# [SGP - 0005] - Shimmer Community Grant Committee

## Boosting the Shimmer Ecosystem as a community

This proposal has gone through three iterations in Phase 1, and this **[Third version](https://govern.iota.org/t/shimmer-community-treasury-grant-committee-version-3/1575)** presented here has (same as the previous versions) passed the acceptance requirements for Phase 2.
Therefore, the community governance group has decided that this is the final version of the proposal, and it shall now be brought to a final community decision via Phase 2 (Forum Poll) and Phase 3 (Firefly vote)
For reference see the **[First Version](https://govern.iota.org/t/shimmer-community-grant-committee/1415)** and the **[Second version](https://govern.iota.org/t/shimmer-community-treasury-grant-committee-version-2/1437/17)**.

**All changes implemented in the third version compared to the previous version of this text can be precisely seen in the following GitHub commit:** https://github.com/iota-community/Shimmer-Governance/pull/28/commits/9364ed5efccb8651a3893c2e4c96ed8db5fb4dd2

You can watch all recordings of the groups weekly meetings where this proposal was designed here: https://youtube.com/playlist?list=PL5joP0FyJQU4eKPWfQWradNVjMIPq86ID.

---

**If you want the Shimmer Community Treasury Committee to be established, please support our proposal by voting for it in this poll.**

[poll type=regular results=always chartType=bar groups=trust_level_1,trust_level_2,trust_level_3,trust_level_4 close=2023-01-30T14:00:00.000Z]
## **Do you support to set up the Shimmer Community Grant Committee?**
* Yes, i support setting up the Shimmer Community Grant Committee
* No
[/poll]

---

**Reasoning for the updated version 3:**

**1.)** We have recently started the application process for Grant Reviewers and Committee Lead based on this framework. A problem became evident that we had not considered in all those months of developing this framework. **This is the issue we want to address:**

- Grant reviewers are allowed to have affiliations with projects. We are happy about getting experienced ecosystem builders as part of the committee.
- Many applicants have shown interest in becoming grant reviewers and submitted their [applications](https://govern.iota.org/c/shimmer-governance-proposals/community-treasury-grant-reviewer-applications/58) in the governance forum.
- Through the currently received 23 applicants for a front reviewer position, we have seen that several ecosystem projects are represented by multiple candidates that are either direct team members or strongly affiliated with the same project.
- In the worst-case scenario, this could lead to a situation in which all 4 Grant reviewers voted in by the community are members of the same ecosystem project.
- We must avoid such a situation for two reasons:
- Very likely, there would be high doubts in the community about the neutrality and fairness of decisions taken by such a committee
- As Reviewers are not allowed to review applications from projects where a conflict of interest exists for them, we could find ourselves in a situation where we could not review an application because not a single of the committee members would be allowed to check it. This would make the daily business of the grant committee overly complex and sometimes impossible.

The creators of this proposal have recognized this issue in our initial proposal, and many community members have contacted us and raised their concerns. Therefore we have decided in our meeting on 22 November to limit the number of committee members from the same project that are allowed to be permanent members of the Grant committee to **ONE PER PROJECT.**

- We implemented this decision before the Phase 2 polls of the Grant Committee application process, and therefore, all [currently preselected candidates](https://govern.iota.org/t/results-of-the-first-3-phase-2-shimmer-governance-decisions/1564) for the committee have already been selected following these rules.
- A Paragraph that clarifies this change of the rules has therefore been added to the Requirements for Committee Members in the specification section of this proposal.

**2.) Small updates to the KYC process:** One of the points required to receive a grant is stated as "The whole project team does KYC" - if we had a Team of 20 people or even a bigger company etc., asking for a grant would require every team member of this company to do KYC. This is an overly complicated and costly process. Therefore we reduce the requirement for KYC to a maximum of 3 members for the Tier 3 and Tier 4 grants.

**3.)** **Changes in establishing a legal entity.**

After many consultations with different lawyers from Switzerland, Lichtenstein, and Marshal islands and also independent legal discussions with members of Lex DAO, the community Governance Group has decided to establish a legal entity for the Shimmer Community Grant Committee as a Marshal Island DAO LLC with [MIDAO](https://www.midao.org/).

This legal framework offers the best combination of decentralization and actual DLT-based Governance with relatively low cost, easy and quick setup, and freedom to establish a tailored framework under which the Shimmer Community Grant Committee can operate.

