A few days ago, Mashal Waqar, Eugene Leventhal, and a team of researchers published The State of Web3 Grants Report, a deep dive into 15 grant-making programs in the web3 and blockchain ecosystem. This report is one of the first attempts of the web3 community to offer a more transparent look into how web3 foundations award grants, measure impact, and support grantees in the broader community. In particular it does a great job at demystifying the process for grantees, unpacking the types of projects funded, and chronicling the evolution of these new entities.
In this blog post, I'll share some reflections I had while reading this report, and what other industries might take away from this model.
New Models for Funding Public Goods
I've always been impressed by how web3 foundations offer a new approach to funding public goods. Rather than rely on external public or private entities to bootstrap innovation, many blockchain networks are built to either reserve or directly allocate a portion of their value or tokens to directly support and advance their own ecosystems.
What’s great about this concept is the acknowledgement that progress (but in particular, technological progress) includes a mix of both profitable ventures and crucial work that might not make as much money—like research, setting standards, or building key developer tools.
When I worked with the team at the Uniswap Foundation for the better part of a year, I learned first-hand how much potential exists to accelerate innovation in nascent networks and protocols, when you have direct access to a treasury. You can see the types of initiatives they have funded this year alone, and the impact it has on the ecosystem broadly, in the Uniswap Foundation 2024 Impact Report.
How Are Web3 Foundations Structured?
One of the things I've been curious about since I worked with the Uniswap Foundation to help update a new strategic framework for allocating $30M+ in grants is to learn more about how other web3 foundations are structured, funded, and sustained.
This report is a good start at getting some of those questions answered. But, at 180 pages, I didn't have time to read the entire thing line by line this morning. Instead, I uploaded this report into ChatGPT and asked the AI to extract some relevant details about things interesting to me the origin stories, founding years, and entity structures of the grant programs analyzed.
After going through a more painful round of fact-checking that I would have liked (the AI hallucinated quite a bit on me on these details), here's what I wound up with. (And if you see an error in here, fact check me on it please, and I'll correct.)
Grant Program | History | Entity Structure | Founding Year |
|---|
DFINITY Foundation | Formed in 2016 before the testnet, whitepaper, and token launch (2021) to encourage initiatives like outreach, education, and advocacy within the Internet Computer blockchain (ICP) ecosystem | Swiss non-profit | 2016 |
Ethereum Foundation (ESP) Grants | Created in 2015 to coincide with beta launch of Ethereum; grants program designed to fund related research, public goods, and decentralization projects | Swiss non-profit, with decentralized decision-making | 2015 |
ENS DAO Public Goods | ENS founded in 2017, ENS DAO launched first small grants program in 2022, designed to support public goods funding for projects benefiting the ENS and Ethereum ecosystem. | Managed by ENS DAO through a decentralized governance system, where token holders vote on grants. | 2022 |
Manta Foundation | Launched after Manta Network's token launch in Jan 2024 to align projects that are either natively building on or closely integrating with Manta Network | Entity structure unknown | 2024 |
Mantle (Grant Program and EcoFunds) | Mantle mainnet launched in 2023, original grants budget allocated in 2023 during testnet phase to fund blockchain gaming projects as part of the Mantle Layer 2 scaling solution | Operates as a DAO, with token holders voting on project funding proposals | 2023 |
Octant Community Fund | Golem project launched in 2016, Golem Foundation founded in 2019 to fund decentralized computation projects on the Golem Network, Octant Community fund launched in 2024 | Golem Foundation staked 100,000 ETH from its treasury, and 5% of staking rewards are being used to fund Octant's grant rounds every 90 days | 2024 |
Polygon DAO Grants | MATIC founded in 2017, rebranded to Polygon in 2021, first grants launched in 2019 to grow the Polygon ecosystem by funding decentralized applications, Layer 2 solutions, and community projects | Managed through Polygon DAO, with a community-driven governance model. | 2019 |
