- 2023-07-12: Created initial post
- 2023-07-17: Based on feedback, we have reduced the initial ask for the Grants Program from 54M NTRN to 20M NTRN with the intention for us to re-evaluate the size of the Grants Program after a year once the Annual Report has been published. In addition, we will add the public good funding of CosmWasm-related projects/efforts to the scope of the Grants Program to make things more explicit
- 2023-07-26: Edited the proposal to include retroactive grants within the scope of the program.
- 2023-08-28: Added last call for comments for the date September 1st 2023
- 2023-09-01: Updating the composition of the reviewer committee to replace one fixed reviewer (Dan Lynch) with a currently-unfilled flexible role which can cover either additional technical, operational, or administrative support for the program
- We are proposing the creation of a DAO-adjacent Grants Program for Neutron to issue grants for Neutron-related technical research & development and other initiatives beneficial to the Neutron ecosystem
- The entity would be structured as a ‘cybernetic organization’ (aka ‘BORG’) featuring smart-contract-based transparency and accountability mechanisms hardwired into its governing rules. We propose that the Grants Program be initially allocated 20,000,000 NTRN tokens, i.e. 3.7% of the NTRN tokens currently governed by the Neutron DAO or 2% of NTRN’s fully-diluted supply, in line with the allocation earmarked in the NTRN Economics document with an annual review with the MainDAO deciding future funding amounts
- The Grants Program’s initial management and staff would consist of a Grants Lead and four committee members/reviewers (paid for work up to 10 hours a week). Collectively, these individuals would be in charge of helping run operations of the Grants Program including, but not limited to, reviewing grant proposals, deciding how much to allocate to various grants, and providing regular updates and relevant communications to the wider Neutron community and the NeutronDAO for accountability
This draft proposal outlines the preliminary design of the structure and processes of the Grants Program and provides a strategic overview of how the Grants Program would work, what its aims will be, and how the Grants Program would add value to the Neutron ecosystem. We believe that an effectively run grants program will provide a crucial way to bootstrap Neutron’s initial community by funding initiatives including research, public goods, infrastructure, developer tooling, and user-facing applications. After incorporating feedback to this proposal through any necessary or desirable revisions, a final copy of this proposal, along with all the charter documents and smart contract code of the Grants Program itself, will be published and submitted for binding on-chain approval by the Neutron DAO.
A Grants Program is an effective and accountable (to the wider Neutron DAO) way to further the ecosystem’s key goals. Neutron aims to distinguish itself as a blockchain and Cosmos Hub’s first consumer chain by providing the best platform for developers to easily build secure cross-chain DeFi applications. This means Neutron is aiming to be the default home for all the DeFi needs of users within the Cosmos ecosystem wherein users can interact with other AppChains and applications from the Neutron Homebase in a frictionless and user-friendly way. Moreover, by leveraging the economic security of the Cosmos Hub, Neutron will be the best place for developers looking to deploy contracts safely whilst maximizing the possibility of their product’s success.
The explicit goal of Neutron is to become the main DeFi Hub in Cosmos and the Neutron Grants Program’s areas of focus will be aimed at facilitating that in a variety of ways. Grants can be used across many different focus areas — such as education, research, protocol development, developer tooling, user-facing applications, and more — to further the aims of Neutron as laid out at its founding. The Grants Program will provide initial funding from as little as $1K to as much as $500k to the best prospective grantees in either NTRN or USDC and work with them to bring their projects to life while holding them accountable. Furthermore, by having a seasoned team of experienced researchers, developers, and investors to form the Grants Program committee, we can ensure that the allocation of NTRN will be used to maximize value for the Neutron community.
To best align with the strategic goals of the Neutron ecosystem, we will explicitly focus on the following areas for grant funding:
- Developer Tooling and Experience: Proposals that improve the process of developing applications on Neutron such as developer documentation, RPC and Relayer infrastructure, analytics, infrastructure around testnets, and hackathons
- Protocol Development: Efforts to introduce improvements to the Neutron blockchain itself
- User-facing Infrastructure: Efforts to improve how users interact with Neutron directly in the form of wallet integrations, hardware wallet support, MEV-mitigation tools, and faucets
- User-facing Applications: Applications that users will directly use and get value from
- Joint Funding: Jointly fund opportunities with other Cosmos ecosystem Grants teams that seek to benefit the ecosystem as a whole
- Research and Education: Initiatives and content which has the aim of educating users and developers on the Neutron ecosystem or pushing forward key technical areas of interest which can help add value to Neutron
Within each of these pillars, we will present Requests for Proposal (RFPs) to help guide the initial wave of prospective grantees.
