Following community discussion about a grants program, the general feedback has been that in the long run, a formal program, likely with a dedicated grants committee, would produce the most effective and disciplined results. That said, given that the Morpho DAO has recently received a large number of new delegates and the program is just being considered for the first time, a limited-scope pilot would make sense at this time.
A few useful points that I want to highlight here:
PGov agreed with the idea of grants cycles to streamline the review process, and suggested that grants be placed into specific categories
Anton suggested that the grants program should not include big “integrator grants”, but focus on builder grants and smaller initiatives where grants can have a large impact
SEEDGov argued that partial upfront funding should be acceptable, with the majority contingent on milestones and proven results
allthecolors advocated for the use of an external grants framework such as Questbook
GFXLabs emphasized the need for a full lifecycle model of grants, not simply “post and get funding”, and a disciplined approach to monitoring the results of grants
Zeebradoom advocated for specific focuses for each round of grants to narrow the scope of applications and avoid wasteful spending
Sov advocated for a clear standard payments structure, ie, 20% up front, with the rest tied to milestones or measured impact
I’m happy that the DAO received impact from experts who have overseen millions of dollars in grant spend on committees across multiple major DAOs including Compound, Uniswap, Optimism, and Bitcoin.
In light of this feedback, I’d like to propose the following pilot program:
Allocate a maximum of 200k MORPHO tokens for the first three month cycle of grants.
Limit the first cycle to builder grants (tooling that enhances the use of the Morpho protocol), since this is one of the easiest categories to measure objectively. To be eligible, the tool must be open to everyone (ie, position management tools that are part of a subscription-based platform are not eligible).
Publish a “call for grant applications” with a submission deadline of January 1, where submissions are to be posted in a single thread in the Morpho forum. Require that grants define objectively measurable impact metrics for their submission to be eligible, and that grants cover the implementation of new work, not retroactively request funding for already-completed work. For example, consider the idea of an aggregator that rebalances between stablecoins in pursuit of the highest yield on MORPHO. For this project, good metrics could include net-new TVL (users who deposit capital that was not previously on Morpho, as opposed to TVL drawn from existing vaults), as well as net rate improvement (how much users benefitted compared to depositing a single stablecoin in the best performing of the vaults it integrates).
Use weighted voting on Snapshot to select which grants to fund, with voting taking place on January 15.
Fund grants in the order of the most votes received, breaking ties by funding the grant with the smaller budget request. For example, if there are five grants under consideration, which all receive 1M votes, and requested 100k, 50k, 50k, 25k, 25k MORPHO, then all but the most expensive grant will be funded.
If there is a “deadlock”, as when grants have an equal funding request, there will be a runoff vote with single-choice voting of the grants in question.
Adopt a standard framework where 20% of the grant’s budget is paid up front, 20% paid upon the completion of the work described in the application, with the remainder based on the objective metrics defined in the grant application
The budget is intentionally modest to allow for a “training wheels” period in evaluating grants while minimizing expenditure. After the first cycle is complete, the DAO can consider whether to elect a grant committee and allocate an increased budget to the program.
We are fully in support of this grants proposal and the measured approach it takes.
Consider publishing a follow-up report at the end of the pilot, summarizing key learnings and evaluating whether the budget allocation and milestone-based payment structure achieved the intended results. This would provide valuable input for scaling the program in future cycles.
Also we recommend not excluding retroactive grants. We have seen these to be net positive for ecosystems like Optimism, and incentivize builders to work on relevant projects before receiving a grant.
Looking forward to seeing how this initiative drives innovation in the Morpho ecosystem!
A 200K MORPHO budget for a three-month builder-focused cycle feels appropriate for the first iteration of a Morpho DAO grants program. One comment from experience in other DAOs (STIP, OP) is that individual grant decisions are often challenging for delegates to evaluate effectively due to incentives, bandwidth, and domain expertise. Having delegates vote on proposals is a fine place to start, but it’s definitely something the DAO can work to address in future iterations, whether via a council or more cavalier approaches.
One clarification: Are we correct in assuming the Morpho Association handles the program’s operations, such as managing deadlines, funding, and assessing grantee outcomes?
I support the grant pilot program but would recommend a few considerations:
I agree with @Re7-Labs that there’s no particular reason retroactive funding should be dismissed. Since it was never expected, it’s the perfect time to include this and reward those who have already supported Morpho to get where it has gotten today.
