Crypto Grants Incentive Development of Community-Based Ecosystems

Allocating funding grants for promising projects is common practice within the crypto and blockchain communities. It is among the most preferred mechanisms ecosystems rely upon to cherry-pick projects that deserve support and backing.

These days, almost every blockchain network offers grants. But it all started with Ethereum, the first smart contracts platform and the home to a myriad of DeFi, NFT, and P2E projects, among others. 

Currently, the Ethereum team offers a diverse range of funding grants for projects designed to help contribute towards the growth and success of the Ethereum ecosystem. By “grants,” we mean “direct funding” awarded to deserving projects through predefined application and selection processes. This includes intensive review, discussions, and inputs from the platform’s technical advisors and community, after which a decision is made.

There are different Ethereum grants, each designed to support new ideas that positively impact the Ethereum ecosystem. Let’s take a closer look at them and how they work.

Ethereum Grants

Ethereum grants cover a wide range of products. There are specific grant categories to choose from, including:

Grants for the broader Ethereum ecosystem: 

By providing funds to a diverse range of projects, these programs contribute to the overall Ethereum ecosystem’s development. Scalability, community building, security, and privacy are just a few of the issues addressed.

They are not limited to any particular Ethereum-based platform and are an excellent place to start if you are unsure where your project fits. Under this category, there are different types of grants:

• The EF Ecosystem Support Program: Projects that focus on infrastructure, universal tools, public goods, and research are eligible to apply for this grant. The Ecosystem Support Program (ESP) is an evolved version of the original Ethereum Grants program. Although this program considers a diverse range of projects and is open to developers, researchers, academics, and teams, there are certain eligibility prerequisites.
  
  One of the most recent winners of an EF ESP grant is SSV.Network. The SSV team bagged a $10 million fund to accelerate the development of its decentralized staking infrastructure and proof-of-concept for the ongoing ETH 2.0 upgrade. 

• MetaCartel: MetaCartel is a DAO (decentralized autonomous organization), offering grants to early-stage Dapps (decentralized applications). Under this program, the Ethereum ecosystem supports Ethereum-based Dapps, new DAOs, community-focused projects, and innovative consumer-facing use-case experimentation projects.
  
• Moloch DAO: This is another Ethereum Grants program based on an open-source DAO framework. The goal of this program is to fund projects related to ETH 2.0. To date, Moloch DAO has awarded upwards of $700,000 to several promising projects like Tornado Cash,  DApp Node, Lighthouse, Ethereum Cat Herders, and several other projects and reports.
  
• Open Grants: Open grants are Ethereum-based smart contracts designed to forward all funds received to a predefined list of recipients. This program offers long-term, recurring incentives to open-source developers working on projects aligned with Ethereum’s roadmap, primarily related to R&D and public goods.

Project-Specific Grants

These are grants created by individual projects participating in the Ethereum ecosystem. Existing Ethereum-based projects like Uniswap, The Graph, Balancer, and mStable are among the projects with their own grants program, either backed by the ecosystem or by the community.

Quadratic Funding (QF): 

Developed by Vitalik Buterin, quadratic funding (QF) ranks among the fairest ways to award grants to deserving projects. Unlike other grants, where the funding received by a project is the sum of the contributions made by the funders, quadratic funding introduces the concept of matching asset pools with crowdfunding campaigns based on Ethereum’s proprietary QF algorithm.

Simply put, it is the mathematically perfect way to fund projects via decentralized communities. It is designed to amplify minimal contributions made by a large community over large contributions made by small communities (institutional investors, angles, venture capital funds). Through this, the funding process removes any whales and deep-pocketed organizations, thereby creating a more democratic fundraising process.

A total of $2,838,000 has already been distributed via QF projects like Gitcoin Grants, Pomelo, Downtown Stimulus, and clr.fund. To give the numbers more perspective, in 2021, Gitcoin Grants’ round 12, GR12, raised $6.1 million for public goods – marking 135% growth compared to the GR11 round’s $2.6 million. 

Ethereum’s QF model, which has proven especially popular, has been emulated by other networks, namely EOS. For instance, the community-led open-source platform Pomelo has positioned itself as a funding source for EOS-based projects using the quadratic funding mechanism. 

Think of Pomelo as the Gitcoin of EOS. At the heart of Pomelo is the matching pool, funded by community members and the ENF (EOS Network Foundation). According to the available data, ENF had funded as much as $500,000 for Season 1 of Pomelo QF and has committed to fund another $888,888.88 for Season 2 to help accelerate the growth of projects on the EOS ecosystem.

As highlighted above, grants already demonstrate the immense potential to help build out the Ethereum landscape and support Web3 initiatives. More importantly, this potent model is encouraging other prominent networks to take note and embark on parallel steps. With their ecosystem orientation, grants will likely rise to greater prominence as supported projects enter the spotlight.

Download the TipRanks mobile app now

​To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.