Below are some examples of the potential early RFPs that we are most excited about funding via the Grants Program. Grants proposals not included in the sections below will still be considered on the same terms as those listed below and our RFPs are meant only as potential ideas for prospective grantees. We also include retroactive grants within the scope of the program.
Research and Education:
- Research into different approaches to MEV mitigation in trust-minimized and decentralized ways: leveraging ABCI++ for threshold encryption, POB, etc
- Research into ways to augment, improve, or change Neutron’s consensus mechanism (i.e. things like “Cosmos without Tendermint”, Multiplicity, Ferveo)
- Research into ways to further scale Neutron in trust-minimized ways (i.e. Cosmos-SDK rollups, Rollup bridges written in cosmwasm, ideas for a “modular-first” roadmap for Neutron)
- Research into how Mesh Security can expand the Hub’s security while also providing additional utility to NTRN
- Research on account-based/local fee markets and parallelization to properly quantify resource demand and ward off spam
- Research on optimizing economic incentives to ensure high retention rates of liquidity and users
- Research into further ways to improve Neutron’s governance, including research and development of governance modules
- Research into frameworks to improve the efficiency of incentives spending
Protocol and Application Development:
- Alternative open-source front-ends for interacting with all aspects of Neutron (i.e. governance, submitting transactions, etc.)
- Tooling to help developers and users interact with applications more effectively (i.e. Multisigs, batch sending, fee abstraction, etc.)
- Open-source MEV tooling (such as arbitrage bots or MEV dashboards)
- IBC abstraction for improved cross-chain UX
Developer Tooling and Experience
- Developer Bootcamp or MOOC to learn CosmWasm (similar to Consensys Academy, Encode Club, or Chainshot) and integration with Neutron-specific features like Interchain Accounts (ICA) and Interchain Queries (ICQ)
- Alternative scripting languages (that compile to CosmWasm Rust) for developing smart contracts focused on accessibility and readability — potentially as a way to onboard Solidity developers
*CosmWasm-focused Public Goods
- Integration for Neutron and the rest of the Cosmos ecosystem with MetaMask, Coinbase Wallet, and/or other major wallet providers
- Open-source block explorer
- Other dashboard integration and bespoke Neutron dashboards to better track the chain’s on-chain activity
- Interchain Wallet with Zapper-like UI and capabilities
- Smart Contract Multisigs and account abstraction solutions
- Prediction Markets
- On-chain Games
- Decentralized Finance:
- Decentralized Exchanges (AMMs and Order Books)
- Perpetual Swap Protocols and Other Derivatives
- Lending Protocols
- NFT Lending
- Real World Asset lending
- Betting/Prediction marketplaces
- Liquid Staking
- Yield Aggregators
- NFT Marketplaces
- Decentralized Identity and Sybil Resistance solutions
- IRL p2p marketplaces leveraging Cosmos payment infrastructure
- DAO and Treasury Management solutions
The Grants Program’s operational structure will be comparable to other grants programs but with an explicit focus on always maintaining accountability to the Neutron DAO via on-chain mechanisms. We are open to feedback on the details of the Grants Program’s structure. The highlights of the program are as follows:
- The Grants Program will distribute funds as it sees fit, but shall not exceed more than 54% of its total NTRN holdings in a given year without additional approval from the Agora. The method of distribution will be via smart contract and such terms will be added to the documents of the entity or entities.
- There will be one full-time (up to 30 hours a week paid) Grants Lead who will lead evaluation, interviewing, and memo writing on prospective grantees and then submit an on-chain proposal to approve a given grant
- Four part-time (up to 10 hours a week paid) Grant Reviewers who will assist the Grants Lead in the reviewing process and ultimately must reach a consensus to vote on a prospective grantee
- The grants funds and incentive awards will be subject to on-chain controls that balance the discretion of the BORG’s management with feedback and checks/balances from the Neutron DAO, as described below under “BORG Structure”.
