Summary
- We support the initiative put forward by @OneTrueKirk to launch a Grants Pilot Program for the Morpho ecosystem.
- To facilitate a smooth grant lifecycle for the pilot program while introducing the Morpho community to the Questbook platform, we propose that submission, public discussion, KYC/contracting, and milestone payouts be managed through the Questbook platform.
- By using Questbook, the community will be able to transparently monitor grantees’ progress toward milestones as well as the associated payouts.
- Signers on the multisig holding the Grant Pilot Program’s MORPHO will be able to take advantage of Questbook’s SAFE integration to easily and accurately disburse MORPHO to grantees at the appropriate milestones.
- Questbook has facilitated the efficient distribution of more than $8M in grants while operating grants programs for leading DAOs and chains including Arbitrum, Compound, TON, Axelar, and Polygon.
- Toward the end of the grants pilot program, Questbook will solicit community feedback and, should the community find value in the service, propose to facilitate future iterations of the Morpho Grants Program through the proven delegated domain allocation model that powers Questbook’s successful hosting of grants programs for DAOs including Arbitrum, Polygon, and Compound.
Purpose
An active grants program is an important way to attract and incentivize builders to build on Morpho. The Grants Pilot Program proposed by @OneTrueKirk strikes us as a balanced and efficient approach to get the program off the ground and to empower holders of MORPHO to engage directly in the growth of projects and tooling around the Morpho ecosystem.
By addressing the operational needs of the program through Questbook, the DAO will benefit from greater transparency into the process and will be well-prepared to take over operation of future grants cycles through our proposed delegated domain allocation model.
Delegated domain allocation strikes a critical balance between fully decentralized grant decision-making and centralized control that allows the DAO to rely on its experts in each domain while retaining control over the grants program as a whole:
Challenges for tokenholder-weighted grant allocation
We also know from experience with other DAOs that as the ecosystem and developer community around Morpho grow – and as excitement over token transferability gradually fades – it becomes unsustainable for all active delegates to thoughtfully review all incoming proposals. Other challenges raised by tokenholder-weighted voting include:
- Delegates - whether individuals or organizations - tend to have specialized knowledge in some aspects of the DAO’s operations and limited knowledge in others. Tokenholder-weighted voting makes it difficult to surface which among a delegate’s votes on proposals are expertly informed and which are based on limited knowledge within the domain of the proposal.
- Conversely, delegates’ specialized knowledge is valuable for proposal review but can easily get drowned out by less-informed viewpoints within a tokenholder-weighted voting model.
Challenges for traditional grants councils
Many DAOs address the fatigue and expertise mismatch challenges of tokenholder-based voting by empowering a Grants Council or similar body to assess proposals and manage grants. Such bodies have their own set of challenges:
- Gaps in committee knowledge base - As with tokenholder-weighted voting, it is unreasonable to expect every grant committee member to have expertise across all relevant domains. If there are any gaps in the committee’s expertise as a unit, it becomes difficult to fairly assess projects that lie outside the committee’s expertise yet may still be valuable to the Morpho ecosystem. By delegating the decision-making to people with expertise in domains deemed key to the protocol’s success, we can successfully surface the ideas and projects with the greatest promise for advancing the DAO’s goals.
- Centralized manager burnout - A single committee or Council can handle only so many applications at any point in time. By not delegating and decentralizing the capital allocation, such programs introduce a single point of failure.
- Inadequate Tooling - Grants Councils are often spun up in the absence of transparent infrastructure for ensuring that the community can publicly follow the allocation process and flow of tokens to builders. The lion’s share of grants infrastructure platforms are built by and for specialists in the public goods funding space and implement models that, while being truly clever and interesting philosophically, simply don’t reflect the straightforward, predictable way that DeFi DAOs and their builders seek to fund and be funded.
Delegated domain allocation retains tokenholder enfranchisement by ensuring that holders of MORPHO retain control over periodic assessment and evaluation of the domain allocators.
Despite the shortcomings of full tokenholder-based voting, given the urgency of capitalizing on ecosystem excitement to launch a Grants Pilot Program quickly, we support @OneTrueKirk’s proposal for the Grants Pilot Program to function on a tokenholder-weighted voting model. However, we believe it is important for the community to be prepared to transition to a more efficient model after completion of the Grants Pilot Program, and we believe that having domain allocators operate future iterations of the Grants Program will empower the Morpho DAO to delegate builder outreach and support to members of the community who work closely with builders and understand their needs. By periodically reviewing and re-authorizing these DAO-selected domain allocators to review proposals and allocate MORPHO to the most promising projects, the DAO will retain control over its vision for its Grants Program while benefiting from the efficiencies of charging community experts in each domain with the details of implementing the program.
Anticipated outcomes
By adopting Questbook’s platform for the Grants Pilot Program, the Morpho DAO will:
- Gain transparency into the grant allocation, milestones, and disbursement processes for its awarded grants.
- Develop familiarity with the grant submission and review process within Questbook, facilitating the proposed transition to a delegated domain allocation model run through the platform.
- Expose prospective domain allocators within the community to the grant review process on Questbook, increasing the likelihood of identifying experienced and willing community members to serve as domain allocators.
- Reduce the risk of misappropriation or loss of MORPHO, e.g. due to a mistake in a multisig transaction for disbursement of MORPHO.