Another thing that changes in regards to the legal entity is that the Lead is required to have its own company/legal entity setup in his/her home country which then contracts the Lead Position with the MIDAO LLC to avoid any form of employment relationship and keep it purely on a service provider contractual basis.

We have also officially engaged with an Italian Lawyer, Paolo Maria Gangi https://twitter.com/paolomgangi who specializes in Crypto and DAO Law and setups and will support us in drafting the needed legal documents and statutes for the Marshal Island DAO LLC.

**4.) Specify how changes to this framework can be proposed and carried out** - Clarified under which circumstances and rules the processes described in this framework can be changed - see section 4.8

---

## **1.) Simple summary**

The Shimmer Network will start with an allocation of **181.362.051 SMR** to a community Treasury. This is 10% of the total token supply of the Shimmer network.

* We propose to elect a committee of 5 members to receive **a budget of 15% (27.204.307 SMR) from this 181.362.051 SMR** treasury and give out grants in the name of the community.
* We propose that the community votes for the members of this committee and **elect one full-time employed Project Lead and four part-time contracted Grant Reviewers.**
* We propose establishing the committee as a legal entity in the Marshal Islands under the **Marshal Island DAO LLC** framework created by the Marshal Island Government and [MIDAO](https://www.midao.org/).
* We propose to give out grants based on **clearly defined selection criteria and tiers** that increase the due diligence with the requested amount of funding.

In establishing this Shimmer Community Grants Committee, we propose to follow successful grants management programs, mainly [Aave grants](https://aavegrants.org), [Polygon DAO Grants](https://village.polygon.community/) and [Bankless grants](https://bankless.notion.site/Grants-Committee-44eb039915ff47128e98e39696d39109).

Please watch the recording of our Bankless Townhall session, where they explain the Aave system: [https://youtu.be/D_epzJC0Ap4](https://youtu.be/D_epzJC0Ap4).

## **2.) Abstract**

The 10% Shimmer Community Treasury funds currently have no structure, and no rules are defined to guide how and if the community should use them. Not using these Tokens to support growth in the Shimmer Ecosystem would result in a massive loss of opportunity for the Shimmer community.

There is an immediate need to support teams, create outreach and marketing campaigns and incentivize builders to make Shimmer a successful network. We need to establish an organization, rules, and guiding principles to use the community funds to support the growth of the Shimmer network as soon as possible.

## **3.) Motivation**

After researching and reviewing how other communities have bootstrapped a token treasury and brought measurable growth and adoption into their ecosystem through a committee-based Grant program, we believe this is also the right approach for the Shimmer community, starting to support valuable builders and initiatives in the network.

Otherwise, if we leave any grant application to a lengthy proposal process and a community vote, we don't think we can establish the needed incentives for builders and community growth.

We would not be able to get Shimmer to the same level as our competitors in the DLT and Web 3 space. Other networks like [Aave](https://aavegrants.org/), [Uniswap](https://www.notion.so/unigrants/Welcome-to-UNI-Grants-6e3e84967a984a5fb127ae749649ddc9), and [Compound](https://compoundgrants.org/program-expenses) have similar systems and successfully bootstrapped their ecosystem.

Builders' teams constantly look to where they find the best conditions and see the most significant chance of growth and success for their applications before allocating their resources (time, knowledge, workforce).

Shimmer and IOTA need to be on the same level as those competitors to convince builders, which can facilitate the Shimmer protocol's technical growth and adoption. Without sufficiently easily accessible incentives, Shimmer cannot compete in the current market against projects that get support from big VC funds and have access to funding in the 2-3-figure millions.

You can find some examples of such incentive programs in [Kappys proposal](https://govern.iota.org/t/discussion-proposal-to-increase-the-shimmer-supply-for-a-community-treasury/1291/1) that initiated the launch of our community treasury for further reading.

It is now time that the community takes action and executes what is needed to increase the adoption and value of our networks. For a long time, it was an ongoing critique that the IOTA Foundation did not do enough marketing, outreach, etc.

There are hundreds of great opportunities to bring more developer teams and applications into the project. Now is the time to act and enable growth through well-placed incentives and initiatives.

