Project Funding Framework Upgrade [Vibe Check]

Governance Proposals
1

Author: @Jengajojo
Date

SUMMARY:

This draft proposes three concrete upgrades to the bDAO project funding framework

  1. Establish a new class of entities called, ‘Incubators’ and upgrade some projects such as (but not limited to) newsletter project, IMN, podcast hatchery, bankless academy to this new structure. Allow incubators to setup their own guidelines on project acceptance, develop a standard price list for incubation and establish a ‘graduation’ criteria for incubating projects

  2. Take the GSE cohort 1 recommendations and move existing and future long term projects to be funded with a BanklessDAO quadratic matching round.

  3. Mandate the GC to

  • Upgrade the proposal format for projects
  • Help bDAO spin up more incubators by categorising past projects
  • Setup and monitor policies for projects to be eligible for seasonal matching rounds

DISCLAIMER

The scope of this proposal is limited to current and future bDAO funded projects and does not include guilds, departments or any other non-funded groups working within bDAO.

BACKGROUND

Project Funding

Since season 1, the procedure for projects to receive funding has seen little change. GC teams over the past seasons have added valuable modifications such as

  1. Voting thresholds
  2. KPI reporting
  3. Mid-Season KPI checks

While this has improved the process, this is akin to shipping upgrades to V1 Project Funding as opposed to a fully fledged V2. We see that many projects (greater than 95%) receive funds from the GC but only a handful have some sort of product market fit. This, in my opinion, boils down to two flaws in V1

  1. V1 assumes that GC members have the necessary qualifications to objectively decide which teams and projects are worth funding, however, the reality is that popularity contests seldom result in a panel of experts.

  2. Project teams have high passion, but often lack the right support structure or skills in order to succeed.

GSE Recommendations

The GSE took steps in the previous seasons to look at some of these challenges and recommend a few solutions. Some of the solutions relevant to this post are:

  1. Revamped Levelling System
  2. Project Funding Roadmap
  3. Rigorous DAO Reporting
  4. Customer centric funding

SPECIFICATION

With the above points as background, we see that groups independently emerged within bDAO to tackle some of these challenges, I call these groups, Incubators.

Incubators

“Incubators are entities which help bDAO project teams become successful by providing them with the necessary expertise, infrastructure and talent during the incubation period.”

In this post, I use the examples of IMN, Newsletter Project, Podcast Hatchery and Bankless Academy as projects which independently spun up and are helping other groups become successful. Below is an example of this specific workflow

Screenshot 2022-10-11 at 14.02.38
Screenshot 2022-10-11 at 14.02.38970×1150 87.1 KB

The suggestion is to make this role (Incubator) official and use this as a template to spin up incubators for other similarly grouped projects in the future. Incubator management seats can be intentionally filled with domain experts who can help multiple teams become successful.

Eg: An NFT projects incubator can help projects such as 1 2 3

How do incubators get funded and evaluated?

Incubators have admin costs and they should scale along with the number of projects an incubator is incubating. At the same time the success of an incubator(aka MoS, Measure of Success) can be measured by the number of successful* projects, while the KPIs can be:

#the number of projects graduated

#the ratio of incubator admin expenses to total expenses

*successful = self-sustainable

In concrete terms, each incubator submits a forum post which has

  1. Fixed cost to run the incubator with at least 1 project incubating during the season
  2. A price list for a project to reach graduation (eg: 100K BANK to graduate a new podcast project)
  3. Acceptance criteria for new projects
  4. KPIs and MoS update of the incubator in the past season

When a new project wants to become part of an incubator, they use the standard price list and follow the blanket process to qualify for any support or funding from bDAO. Today this process is:

  1. Make a forum post
  2. Achieve forum quorum

Once this is achieved, the project has to meet additional criteria (if any) set by the incubator they wish to work with. Once all the standard formalities have concluded, the GC sends funds to the incubator in question, this covers

  • the cost of paying new contributors
  • Additional admin expenses for the incubator
  • Any other tools or other costs involved

Below is an example of how this workflow could look like

Screenshot 2022-10-11 at 14.02.44
Screenshot 2022-10-11 at 14.02.44998×612 98 KB

Graduation

After projects have finished their incubation period, they are considered to be graduated. Each incubator has the liberty to decide their own graduation criteria, for projects which do not qualify for incubators, the GC decides the graduation criteria along with the project team in question.

