---
tags: Hats Protocol, Arbitrum, Grants
---

# Arbitrum Grants Joke Race Proposal

## Background

Grants Framework Design Contest is LIVE!
What is it

A “Jokerace” contest designed to solicit bottoms-up input into a grants framework design process. During the submission period, people submit ideas on what a great grants framework might look like. Then during the voting period, the top 100 delegates will vote on which ideas they like the best. This will function as a “heatmapping” to showcase what ideas the DAO is most interested in seeing come to light.
Prizes

Top 3 submissions by votes will win:

1st place - 500 arb
2nd place - 200 arb
3rd place - 50 arb

Another 250 arb will be rewarded by the contest host at his discretion. (Yes that is me)
How to participate

Click on the Jokerace Contest Page Link
Submission Period (4/20 - 5/13)

During the submission period, anyone can submit a grant framework design. Those familiar with “Design Thinking” will recognize this as a DAO native version of the double diamond design framework where we are currently in the second diamond diverging to brainstorm every possible solution idea.

Please do not submit proposals for funding individual projects.
Voting Period

During the voting period, top 100 delegates will vote to heatmap the most interesting frameworks. This is a convergence stage where we now heatmap for the best ideas.
Tips for a great submission

Things you might want to include:

    how the mechanism sets a total spending limit
    distinguishing between low and high latency work (ie. discord support help vs algorithm research)
    tools needed to make it work
    how the design is “pluralistic” or could it be one part of a larger plurastic framework
    how it maintains accountability
    how it increases voter participation and decreases apathy
    how it provides the arbitrum a healthy future (sustainability)

Other links & relevant info
Statement about purpose

This is not being put forward by the foundation, nor is it Offchain Labs. As a delegate in the Arbitrum ecosystem, I am helping to move things forward by showcasing innovative ways for the DAO to come to good decisions, avoid voter apathy over time, and sustain innovation and fun!
Design thinking for DAOs

Our next steps in the design process will be to have a small group of people engaged with the conversation gather to workshop the best proposal using the inputs from this experiment.
Links

Jokerace Contest Page Link

Transaction dropping 100 jkARB (Non-transferable Voting Tokens) to each of the top 100 delegates

## Proposal

### Overview

We would like to propose a framework for grants that takes into account many lessons learned from the world of grants in the Web3 space. This framework intends to incorporate tools as they are required. At it's very basis the framework looks like this:
- Delegates Elect to Form a Grants Council
- Hat NFT minted with rules and paramater governing expectations of Grant Council. If delegates or due to some onchain mechanism, the grants council fail to live up to the expectations, the Hat will be revoked and the Grants Council would be disolved and elections held for a new council.
- Delegates Elect members to be on Grants Council
- Hat NFT is minted per member with the same sorts of stipulations discussed above.
- Grants Council Prepares detailed budget for a season
- Proposes to delegates for seasonal funding
- If accepted, funds are sent to Grant Council Safe, controlled by DAOhaus.
- Grants Council Awards Grants directly, via governance forum proposal (GC will decide how to do this)

This framwork may appear somewhat complex on the surface and admitedly there are a lot of parts, however once everybody is settle into their role, it is really very simple.

To begin we would like to define some roles that exist in this framework.


### How This Proposal Set a Total Spending Limit

Spending limits are set via carefully distribution of funds, in chunks as needed. The grants council would be the trusted keepers of funds and they will use democratic mechanisms to ditribute funds to sub-comittee.

Sub comittees would be distributed funds dependant upon the amount required to run the program they are performing.

### Distinguishing between High and Low Latency Work

### Tools Needed to Make This Work
#### Primary Tools
- Snapshot
- Enables all Delegates to take part
- familiar and customizable tool
- existing strategy for $Arb tokens
- Hats Protocol
- Enables revokable permissions, terms and standards must be kept or permissions can be revoked.
- Customizable to any events on-chain.
- Follows ERC1155 standards, so is able to do anything an 1155 can do.
- DAOhaus Protocol
- Easy to set up and highly customizable DAO framework, for managing governance for the Grants Council and Sub-Comittees
- Safe
- All funds are stored using safe. Safe' are managed via DAOhaus governance front end.