*Disclaimer: Aragon has provided trustless onchain guardians for Morpho vault curators, which have been extremely beneficial and generated $0 for this service. I would not vote for Aragon due to the conflict of interest, but i’m sure the team would appreciate the opportunity.
I agree with @Gauntlet that delegates may not be the best allocators. I would trust the Morpho Association for this.
I think weighted voting otherwise is a great mechanism. It’s a shame it would be offchain voting. Gauges are becoming more popular for directing incentives and could be considered for a larger program in the future.
I would recommend stricter guidlines for applicants including: being FULLY open-source
I think setting a framework for payments, a follow-up report, etc. are all important to drive future iterations of the program and appreciate Morpho launching a sensible pilot first.
Makes a lot of sense the way you outline the pilot, particularly pleased to see point 6 included for stricter accountability.
Would agree with @Gauntlet that in future iterations grant assessments is probably best done by a committee of sorts, though for this first round I think having delegates involved can be a good experience this early on with governance just launching etc etc. Also, I’m inclined to agree with @Re7-Labs, not sure it makes complete sense to close the door to retroactive grants entirely; that is, if there is a protocol that can be tweaked to benefit Morpho, we shouldn’t turn those down just because they’ve already built the thing. At the same time, it’s understandable to want to keep things simple for now, so perhaps that is also something to consider for the next iteration.
As someone who’s already built on Morpho, I think it makes sense to start with non-retroactive grants. This would make everything way simpler - from defining the scope to evaluating proposals - and help us get the program running faster.
But I agree with @Re7-Labs and @Avantgarde, maybe we could still have applicants mention what they’ve already built in their proposals, while being super clear that this program won’t be “rewarding” past work. This would give the Morpho Association some useful context about:
Whether the team has a good track record of building
If we might need another program to reward those past contributions
We support the idea of using the first grants cycle as “training wheels” to test the process. Also, we believe it’s important to start discussions about the program’s future at least one month before the pilot program ends.
While we understand—and agree—that past builders would value the opportunity to receive retroactive grants, it’s equally important to prioritize and encourage new work. If retroactive grants are to be considered, it would be crucial to clearly define the criteria in advance, as well as establish who will evaluate them and how the assessment process will be carried out.
We wouldn’t completely rule out the role of delegates in the future. A hybrid model—combining a committee structure with off-chain voting to gauge interest from delegates (and the community) could make sense to ensure transparency and engagement.
It seems right to start the grants program as a pilot program with an allocation of 200k MORPHO tokens.
At this stage, when the grant distribution system is not yet fully mature, it is appropriate to limit the scope to builder grants.
We would like to share three comments regarding the design of the program:
First, we particularly support GFXLabs’ idea.
From our experience in Optimism Grants Council, we recognize the significant value of running grants programs in cycles. It allows for iterative learning about grant allocation, both for assessing individual initiatives and for understanding the broader impact on the ecosystem. This process is critical for refining the system over time.
Second, it is essential to clearly define the format for grant proposals. Without standardized requirements, evaluating proposals becomes challenging, and reviewers may need to ask follow-up questions, causing unnecessary delays. A well-defined format will streamline the review process and improve efficiency.
Third, we would like to raise a question regarding how discussions on each grant proposal will be conducted. One potential solution could be:
Managing initial grant proposals within a single thread.
Allowing only complete proposals, with all required information, to proceed to the next stage.
Creating a dedicated discussion thread for each complete proposal, managed by the administrator, to serve as the platform for evaluations and discussions.
While this approach may increase the administrative burden, it would prevent grant proposals from overwhelming unintended sections of the forum and ensure a more organized process.
Agreed with this – directly funding past work opens up a can of worms, but naturally builders with a track record of building on Morpho should be seen in a favorable light when grants are evaluated. I’m not closed to the idea of retroactive rewards, but would prefer that this be considered separately from the forward-looking grants program.
Let’s not think of it as retroactive funding. Let’s think of it as “here’s a past success, and here is how we can extend that success further.”
This has the benefit of ensuring the funds are for future deliverables, and treats the past contributions as proof of principle (assuming it’s related to the new grant plan).
GFX has been on grants/procurement committees that handled several hundred of million dollars in 2024. There’s very few retroactive programs that perform as advertised, in our experience. Simultaneously, grantees often show up with little experience and no proof of principle, and asking for a large sum. The sweet spot is in the middle, where the applicant has prior success that can be invested in.
It’s also going to be important to pick a specific goal(s) for grants. TVL growth? Measured by whom? User growth? Is that DAU or MAU or what? Protocol revenue? How is that attributed to avoid double counting or capturing accidental windfall?