This element is inspired by the GSE’s recommendation on ‘Project Funding Roadmap’, specifically: “The first round of funding is given as a grant”

All projects which have graduated are eligible for seasonal bDAO matching rounds, however, the GC makes the final policy on which projects can participate and acts as an emergency fail-safe incase things go south.

Sentiment check on: Adding Incubators and Graduation to bDAO processes and constitution

  • LFG, bDIP wen?
  • I generally agree, but I have some comments
  • I completely disagree and will tell you why in comments below

0 voters

Seasonal Matching Rounds

The final suggestion is to fund long term projects as well as graduated projects which fulfil the policy set by the GC, with gitcoin style quadratic matching rounds.

Today, the GC faces a challenge towards the end of each season when 30+ proposals have to be reviewed and approved by 7 people in a week or two. As previously stated, a centralised panel of 7 non-experts is not the optimal solution. Secondly, projects have different asks and there is a discrepancy between projects with similar goals but variable asks.

The GSE recommendation of a ‘Customer Centric’ funding approach makes more sense here, wherein the early adopters of each of the projects can vote with their wallets and bDAO matches these donations with a fixed pool of BANK tokens(matched via quadratic funding) Learn more about quadratic funding here

As a consequence, projects which have a better product market fit, PMF, will attract enough funds to bootstrap themselves into the future and projects with no product market fit will fizzle out as those contributors won’t be sufficiently funded. All projects which have graduated, will have the sufficient resources to become successful (as guaranteed by the incubation criteria set by the incubators) so the final deciding factor is the merit of the contributors more than anything else.

This enables bDAO to rapidly fund and ship projects with high probability of PMF and fizzle out teams which keep asking for funds with no PMF.

POLL

Sentiment check on: Modifying long term projects funding framework to quadratic matching rounds.

  • LFG, bDIP wen?
  • I generally agree, but I have some comments
  • I completely disagree and will tell you why in comments below

0 voters

Grants Committee

Upgrade the proposal format for projects

In order for this workflow to function smoothly, the GC role needs to be modified from having to make decision on all projects which ask for funding to only those projects which cannot be categorised into an existing incubator

A few things I have learnt by being on the GC and being a project champion is

  1. Teams who can think through their idea early on have an easier time to deploy their projects later, hence it is recommended that the Project proposal format is updated to

    a. Help teams think through their ideas early on

    b. Has precis guidelines on what is acceptable version of KPIs and MoSs

  2. Teams who have seen some success in bDAO (eg: L2) or have members with skin in the game (L1) often show higher commitment. The GSE has similar observations and recommends

“Revamped Leveling System

We recommend adding a skills-based reputation component to membership in addition to BANK balance. Currently, only L2s are earned through recommendation.

  • Skill-based: Skill-based leveling (L1-L3) Right now, the only earned level is L2.

Graduated BANK holding requirements for levels. Ex. 50k for L2 and 100k for L3. This would greater incentive alignment and reduce supply.

  • Introduce Funded Working Group Role Level Requirements. Ex: Must be L3 to be a champion or coordinator.

  • Resiliency: Must have two L2s on the team (apprenticeship model) These L2s should have the same access to the L1’s systems for safety (reduce single point of failure)

As well as

“Project Funding Roadmap

Leveling requirements for funding (Must be Ln to ask for x BANK)”

The proposal is to MANDATE the GC to revamp the project’s proposal format based on these inputs and come up with a new format which can be used as a blanket ‘temp check’ by all prospective projects.

Help bDAO spin up more incubators by categorising past projects

In case the incubator model gets adopted, the GC is mandated to survey all the projects which have been funded in the past, and identify incubator categories. Further the GC should make a post on

  • the categories of incubators which it has identified
  • a suggestion on the cost of incubating 1 project in each category

The GC should establish

  • a dedicated GC sub-team to encourage contributors to spin up these incubators
  • a dedicated GC sub-team to watch out for common project themes in the future and encourage contributors to spin up these incubators

Setup and monitor policies for projects to be eligible for seasonal matching rounds

In case the matching round model gets adopted, the GC is mandated to:

  1. Setup guidelines and policies for projects to be eligible to participate in matching rounds
  2. Identify projects which violate policies and remove them from matching rounds
  3. Make sure matching rounds flow through smoothly

FINANCIAL IMPLICATIONS

Seasonal Projects funding:

The biggest change will be how funding for seasonal projects is allocated. Today, projects ask random amounts without much consideration for the BANK token supply or their own ability to be efficient with their funds or PMF. However, in this case, long term projects no longer need to make a forum post, but a gitcoin style grant application, wherein they can pour their own creativity into convincing their community about their merits.