Public Nouns DAO Grants | Inspired by Nouns DAO (launched in 2021), Public Nouns launched in 2022 to fund public goods projects aligned with experimentation, advocacy, and funding | Operates as a DAO, with NFT holders voting on funding proposals using on-chain governance. | 2022 |
Rootstock (RSK) Grants | Rootstock Labs launched in 2017, grant program was introduced later to address developers’ needs and empower them to build on Rootstock | Managed by Rootstock Labs with community involvement in vetting and reviewing proposals. | Sometime after network launch (2017) |
Solana Foundation (Convertible Grants) | Solana testnet and foundation both launched in 2019, first grants deployed in 2020 to fund projects building on Solana, focusing on DeFi and Web3 innovation | Swiss non-profit | 2019 |
Stellar Community Fund (SCF) | Stellar Development Foundation launched in 2014, 10 years preceding the launch of Soroban, Stellar's smart contract tech stack. Stellar Community Fund launched in 2016 to support innovation in Stellar ecosystem | Managed by the Stellar Development Foundation (SDF), a U.S.-based nonprofit | 2016 |
If you're new to web3 foundations overall, you'll notice a few things about the grant programs profiled:
All of them are directly connected or linked to an underlying blockchain network (and in fact, an associated public goods foundation is now commonplace in nearly every crypto network)
There's a mix of formal nonprofit entity structure (but few with U.S.-based entities) and more novel decentralized autonomous organization (DAO) structures
This entire ecosystem and concept is still incredibly new, at only a decade old
The majority of these grant programs today are funding developer tooling and research, with less focus on what one might consider broader public goods that engage with the public external to crypto networks
What We Can Learn from Web3 Foundations
While there's clearly a lot to figure out, I love learning about new ways that nascent ecosystems are beginning to rethink funding models for development and innovation work, and I'd like to see more of these ideals carried outside of web3.
A couple of years ago, I read Mission Economy by economist Maria Mazzucato. In the book, she explores the hybrid funding models that fueled one of the greatest technological and cultural achievements of the modern era: The 1960s moonshot project to land a man on the moon.
Her main argument is that solving society’s biggest challenges—those that need collaboration, innovation, and multi-stakeholder involvement—requires supporting innovation through both public and private sectors. She highlights the many publicly funded initiatives that developed critical technologies for astronauts, which later led to private sector successes built on those innovations.
Mission Economy
Economics - Innovation - Inclusive Growth - Public Purpose | Mariana Mazzucato
I believe these principles could be applied to "thorny" and intricate problems across industries—blending public and private interests to create new funding models that push the boundaries of what’s possible.
While the State of Web3 Grants Report does an excellent job of diving into the grant-making process, a few areas are left unexplored. For example, I am curious to read a deeper analysis of how on-chain treasuries were established, the relative size of grant allocation compared to the total market cap of that treasury, how treasury funds are allocated, and how these foundations plan to achieve self-sustainability over time. Maybe that's a topic for next year...
If you’re interested in exploring more, check out the tweet thread announcing the State of Web3 Grants Report here:
SO. MAJOR Announcement. We've just published our 2024 State of Web3 Grants Report. 180 pages of insights and research. 20 pages of takeaways. 13 programs. 5 grants tools.
Read the report here: bit.ly/Web3-Grants-Re…
Produced by: Grant Innovation Lab at…
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There's also a 20 page Takeaway's version of the report :)
New post: How Web3 Foundations are Rethinking Grant-Making Today I read through the 2024 State of Web3 Grant Report, with a particular interest into the origin stories and entity structures of the organizations profiled I continue to believe there's a lot of untapped potential in hybrid public-private funding vehicles and would like to see a little more web3 experimentation in other industries and context More on that here... https://paragraph.xyz/@bethanycrystal/how-web3-foundations-are-rethinking-grant-making cc @mashal - nice work on this, between you, Eugene, and the whole research team!