We, therefore, propose the following setup to manage the Shimmer Community grant program leveraging a budget supplied from the Shimmer community treasury to the proposed committee:

## **4.) Specification**

### **_Mission of the Shimmer Community Grant Committee:_**

**_A community-led committee-based grant program to support the Shimmer network and empower its ecosystem_**

### **4.1) The Committee**

**The committee will be set up with five members**.

One of them is the **Program Lead**, which, besides reviewing funding requests, takes care of all administrative tasks and reporting and coordinates the committee members' work.

* The Lead also promotes the Program, identifies directions for funding, and has a thought leadership role in guaranteeing the Program's success.
* The Lead is directly involved in grant reviews and decides which team of reviewers should work on a proposal.
* Further, an important part is ongoing coordination with the second ecosystem funding program run by the Tangle Ecosystem Association and the Shimmer Growth Committee to ensure effective alignment in the goals and directions of the community grants program.
* The Lead organizes the regular public meetings of the Grant Committee and takes care of reporting for financial transparency and fund usage.
* The Lead will act as first public contact for anyone that wants to approach the committee besides funding requests.
* The Program Lead will be contracted by Marshal Island DAO LLC (to be set up) which acts as the legal body of the Program and offers limited liability and the needed legal structure to ensure a safe operation.
* To establish this contract the Program Lead is required to have its own legal entity (company, LLC, GmbH, etc) setup in its home juristriction that will engage in the contract with the MIDAO LLC.
* The Lead will be compensated via invoices of max 11200 USDT per month on a 40-hours-per-week basis and will sign a 12-month service provider contract.

**The 4 Grant Reviewers will process funding requests on a part-time basis**.
* The committee operates a 3 of 5 Gnosis multi-signature wallet that requires 3 out of 5 signatures for any operation (like spending funds or adding or removing members).
* The Lead will assign reviewers to work on proposals based on their qualifications, experience, and availability.
* Grant reviewers will operate on a service provider contract basis with the Marshal Island DAO LLC.
* Grant reviewers will be compensated with 50 USD (net) per hour for a maximum of 40 hours per month / 10 hours per week submitted via invoice to the DAO LLC.
* The committee members will select one of the four reviewers as the **Co-Lead**. The Co-Lead acts on behalf of the Committee Lead in cases of sickness, holidays, or leaving. If the Lead resigns, the Co-Lead continues the operation and organizes an election of a new Lead through a community vote.
* If the Programm Lead is unavailable/sick/on leave and the Co-Lead needs to fill this position, the Co-Lead will be compensated for this extra time and can invoice more than 10 hours per week.

**This proposed Grant Program will run for 12 months.** Decisions to continue or end the Program will have to be made one month before the current period ends to enable a graceful shutdown of operations or a transition into the next period. (Costs of operational shutdown need to be secured)
The 12 months period will start on the day when the Firefly vote (Phase 3) results to establish this committee have been community verified and publicly announced.

**The community may replace members** during the Program's period at any time through a governance vote following the process described in the [Shimmer Governance Framework](https://govern.iota.org/t/the-shimmer-governance-framework-phase-1-discussion/1397).

* Need for replacements may occur if committee members find they cannot dedicate sufficient time to the Program. If they ask for a replacement for personal reasons, or if the community has valid concerns about the motivation and professionality of a member or has any proof of fraud, betrayal, or violation of terms.
* Grant reviewers are free to leave the position based on the terms stated in their contract. A 4-week prior notice is required before leaving the committee.
* In case of serious violation of terms of the contract, like a breach of NDA, insider trading, or not disclosed conflict of interest, reviewers will be immediately discarded from the committee position by the committee lead and removed as signers of the multisig wallet.
* Replacement positions will be offered to the runner-up candidates of the committee selection process (Phase 3 results).

### **Requirements for Committee members:**
* All committee members will do KYC to reveal and verify their identity and sign a legally binding contract (employment or service provider) with the DAO LLC.
* All committee members must reveal any potential conflicts of interest to become committee members. They need to indicate if they currently are or have been in the past part of a team in a DLT project or have other connections or affiliations to projects or groups that could cause a conflict of interest. A conflict of interest policy needs to be accepted and signed.
* To ensure a committee structure that provides different views and makes decisions as unbiased as possible, the maximum number of committee members from a Project Team is limited to **one member per Team**. A Project Team, in this sense, is defined as any organization that causes a conflict of interest by being affiliated as a team member or earning a salary, payment for services, or commission from the project.
* A committee member cannot be involved in evaluating any proposal that would cause a conflict of interest. Other grant reviewers will handle such cases without involving the member that has the conflict. Conflicts of interest are not exclusion criteria for committee members in general; those conflicts need to be disclosed to the Committee Lead. The Program Lead will then exclude the reviewer from the decision-making process for specific grants that would cause a conflict of interest.
* The Programm Lead and the Co-Lead are prohibited from holding any paid position within a Crypto project.
* All members will sign NDAs and Insider Trading disclosures.
* All Committee members are required to operate the Gnosis Multi-Signature Wallet with a Ledger Nano or similar device.

