# Shimmer Community Grant Committee - Version 2

## Boosting the Shimmer Ecosystem as a community

This is the second and updated version of a proposal that was created by a group of community members who care about the Shimmer ecosystem's development and the network's success. We have met every Tuesday and Thursday in the IOTA Discord general voice channel, and all these topics have been publicly discussed, and the proposal was developed and fine-tuned in these meetings. Core contributors have been: @Deep_Sea @AndyW @gman @overclocked @Werner @TonyO2 and many others that took part in the calls and added context to the proposal. Read the **[First Version](https://govern.iota.org/t/shimmer-community-grant-committee/1415)**

You can watch all recordings of those meetings here: https://youtube.com/playlist?list=PL5joP0FyJQU4eKPWfQWradNVjMIPq86ID

Please read carefully and leave comments and suggestions in this thread.
The selection process for potential committee members is specified in **[this forum post](https://govern.iota.org/t/community-grant-committee-selection-proccess-specification/1436)**

**If you like the idea, please show your support at the end of this post [here](#h-5-rationale-19)**

## **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 committe and **elects one full time employed Project Lead and 4 part time contracted Grant Reviewers.**
* We propose to establish a **GmbH (LLC) in Switzerland** as a Subsidiary of the Tangle Ecosystem Association to operate the Grant committee.
* We propose to give out grants based on **clear defined selection criterias and tiers** that increase the due dilligence with the requested amount of funding.

In establishing this Shimmer 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% 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.

The Shimmer community will be the biggest token owner in the Shimmer network. With this, there also comes a responsibility to actively do something for the network's success, creating a win-win situation for all participants.

## **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, therefore, 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.

Some examples are taken from [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:

* [Avalanche Foundation Announces $180M Defi Incentive Program 9](https://medium.com/avalancheavax/avalanche-foundation-announces-180m-defi-incentive-program-d320fdfafff7)
* [Avalanche Developers and Investors Form $200 M' Blizzard' Investment Fund 6](https://www.coindesk.com/tech/2021/11/01/avalanche-developers-and-investors-form-200m-blizzard-investment-fund/)
* [Announcing 370m FTM incentive program 1](https://fantom.foundation/blog/announcing-370m-ftm-incentive-program/)
* [New 335m FTM Incentive Program with Gitcoin Grants](https://fantom.foundation/blog/new-335m-ftm-incentive-program-with-gitcoin-grants/)
* [$300M incentive program backs 100% rally in Harmony (ONE) price 1](https://cointelegraph.com/news/300m-incentive-program-backs-100-rally-in-harmony-one-price)
* [NEAR Protocol raises $350 million in a new funding round led by Tiger Global 4](https://www.theblockcrypto.com/post/140751/near-protocol-raises-350-million-in-new-funding-round-led-by-tiger-global)
* [Privacy startup Nym brings in outside backers for $300 million developer fund](https://www.theblockcrypto.com/post/144344/privacy-startup-nym-brings-in-outside-backers-for-developer-fund)

We believe 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:_**

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

### **4.1) The Committee**

**The committee will initially 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 to ensure effective alignment in the goals and directions of the community grants program.
* The Lead organizes the public meetings of the Grant Committee and takes care of reporting for financial transparency and fund usage.
* The Lead will be employed as the Managing Director of a Swiss GmbH that acts as the legal body of the Program and offers limited liability and the needed legal structure to ensure a safe operation.
* The Lead will receive a salary of 11200 USD per month on a 40 hours per week basis and will sign a 12 months contract.

**The 4 Grant Reviewers will process funding applications 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 with the Swiss GmbH.
* 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 Swiss GmbH.
* 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 leaves, the Co-Lead continues the operation and organizes an election of a new Lead by 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 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 breach of NDA, insider trading or not disclosed conflict of interrest, such reviewers will be immediatly discarded from the committee position by the committee lead and removed from the multisig.
* Replacement positions will be offered to the runner-up candidates that have received the most significant support during the committee selection process.

### **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 legal entity.
* All committee members must reveal any potential conflicts of interest in becoming a committee member. 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 teams that could cause a conflict of interest. A conflict of interest policy needs to be accepted and signed.
* A committee member cannot be involved in evaluating any proposal that would cause a conflict of interest. The other grant reviewers will handle such cases without involving the member with has the conflict. Conflicts of interrest are no exclusion criterias for committee members, they just need to be declared and for such specific grants that would cause a conflict of interrest the reviewer will not take part in the decision making process.
* 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 MultiSignature Wallet with a Ledger Nano device.

### **Selection proccess 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

### **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 establishing successfull and profitable business models on Shimmer.

#### **Target areas:**

* 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. **Projects that can guarantee a backflow of capital/investment into the community treasury will be evaluated more positively.**
5. **The proposer or team must be capable of delivering the proposed project. Evaluating this is the responsibility of the committee.**
6. **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.**
7. **The requested budget must match industry standards for comparable tasks. If a proposal requests way above fair market value, the committee will go into a 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.**
8. **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.**
9. **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 are not allowed to process, comment, or vote on a proposal.**
10. **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.

**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.**

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)

### **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 approves or declines it within two business days after submission. KYC is required for Tier 1 project teams. 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. The team must do KYC. The team presents the idea in a video interview with two Grant reviewers. 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 whole Project Team must do KYC. Additionally, applications need approval by the entire grant committee. The team presents the idea in an extensive live interview with the entire grants committee. 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 / Normal Tier 200.000 - 500.000 USD:** The entire grants committee will review those applications. Same procedure as in Tier 3. 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 proccess as a Phase 2 Poll in the Governance Forum.

