. EigenLayer AVSs could create sustainable, endogenous funding pools for ecosystem dependencies.

• Mechanism: Stake ETH/GLP, earn yield, allocate yield to curated grant projects.
• Key Benefit: Creates a perpetually replenishing treasury from protocol-native cash flows.
• Key Benefit: Aligns security (restakers) with ecosystem health (funded public goods).

Continuous auctions are vulnerable to Sybil attacks where a single entity creates multiple identities to manipulate outcomes. This undermines the core principle of fair, decentralized allocation.

• Sybil resistance is non-trivial; naive solutions like token-gating favor whales.
• Projects like Gitcoin Passport and Worldcoin attempt to solve this with identity proofs, but adoption is nascent.
• Without robust identity, auction results are meaningless and funds are misallocated.

Auction mechanisms that rely on external data (e.g., GitHub stars, protocol revenue) are only as good as their oracles. A compromised oracle leads to catastrophic fund misdirection.

• Chainlink and Pyth dominate DeFi, but their data feeds aren't optimized for subjective grant metrics.
• Custom oracles for social sentiment are expensive and prone to manipulation.
• This creates a single point of failure, reintroducing centralization risk the model aims to eliminate.

Continuous auctions require consistent, high-quality participation to function. Low turnout creates a negative feedback loop where results are skewed, deterring future participants.

• Early models like Quadratic Funding suffer from this; small, coordinated groups can dominate.
• Without a critical mass of voters and capital, the market for grants fails to price accurately.
• This risks reverting to a system where only the loudest or best-funded projects win, defeating the purpose.

Automated, continuous fund distribution blurs legal lines between grants, donations, and investments. This attracts regulatory scrutiny that could freeze entire systems.

• SEC may view token distributions as unregistered securities offerings.
• FATF Travel Rule complications arise for cross-border, pseudonymous flows.
• Protocols like MolochDAO and Gitcoin operate cautiously; a fully automated system is uncharted territory.

Sophisticated auction mechanisms (e.g., bonding curves, frequent settlement) are computationally expensive. High gas costs exclude small contributors and grantees, recentralizing power.

• On Ethereum Mainnet, a single vote could cost >$50, making micro-grants economically irrational.
• Layer-2 solutions (Optimism, Arbitrum) help, but cross-chain coordination adds another layer of risk and fragmentation.
• The system's efficiency is directly throttled by the underlying blockchain's performance.

Predictable, recurring auction cycles are prime targets for Maximal Extractable Value (MEV) bots. They can front-run votes, sandwich transactions, and extract value meant for grantees.

• This is analogous to MEV on Uniswap and other DEXs, but with a public goods budget as the target.
• Solutions like Flashbots SUAVE or private mempools add complexity and may not be universally adopted.
• If unchecked, MEV could become the primary beneficiary of the grant system.