Web3 Grants Guide

Ethereum Foundation

History

Ethereum is a decentralized, open-source blockchain system that features smart contract functionality. While the development of Ethereum started in 2013, and the first Proof of Concept (PoC) rolled out in 2014, the beta launch of Ethereum, Miners, was in 2015, and the second major version release of Ethereum, Homestead, was finally rolled out in 2016. Ethereum is one of the most established crypto networks today.

The Ethereum Foundation (EF) was created to support the Ethereum ecosystem. They’re part of a larger community of organizations and individuals that fund protocol development, ecosystem growth, and advocacy of Ethereum, ensuring its security, scalability, and sustainability.

While the term “web3” became mainstream in 2021, it was coined in 2015, and was often hashtagged in EF’s blog posts that year. 2015 was also when EF launched their inaugural grants program, ÐΞVgrants. Prior to this, they’d started a bug bounty program in 2014.

The EF, being one of the oldest organizations in crypto, has a rich history of supporting the Ethereum ecosystem. Over the years, they’ve experimented with various methods of support, leading to their current landscape of the Ecosystem Support Program (ESP) along with select programs run by other teams at the EF with support from ESP as needed. For this report, we’ve outlined ESP, which has an outward-facing grants program.

The Ethereum Foundation's Mission:

To do what is best for Ethereum's long-term success. To allocate resources to critical projects, to be a valued voice within the Ethereum ecosystem, and to advocate for Ethereum to the outside world.

Ecosystem Support Program's Role:

As the public facing allocation arm of the Ethereum Foundation, ESP provides funding and other forms of support to eligible projects working to improve Ethereum. ESP’s focus is on work that strengthens Ethereum's foundations and enables future builders, such as developer tools, research, community building, infrastructure and open standards. The work they support is free, open-source, non-commercial, and built for positive sum outcomes.

The original scope of EF grants in 2018, was open source, funding for future work, trying not to advantage teams over one another and avoiding playing favorites or giving EF’s “stamp of approval”. Overall, their approach was and has remained staying neutral, especially in regards to endorsements of different projects.

ESP grants are not prescriptive, with a few different routes of grant giving. Some examples of these are Proactive Community Grants rounds, such as the Academic Grants round, L2, Account Abstraction, etc.. Different teams within the EF award grants based on their priorities. While ESP grants are more open ended, these grant rounds allow teams to bring awareness to particular domains. The ESP provides cohesion across these teams, offering support and infrastructure for grants.

They’ve developed a "layered" model to allocate resources effectively:

• ESP: They have 3 tiers of support for applicants, with two different grant tiers depending on the size of the project. We’ve outlined more details around this below.
• EF Teams: Internal groups that contribute directly to the Ethereum ecosystem. Other teams within EF also allocate and manage grants to achieve their ecosystem goals.
• This includes proactive grants where internal teams identify and present priority projects to the ecosystem hoping to learn of various creative solutions, and initiate financial support discussions.
• Delegated Domain Allocators: They collaborate with external groups to decide funding within specific domains like zero-knowledge tech, developer experience, and more.
• Third Party Funding: Direct funding to external groups like 0xPARC, Nomic Foundation, and ETHGlobal, empowering them to decide allocation.

They’ve continuously refined their processes to ensure efficient decision-making while not missing out on quality applications. They’ve split their grant application process to cater to different needs and have adjusted their focus based on feedback.

ESP grant application process depends on the type of project and funding required. There’s additional support offered in the form of Office Hours, where folks can directly connect with a member of the EF's Ecosystem Support team for support other than funding, including including project feedback, redirection and navigation within the ethereum ecosystem, and questions around the process of submitting an application with the process of submitting a grant application. This is best for non-financial guidance.

Small grants, capped at $30,000, have a streamlined application and evaluation process to deliver a decision around two weeks after submission.

1. A potential grantee submits an application via ESP’s small grants form here.
2. After submitting, they'll likely receive a confirmation email within two business days.Potential grantees can reply to the confirmation email if they have questions or want to share additional relevant information.
3. Potential grantees can expect to hear back from the ESP team with a final decision around two weeks after they submit it.
4. The next steps might include
• gathering more information
• getting input from advisors
• working with potential grantees to refine or rescope the project proposal.
5. Grantees undergo the grantee onboarding process, including a KYC check, and may receive funds in fiat, ETH or DAI.
6. Once the grant work is completed, depending on the scope of work required, grantees deliver the completed work to their assigned evaluator. The deliverables results can vary in format, reports, blog posts, videos, github repos, presentations, demos, proof of concept, MVP, etc.

A subset of small grants are community events and sponsorships capped at $20,000. These can cover events such as meetups, hackathons or conferences. Those who are awarded sponsorships have a much simpler route as they don’t typically need to sign agreements or complete KYC.

Project grants have no specific funding cap, and undergo an identical process of review and potentially rescoping as they do for Small Grants. The biggest difference from Small Grants are approval timelines which depend on scope and complexity and may result in several rounds of review and re-scoping, although they target 2-3 months for decision-making.

Decisions are made faster on Small Grants because of the smaller scope compared to a Project Grant.

1. A potential grantee submits an application where they go into depth about their goals, motivations, plans and intended impact via ESP’s project grants form here.
2. If the project is within scope for ESP support, they’ll begin a deeper evaluation of the project's technical approach, potential impact, risks, and other factors.
3. The next steps might include
1. gathering more information
2. getting input from advisors
3. working with potential grantees to refine or rescope the project proposal.
4. Once the proposal is finalized, they’ll make an allocation decision based on their assessment as well as input received from advisors.
5. Grantees sign a grant agreement, complete KYC, and receive funds in fiat, ETH or DAI.