- The Grants Program will be responsible for maintaining appropriate communications in the form of memos and quarterly reports to prevent vetos from occurring
The Grants Program will receive a meaningful amount of the DAO’s initial supply but will limit itself to only ever spending 54% of its treasury in a given year, without requiring additional approval from the Agora.
This is a reasonable balance between maintaining our aggressive objectives of promoting Neutron in the first year (whilst being realistic about likely costs) whilst also not being overly cavalier with spend. We welcome community discussions as the Grants Program continues to operate if there is a desire to increase or decrease the allocation.
Historically, other Grants committees have faced challenges due to low engagement and time commitment. To avoid these issues, we propose having a well-compensated, full-time Grants Lead who will be responsible for the success of the Grants BORG. In addition, we will have 4 reviewers who will ultimately vote on the approval of grants and help the lead review all incoming proposals.
We will hold the Grants Program to the highest ethical and operational standards and will implement the following rules for all members of the Grants Program to follow and for the organization as a whole to adhere to:
- Disclosure: Any conflicts of interest (investment, involvement, or personal relationship with other projects/members of projects) should be disclosed and made public upon joining the Committee and maintained up-to-date in the Committee members database.
- Recusal: Members with a conflict of interest involving a project being reviewed by the Committee should recuse themselves from participating in the evaluation and should vote Abstain if a proposal directly related to the Grants Program is submitted.
- Self-Dealing: Participants should refrain from voting on sending funds to themselves or organizations where any portion of those funds is expected to flow to them, their other projects, or anyone they have a close personal or economic relationship with.
- Ethical Trading: Members are required to follow ethical trading standards in regard to NTRN and any other relevant digital assets
The NeutronDAO may enforce these standards through its power to slash unvested NTRN tokens, as further described below under “BORG Structure”.
In the event of fraud or intentional/knowing breach of the BORG’s published rules, the DAO will be permitted to designate an ‘Emergency Supervisor’ of the BORG. This supervisor’s duties will encompass resolving the issue at hand, instigating legal action against culpable directors, and implementing any other necessary corrective measures. _See below _under “BORG Structure”.
As we will detail further in the KPIs and Transparency Reporting section, we will provide memos for all successful grants that help elucidate our reasoning for approving a grant. Moreover, there will be a dashboard on our website which will provide an overview of the KPIs for the Grants Program. Once a quarter we will provide an overview of our work and operations so that the community can accurately judge our output and continue to hold us accountable.
We will review grants continuously but publicize them every month in the form of Batches to streamline the approval process and also provide a consistent timeline for everyone in the community.
As the above diagram explains, we have a well-defined process for the lifecycle of a Grant from application to funding:
- Application: The application fills out an intake form which provides the details of their proposal
- IntakeDB: Their application is added to the Grants Program’s internal database and added to the Grants Program evaluation backlog
- Initial Evaluation: The Lead and at least one Reviewer conduct an initial evaluation to identify and prioritize the most promising applications and to quickly reject any spam or low-effort proposals. Once the initial evaluation is complete, the lead notifies the applicant if their proposal has been rejected, or provides the timeline for the next steps.
- Initial Interviews: The Lead and one reviewer interview each applicant at least once. Additional interviews may be requested for more complex projects or projects requesting larger grants.
- Scorecard and Evaluation Memo: The Lead and at least one reviewer put together an evaluation memo on the grant proposal and fill out an evaluation scorecard to accurately score the project. The lead also comes to their intended recommendation in collaboration with at least one reviewer
- Sync: The entire committee reviews the application, memo, and scorecard and then comes onto the call to discuss the grant proposal and work out the next steps, whether that means a further interview or a decision if a consensus is reached. If the committee rejects the application, no on-chain vote is made and the applicant is notified. The letter includes honest and helpful feedback to help the applicant grow.
- Second Interview: Some applications may require a second interview, especially if the applicants are asking for a larger sum of funds or building a consumer-facing application on Neutron
- On-chain Vote: If approval is reached on the sync, then the lead submits an on-chain proposal to the committee to approve the proposed grant. If the proposal is approved, the lead will notify the grantees. If the grant is rejected or overruled, then the lead will notify the grantees of the outcome of the vote along with feedback.
- Milestone: The grantee is funded based on the completion of the relevant milestones and the lead works with one reviewer to hold grantees accountable and provide further updates to the committee and community as needed. Payouts for all active grantees will be processed in weekly batches to maintain the efficiency of the process and allow reviewers to ensure availability.
