# Different Grant Funding Mechanisms **Technocratic Funding** and **Democratic Funding** are distinct approaches to resource allocation, particularly in contexts like grant funding, governance, or public goods distribution. Here's how they differ: --- ### **Technocratic Funding** - **Definition**: Decision-making and allocation are driven by experts, professionals, or those with specialized knowledge in a particular domain. - **Key Features**: - **Expertise-Driven**: Decisions are based on technical knowledge, data, or past performance. - **Efficient but Exclusive**: Focuses on optimizing outcomes, but may limit input from the general population. - **Example in Web3**: - **Retroactive Public Goods Funding (RetroPGF)**: Funds are allocated by expert badgeholders or decision-makers after assessing the outcomes of a project. - **Request for Proposals (RFPs)**: A targeted funding mechanism where experts review proposals and select the most promising projects. - **Pros**: - Ensures funding is aligned with measurable impact or strategic goals. - Avoids the noise of public or community biases. - **Cons**: - Risk of elitism or exclusion of diverse perspectives. - Limited accountability to the broader community. --- ### **Democratic Funding** - **Definition**: Allocation decisions are made through participatory or collective processes, often involving voting by a broad group of stakeholders. - **Key Features**: - **Community-Driven**: Empowers individuals to decide where resources should be allocated. - **Inclusive but Complex**: Requires mechanisms to balance fairness, participation, and effectiveness. - **Example in Web3**: - **Quadratic Funding (QF)**: Funding is based on the number of contributors, rather than the size of contributions, to amplify smaller donations from a larger community. - **Conviction Voting**: Decisions evolve based on continuous support from participants, reflecting collective priorities over time. - **Pros**: - Amplifies diverse voices and preferences. - Builds trust and engagement within a community. - **Cons**: - Prone to manipulation (e.g., sybil attacks in QF without proper safeguards). - Can be less efficient than expert-driven models. --- ### **Comparison** | Feature | Technocratic Funding | Democratic Funding | |-----------------------|-------------------------------------------|------------------------------------------| | **Decision Drivers** | Experts or professionals | Community or stakeholders | | **Inclusion** | Limited to experts | Broad participation | | **Efficiency** | High, but may overlook community needs | Reflects collective will, slower to implement | | **Examples** | RetroPGF, RFPs | Quadratic Funding, Conviction Voting | --- ### **Highly Technocratic Funding Mechanisms** 1. **Retroactive Public Goods Funding (RetroPGF)** - Experts (badgeholders) allocate funds based on the proven impact of completed projects. - Examples: Optimism's RetroPGF. 2. **Request for Proposals (RFPs)** - Organizations invite proposals and select winners based on expert evaluation. - Common in research grants or government funding. 3. **Direct-to-Contract Incentives** - Funds are allocated programmatically based on smart contract performance or metrics. - Example: Rewards for contract usage like EIP-6969. 4. **Impact Attestations** - Experts validate and reward projects based on measurable outcomes and attestations. --- ### **Balanced Mechanisms (Technocratic + Democratic)** 5. **Conviction Voting** - A mix of community input and weighted voting over time to reflect sustained preferences. - Combines grassroots participation with decision longevity. 6. **AutoPGF (Automated Public Goods Funding)** - Funds are generated programmatically, with the community voting on allocations. - Example: Glo Dollar or Octant. 8. **Bounties** - Funding is task-specific, with payouts upon delivery. Tasks can be decided by a mix of experts and the community. --- ### **Highly Democratic Funding Mechanisms** 8. **Quadratic Funding (QF)** - Small community contributions are amplified through a matching pool, emphasizing participation over large donations. - Example: Gitcoin's Grants Program. 10. **Participatory Budgeting** - Community members directly decide how a portion of funds is allocated via voting. - Examples: Municipal or DAO-level participatory budgets. 11. **Revnets** - Funding and incentives are designed to allow participation without governance overhead, encouraging open engagement. 12. **Gift Circles** - Members allocate resources collaboratively to reward contributions and strengthen community ties. --- A combination of these funding mechanism for a specific vertical of a mission can be powerful! ### Reading Recommendations - OnChain Capital Allocation Book: https://allobook.gitcoin.co/ - Grant Maturity Index: https://arxiv.org/abs/2410.19828 - Retro PGF Case Studies: https://docs.google.com/document/d/1ZBaP_Wv7ldMKZR7tkucm7LZOvcK_RySmvj1NwPBlPWc/edit#heading=h.8qvjms6dvosp - Github Grants Datalake: https://github.com/opensource-observer/oss-funding - State of Web3 Grants Report 2023: https://docs.google.com/document/d/1CFD6ztSh2ggJSO-U3uEea92UVB1cRbvBlA1tfPxLKi8 - State of Web3 Grants Report 2024: https://www.researchgate.net/publication/384437723_State_of_Web3_Grants_Report_2024 - Web3 Grants Report 2024 KeyTakeaways : https://drive.google.com/file/d/1xW1EzA_KJbBeDvk-mBJv_YoWItk8msOH/view - DAOIP-5: https://docs.daostar.org/DAOIP/5 #### Projects we checked out during the talk - https://juicebox.money/projects - https://giveth.io/projects/all - https://lottopgf.org/