Whatever you measure for is what you’re likely to get, so the goal needs to be the very first thing established. If there are multiple goals, how much budget for each one? In our experience, it’s also best to have budgets that are specific to a single goal rather than an omnibus grants fund with lots of objectives. It confuses applicants - they’ll try to kinda maybe sorta hit all the objectives but not do a good job at any - as well as reviewers/delegates - how do you weigh increasing TVL vs increasing users, etc.
To be perfectly honest, the first time anyone does anything, it won’t be perfect. We would suggest simply choosing three reviewers, capping grants at a modest sum, like 20k MORPHO, giving them a goal and short term deadline, and getting things moving quickly while a more extended discussion takes place about long term goals and procedures.
Excited to see this moving. Thanks for driving it forward.
I agree with @GFXlabs on treating past work as “proof of principle” rather than retroactive funding - I’ve seen this work really well in other DAOs where we find that sweet spot of supporting builders who’ve already shown what they can do.
Also think @Gauntlet nailed it about the challenges of delegate voting on individual grants, and love SEEDGov’s suggestion to start planning the next phase before this pilot wraps up.
From my experience, starting small and focused while building toward something more structured (whether that’s a dedicated committee or some hybrid approach) feels like the right way to go here.
I think it could be interesting to perhaps provide the grants in stages; maybe in the first stage, a large number of grant applicants are given the “initial” starting grant, and only those that make progress and complete further parts of the grant get future tranches.
I think this removes the often suffocating barrier where people/orgs who have never built an open source grant before get voted out at the very beginning, even if they might have great ideas. Morpho could be a great place to start for them through this design.
Maybe we first give grant recipients like a small ~1k in Morpho initially as incentive to start working, and only those who finish get the rest. It also lowers the barrier for idea cutoff; its no longer “is this project worth 20 grand” its “is this worth at least pursuing for like 1k”. Just thoughts, would love counter arguments.
Long-standing builders of large orgs who have big names for themselves would also get included and should not be worried as if they finish their work, they will get paid in full just as they always have. Accounts receivables for them.
Joseph here from Axis Advisory - I won’t delve deep into our background as most can be found on our social media accounts, but we’re very excited to start offering our thoughts on several initiatives within the Morpho Ecosystem (we’ve been following for a while through the good friends of ours over at @Gauntlet ).
We want to share some of our thoughts on the proposal above (great work here):
Acknowledging the opening comment on the plan to run a limited-scope pilot before transitioning to a more formal program with a dedicated grants committee, given the decision to rely on delegates to select the most deserving projects for grants, we feel that the following points should be considered:
The signalling effects of larger delegates → This is something we observed over at Arbitrum which is why larger delegates such as L2Beat tend to vote towards the end of the voting period (to avoid unintentionally signalling outcomes and influencing smaller voters). On this note, we think that within the context of grants, this could be a good use of Shutter’s shielded voting, whereby votes are encrypted during the voting period and are decrypted only after the vote closes i.e. during the voting process a voter’s position is private, and after the vote, positions are made public.
Voter fatigue → Frequent or unstructured voting can lead to rushed decisions, excessive noise and delegate disengagement. We feel that the use of grant cycles, as proposed by PGov and others, whereby grants will be evaluated per quarter could help mitigate this. This will also help reduce the load for delegates and add more structure to the process. Additionally, the fact that clear pre-defined tie-braking mechanisms are already in place, will help maintain an efficient grant allocation process and prevent unnecessary delays or confusion.
Conflicts of Interest → In smaller ecosystems, the risk of conflicts of interest is heightened due to the likelihood of personal or financial ties between delegates and applicants. While it is impossible to eliminate this risk entirely, proactive measures can be implemented to mitigate its impact. Establishing robust checks and balances, alongside clear conflict-of-interest policies could prove useful. These policies should mandate that delegates disclose any relationships with applicants and recuse themselves from voting on proposals where a conflict exists. While relying on self-declaration is not foolproof (and may benefit bad actors), this will depend on the culture within the ecosystem and is a proactive measure which strives to protect the integrity of the grant decision-making process.
Lack of structure and monitoring → Appointing a dedicated program manager could prove useful. This individual would take responsibility for managing and overseeing the entire grant process, ensuring that key milestones are tracked, monitored, and met. In addition to operational oversight, the program manager would serve as a vital communication link, maintaining ongoing dialogue with grantees, addressing their concerns, and providing guidance as needed. The program manager would also act as a liaison between delegates and applicants, ensuring that the expectations and decisions of delegates are clearly conveyed to grantees while offering regular progress updates to delegates. We have some experience in this regard recently advising grants programs in the Cosmos Ecosystem and also based on our experience recently running grants initiatives in Arbitrum & Uniswap - happy to hop on a call w/delegates to discuss and brainstrom further!