### **Selection process for committee members and the Program Lead:**
- Please review [the selection process specification](https://govern.iota.org/t/community-grant-committee-selection-proccess-specification/1436) that describes the community-driven selection process
- Phase 1 started on 6 November - you can check the applications here:
- [Grant Committee Lead applications](https://govern.iota.org/c/shimmer-governance-proposals/shimmer-community-treasury-coommittee-lead-appli/59)
- [Grant Reviewer Applications](https://govern.iota.org/c/shimmer-governance-proposals/community-treasury-grant-reviewer-applications/58)

### **4.2) Funding Priorities**

#### **Funding objectives:**

* To increase the utility of the Shimmer network and attract new builders.
* To promote Shimmer and make it more visible and attractive in the DLT space.
* To enable projects to establish successful and profitable business models on Shimmer.

#### **Target areas for grant funding:**

* Applications and integrations (front-ends, Defi, Gaming, and other applications that use the Shimmer protocol on L1 or L2)
* Incentivizing established successful projects from different ecosystems to deploy their application on the Shimmer network
* Developer tooling
* Open source software development using Shimmer technology
* Analytics tools and dashboards
* Community Education
* Marketing and outreach initiatives
* Code audits
* Events, Community meetups, and hackathons
* Bounties

### **Guiding principles for funding decisions:**

1. **A proposal must be relevant to the Shimmer network and its ecosystem.**
2. **A proposal that segregates individuals, organizations, or communities based on sex, race, color, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation.**
3. **The committee will prioritize projects with the highest potential and positive impact on the ecosystem compared to the received funding.**
4. **The proposer or team must be capable of delivering the proposed project. Evaluating this is the responsibility of the committee.**
5. **All funded projects must be open source (under[ MIT](https://opensource.org/licenses/MIT), [GNU](https://www.gnu.org/licenses/gpl-3.0.en.html) or [Apache 2.0 license](https://opensource.org/licenses/Apache-2.0)). Projects in development must allow the grant committee to access any private repos for review. These projects will only receive 50% of the proposed budget untill they fully open-sourced their code.**
6. **The requested budget must match industry standards for comparable tasks. If a proposal requests way above fair market value, the committee will dialogue with the team to request adjustments. The committee may either reject such a proposal or cut the funding to settle at fair market value.**
7. **If a project has already received funding from the Tangle Ecosystem association, it cannot receive funding from the Community Treasury for the exact scope of work again. But, the committee can grant additional funding for extensions or further developments of such a project.**
8. **A proposal that creates any conflict of interest from members of the proposing team or committee members must be reported to the committee Lead. Committee members with conflicts of interest cannot process, comment, or vote on a proposal.**
9. **Any attempts of Bribery or offer of future payments, token ownership, or compensations/gifts of any form to committee members will lead to the immediate cancellation of a proposal process. Accepted bribes by committee members will lead to the immediate removal of the members from the committee.**

### **4.3) Application and approval process:**

**Easy and quick access to funding** is essential to a successful grant program. Numerous examples in the space have shown that this is one of the most critical reasons teams consider when choosing a network.

### **Funding Tiers and requirements:**

**As long as the market cap of Shimmer is low, we need to take a considerably more secure approach in the early stages.** Therefore, we should define a threshold based on the Shimmer market cap, which will lead to the halt of funding, the start of financing with low tiers, and the switch to regular tiers.

