by 0xd11a019a70986bd607cbc1c1f9ae221c78581f49 (Yemel)
Linked Pre-Proposal
Restructuring the Community Grants Program
Summary
Define a budgeting strategy for the DAO’s Grant Program in order to secure the good standing of the treasury and long-term operations of the DAO.
Abstract
The Decentraland DAO has been granted a 10-year vesting contract worth 222M MANA starting on Feb 19, 2020. The MANA in this contract vests every second, thus gradually increasing the size of the DAO’s fund, at a rate of 1.8M MANA per month. Also, the DAO has its own revenue streams such as marketplace fees and wearable curation fees.
This proposal defines a strategy to limit the maximum amount of funds that can be allocated quarterly via the Grant Program.
Motivation
The DAO’s grant program is one of the best vehicles to help grow the Decentraland ecosystem. However, at this moment there is no general consensus about how much the DAO should be investing in this program.
By reviewing the results of more than one-year operations , the total budget allocated since the beginning of the grant program can be calculated:
- Platform Contributor 35% = $2,584,100 USD
- Gaming 26% = $1,887,500 USD
- Community 21% = $1,558,400 USD
- Content Creator 18% = $1,346,809 USD
Alternatively, the results can be displayed in these categories (aligned with the proposed new categorization of grants ):
- In World Content 49% = $3,545,400 USD
- Platform 21% = $1,585,169 USD
- Core Unit 7% = $520,200 USD
- Sponsorship 9% = $687,500 USD
- Documentation 3% = $193,800 USD
- Social Media Content 4% = $282,240 USD
- Accelerator 7% = $487,500 USD
The DAO needs to agree on how much should be spent and implement a control mechanism to ensure there is no overspending. This will secure the long-standing operations of the DAO.
It’s also necessary to agree on the distribution of the funds over different categories of projects. This will prevent allocating 95% of the funds to one category and not leaving space for other important initiatives. The DAO should agree on a diversification strategy and revisit it periodically.
Specification
The Grant Program will be divided into four periods (Q1, Q2, Q3, Q4). At the beginning of each quarter the maximum amount of money that can be allocated through the Grants Program will be defined using the formula:
5,500,000 * MANA_PRICE * 0.7
This means the DAO at maximum capacity will be spending 70% of the MANA received from the vesting contract. For example, using $0.39 as the current MANA price , the total budget for the quarter will be $1,501,500 USD.
Also the DAO should set a desired distribution of funds on the different grant categories. Define the maximum amount of funds that can be allocated to a particular activity and when that number is reached, it won’t be possible to request more grants of that category until the start of the next quarter.
Below is the proposed distribution for the first quarter, including the quarter budgets using the previous example of a MANA price of $0.39:
- Platform 40% = $600,600 USD (per quarter)
- In-World Content 15% = $225,225 USD
- Core Unit 15% = $225,225 USD
- Sponsorship 15% = $225,225 USD
- Accelerator 5% = $75,075 USD
- Documentation 5% = $75,075 USD
- Social Media Content 5% = $75,075 USD
The DAO can change this distribution in the future via a Governance Proposal or by implementing an alternative voting mechanism such as weighted voting.
Conclusion
The DAO has an income of 1.8M MANA every month and it should set up a limit control to not spend more than 70% of such a stream. This will mitigate the risk of running out of funds in the next 7 years.
The DAO should agree on limits for each category, so that the funds are distributed based on a targeted strategy. This will encourage initiatives in underfunded categories.
The DAO refreshes and recalculates the category budgets using the MANA price at the beginning of each quarter. It’s possible that many grant requests will be submitted when such limits are refreshed, looking to secure their budget before it’s allocated to other initiatives. This could be beneficial for the DAO, encouraging competition and ultimately leveling up the bar.
great proposal, I think this will help elevate the anxiety of the DAO about how much the grants program is spending and focus on evaluating the projects involved and their merits.
Agree with this, 70% of the vesting amount each month is a good starting point, giving the DAO a reserve of the already vested mana + 30% vesting amount in future + the income generated.
I think this part, by itself is too big a big change. We are essentially relying on the ability of the DAO to forecast future potential of different categories, and increasing friction in any quick changes that might be needed. Since in the current system, the DAO gets to individually evaluate each decision, and the overall budget naturally brings in competition and avoids overspending, I think we can do away with the category-wise budget entirely.