All long term projects which are not incubators, guild or departments will be part of seasonal quadratic matching rounds.

How do we decide how much BANK to allocate for the seasonal matching round? Some suggestion below:

  • Allocate a fixed amount (eg: a few million BANK each season)
  • Allocate all remaining funds from a given season
  • other (add comment)

0 voters

Incubator funding:

As stated before, each incubator will ask the community for a minimum budget to incubate 1 new project. When new projects want to be added to the incubator, they make a forum post with the standard price list and receive additional funding as projects pass the steps required to be funded.

Grants Committee Funding

The GC will no longer need to spend time in evaluating projects with similar goals as well as deep diving into long term projects. This will either incentivize the GC to reduce their seasonal ask or pay closer attention towards funding new types of projects or spinning up incubators for common categories of projects.

A graphical overview of the end-to-end process is available here

POLL

Sentiment check on: General vibe?

  • Yes, I generally agree
  • No, I completely disagree

0 voters

1 Like
2

After re-reading what I wrote below, I seem a bit critical, so I wanted to state at the beginning that, overall, I am in favour of testing out some of the ideas in this post. I think we HAVE to experiment with funding at bDAO if we want to thrive.

That being said, the scope of this post is MASSIVE. It proposes completely changing seasonal funding for all of our ongoing projects and will likely have a significant amount of fallout INCLUDING disheartening many of our contributors. I think we need to experiment in smaller scopes first before we adopt anything like this for the entire DAO.

Feels a little early to be mandating changes when we don’t even know if this incubator idea will accomplish its goals…how about we create ONE incubator and see how it does before we make it mandatory across all of our media projects?

Is the intent for projects to have product-market fit BEFORE they try to seek a grant? I could see that if we were an investment body, but we are a grants body. Grants are typically early-stage funding for projects before they reach product-market fit.

…I don’t understand how changing all projects to quadratic funding will solve this, isn’t this still a popularity contest?

I don’t understand how Bankless Academy is an incubator…they don’t have any internal projects like the other examples. Can you explain a bit more?

It doesn’t sit well with me that we are creating these incubators to try to be more efficient with our funding, and then the GC still has to insert itself in their decisions. It also doesn’t sit well for me that you propose to let the community decide funding but have the GC decide which projects can participate - isn’t the whole point of this to reduce the GC impact on funding?

I’d like for us to be building self-sovereign entities, so I’d prefer that the GC doesn’t have it’s thumb on any incubators we create. Set up a system of incentives and let them play the game how they want.

Aside from having 2 L2’s on the team…is any of this part of the Grants Committee mandate? I don’t think so. I’m not against these initiatives, but why would Grants Committee implement them versus the GSE? Or an independent working group based upon this forum post?

How much is this going to cost? I ask because I know you have been critical of GC budget in the past, but the things you are proposing would balloon the GC budget.

This is a pretty blasé way of criticising every single project at BanklessDAO, and I’m surprised to see it from you. In my experience, projects aren’t asking for random amounts, they have a budget which they use towards a strategy of moving towards their goals. Again I’ll say that it seems a bit unfair to ask for product-market fit for early-stage products seeking grants - the entire reason they are seeking grants and not investment is BECAUSE they are pre product-market fit.

All incubators MUST incubate a project every season?

2 Likes
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Thank you for the constructive feedback @links

I definitely agree with you that we can benefit from experimentation.

My opinion here is that the projects which I have mentioned already have been working in an incubator style to some degree. We can do a deeper dive into Hatchery and IMN to gain some insights and produce a report for the DAO. What do you think?

That’s correct we (the GC) are an early stage body, but compared to other best case practices in early stage investing, we do not engage in the same deep level of analysis with teams. As you can find later in my post, the idea is for the GC to offer grants so that the project in question can prove PMF before going to seasonal matching rounds.

I do encourage you to read Justice’s post on Customer centric funding. The rationale here is that, we want this to be a popularity contest to understand which projects exactly are popular amongst our customers. We want our customers to vote with their wallets as opposed to 7 people deciding on seasonal funding since this allows everyone to see which projects have an early user base and then these projects can use it as a lever to apply for other funding opportunities.