* No grants are given out as long as the Market cap of Shimmer is **below 50 Million USD**
* Grants will be given out with **low Tier values** if the market cap of Shimmer is **between 50 and 100 million USD**
* Grants will be given out with the **Regular Tier values** if the market cap of Shimmer is **above 100 million USD**
* **Tier 1 - up to 5.000 USD**: Two reviewers handle the proposal and approve or decline it within two business days after submission. KYC is required for one member of the project teams (the Grant submitter needs to do KYC and be a signer). The reviewers will decide based on the provided data in the application and especially consider if the submitter has a positive history in our community. As soon as funding is approved, the proposal will be funded within two business days after KYC is completed.
* **Tier 2 - Low Tier 5.000 - 25.000 / Regular Tier 5.000 - 50.000 USD**: Two reviewers review the proposal. KYC is required for one member of the project teams (the Grant submitter needs to do KYC and be a signer). Projects considered to be approved can be invited to conduct a 1-hour interview with the reviewers of the proposal. A minimum of two milestones will be defined, and payments will happen based on these milestones. After completing the KYC process, the committee can pay up to 50% of the requested funding upfront.
* **Tier 3: Low Tier 25.000 - 100.000 / Regular Tier 50.000 - 200.000 USD**: Same requirements as the previous tier apply. The Project Team must do KYC (3 members do KYC, including the Grant submitter and Project Team Lead, that will be the signer, and the 3rd Person decided by the Grant Committee Lead). Additionally, applications need approval by the entire grant committee. Projects considered to be approved will be invited to present the idea in an extensive live interview with two grant reviewers and the Program Lead. A minimum of three milestones are defined, and payments happen based on these milestones.

If the project is accepted, the Program Lead will assign one of the reviewers as a project steward. The steward is responsible for keeping close contact and doing regular (minimum every two weeks) checks with the project team. Milestones are reviewed by the steward and approved by the committee Lead. After completing the KYC process, the Program can pay 30% of the requested funding upfront.

* **Tier 4: Low Tier 100.000 - 250.000 / Regular Tier 200.000 - 500.000 USD:** The entire grants committee will review those applications—same procedure as in Tier 3. The Project Team must do KYC (3 members do KYC, including the Grant submitter and Project Team Lead, that will be the signer and the 3rd Person decided by the Grant Committee Lead). The final decision if the project receives funding will happen in a **vote by all token holders**.
* Suppose the grants committee supports that the community shall fund a Tier 4 application; it forwards this application to the community as a proposal in the governance forum and asks for approval by the community in a vote by all Shimmer token holders.
* The proposal in the governance forum will be submitted by the committee lead and includes the project team's full proposal and a detailed statement by the grant committee on why it recommends funding this proposal. Such a proposal will enter the governance process as a Phase 2 Poll in the Governance Forum.

### **4.4) Application and scoring process**

The teams must provide the following details in an [**application questionnaire form**](https://shimmer-community-treasury.notion.site/Test-Treasury-Grant-Application-d07087e75aa14317b36c2ae3c6f6954e):

**Proposal Title**

**Project Owner Name**

* Applicant Name (Full legal name)

**Project Owner email**

**Wallet address for payments**
* Binance Chain USDT address as long as Shimmer has no native USDT Stable Coin

**About the Team**

* Number of Team Members
* Details per member (write about every Team member. Education and work experience, link to relevant portfolios)
* Legal Status (No status, individual, incorporated)
* Country of the establishment (if legally established)

**About the Project** (Write about your project - idea, use cases, process, goals, and how it helps our ecosystem)

* Project Name
* Project Links
* Project Details (Write details about your project - requirements, deliverables, and milestones - as detailed as possible.)

**Project Goals** (Write about what your team plans to achieve with this project)

* Project Milestone 1,2,3,etc
* Expected Milestone Reward in USDC (How much money would you need to achieve this milestone)

**Funding & Budget Breakdown** (How much money would you need in total, and explain how you would spend this money if your application is accepted)

* Funding Ask in USDC
* Funding Breakdown (Write about how you plan to use the funds in your project, i.e., marketing, developers, etc.)

**Open source:**

* Will you publish the source code of your project under an open-source license (under [MIT](https://opensource.org/licenses/MIT), [GNU](https://www.gnu.org/licenses/gpl-3.0.en.html) or [Apache 2.0 license](https://opensource.org/licenses/Apache-2.0))?

**Previous Funding**

* Has the Team / the project previously received funding from another grant-giving program? If yes, please provide details.
* Has the Team / the project currently applied at other grant-giving programs? If yes, please provide details.