Questbook proposal flow for builders
On the Questbook platform, proposers would find the Morpho Grants Pilot Program on the platform landing page at questbook.app or by navigating to a program-specific domain (for example, morpho.questbook.app could be assigned for this purpose).
Proposers create an account (key) on the platform which is used for future logins. They can then upload their proposal together with a contact email and an address to be used for funding if the proposal is accepted.
Once submitted, the proposal is available for public view and comment by the community. Proposers can choose to receive email notifications about their proposal and can respond to public questions and comments in the proposal thread.
If the proposal is accepted – in the case of this Grants Pilot Program, by tokenholder voting – then the Questbook platform can be used to facilitate KYC/KYB obligations and establishment of a contract between the grantee and the DAO for the proposed work.
As the milestones established in the Grants Pilot Program are met, grantees communicate the associated outcomes publicly on the Questbook thread. Grants multisig signers can then move the milestone payment forward through Questbook’s Safe integration which offers one-click queueing of single or multiple grantee payout transactions.
The Future: Toward Delegated Domain Allocation
Alongside our suggestion to run the Grants Pilot Program through Questbook, we would invite the community to begin the process of identifying suitable domains for efficient review and allocation in future iterations of the Morpho Grants Program. Below are some initial suggestions based on priorities raised in the Morpho Governance Forum:
| Domain | Credentials Needed | Why it is relevant |
|---|---|---|
| Security (smart contracts, front ends, infrastructure, and socials) | Verifiable experience with smart contract audits and/or web2 cybersecurity | Security of the protocol and of user access to the protocol is a top priority for any DeFi protocol |
| Developer tooling | Core contributor to Morpho or similar EVM-based DeFi protocols | Making it easier to build on Morpho accelerates the pace of integrations that attract users and capital to the protocol |
| Multichain Strategy | Verifiable experience with smart contract deployments across multiple chains or work on cross-chain infrastructure | Lending and borrowing is happening at scale across multiple chains; Morpho misses out on opportunities to serve any chain it is not deployed on. |
| Developer and user education | Demonstrated technical writing or workshop organizing skills | Expand the talent pool for development around Morpho and help new users understand what makes Morpho different |
| New protocol ideas and dapps | Core contributor to Morpho; past Morpho Grants Program Awardee | Encourage more people to experiment and build DeFi integrations on top of Morpho |
Future Domain Allocator Roles & Responsibilities:
- Time commitment per week: Estimated 10 hours, might fluctuate based on the number of applications.
- Reviewing applications: The grant manager (Initially a Questbook team member) will ensure a 2 week turnaround time to actionable feedback or a decision for the applicants.
- Allocation of amount for the accepted grant proposals
- Using the Questbook platform to disburse MORPHO via the associated multisig. It’s seamless, you can check it out here.
Questbook will proactively manage the tasks of the domain allocators at first, but eventually this manager will be elected from the community itself.
Future Compensation Model for Domain Allocators and Manager:
- Domain Allocator is paid at $90 an hour, max $900/week.
- Grant manager is paid at $100 an hour, max $1000/week.
Assuming five domains to start plus a grant manager, personnel costs to run a future grants round through delegated domain allocation are capped at $71,500 and likely to be just a fraction of this amount. These costs are fully open to community input.
Success metrics for adopting Questbook as the Grants Pilot Program platform
Objective
- The community has meaningful insight into how funds are allocated according to builder milestones within the Trail Grants Program.
- The community is motivated to fine-tune the relevant domains for the next iteration of Morpho Grants and identifies (including members self-identifying as) candidate domain allocators for these domains.
- Engagement of community members in assessing the quality of Grants Pilot Program outcomes.
Subjective
- An increase in community involvement keeps the grant program accountable
- Increase in quality of external builder sentiment toward Morpho as a protocol with a robust and trustworthy grants program.
About Questbook & operational costs:
Credentials
- Questbook (YC-W21) is a leading decentralized grant orchestration tool. The platform has facilitated over $8M in grant distributions and is in use by high-impact DAOs includding Compound, Arbitrum, TON, Axelar, and Polygon.
- An experienced Questbook team member will facilitate onboarding of Morpho’s Grants Pilot Program to the Questbook platform.
Costs
- To cover costs associated with the development, user support, infrastructure, integrations that enable Questbook to deliver a quality platform for end-to-end grants management, Questbook charges a monthly service fee of $10,000.
- To encourage the community to experience the platform’s value for itself, and because Morpho’s Grants Pilot Program will not directly use the domain allocation reviewer tools, we will offer the tool for a fixed one-time fee of $10,000 instead of three charges to span this one-quarter pilot program (67% discount).
- For any specific asks from the grants multisig signers in order to run the process more smoothly, we charge for the additional features based on the development overhead. From our previous work experience: We recommend a budget of $20K to be kept aside for such specific features.
Community interest and next steps
This is a temperature check to gather interest in having Questbook facilitate proposal intake, discussion, and transparent milestone payouts for the Grants Pilot Program while retaining the full tokenholder-based voting of @OneTrueKirk’s concept for the program. If the idea is accepted by the community, we will work with the Morpho Association to implement the proposal workflow for the Morpho Grants Pilot Program within Questbook and share additional resources for welcoming the community to the platform.
We will also be involving more members from the community to prepare for a future delegated domain allocation-based Grants Program by identifying the most compelling domains for the Morpho ecosystem and a strong set of domain allocators to provide expert review and assessment of proposals in these domains.