We believe this process provides a realistic framework for us to follow by maintaining a good balance between thoroughness and speed of approval or rejection.
The proposed Grants Program composition would be as follows:
- Grants Lead
- Lanre Ige (Grants Lead): Lanre was previously the lead crypto asset researcher at Menai Financial Group, a trading and asset management firm founded by ex-co-president of Morgan Stanley Zoe Cruz. He has spent the last six years investing and researching cryptoassets formerly at 21.co (formerly known as 21Shares) — where he was an early employee and started the research team — and Mosaic (a crypto data aggregator). His main focus areas include L1 design, inter-blockchain communication, and DeFi derivatives design. In addition, he led marketing, communications, and business development for a prominent NFT project as a founding team member and was formerly on the grants committee for Perpetual Protocol. He is an active member of the Cosmos community and an angel investor in Celestia.
- EffortCapital (Reviewer): EffortCapital is currently a Research Analyst at Blockworks Research focused on the Cosmos ecosystem. Before his position at Blockworks Research, he was the lead Cryptoasset Analyst at Lightning Capital, a digital asset liquid token and VC fund. He has over six years of combined personal and professional experience investing and researching in the crypto space, focusing primarily on consumer-facing applications and go-to-market strategy. Before jumping head first into crypto, he worked in the energy industry, leading a team focused on the execution strategy of a $400M+ construction portfolio.
- Emir Izaddeen (Reviewer): Emir is a Program Lead at LongHashX, LongHash Ventures’ accelerator arm, where he spearheads end-to-end processes with regard to their accelerator programs including the upcoming ATOM Economic Zone Accelerator alongside Neutron & ATOM Accelerator DAO. In the previous LongHashX Accelerator program, the world’s first cross-chain cohort, Emir led LongHashX’s collaboration with Axelar’s grants team. Through this, an additional 10 projects were provided grants within 2 months. Emir is also very experienced with reviewing projects. In the past year alone, he has assessed over 500 submissions to various programs for funding.
- David Park (Reviewer): David is Co-Founder at Cosmostation, a crypto infrastructure company serving 80+ protocols and 500k+ users globally with its validator operation and user applications. He is currently chief strategy officer at Cosmostation, leading initiatives for protocol research, validator onboarding, and investments at the company. He has spent the last 6 years focusing on go-to-market strategy and partnerships for the suite of products the company has built including Mintscan and Cosmostation validator.
- Further Part-time Technical, Operational, or Administrative Support: We will reserve the right to add another part-time reviewer or other part-time role to help facilitate the operations of the Grants Program. This role will take the place of the previous fixed reviewer and so will not lead to any changes in annual spend.
As previously mentioned, Grants Program will consist of a single Grants Lead and 3/4 part-time reviewers who are paid for work up to 10 hours a week. These individuals together will act as overseers for the whole Grants Program and will hold governance rights (though the Neutron DAO maintains a veto) over the allocated funds.
The Grants Lead is tasked with setting up the Grants Program and grants program, reviewing applications, writing memos, and communicating the operations of the Grants Program to the wider community. This will be a role which will take up a substantial amount of time and the lead will be expected to prioritize this role above any other professional obligations they may have. The lead will work together with reviewers to properly manage the Grants Program. The Lead’s roles can be defined as such:
- Application Review and Processing
- Grantee Support (I.e. checking with the grantees, holding them accountable to the milestones, conveying feedback)
- Operations and Logistics (i.e. legal and financial matters)
The role of the reviewers will be to support the Lead, manage control over the BORG via their on-chain votes, review and approve grantees, and generally help support the Grants Program. They represent a range of profiles within the crypto and Cosmos ecosystem which ensures that the Grants Program is best placed along technical, product, and research lenses to accurately review each grant that is sent to the Grants Program.
When considering compensation our objectives were as follows:
- Simplicity: The Grants Program will be (one of) the first BORGs of Neutron, its compensation framework should be simple to understand and simple to execute.
- Attractiveness: To best serve the network’s interest, the BORG will need to attract and retain top talents. The compensation should be high and flexible enough to adapt to their circumstances (full-time, part-time, etc).