Lack of participation by delegates → While we understand that this should not be a major concern, this can be proactively addressed by implementing mechanisms such as delegate incentives to ensure sustained engagement. One approach could involve introducing gamified incentives tied to the performance of projects selected by delegates. For instance, delegates could earn rewards based on the success of the projects they support, measured by milestones achieved or the overall impact of the project. This not only motivates delegates to participate actively but also encourages thoughtful and strategic decision-making.
Low-quality applications → The preparation of a clear and standardized application template should be introduced. This template would ensure that applicants provide consistent info and address key evaluation criteria, facilitating a more efficient and thorough review process for delegates. The template would also set clear expectations, signaling to applicants the level of effort and detail required. Additionally, implementing a small application fee (similar to the fees firms pay when applying for regulatory licenses) could act as a further filter. This fee would discourage spam submissions and deter less serious applicants who are unwilling to invest the effort needed for a well-prepared proposal. Together, these measures would help reduce the burden on delegates, ensuring their time is spent evaluating a smaller pool of high-quality applications.
Other observations/thoughts:
Conducting a post-mortem evaluation at the end of a funding cycle to identify key challenges, refine processes and iterate with every cycle, serving a feedback loop akin to that carried out in Optimism. This should include a review of both successful and unsuccessful grants, and can also include metrics such as the % of grants rejected, the success of funded projects, and time taken for grantees to meet milestones.
Possibly outsourcing the reviewing of grants to Thrive Protocol or something similar could prove useful but based on the forum posts, it seems the case that delegates will be best position to understand the needs of the ecosystem at this stage.
We second that a % of funding is paid upfront as stated by SEEDGov, Sov and others. This approach is particularly crucial for projects that require initial capital to begin their work effectively i.e. providing a portion of the grant upfront ensures that resource-constrained teams can cover essential startup costs, secure necessary tools or resources, and make timely progress toward their milestones.
We support the submission of applications in a single thread on the Morpho forum, however, to facilitate the review process, applicants could also include a downloadable PDF link with their full proposal towards the end of their submission. These PDFs can then be organised in a shared database, such as Notion, enabling easier navigation, filtering and review. One concern that comes to mind with conducting a public review (and not entrusting in a grants committee/council) is the concept of confidentiality. This should be considered when designing the application template.
Introducing an amendment period for applications, whereby delegates would have the opportunity to ask questions and seek clarifications, either on the forum or through online calls could prove useful. This interaction would allow applicants to address any gaps or ambiguities in their proposals and refine their submissions accordingly.
We look forward to your feedback and seeing the initiative come to fruition!
It’s great to see a Grants Pilot Program move forward.
@Gauntlet raised an important question about how operations for the pilot program will look, and several community members have voice reasoned interest in seeing the program eventually transition away from pure tokenholder-weighted voting in future cycles.
Running the Grants Pilot Program on Questbook would be an efficient way to address both of these forward-looking questions and to prepare for the transition to fully a community-managed grants program.
We invite the community to provide feedback on our temperature check post for running the Pilot Program through Questbook, which has already facilitated $8M in grants for DAOs and chains including Arbitrum, Compound, TON, Axelar, and Polygon.
Thanks everyone for the thoughtful comments. Wanted to make one amendment to my initial proposal:
Originally I said we should “limit the first cycle to builder grants (tooling that enhances the use of the Morpho protocol).”
I’d like to adjust this idea to “limit the first cycle to those grants which have objectively defined impact metrics”. For example, perhaps educational content about Morpho that provably receives a certain number of views could be a valid grant category. It’s hard to be sure in advance what kind of quality proposals may arise, and I want to focus on emphasizing that they be objectively measurable, rather than excluding any particular category of proposal.
As a first iteration, in my opinon (and given the nascent stage of the Morpho ecosystem), it’s a good idea to keep the scope of the grants program a bit generic. This way, you’d be able to assess the verticals that receive most interest from grant proposers and can then double down on the ones that work and prove to have a positive impact from an ROI perspective.
This looks very good, looking forward to see what grants will be received!
In general I would say that it would be good to list a number of areas where we want to expect grants, but I guess let’s try that way and see if we see anything interesting.