Academy incubates educational content. Recently the GC passed a proposal to produce an educational course for the DAO Tokenomics Leveling Up Proposal In the same way we can produce other educational courses in other relevant topics. In this case, the academy team has already produced several courses, so they have the data and expertise to inform new course makers on how they should structure their content, offer help in marketing the new course as well as other support in the form of talent and resources.

Yes, you have identified the purpose of incubators correctly and I agree with you that we should envision to make them more self sovereign, my only hesitation was how this will work in practise in the transition phase and hence I stated the points above as a potential solution. But I agree with you that, in the long run, incubators should become more sovereign

The GC sets criteria on which projects it accepts. My opinion is that the GC should considers these points and adds some combination of membership status, past performance etc before accepting projects. Since there is no formal agreement on the scope of the GC, one can endlessly debate on what the GC should or should not do.

I am not critical of the GC budget, but generally the way GC spends its budget. The rationale is that, the budget spent today is not measured or spent with a long term concerete goal in mind. Ofcourse we have the DAO mission, but that’s too vague. If we were to set up these entities, then our expenses would have a clear goal and we have a way to track these goals.

This statement is only in the context of seasonal funding and not for new projects. Let me say it again if it’s not clear, new projects are not being asked to prove PMF, only seasonal projects. For new projects, (as you can read in the post above) the idea is to agree with them on what a graduation criteria looks like and fund them 1 time = give them a grant.

Today, projects approach the DAO every season for funds, but how many of them are able to produce consistent detailed reports on their progress? The amounts requested by projects is used to pay contributors, but there is no accountability on the results. The bottleneck is that the GC/DAO keeps funding projects on whatever they ask as long as it’s 1kBANK/hr but there is no consideration on the objective value that any project generates, as well as no comparison to similar other projects in the DAO or in the greater web3 ecosystem.

Not a MUST. But if they don’t it’s difficult to justify admin expenses. Going back to the earlier point of self sovereign incubators, once they are sovereign we don’t need to worry about it, it’s the road between now and then that needs solutions.

2 Likes
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Interesting post. I generally agree with this on the basis that 7 people do hold a lot of power over which projects are funded. We should be working on ways of decentralizing the project funding process.

A major revamp of the system could be difficult and costly. Could we could trial this with something like Podcast Hatchery?

If a project doesn’t fall within an incubator category then it goes to GC on its own?

Have we contacted anyone from Y-combinator or any other incubator for advice? Is this something our incoming Consensus cohort may have knowledge on?

1 Like
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Yes, that’s correct

Good idea

In a way we have already been doing this in IMN (when bankless brasil was spun out) or Hatchery when Bounty hunter was spun out. But in general, I see the need to state these examples more clearly for the DAO

2 Likes
6

@Jengajojo I generally vibe with the details in the post. Project incubators within BanklessDAO will diversify its product offerings and attract many talents. We have vaguely tested the general idea of an incubator within the DAO with IMN and PH.

The only project set up exclusively this way is the podcast hatchery which has hatched podcasts of Bankless Africa and bounty hunter. many projects during the early stage lack members with specific skill sets or often need training in specific areas. An incubator will definitely solve this issue.

To test things out, I would split the proposal into 3 different parts.

  1. proposal focusing on the incubator framework
  2. the funding of the graduated projects and
  3. the GSE and GC ops adressing membership structure and funding requirements
    when we are ready to transition to an incubator hub.

I’m assuming the graduated projects don’t need BanklessDAOs funding to survive, and the quadratic funding is another source for them.
The proposal splitting ensures a smooth transition and validation of the incubator model within DAO. As we need to establish a new NFT incubator or potentially restructure IMN.

Just a quick question: why should we fund a project which has already achieved self-sustainability. in my opinion, they are in a position to contribute back to the DAO.

I agree 100 per cent here. The expertise of GC can’t always vet the projects coming in or askes for funding, I believe this is the main reason why @links in his KPI-based funding model asks each project to come up with there own realistic KPIs

From my observation, projects generally overestimate their budget, add unwanted roles etc. I’m not sure how many projects have started with a bang, made reasonable asks and eventually rage quitted.

the requirement upgrade for project funding which you are suggesting, might solve this issue as more dedicated contributors are involved.