**Other Information:**

* Telegram Handle: (All Team members)
* Discord Handle: (All Team members)
* Whitepaper (if available)
* Pitch deck (if available)
* GitHub repository (if applicable)
* GitHub handles of Team members (if applicable)
* Other social media accounts operated by the team or the team members.

**Category?** (Please put exactly: DeFi, DAOs, NFT, Gaming, Enterprise, Metaverse, Tooling, Infrastructure, Marketing, Outreach, Education, Event, Hackathon, Social, Other)

### **Grant evaluation scoring system:**

**Grant reviewers will use a scoring system to evaluate funding proposals.**

| **Scoring Qualities** | **Outstanding (4 points)** | **Good (3 points)** | **O.K (2 points)** | **Needs Improvement (1 point)** | **Missing or Extremely Low Quality (0 points)** | **Score (out of 4)**|
| --------------------- | -------------------------- | ------------------- | ------------------ | ------------------------------- | ----------------------------------------------- | -------------------- |
| **Relevance to the Shimmer/IOTA Ecosystem**| The project is very relevant to the Shimmer/IOTA Ecosystem and exclusively builds on the Shimmer Network. They may currently have an MVP on Shimmer already.|The project is relevant to the Shimmer Ecosystem and either builds exclusively on Shimmer or plans to deploy later onto IOTA Mainnet as a second instance.|The project is somewhat relevant to the Shimmer/IOTA Ecosystem, and the Shimmer network is a main network of choice, but not the only one.| The project treats Shimmer as one of many chains and doesn't seem loyal to the Shimmer/IOTA network.| The project shows no signs of Shimmer development or doesn't seem to be faithful to building on Shimmer.| |
|**Plan and Funding Model**|The team has clear, realistic expectations on their milestones and how the funding will move the team closer to these goals. They follow the expectations of the grant system.|The team has somewhat clear, realistic expectations on their milestones and how the funding will move the team closer to these goals. They somewhat follow the expectations of the grant system.|The team has clear, descriptive expectations of their milestones but are not entirely realistic.| The team has a semblance of expectations for their milestones, but they are unrealistic.|The team has no clear vision of what funds would be used for.| |
|**Execution**| Several critical steps have already been taken toward their project goals. This could be seen in the form of a significant MVP, high traction, etc.|Some critical steps have been taken toward their project goals. Their MVP is currently being built with signs or some sort of traction.| Initial critical steps have been taken (interesting website, socials, etc.), and it seems like a decent project, but extremely early.| Initial steps taken are poorly executed or sloppy. If there are socials (Twitter, Discord, etc.), their following looks inorganic (fake).| The team has taken no steps to execute their project.| |
|**Verifiability and Quality of the Team**|Team is doxxed, and we can easily verify backgrounds. The team is also high quality and seems capable, trustworthy, and ready to take action on the project.| The Team is somewhat doxxed, and backgrounds are decently easy to verify. They are trustworthy.|The team is somewhat doxxed, but verifying background information may not be easy. They are more trustworthy than not.| The team is somewhat suspicious and hard to verify.| The teams' background and information cannot be verified or is fake.| |
|**Overall Quality & Originality of the Idea**|The project is unique and would greatly impact the Shimmer ecosystem.| The project would significantly impact the Shimmer ecosystem and is decently unique.|The project would somewhat impact the Shimmer ecosystem as a whole and is somewhat unique.| The project would have little impact on the Shimmer ecosystem as a whole and is somewhat unique.|The project/idea is a copycat or extremely weak.| |
| | | | | | |Total: x/20|

**A project should reach a particular score to be eligible for certain funding Tiers:**

* **Tier 4** (Funding budget 200.000 - 500.000 USD) - required score **minimum 17 of 20**
* **Tier 3** (Funding budget 50.000 - 200.000 USD) - required score **minimum 15 of 20**
* **Tier 1 & 2** (Funding up to 50.000 USD) - required score **minimum 13 of 20**

### **Possible Extra Scoring Points:**
* Projects offer 0,5% of the projects total token supply to go to the community Treasury: **one extra point can be granted.**
* Projects offer 1% of the projects total token supply to go to the community Treasury: **two extra points can be granted.**
* Projects offer more than 1,5% of the projects total token supply to go to the community Treasury: **three extra points can be granted.**

**This does not imply that automatically such an offer will lead to granting the extra points. Granting these additional points is decided on a case-by-case basis.**

[**JD Sutton has built a Notion Database for this selection process**](https://shimmer-community-treasury.notion.site/6c31a43cd24a4a94822559be6fbe17a0?v=ed47a1af7e2641d0841d0b956143170f)

The scoring system is a guideline for reviewers. We understand that it may only sometimes apply to some kinds of projects.

