In Web3 and DAOs, grants are decentralized, community-governed financial distributions from a collective treasury, used to fund public goods, projects, and initiatives that align with the network’s purpose and values.
Grants represent one of the most fundamental actions a DAO can take. They are the primary mechanism through which a DAO translates its collective intent into funded work. Unlike traditional grants, which are often slow and administered by centralized committees, DAO grants are typically proposed, debated, and approved through transparent, on-chain governance processes. This allows for more dynamic, responsive, and permissionless resource allocation, enabling communities to directly fund the contributors and projects they believe will best serve the ecosystem.
This model transforms funding from a top-down directive into a bottom-up, community-driven process. Grants are used to fund everything from core protocol development and security audits to creative content, community-building efforts, and ecosystem research. They are a powerful tool for bootstrapping an ecosystem, incentivizing innovation, and rewarding contributions in a way that is aligned with the collective’s shared goals.
Uses of “Grants”
As a Primary Tool for Treasury Deployment
For any DAO, the treasury is its central economic engine, and grants are the primary vehicle for deploying its capital. The governance process is often centered on evaluating grant proposals to decide how to allocate these shared resources effectively. A DAO’s grants program is a direct reflection of its strategic priorities and its ability to execute on its mission.
As a Foundational Mechanism in DAO Frameworks
As noted in notes/links/to-review/A Pocket Guide to DAO Frameworks, many of the earliest and most successful DAO frameworks were designed specifically for grant-making.
- The Moloch framework was conceived as a “minimum viable DAO” for grant distribution, introducing the “Ragequit” feature to protect minority members from funding decisions they strongly oppose.
- More modular frameworks like OpenZeppelin Governor provide the general-purpose proposal and voting machinery that DAOs like Uniswap use to pass grant proposals, funding a wide range of ecosystem development.
To Fund Autonomous Teams in Scalable Networks
In the scalable network model described in artifacts/articles/network-evolution 1/Building DAOs as scalable networks, grants are essential for resourcing the small, autonomous teams (Cells) that perform the network’s work. Rather than receiving a salary from a central authority, Cells or individuals can submit proposals to the DAO’s governance bodies to receive grants for specific projects. This model also supports innovative funding mechanisms like retroactive public goods funding, a type of grant that rewards past work that has proven valuable to the network, thereby incentivizing permissionless innovation.
Related Concepts
- Treasury: The collective pool of assets from which grants are funded.
- Governance: The decision-making process through which grant proposals are reviewed and approved.
- DAOs: The organizations that operate grants programs to achieve their goals.
- Resources: Grants are the mechanism for allocating a DAO’s financial resources to contributors.
- Cells: The autonomous teams and working groups that are often the recipients of grants.