I agree with @links here as GC is generally considered a funding body, and GSE is the one making structural changes. I can’t imagine the Grants committee reengineering the entire membership structure of DAO with the GSE recommendations.
Splitting this proposal into different parts and a part dedicated to the membership level within the DAO will solve this issue range and give the ball back to GC coart.

1 Like
7

I really like this proposal!

I was wondering: What would be the official requirements for a team to become an incubator and be funded as such.

For example: You mentioned the need of an NFT incubator, what are the steps and requirements (for example demands for a qualifications or expertise of the members of the team) a team needs to take or prove to have in order to be recognised as such and start working as that entity within the DAO. Could I, someone who has no experience nor expertise in this area start an incubator, or do I need to prove myself in a way or another one?

Thank you in advance for your answer! :slight_smile:

8

This is a good question. I think in the beginning a group can come forward with their proof of expertise, a qualification criteria for accepting projects and a graduation criteria. With these the DAO and GC can signal their point of view. As such the idea of incubators is to have experienced people teach others how to build and ship projects

9

Thanks. I agree with this

100%, this is for projects which have not yet achieved sustainability. Now, long term projects approach the DAO each season for funds.

1 Like
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I don’t know anyone in the YC team but I could probably find someone in Entrepreneur First and I know various people at Antler? I spoke to one of the EF program mentors yesterday who is also a founder of a Web3 business.

@Jengajojo - if it would be helpful let me know and I can reach out to him?

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Thank you @Adz Please do reach out to them

1 Like
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The idea of providing structure and support to new projects is awesome.

I just want to ask a question about the structure.

The incubators I’ve gone through were been product agnostic.

Their primary goal was to provide structure, general startup education, and then connect the incubated teams with specific experts / expertise.

A program runs x times a year, a cohort come in with their ideas, they are supported in the general skills of trying to turn an idea into a viable business. Often there is a mentor assigned, there are workshops on specific skills, and there’s a lot of peer support and group learning.

The cohort and peer-based element was often the most valuable to me when I was a founder.

We all worked on very different businesses (from hardware for cement trucks, to baby wearables, to digital coaching apps, to AI for pharma…) but we had more in common than divided us. Sharpening the idea, getting good at communicating it, working on the business model, doing customer research, figuring out our Go To Market, testing and trying to get initial traction, preparing for grant / investment processes…

So, are the projects more likely to succeed if we run multiple incubators, or run one incubator program that brings cohorts together and then draws on experts from places like IM and PH - as mentors and / or for specific program elements?

If there was a shared program, would that allow us to better develop the general skills involved in getting something off the ground?

Would it enable more peer-based support across projects?

Or am I thinking of this wrong by applying startup experience to these kinds of projects?! Apologies if that’s the case!

13

There is a lot here and I don’t have the ability to take it all in but these are a few thoughts that come to mind:

  • I love the idea of quadratic voting for projects. It amplifies the signal of demand. One big question: Is it available from Gitcoin now? Could we use this for an arbitrary number of projects? I’m under the impression that it is now.
  • I like the idea of helping projects level up. That should be a part of the appeal of joining the DAO. But I’m not sure that paying a separate group to do it is ideal. The birthing team must own and deliver that.
  • I’m not confident that any group in the DAO can even launch a compelling incubation program outside of maybe Bankless Consulting (no offense to anyone). This should be happening to a great degree in the Guilds IMO.
  • I adore the way all of this is framed as a temp check for bDIP. This is the way IMO.
  • Lastly, this all may have a better chance of success if there is a staged rollout where each stage produces an independent incentive.

Much love @Jengajojo its obvious you are wading into the deep end of the pool and we is very fortunate to have you :pray:

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Hi Jenga, first thank you for the deep thoughts for developing the DAO and our systems.

My question is generally around the Incubatooors, would that be a team or an individual? and how would we know that they will be able to incubate a project? past experience i guess. Podcast hatchery would be good example may be?

If that is the case, there should be some guidelines on how to become an incubator also.

15

Thank you for sharing your experience. Maybe we can A/B test both approaches i.e. focused incubators and generic incubators and see which one works best for us?

16

Thanks for sharing. I agree with this:

Could you please help us understand why any group in the DAO is incapable of spinning up an incubator in your opinion?

Check out this thread from Gitcoin about Grant protocol