We reserve the ability to place specific projects into different tiers even if point scoring disagrees. Still, this scoring system should apply to the majority of projects.

**The grants committee will present all accepted Tier 1, Tier 2, Tier 3, and Tier 4 applications in a public meeting (weekly or once demand exists) in the IOTA / Shimmer Discord, where the community is invited to ask questions and get insights into the evaluation and decision-making process.**

**All decisions by the grant committee will be published without naming the individual grant committee members who worked on a proposal to avoid becoming vulnerable to potential complaints and attacks from declined projects.**

The committee will host a publicly accessible database (Notion) where all accepted proposals are listed, and all spending can be tracked by the community (including the respective Links to Stablecoin Payouts)
[**Proposed structure example Notion by JD Sutton**](https://shimmer-community-treasury.notion.site/cf6eff9879f04c9e9afc3fdddda72ded?v=54898c0985b24602bfd7683aa330b3fd)

### **Complaint process:**
Should a project feel it has been treated unjustly by a decision of the grant committee, it should first contact the Programm Lead and try to resolve the issue. If that is not successfull the project can open a complaint thread in the Governance forum and lay out the reasons for the complaint respectfully to the community.
If a Grant Reviewer is also a Governance Forum Moderator, this moderator is excluded from any moderation activities in this specific forum conversation.

### **4.5) The Budget**

**We propose this: Budget for 12 months of operation**

* The Budget for the committee spending during 12 months is 15% of the SMR community Treasury tokens currently held in [this address](https://explorer.shimmer.network/shimmer/addr/smr1qrmakyqt5ezm5k9c0sk39gwfavpktxkjmx0jvh9ejxjq6pr6d39egv2mvuc).
* **15% of this 181.362.051 SMR will be 27.204.307 SMR available for the committee to spend on grants and cover all operational costs.**
* The committee will operate a MultiSig Wallet, supplied with fractions/ monthly allocations of SMR tokens from the community wallet (currently operated by TEA) to the Multisig.
* The committee will pay monthly salary in stablecoin USDT or USDC to the Project Lead and payout compensation to Grant reviewers based on monthly invoices. It will be responsible for handling this efficiently and transparently.
* Six months of salary required for the Project Lead (67200 USD) will be converted from SMR to USDT at the beginning of the program period and again after the first six months of operation.
* The committee will convert the potential max compensation for the grant reviewers (24.000 USD if four reviewers do 10 hours a week) from SMR to USDT quarterly.
* Liquidating those tokens on the exchange shall happen in small amounts controlled by the committee and randomized in time and quantity. (Crypto finance custody potentially an option)
* Once a project has been approved for funding, the committee will convert the amount of Shimmer tokens approved for this project into USDT so that the financing of this project is guaranteed. Market volatility should not impact project funding and Reviewer compensation.
* The needed legal costs and expenses around the setup of the Marshal Island DAO LLC and the potential shutdown costs at the end of the program operations will be covered by the Community Treasury.
* Any excess funds left in the Committee's MultiSig Wallet towards the end of the 12 months will be sent back to the Community Treasury wallet by the committee members in case the community decides not to continue the Program.

### **4.6) The legal entity**

The committee members must have a legal status to be aligned with all regulations and operate on safe, legal grounds.

- We propose to start this Grant committee under the umbrella of the Tangle Ecosystem Association until the legal entity in the Mashal Islands has been fully set up. The Tangle Ecosystem Association has agreed to sign service provider contracts with the Committee members to let them start operating as a Grant Committee once the vote has passed.
- Once the legal entity has been fully established, the Committee Lead and the Grant reviewers will sign Service Provider contracts with the Marshal Island DAO LLC and receive legal liability protection from the entity based on these service contracts.
- All committee members will be KyC'd and can be made responsible if any misbehavior occurs based on their contractual terms.

This setup will enable a regulated and lawful grant-giving committee that can be held accountable and operates under a transparent and regulated status.

