DAO Drops has developed web3 grants tooling and research to explore the power of distributing decision-making power over fund allocation, based on on-chain activity. We continue to develop tools, conduct research, and build networks to support Web3 grants managers and communities.

DAO Drops V1

In 2022, we developed DAO Drops V1, a pilot to explore the power of distributing decision-making power over fund allocation based on on-chain activity. The purpose was to assist intelligent, rapid deployment of Ethereum Foundation funds, beyond their small staff.

• assigned voting power based on on-chain activity, referencing 3 data sets as an initial example to be forked and adapted

• a playful, game-like UI to make the voting experience delightful. We received tremendous appreciation for this piece, nearly everyone found it easy to use and fun.

• design thinking for long-term DAO-ification of the program

• Stats: Distributed $250,000 in grant funding to 57 nominees. 277 voters (out of 40,000 eligible), median grant size $3,056, largest grant $18,185. Active contribution from nominees during and after the round for communications and grant design evolution.

Our research and findings for DAO Drops is available for peers in the Web3 grants ecosystem to learn from. https://daodrops.gitbook.io/dao-drops-research . It includes a summary of the process we used to design a novel grants program, for reference for new grants managers.

Project Curation

DAO Drops V1 was an initial prototype, to be further improved. The main step that was intentionally a placeholder was the curation step. We used a centralized approach for V1, using dOrg team members to whittle the public nominations down to about 50 - the number we felt people could meaningfully read through without simply choosing their favorites. We found this approach to be lacking in several ways. Here are two decisions we landed on for how to improve it.

1. We developed a V2 of DAO Drops called PairDrop, that uses pairwise comparison and a limited set of pairs, to allow more nominees while at the same time increasing fairness in evaluation. More on PairDrop in a moment.

2. If we had been able to raise the amount of funds needed to run a second grants round ourselves, we planned to use the VC "scouts" model for curation. It's the initial approach we had spoken with members from the Ethereum Foundation about. In this approach, the grant operator team would reach out to managers of Ethereum coworking communities around the world. This would achieve geographic diversity, and to the extent we would be able to effectively solicit a diversity of types of projects, would surface lesser known projects in the Ethereum ecosystem.

While centralized in one sense, we felt the Scouts approach was the best thing for us to try next, to a) reduce the operational burden and expense of sifting through hundreds of nominations, and b) reduce the other vector of centralization, the curation/review board. Our long term plan for DAO Drops V1 was to dao-ify the curation process, incentivizing contributing voters and projects to collectively manage this stage in a way that continued to increase the surface area of types and locations of projects the Ethereum Foundation was able to fund.

During DAO Drops V1, many nominees and other folks we talked to about our methodology told us they wanted to run geographic location-specific grant rounds. This could be seen as a form of curation - distributing a primary grants pool into geography-specific DAOs or round operators to manage. We had interest in this from Bankless Africa and Ethereum CDMX (Mexico City) specifically. We also had requests for even more specific rounds, for example the Colorado State budget for clean energy development, and a topic-specific use-case to curate a registry of hemp seed strains that are best for various kinds of applications such as carbon sequestration, textile production, building materials, etc.

DAO Drops V1 as an open source grants primitive can be used for a maximally easy user interface for voting.

PairDrop

To increase fairness in evaluation and further reduce the popularity contest dynamic in many Web3 grants programs, we built an adaptation of DAO Drops that used pairwise comparison voting. It is available as a forkable app here: https://github.com/dOrgTech/PairDrop. The differences between PairDrop and Optimism or General Magic's pair voting apps are:

• Voter points are distributed using a dynamic, adaptable script to scrape on-chain data that demonstrates addresses have various types of expertise and experience in Ethereum. (The algorithmic governance innovation from DAO Drops V1)

• Round operators can customize how many pairs are selected. As few as five pairs, even with a low number of voters, successfully determines preference average.

• Uses BudgetBox by Colony, a trusted machine learning model for generating a "preference graph" to normalize funds distribution based on voter choices. We believe this mechanism is an underutilized way for communities to harness their collective intelligence in an efficient and unbiased manner.

Next Steps

The DAO Drops team is still available to run grants rounds if we secure more funding partners. For now, we are directing the funds we raise into doing what we do best at dOrg, developing open source tooling for DAOs and communities.

The next drops we are working on include:

Privacy DAO: In Privacy DAO the privacy of its members is paramount. The infrastructure is meticulously designed to ensure that each interaction and communication is encrypted and secure. Make decisions and allocate funds as a community without revealing the identity of participants. This is important for civic activism, human rights DAOs, and Web3 grants operators who want to experiment with getting funds into these hard to service areas. A specific example for reference: "How might we finance Indigenous land defenders while protecting their identity and location, to safeguard them from being assassinated by mining companies."

DAO Onboarding Bot: To further reduce the overhead of grant round communications, as well as the burden on small projects to write grant applications (+ loads of non-grants use-cases), one of our drops this quarter will be an instructions kit on how to build a RAG bot using AI, trained on your community's data. For grant writers, the bot can reference previous grant applications, knowledge materials generated by DAO members, code bases and more, to ease the burden of writing hundreds of grant applications a year, each with a specific frame as put forth by the grantor. Additionally, such bots can assist with DAO onboarding to help new members find resources, knowledge, and who to contact.

DAO Drops V1 as a forkable app.

Forkable Passport for DAO membership and voting power. Based on dOrg passport that we developed for participation in our developer collective, it includes earning reputation, voting, skill credentials, and more. It can be used to support interoperability across grants ecosystems to assign voting power and roles.

Please don't hesitate to reach out if you want assistance building or have questions about what we found in our R&D through developing these offerings. We have deep expertise on the technical side, as well as decades of experience developing multi-stakeholder and coalition-based grants programs. The research from our grants development is publicly available for anyone working on public goods funding innovations. https://daodrops.gitbook.io/dao-drops-research

We look forward to participating in the Cartographer Syndicate. Thank you for your support!

DAO Drops team at dOrg.tech

Muath Juady, Ori Shimony, Marko Negroni, Magenta Ceiba, Andrei Taranu, Anita Caldera