Introduction

Today, grant programs in the Web3 industry are just as present as airdrop campaigns. While the goal of airdrops is usually attracting early users, grant programs attract talent across different horizontals. Grant programs are usually run by infrastructure providers, such as blockchain networks, side chains and similar. Their success not only depends on their technology but also on their ecosystem, meaning, offering users a wide span of applications.

Think of it: Imagine you are developing a new high-end console for gamers. You may have the best technology but if there are no games playable on the console, it won’t be a success.

This article does not deal with the question of "why" there are grant programs. Instead, we want to introduce three grant management tools that can help Web3 ventures that are running or planning to start a grant program:
• Gitcoin Grants Stack,
• Questbook, and
• CharmVerse

These tools facilitate the easy setup and management of programs without the need for acrobatics in Excel spreadsheets. At the end of each platform, we summarize who each tool is for. We do not see these as direct competitors, as they serve different target groups.

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Grants Stack emerges as a decentralized, customizable, and smart contract-enabled solution for covering the full life cycle of grant programs. The term "smart contract-enabled" implies that virtually every operation within Grants Stack occurs on-chain. Necessitating a signature from authorized persons for each step. This includes the entire lifecycle, from applicants submitting forms to the approval or denial of applications, and finally, the distribution of funds.

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Features

Beyond being just a grant management tool, Grants Stack functions as a marketplace. Builders can explore a diverse range of grant programs, enabling them to apply to those most aligned with their objectives. This results in increased competition but also increased visibility. Builders do not have to find your program specifically to apply, they can go to Grant Stack as a whole and select you for an application. Resulting in greater awareness and visibility at no additional costs. Additionally, the marketplace allows donors to donate to projects that have been approved in any single round.

Grants Stack comprises three primary components:

Builder: Tailored for applicants, the Builder component enables the creation of profiles, management of applications, and acceptance of donations.

Explorer: Designed for donors, the Explorer component facilitates the discovery and support of various programs and projects within the Grants Stack ecosystem.

Manager: This component empowers users to create, customize, and manage grant programs. It encompasses the entire process, from program initiation to the rejection/approval and disbursement of funds to applicants.

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When setting up a grant program, the program manager can decide whether the program is private or public. If it is private, only people who have the link to the program can access it and submit applications. If it is public, it will be listed on the Explorer, so anyone on the Internet can access it.

Grant Stack allows you to setup the process from end to end. Starting with the application form that builders will submit. This flows into how funds are allocated, the post approval process, where grant recipients could undergo Know Your Customer (KYC) via Synapse if that is required by the organization to the final distribution of funds.

The method of allocating funds is a key decision that must be made. Grant Stack offers two options with vastly different implications. These are whether the funds are distributed directly or via quadratic funding. This choice affects the decision-making process. Grant programs selecting direct funding are reviewed by a reviewer selected by the program manager. In the case of quadratic funding the community selects on where funds should be distributed. Direct funding makes implicit sense, but quadratic funding requires a deeper dive.

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Quadratic Funding

A standout feature of Grants Stack is its Quadratic Funding (QF) mechanism. Essentially, QF provides funders with a voice to determine the distribution of available capital. In practical terms, the more financial support a project gets from contributors, the greater the allocation of funds. The term "quadratic" denotes that a contributor's modest investment, say $1, can result in a substantial multiple for the supported project. While diving deeper into QF is beyond the scope of this article, excellent resources, such as Gitcoin's blog post¹ on Quadratic Funding, break down this complex topic using digestible language.

The implementation of Grants Stack, particularly the use of the QF mechanism, has resulted in notable success stories. A case study² on Arbitrum reveals increased governance participation within its community. Meg Lister, Product Lead at Gitcoin, underscores in an interview³ that the growing enthusiasm for governance involvement is not coincidental. Having a say in where capital goes resonates well with the community because participants see that their support has a significant impact.

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Sybil Resistance with Gitcoin Passport

The integration of Gitcoin Passport makes the grant program resistant to sybils. Gitcoin Passport allows users to add "Stamps" to their wallet address. Stamps are proofs of ownership via certain Web2 platforms, such as X, Discord, etc. The more stamps a wallet address has collected, the higher the confidence that the user is a real person and not a user who generates multiple wallet addresses potentially manipulating the grant program with dubious applications. While it is unlikely that such applications will be approved, the review and rejection of these applications often still requires human labor. In this case, it's not just about more security, but also more efficiency. You can take a closer look at the Gitcoin Passport here⁴.

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Pricing‍

The use of Gitcoin Grants Stack is completely free as the date of writing.

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For whom is Grants Stack?

Grants Stack is a great grant management solution for Web3-based projects that value transparency and immutability coming with Grants Stack on-chain capabilities. Grants Stack is at the forefront of innovating their product with the objective to make grant management as efficient as possible.

An important part of Grants Stack is that it allows organizations to launch grant programs centrally using direct funding mechanisms which is usually how a grant program starts. Importantly though it allows for a transition to a more decentralized grant program where the community has a say in how funds are distributed using quadratic funding.