#### Secondary Tools
- Discourse
- Excellent place to post long forum Grant proposals, Requests for Proposals and discussion that are organized and searchable.
- Joke DAO, Git Coin Grants Stack, Quadratic Funding Tools, DAOhaus TCR App
- Not to diminish any of these individually, in this framework they are all equally important. Any of them can be used.

### How The Design is “Pluralistic” or could it be one part of a larger plurastic framework

This framework is designed as to "use what works for the circumstance." There are many tools available and many more will become available. This framework allows for the Grants Committee to issue Hats to a Sub-Committee that may choose to run quadratic funding round for Innovative NFT projects. Another sub-committee may consist of scouts, experts in a field, that set out to fund projects that help Arbitrum in some way. One other committee may fund and judge a Hack-a-thon event.

### How it Maintains Accountability

Hats Protocol is designed to create a capture resistant method for distributing roles and authority. If the authority is misused, if conditions are not met or if the role is simply no longer required a Hat can be revoked. This can be done by embedding logic directly into the Hat NFT.

By using DAOhaus and Safe to manage the treasuries and governance of the Grants Committee and any other sub committee's that may form, the DAO will be using a well established DAO protocol that is easy to use, set up, and customizable. There is a support network readily available and DAOhaus has been a supporter of Arbitrum for quite some time now and continue to support Arbitum's DAO community.

By using Snapshot to distribute the Hats required to implement this framework, the DAO would be using a time tested tool for token weighted voting.

Other ways this framework maintains accountability is in its iterative approach to trying a variety of tools and mechanisms for the actual distribution phases. These distributions can be kept small, taking a lean approach. When favored approaches emerge, distribution to these approaches can increase.

### How it Increases Voter Participation and Decreases Apathy

- Fun, Iterative approach**
- Modular
- While a somewhat complex framework, the final execution is lean and changeable

### How it Provides The Arbitrum DAO and Ecosystem a Healthy Future

- Helps attract builders to the ecosystem
- Helps attract new users
- builds loyalty

### Pros

- Involves the whole community.
- Favors open source protocols and is flexible to emergent iterations.
- Has "web3" mechanisms to ensure accountability through out the framework.

### Cons

- Ideally, there would be a Snapshot plugin available to mint hats automatically. Snapshot is the weak point in this framework as it is a centralized entity and is considered "off chain" voting. Voting on-chain is the preferred action as it provides an immutable record.
- Requires some customization in order to get all the parts working together.
- There can be simpler ways to do this.
- Initial administration. Much of the work getting this set up is being done before a proper Grants Council is established. This should rectified fairly early in establishing the framework.
- There may be a mistake in how the initial treasury allocations are handled as I am unsure as to what funds the token holders currently have available to begin this program. It may be that the DAO must request funds from the Arbitrum Foundation for this program.

### **Joe's Criteria**
[Grants Funding Framework Discussion](https://forum.arbitrum.foundation/t/grants-funding-framework-discussion-how-to-excel-at-being-a-dao/13818)

[Arbitrum Grants Framework Design Submission](https://www.jokedao.io/contest/arbitrumone/0xc1AD5102A357049f3e698248731e6A86f0F3a73d)

The pattern we’ve seen from other DAOs looks something like this:

Crazy spending spree with no concerns about outcomes
3-12 months in (and a ton of wasted funds later) people start asking for accountability
DAO centralizes control to show stewards it is accountable
Voter apathy starts and no innovation (or fun) is happening

**What We Can Do About It**
This potential proposal has a few goals and corresponding signals to know we’ve achieved them

Help us avoid the above pattern (Signal: People are buying $ARB to use in governance)
Establish the most innovative grant program in existence (Signal: Vitalik writes an article saying “They set out to create the most innovative and high performing grants program in existence and I believe they have done just that!” before 12/31/24.
Create a pluralistic funding framework (Signal: We establish concurrent frameworks for funding by 12/31/23)
Consider the potential for mechanisms to ensure the longevity of the DAO (Signal: Treasury is diversified to 10% stablecoins & on-chain guarantees of at least 10 years of budget availability for the DAO by the end of 2023)

## 'Funding Ships' Proposal Outline

### **Context**
This is a gamified grant funding mechanism that uses sound DAO governance principles.

### **The Funding Ships**
**Idea:** n(n=6 for this exercise) Funding Ships are constructed at the beginning of the game. A funding ship is essentially a grant-giving subdao, free to operate internally however they like within certain constraints defined here. Their primary responsibility is to vet external teams for grantworthiness, deploy capital, monitor progress and report results.