**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.**

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

The following details must be provided by the teams 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 londg 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 establishment (if legaly 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 received funding from another grant giving program before? If yes, please provide details.
* Has the Team / the Project currently applied at other grant giving programms. 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 not realistic.|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 maybe a little difficult to verify background information. 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 Web3/crypto ecosystem.| The project would significantly impact the Web3/crypto ecosystem and is decently unique.|The project would somewhat impact the Web3/crypto ecosystem as a whole and is somewhat unique.| The project would have little impact on the Web3/crypto ecosystem as a whole and is somewhat unique.|The project/idea is a copycat or extremely weak.| |
| | | | | | |Total: x/20|

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

**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**

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

The scoring system is a guideline for reviewers. We understand that it may not always apply to all kinds of projects.

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

### **Complaint proccess:**
Should a project feel it has been treated unjustly by a decision of the grant committee, it can open a complaint thread in the Governance forum and lay out its 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:**

* The Budget for the committee spending during 12 months is 15% of the SMR community Treasury tokens.
* **15% of 181.362.051 SMR will be 27.204.307 SMR available for the committee to spend on grants and cover all costs.**
* The committee will operate a MultiSig Wallet, supplied with fractions/ monthly allocations of SMR tokens from the TEA wallet to the Multisig.
* The committee will pay monthly salary in stablecoin USDT or USDC to the Project Lead and payout compensation to 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 on a quarterly basis.
* Liquidating those tokens on the exchange shall happen in small amounts controlled by the committee and randomized in time and amount. (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 therefore not impact project funding and Reviewer compensation.
* The needed legal costs and expenses around the setup of the Swiss GmbH and the implementation into the Tangle Ecosystem Association and the potential closing of 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 will need legal status to be aligned with all regulations and operate on safe, legal grounds.

- We propose to set up a Swiss GmbH (LLC) subsidiary of the Tangle Ecosystem Association.
- The Project Lead will eventually be employed as Managing Director of this GmbH with the respective rights and responsibilities.
- Grant reviewers will sign Service Provider contracts with the Swiss GmbH.
- Details of this are still under review, and a meeting with Swiss lawyers is scheduled to discuss this.

This setup will enable a regulated and lawful grant-giving committee that can be held accountable and operates under a transparent and regulated status. The Gmbh will be obligated to pay taxes and follow all regulations of Swiss law.
Setting it up as a TEA subsidiary will bring significant Tax saving potential for the Community Treasury.

- All committee members will be legally KYC'd and known to the GmbH and can be made responsible if any misbehavior occurs based on their contractual terms.
- "Gesellschafter" and Founder of the GmbH would be the already existing Tangle Ecosystem Association incorporated in Switzerland
- The GmbH will be legally bound through obligations in their constitutional setup to follow Governance decisions by the Shimmer Tokens holders so that the community will have direct control and enforcement over the GmbH.

**Registration & costs**

* Minimum share capital of CHF 20.000, which the community must fully pay at the time of the registration (Art. 773 OR).
* The notary and commercial registry costs are around CHF 2.000. We must add attorney costs for the draft of documents, in particular, Gesellschaftsvertrag and Geschäftsführeranstellungsvertrag
* The company's actual site (Verwaltungssitz) must be in Switzerland.
* One person is enough to register the GmbH. The Tangle Ecosystem Association will carry out this registration.

**Alternatively, it would be possible to set up a Marshall Island DAO LLC as the Content Creator DAO has already done it.**
- This would not be such a highly trusted legislation as Switzerland
- It would need to be more "non Profit", so we must clarify certain things like receiving tokens from funded teams, and the DAO cannot payout rewards to the direct members. It can still be a feasible option if structured correctly.
- The running costs are likely lower than Switzerland
- Setup is more straightforward, including taxes and employment regulations.

**A Third alternative: Combining MIDAO and Switzerland**
- Marshall island DAO would be the real Community DAO where all token holders have voting rights and which holds the governnce rights and control over the full community treasury.
- This Marshall island LLC founds the Swiss LLC and fascilates the grant programm and contracts the reviewers

All options currently under review

### **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.

## **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:**

- Finalizing the talks around the legal entity in Switzerland with drafting all documents and contracts for the Lead and Grant reviewer. In parallel accessing options with Marshal islands DAO LLC and figure out if we can find synergies that make sense **DRI: Phylo with legal Team TEA, Dependency: Process in Switzerland.**
- In Parallel: Execution of community vote to select the committee members. **Dependency: Governance Group and Community decision**
- Shimmer EVM chain successfully deployed and running stable. **Dependency: IOTA Foundation Engineering**
- Implementation of Shimmer EVM into the Gnosis "Safe" Contracts platform (a Team is working on that already). **Dependency: Project development by Ecosystem Team funded by EDF (Mark)**
- KYC and Contract signing of all Committee members.
- Setup of the Gnosis Multisig Wallet and transfer of the first tranche of Funds from TEA to the Wallet.
- After this, the committee will be operational and can accept grant applications. JD Sutton has already designed an [excellent Front-end](https://shimmer-community-treasury.notion.site/Test-Treasury-Grant-Application-d07087e75aa14317b36c2ae3c6f6954e) and application process for this.