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Yam Grants

What are Grants?​

Grants are the mechanisms by which contributors and the DAO interact. Grants are contracts formulated between individual contributors or groups of contributors, and YAM token holders, with specific terms and expectations. The DAO provides retroactive funding and the contributors provide the agreed upon work. Grants are focused on particular goals that the DAO has, and live within a particular silo. Fundamentally, a silo is a collection of grants that are given out to complete the tasks and goals enumerated in the creation of the silo.

Grants have defined durations and scopes of work. These defined durations are important for token holders to be able to review the progress and value of the work being done. Grants can be given out for parts of overall projects, and renewed after the scope of the grant is completed. Their main goal is accountability and transparency for contributors. Grants provide accountability for token holders by giving them the power to negotiate the terms of the grant contract and pay out on completion of that contract. Contributors who wish to receive payment can limit their risk of non-payment by insisting on shorter term grants with smaller packages of deliverables, similarly to a monthly employment contract that rolls over.

Applying for a Grant​

We imagine 2 different ways to apply for grants.

  • The first way is for someone to proactively apply for a grant to do some work for the DAO that the applicant has noticed needs to be done. The applicant would need to document the work that needs to be done, specify how they plan to achieve it, and specify the terms under which they will do the work. We expect this to be more common among existing contributors and those who are familiar with YAM already, but it is open to anyone. This type of grant proposal would need to be approved by YAM token holders before any payment could be made.
  • The other way is to respond to a request for work that is written by someone associated with the DAO who sees work that needs to be done. This is a “request for qualifications (RFQ)” model and will require that someone already participating in or working on YAM sees something that needs to be done but does not have the time or skills to do it themselves. That person would scope out the work that they need done and get it pre-approved for a grant. Applicant who can do the work would then put themselves forward to governance to take on the work and would be approved by YAM token holders.

Grant Requirements​

Because Grants are contracts between YAM token holders and another party, they must be thorough and include all the required specifications needed by both parties to determine whether the work promised matches the work done. The quality of these contracts will determine the success of the program. Grant recipients are partially at the mercy of YAM token holders, who hold the keys to pay out the grant, but unfair practices and non-payment will quickly lead to a lack of trust and inability for the DAO to get more work.

Because of this, it is in the best interests of the DAO to pay consistently, and in order to do so and limit it’s own risk, the DAO must be very clear to specify what it expects out of the work to be done. If token holders are writing the grant proposals for others to take on (RFP model) then they have the power to specify as they see fit. If the future recipients are the ones writing the proposals then the DAO will need strong examples, best practices, and guidelines for these documents to make sure both parties leave happy, and if not, that the DAO can show that it was not the one acting in bad faith.

In the next sections we will look at how we think this model should be structured to protect both the DAO and future grant recipients.