**Registration & costs**

Setup Fee: 9500 USD
Annual Fee: 5000 USD

### **4.7) Program success metrics**

**Measurable criteria:**

* Growth in the number of grants applications received quarter-over-quarter
* Growth in the number of projects, ideas, and events funded
* Growth in community engagement (e.g., increased activity on Discord, Forum, Twitter followers, etc.)
* Growth in Shimmer market capitalization that is driven by applications/projects funded via grants (e.g., increased TVL in the EVM Chain, increased amount of daily/weekly active users, increase in daily active addresses in the Shimmer network and the EVM Chain, increased value transferred due to apps funded by grants)

The committee will provide reports on these metrics every six months.

### **4.8) Changes to this Framework**

Once this Framework has been accepted through a public vote by the Shimmer token holders, the process or daily work for the members of the Treasury committee can begin. Even if we now think that we have designed a comprehensive and very well-working set of rules under which the committee members can carry out the grant-giving activities, the committee members may conclude that specific points described in this Framework need changes to operate better and more effectively.
The committee members will be the only ones who can correctly identify the need for such changes. Therefore, we would limit the group of Persons that can propose changes to the specifications described in the document to the five elected Committee members.

- **The following points are open to changes by all community members via the official Shimmer Governance process:**
- Proposal to replace/remove a Grant Reviewer
- Proposal to replace/remove the Programm Lead
- Proposal to terminate and shutdown the Shimmer Community Treasury Grant Committee
- Proposal to extend the operation period of the Shimmer Community Treasury Grant Committee
- Proposal to add additional funding to the budget of the Shimmer Community Treasury Grant Committee

- All changes to other points described under **Specification (Point 4.1 - 4.8)** of this document can only be proposed by a member of this Shimmer Community Treasury Committee (Programm Lead and the four elected Grant Reviewers) through a public proposal in the Governance forum following the process laid out in the Shimmer Governance Framework.

## **5.) Rationale**

This proposed structure is based on the very successful Aave grants program ([original proposal in Aave forum](https://governance.aave.com/t/arc-aave-community-grants-program/3642)). It also took inspiration from other programs like the Bankless and Polygon DAO grants.

They all work with committee-based structures and different Tiers of funding that make it easy to apply for small grants but increase the due diligence of higher-tier financing.

Looking at the list of successful sponsored grants and events from Aave should show very clearly where we need to arrive with our grants program:

[https://aavegrants.org/funded-grants](https://aavegrants.org/funded-grants)

[https://aavegrants.org/list-of-sponsored-events-community](https://aavegrants.org/list-of-sponsored-events-community)

## **6.) Implementation**

**Once this proposal has successfully passed Phase 3 (Firefly vote), the following measures need to be taken:**

- Set up the Marshal Islands DAO LLC.
- Execution of community vote to select the committee members (happens at the same time as the framework proposal vote).
- Contract signing of all Committee members with the Tangle Ecosystem Association to bridge until the Marshall Island DAO setup is finalized.
- Setup up the Gnosis Multisig Wallet and transfer the first tranche of Funds from TEA to the wallet.
- After this, the committee will be operational and can accept grant applications.

---

## **Vote Name, question and answers, and optionally additional information**

**Question:**

* Do you support the setup of the Shimmer Community Grant Committee?

**Answer 1:**
* Yes, i support setting up the Shimmer Community Grant Committee

**Answer 2:**
* No

**Additional info:**

Read the full Proposal: [SGP - 0005] - Shimmer Community Grant Committee (add weblink to the Phase 2 Poll in the Forum)

## Participation event of the proposal

{
    "name": "[SGP - 0005] - Shimmer Community Grant Committee"
    "milestoneIndexCommence": milestone number when "pre vote" starts,
    "milestoneIndexStart": milestone number when "counting starts",
    "milestoneIndexEnd": milestone number when "counting ends",
    "payload": {
        "type": 0,
        "questions": [
            {
                "text": "Do you support the setup of the Shimmer Community Grant Committee?",
                "answers": [
                    {
                        "value": 1,
                        "text": "Yes, i support setting up the Shimmer Community Grant Committee",
                        "additionalInfo": ""
                    },
                    {
                        "value": 2,
                        "text": "No",
                        "additionalInfo": "I don't want to implement the proposed change"
                    }
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                "additionalInfo": ""
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    "additionalInfo": "Read the full proposal here: Link to the Phase 2 temperature check post in the governance forum."
}