After capital is deployed, teams do work for the season duration. This work is consolidated into a Funding Ship Portfolio Document that demonstrates the outcomes achieved due to this Ship's capital deployment.

At the end of the season all Portfolio Documents from the Funding Ships are scored by Arbitrum (delegated) token holders.

Scores are used to rank the Funding Ship performances. At the beginning of subsequent seasons, each Funding Ship receives funds from available funding pool proportional to their score and total score of all Funding Ships.

**How ships are constructed**
A submission period begins for teams to apply to pilot a Funding Ship by filling out a Funding Ship proposal template. After submissions are finalized, (delegated) token vote is held to elect the top n Funding Ship crews.

**A Funding Ship proposal template**
- Describe your team, your past experience
- Name, Flag, Slogan
- Vision & Mechanisms
- Have you read the handbook?

**When a ship crashes**
If a ship's team ghosts or otherwise fails to submit a valid Portfolio Document - they are declared a Ghost Ship, and a new team can be elected to take over.

Consequences: Their hat is removed by the Referees

**Why this mechanism achieves goals: (TODO)**

The idea is that these ships are built out and manned by a small team.

### RetroRep System

We ask ourselves: How do we ensure the people we give money to prove themselves before they get more money.

1) They get a grant for a small amount
2) Deploy that capital & have a framework around expectations on how they deployed it and expectations on return on community
3) When they go to re-up they should compile all this data
4) All the projects they applied to and all the progress on current projects
5) Token holders should be able to vote on their level of satisfaction
6) Level of satisfaction determines how much they can re-up for

Similar to the relationship VCs have with clients.
Show portfolio, have accountability.

### Portfolio Document

**Q**: What's in it?

**Turn it into a Game**
Make it a game between each grantfunding entity. They compete for reputation.

**Addons & Bonus Rounds**
Measure the fuel and progress of a particular ship over time and set milestones (say, $100,000 distributed) and give a reward.

Creating a real connection between the grant giving org and the receiver.
- Accountability for the receiver & the giver
- Mentorship
- Connection
- Visibility

Add reputation to both the **grant giver** and the **grant recipient**

### **Referee Team**
This game requires a small team of referees to facilitate. Responsibilities include initiating scheduled on-chain transactions and making announcements at pre-defined intervals. This role could be automated in the future.

**Referee Actions:**
* Game Begin:
* Announce the game
* Initiate first Funding Ship vote

**Season Begin:**
Disqualify Funding Ship Ghost Crews (no-shows)
Initiate vote to install a new crew (if needed)
Initiate refuel of the ships (based on previous season performance)

**Season End:**

**Multiphase RFP/Proposal system**

**Objective signal gathering**

Handbook for grant giving orgs:

- Understanding the problem domain
- Is it high latency or low latency?
- How to track progress
- Tests, breakthroughs, current progress
- What it means once it's finished
- If you're putting together a funding ship
- Portfolio summary is templated
- Give them a handbook
- Choices we give people to build their ship:
- What we want for your ship is to have fully on-chain receipts of all the actions you take, and why
- Here's why MolochDAO/DAOhaus is good for that
- Here's why Hats DAO is good for that
- Because you can show transaction receipt and for how much
- Show where money went and to who
- Internal side, on your ship, Hats are a representation of who worked in which roles
- We request that these things are on-chain (Arbitrum) can look at the actions you took and make an inference about what was effective.
- Hats
- I can send you funds and that transaction is on chain
- But you also get the hat to signal you are "it"
-