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Questbook stands out as a dynamic grants management tool, previously on-chain, but currently transitioning to a fully off-chain model for enhanced flexibility and scalability. Despite this shift, Questbook retains its identity as a marketplace connecting grant programs and builders. Unlike Gitcoin’s Grants Stack which offers both quadratic- and direct funding, Questbook enables direct funding only.
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Features

During a platform walkthrough with the team of Questbook, several noteworthy features caught our interest. To start with, grant applications can be configured as either public or private, influencing who can see them. Public applications are visible to anyone on the internet, while private applications limit access to selected reviewers chosen by the grant program manager. This distinction plays a crucial role in the decision-making process for accepting or denying grant applications.
Questbook offers two decision-making options:

Voting: All reviewers can participate in a binary vote on the grant proposal.
Rubric: Utilizing predefined or custom evaluation rubrics (e.g., Idea Quality, Team Competence, Ecosystem Relevance), one reviewer assesses each criterion on a scale from 1-5. Meeting a certain threshold determines the success or denial of the application.
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Questbook incorporates a chat feature under each grant proposal, allowing direct communication between reviewers and applicants. This facilitates clarification and the exchange of additional information to make the evaluation process more comprehensive.

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Upon acceptance, the fund distribution process starts which can either be a single payment or milestone-based. The program manager determines this when the program is created (also which currency is to be paid out). Using the single-payment method, the requested funds will be paid out after the proposal is approved. In milestone-based funding, milestones are set and applicants indicate how they intend to achieve them and how much money they are requesting for each milestone. In addition, the program manager may set a cap on funding so that no application can request more funding than the cap.
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Noteworthy aspects of the post-approval process include:

KYC Integration: Grant recipients must undergo KYC verification, seamlessly integrated with Synapse. Notifications, including KYC invitations and other important messages, are efficiently managed through the chat interface below the grant application.
Grant Agreement: Recipients finalize the process by signing a grant agreement with HelloSign, ensuring legal clarity and commitment.
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Sybil Resistance with Reclaim Protocol

An additional distinctive feature is Questbook's integration of the Reclaim Protocol, countering Sybil attacks by verifying users' ownership of Web2 accounts. This approach aligns with the objectives of platforms like Gitcoin Passport, yet distinguishes itself by working across all Web2 platforms, including apps like Uber or Airbnb, regardless of API availability.
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Pricing

Questbook comes with two pricing plans: Organizations can choose between paying 5% of the total grant volume they distribute or by paying a flat fee of $1,000 per month. The organization can create as many grant programs under their name as they require.
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For whom is Questbook?

Questbook is a good solution for organizations that want to have streamlined processes that can be customized within a given framework. Even though the framework is narrow, it is very efficient. It's great for projects that want to run traditional grant programs and value efficiency over customizability.

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CharmVerse stands out as a user-friendly off-chain grant management tool with a broader scope beyond grants. Serving as a versatile collaboration platform, it empowers DAOs and communities by streamlining member management, task and bounty coordination, facilitating structured discussions, and decision-making processes.

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Features

On the grants side, it acts as a comprehensive management platform, integrating features like token-gated forums to foster a collaborative and secure environment. With its intuitive, Notion-like interface, CharmVerse simplifies the process of discussing, reviewing, and voting on applications. CharmVerse streamlines the application process by seamlessly integrating with popular platforms like Google Forms and Typeform. This allows for effortless collection and organization of applications, enhancing the efficiency of the review and decision-making processes. Reviewers and community members can easily request changes on the application and vote for a final decision on SnapShot. The platform provides a variety of templates for grant applications, ensuring flexibility and ease of use.

One notable characteristic of CharmVerse is its adaptability for program managers. Many properties related to the application process can be customized, which allows building programs with specific needs and requirements. Additionally, program managers have the flexibility to control which members can view, review, and vote on applications.

Managing members is straightforward, allowing inclusion through wallet addresses, emails, or even by requiring members to hold a specific ERC token for participation. Beyond that, CharmVerse allows communities to apply their custom design to their space.

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Pricing

CharmVerse's pricing structure caters to different needs, offering four options, three of which are visually represented. Additionally, there is a "Community Edition'' available for free, with a block limit of 30,000. In the CharmVerse ecosystem, blocks encompass every piece of content, ranging from individual table cells to forum posts. According to CharmVerse, 10,000 to 20,000 blocks are typically sufficient for a small community to initiate its activities effectively. The Community Edition also provides users with access to unique features such as custom domains, unlimited roles management and API access.

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For whom is CharmVerse?

Optimism is one of the notable clients using it to run their grant program. Based on a case study⁵, customizability and ease of use were key factors in Optimism's decision to use CharmVerse. That sums up very well who CharmVerse's grants management solution is a good choice for: anyone who runs or wants to run a grants program that requires flexibility while keeping the most important elements under one hood.

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How can Lemma help with your grant program?

Lemma brings extensive expertise to the table when it comes to establishing and overseeing grant programs. Our track record includes working with prominent clients such as Arbitrum, a leading scaling solution for Ethereum. While dedicated grant management tools prove invaluable in streamlining the initial setup of grant programs, the ongoing maintenance and due diligence associated with them remain significant challenges. To enable you to concentrate fully on the essential day-to-day tasks that drive value, Lemma can take on the responsibility of ensuring the seamless operation of your grant program. Whether overseeing the entire lifecycle of the program or tackling specific modular tasks such as due diligence, transaction initiation and execution, communication with applicants, milestone tracking or more, Lemma is committed to facilitating the smooth and efficient management of your grant initiatives!

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Links

1: https://www.gitcoin.co/blog/quadratic-funding

2: https://www.gitcoin.co/blog/arbitrum-case-study

3: https://www.youtube.com/watch?v=TQXoDO3SU3k&ab_channel=GreenPill

4: https://docs.passport.gitcoin.co/

5: https://charmverse.io/post/case-study-op-grants-chooses-charmverse-for-their-operations/