Grantees will have a point of contact at the EF who will check in with them regularly as they progress with their work for both Small Grants and Project Grants.

Reviewer Structure:

The ESP team did not want to comment publicly on the size of their review team.

The EF has a thorough review process and they give importance to diverse thought in it. Despite an overwhelming number of applications, they want to ensure each application is thoroughly reviewed. There was mention of digging deeper into projects that may not seem as “typically great” projects, but in extracting and discovering the potential through further questioning.

Impact Measurement:

Impact is a core focus for the EF. They monitor active grant agreements and milestones, ensuring that the objectives are met.

However, defining impact can be challenging. For the EF, success isn't just about the amount allocated or the number of grants but the actual impact on the ecosystem, which makes it difficult to measure, for them. One perspective they have is impact through talent building and individual evolution and collaboration within the ecosystem, however this is difficult to measure at scale. They don’t have strict metrics for impact, making it a continuous point of discussion and evaluation internally.

They try not to highlight success stories because they believe in letting the project’s successes speak for themselves. However, an exception to this is their Grantee Roundups, where they highlight some recent grantees projects. The motivation is not necessarily to highlight the success stories, but rather to highlight impactful projects, and to shed additional light on what it means to be a grantee.

Community and transparency:

They don’t have a formal process for community feedback that feeds into the grants program, but they do informally keep an ear to the ground, listening to the community's needs and feedback. They sometimes prioritize applications on specific topics based on the current priorities of Ethereum or the industry at large.

They maintain transparency through their quarterly reporting, with updates provided for every quarter from Q1 2021 to Q2 2023.

Stats Overview

What do they do very well:

ESP has several strong points. A major one is their meticulous approach to reviewing grants. They take the time to closely examine each application, ensuring they don't just spot obvious good projects but also uncover hidden potentials. Their focus isn't just on a single area but on the entire ecosystem. At times, they may direct applicants to other groups better suited to assist them, showing their genuine interest in the growth of the ecosystem over merely dispensing funds. Even after being in operation for some time, the EF remains committed to its original goals. Their decisions are rooted in their values: long-term vision, the principle of subtraction, and the overarching mission of Ethereum. By focusing on clarity in their vision, making intentional choices, and upholding their core tenets, they've fostered one of the most vibrant communities in web3.

Finally, the EF has done a good job with their adaptability. They've transitioned from extended grant durations to shorter, more agile periods between six months to a year, streamlining their review process and resource utilization. What's also impressive is the operational independence within EF. While some teams can directly award grants, the Ecosystem Support Program (ESP) is consistently available for assistance, tailoring its support to the specific needs of each team and grant round.

Challenges faced by the grants program:

At the start, the program faced challenges due to a one-size-fits-all application process. This shifted dramatically when they split the process into three specific application types. However, the constantly evolving nature of the ecosystem posed another set of challenges. A grant scoped out for a duration of 12 to 18 months might find its relevance questioned in just half that time due to the rapid changes in the ecosystem. This unpredictability necessitates flexibility and adaptability in deciding whether to pursue the original scope, redefine it, or even potentially pull back funds. The sheer volume of applications, especially in favorable market conditions, is yet another hurdle. Despite a clear set of criteria, many just try their luck by applying. Sifting through these to find the gems that can genuinely impact the Ethereum ecosystem demands immense effort. A notable issue is that some applications might inadvertently conceal their true potential, making the review process even more challenging.

The EF's relationship with the community also introduces complexities. While the community's prevailing interests might influence the prioritization of some grant topics, they don't directly dictate how the EF allocates its funds. It's essential to strike a balance to ensure the ecosystem grows in a cohesive manner.

Additional Materials:

• DEVgrants: Here to Help
• How the Ethereum Foundation grants program makes decisions
• What ESP Supports | Decvon VI Talk
• About ESP
• EF 2022 Report
• EF Philosophy | Long Term Thinking and Subtraction
• EF ESP Blog (see allocation updates)

Ethereum Grant Opportunities

Can you please provide an overview of grant opportunities for public goods creators in the ethereum ecosystem?

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Public goods creators within the Ethereum ecosystem have access to various grant opportunities provided by different entities and platforms. Here's an overview of these opportunities, focusing on the Ethereum Foundation's Ecosystem Support Program (ESP) and Gitcoin Grants:

1. Ethereum Foundation Ecosystem Support Program (ESP):

The ESP is a significant source of funding for projects in the Ethereum community. It provides grants and other forms of support to projects that contribute to the Ethereum ecosystem's improvement. The ESP focuses on strengthening Ethereum's foundations and enabling future builders by supporting endeavors in developer tools, research, community building, infrastructure, and open standards. The allocation to projects has been increasing over the years, with $7.7 million distributed to 68 projects in 2019, $12.9 million to 99 projects in 2020, and $26.9 million to 136 projects in 2021. The grants are awarded through a formal application and evaluation process, while there are also office hours for informal discussions regarding project feedback, navigating the ecosystem, or grant application guidance1.

2. Gitcoin Grants:

Gitcoin Grants is another prominent platform for funding public goods within the Ethereum ecosystem. The program has distributed over $50 million to early-stage builders working on projects across various domains like DeFi, climate, and open source. The program operates on a quarterly basis, empowering individuals in the web3 community to drive funding towards projects they believe in. A notable feature of Gitcoin Grants is the use of Quadratic Funding, which magnifies the impact of individual donations. Gitcoin Grants is also a community-led initiative allowing direct funding to favorite open source projects. There's an evolution towards a more community-owned and operated model, known as Gitcoin Grants 2.0, which aims to solve the "meta-problem" of public goods funding by leveraging decentralization23456.

These grant opportunities are crucial in fostering innovation and supporting projects that contribute to the broader Ethereum ecosystem and the public goods within it.

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