- Long-term alignment: Since the Committee’s performance is likely to affect the network overall, the Committee’s risks and rewards should be aligned with the network long-term.
To ensure that the Grants Program can succeed in supporting the Neutron ecosystem and appropriately incentivize its committee, we propose paying grants committee members at a rate of $100 per hour for up to 10 hours per week and the grants lead at a fixed amount of $3300 per week. Each Grants committee member would receive a maximum of $1000 per week.
We propose that the pay be distributed as follows:
- 70% Liquid paid in USD equivalents
- 30% in NTRN to a 1-year linear vesting contract with a 6-months cliff and governance power
For certain committee members, the 30% vested portion may be paid in US dollars equivalents, contingent on legal considerations.
Compensation limits are based on the expected time commitments from both the reviewers and leads, with the lead being expected to commit much more time to the program than the reviewers:
- Reviewers: max 10hrs/week
Reviewers may contribute more time than the limit provided they agree to do so pro bono.
The unvested portion of a contributor’s incentive NTRN can be slashed by the director(s), the supervisor or the Neutron DAO itself, as described below under “BORG Structure - C. Funds Pools & Smart Contract Mechanisms”. Whether claimed or not, vested tokens are fully accrued to the contributor and cannot be removed by governance or any other person.
The Committee will be required to publish a report to the NeutronDAO at the end of every quarter. Every two quarters, the publication of this report is accompanied by a single multi-choice proposal to Agora. The Neutron DAO will be asked to rank the performance of the Committee, with the following voting options, which may trigger the payment of bonuses:
- Outstanding Performance: +25% of annual comp in NTRN, deposited in the vesting contract for 3 months
- Good Performance: +12.5% annual comp, deposited in the vesting contract
- Passable Performance: no consequences but sends a signal to the Committee to improve performance.
- Poor Performance: no consequences but sends a signal to the DAO that slashing unvested rewards from the Incentive Funds (as defined below) of the Committee through a follow-up governance proposal may be in order.
Committee Members must abstain from voting on bonus proposals. Failing to do so may contribute to justifying a slashing proposal or result in legal action by the BORG, which may be initiated on the BORG’s behalf by a Supervisor or Emergency Supervisor, as described below.
The criteria in the appendix for both a measure by which to judge the committee and the GrantsDAO as a whole should be used bi-annually to ascertain the appropriate bonus (if any) for the Grants Lead and Reviewers. In addition, where necessary for legal reasons the bonus for certain Commitee members may be paid in USD equivalents.
We propose to initially allocate 20,000,000 NTRN (3.7% of the NeutronDAO’s overall allocation) to the Grants Program with further funding amounts to be negotiated with the MainDAO at a later point. The estimated annual operational budget (not including potential performance bonuses) is as follows:
|Maximum Cost for Grants Lead
|Maximum Cost for Reviewers (assuming 4 reviewers)
|Operational Expenses (i.e. General Operations, Website, Social Media, Software Licenses, and Marketing)
|One-off Reserve Buffer (i.e. Unexpected/Emergency Legal Expenses, Unexpected/Emergency Operational Expenses)
Initially, we anticipate that the necessary amount required (around $1.5M in total) to cover the operational budget for two years, as well as a certain amount of USD-denominated grants, will be converted into US dollars equivalents; such transactions would be carried over-the-counter (OTC) or in private markets to minimize market impact.
The Grants Program’s ultimate mission is to grow the Neutron ecosystem and incentivize the onboarding of new users and developers. We propose to use the following metrics to judge our success:
- Number of applications
- Number of grants funded
- The extent to which grantees stick to milestones
- Users associated with Grants Program-funded projects
- TVL associated with Grants Program-funded projects
- Neutron daily users
- Neutron TVL
- Neutron IBC Activity
- (For Grants Program-funded projects) TVL/NTRN Spend
- (For Grants Program-funded projects) Tx. Fee/NTRN Spend
- Market share dominance of economic activity driven by Grants Program-funded projects
- % TVL dominance
- Growth in unique user dominance within Neutron compared to non-funded projects
- Growth in unique user dominance compared with other Cosmos chains
- Growth in fee and MEV generation dominance within Neutron
In addition, quarterly reports will be published that will include:
- Updates on the operations of the Grants Program
- A detailed overview of funding activity and our grantees
- Details on all relevant on-chain transactions
The proposal is continued in the next post.