Yam Grants

How do Grants Work?

Grants are the mechanism by which contributors and the DAO interact. They are contracts developed between individuals, or groups of contributors, and YAM token holders. Upon approval of the grant via off-chain governance vote, the DAO agrees to retroactive funding and the contributors agree to perform the agreed upon work. Grants have defined durations and scopes of work, which is important for token holders to effectively review the progress and value of the work being done.

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 more consistent payments can limit their risk of non-payment by insisting on shorter term grants with smaller packages of deliverables, similar to a monthly employment contract that rolls over. Grants can be given out for parts of overall projects and renewed after the scope of the grant is completed.

After a grant is approved, they are "Optimistic" in their execution of payments, based on inspiration from other optimistic systems such as Element.fi’s optimistic grants program, Joey Santoro’s Optimistic Approval, and the way optimistic rollups work.

The term “optimistic” refers to the expectation that the grant recipient has completed it unless it is disputed. Payment is the default outcome, but if the payment is disputed then the payment is put on hold while the disagreement is escalated to be resolved. Yam's Optimistic grants models uses its off-chain governance process as an adjudication layer. It relies on there being at least one person who is paying attention and willing to dispute in the case of wrong-doing.

Applying for a Grant

We imagine 2 different Types of Grants: BYOP (Bring Your Own Project) and RFP (Request For Proposal) responses.

• BYOP requires 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 documents the work that needs to be done, specifies how they plan to achieve it, and specifies the terms under which they will do the work. This type of grant proposal would need to start with an application and requirements document approved by YAM token holders before any payments would be made.

• The other way is to respond to a pre-approved 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 Proposal (RFP) model and requires that someone has already seen something that needs to be done but does not have the time or skills to do it themselves. That person or group would scope out the work that needs to be done and get it pre-approved for a grant. Applicants 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 are expected to 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 determines the success of the Grants 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. In this way, the grants program can be modelled as a continuous game in which both parties are better off continuing to cooperate instead of defecting for short term gain. 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.

Grant Proposal Flow

Step 1: Project Creation and Definition

Define and specify your project. This is the information that Token holders will use to determine whether to move forward with the project. This is where you pitch your idea and get everyone excited! The primary document for this work is the Project Specification Document (like this one). It can be supplemented with a marketing document if the author believes that will help sell the project to token holders.

Project Specification: More thorough document explaining the workings of the project. Scope, Goals, requirements, users and user flows, risks, comparables, expected deliverables, etc. What exactly is the DAO funding and what will the project do when complete.

Project Marketing Document (optional): High level document that is intended for a more casual audience explaining why this project is cool/important and should be funded.

Once posted to the YAM Forum, YAM token holders should give feedback on whether this is work they want to fund. This feedback should be incorporated into the first grant proposal. The Facilitators (Gov-Ops Council) is available to help with formatting and coordination. They should help the applicant get feedback from important stakeholders to understand what their next steps should be.

:running_man: Milestone 1: Post Specification Document and recieve feedback

Step 2: Grant Proposal

After receiving feedback on the project, the next step is for the person(s) who plan to work on the project to submit a Grant Proposal. This grant proposal references the project documents, delineates what parts of the project they expect to work on, and makes a specific compensation request and set of deliverables.

There will be a snapshot vote on the Grant Proposal once it has been submitted to the forums. YAM token holders vote to approve a specific grant request to fund work on the project. If they vote YES then the grantee should begin work immediately. If NO then the applicant should revise the application or drop it. If dropped, token holders can shop the project around or wait for someone else to bid on the work.

:running_man: Milestone 2: Discussion and Grant Approval Vote

Step 3: Work and Reporting

Grant recipients should now be working on the project. Based on the terms of their Grant Proposal, they will submit intermittent Status/Transparency reports and open-source their code and/or research in order to release grant funds. Grants can be written to fund a specific scope of work, with progress payments along the way. This is typically done on a monthly cadence, with transparency reports submitted in the first 5 days of the month.

:running_man:Milestone 3: - Progress Report

Step 4: Grant Payment

Upon submission of a Status/Transparency report, token holders have a 3 day window to dispute the payment. If it is not disputed, it is added to the monthly on-chain transaction (with the other approved payments), which is executed via a token vote.

:running_man:Milestone 4: - Grant Payment

Step 5: Completion and Potential Renewal

After the completion of the work and full payment of the grant, the process can be repeated for additional scope of work by submitting a new Grant Proposal (start over at step 2). This iterative process allows for flexibility in the system and allows token holders to re-affirm their approval of the work being done.

:running_man:Milestone 5: - Grant Renewal