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# MOLOCHDAO ANNUAL REPORT 2021

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## INDEX

<ol>
<li>Background</li>
<li>2021 Year in Review</li>
<li>MolochDAO Network/Ecosystem Overview</li>
<li>Grant Strategy</li>
<li>MolochDAO - Looking Ahead</li>
<li>MolochDAO’s plans regarding ETH ecosystem development
<li>Call to Action</li>
</li>

</ul>

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## Background

MolochDAO was summoned on Valentine's Day 2019 at ETHDenver. Since the DAO Hack in 2016, the DAO concept was more or less on ice, with few people working on it. Ameen Soleimani, who had started at Consensys the very week that the DAO Hack started, had continued to think about the concept. In 2019, he set out to create a minimum viable DAO - few lines of code with less complexity to reduce risk.

At ETHDenver, Ameen asked a bunch of people for 100 ETH each to summon a grant-making DAO. (One ETH was worth ~$115 USD then.) Those became the core members of the DAO, along with Vitalik Buterin and Joe Lubin.

As James Duncan described in a [Medium post](https://medium.com/metacartel/molochdao-a-primitive-solution-d11cc522b18e) at the time:

> "The beauty of Moloch is similar to that of the EVM. It is rudimentary, but the system works."

Moloch was active in 2019, and fairly dormant in 2020. But it still had funds in its treasury, and that ETH had appreciated in value considerably. In late 2020, Stellar Magnet started an initiative to reboot the grants program, and get the money working in the ecosystem as originally intended. She applied to MolochDAO for a grant to create an operational guild, which became known as The Really Boring Guild (RBG), which administers the grant program.

In 2021, The Really Boring Guild spearheaded an upgrade of the DAO. Shortly after MolochDAO was summoned, MetaCartel had forked the contract and launched an entire class of DAOs called Moloch DAOs, eventually upgrading the contracts to Moloch v2. But the original MolochDAO remained on version 1 - more correctly, MolochDAO WAS version 1 - while an entire ecosystem grew up around it. To solve for some issues in grant administration, RBG recommended the upgrade to v2, and after conducting due diligence and an open comment period, the upgraded DAO was summoned.

Two grant rounds were conducted in 2021, and we see new activity and new life in MolochDAO.

This is a look back at 2021 and what was accomplished, and a look forward at MolochDAO's evolution.

## 2. 2021 Year In Review
- First grants round (January)
- Creation of Guild One, later renamed "The Really Boring Guild". (January) Background & most recent grant proposal is [here](https://www.molochdao.com/apps/really-boring-guild).
- The first [MolochDAO Handbook](https://docs.google.com/document/d/13jeVWT146jBwmDwmLS04Gn0D1lHEMDBOnpyZFJ00iIE/edit#heading=h.lee194nt22dq) was published, written by TravisWyche and StellarMagnet
- Grants awarded, including a second grant to continue the work of RBG (June)
- RBG engaged with DAOstillery to create an upgrade path to Moloch v.2 to solve for issues of v1 (such as 10 ETH sponsorship requirement). Shout-out to Ven, Dekan & Spencer for their expert guidance and support! (July)
- Community notification and open comment period was held to gather consensus on the upgrade (August)
- DAO upgrade was completed when about $6M in funds (at the time) were moved to a new v2 DAO (September)
- RBG represented MolochDAO at MCON in Denver and Wyoming Blockchain Stampede (September)
- A new [MolochDAO Handbook](https://molochdao.gitbook.io/handbook) was published, written by Travis Wyche (October)
- Second grants round was conducted (November)
- Grants awarded (December)
- $30k of the RBG grant was allocated to Raid Guild to provide: brand identity, website update, annual report & sustainability model work (December, January)

## 2021 Grants Program

Since 2019, MolochDAO has given approximately $1.4m in grants.

<iframe width="600" height="371" seamless frameborder="0" scrolling="no" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRcFV99f9dFNWf1HhLtAlvkxFMowC2AWJ3HAgh2tpRwzohiaq-4jECiXWROPHq8GB2TzFkuYd75EHcx/pubchart?oid=1216381314&amp;format=image"></iframe>

- In 2019, 31 grants were given, with an average $ amount of $8,800.

- In 2020, 21 grants were given, with an average $ amount of $17,390.

- In 2021, 15 grants were given, with an average amount of $49,615

>Note that the dollar amount is always estimated, because that depends upon:
>- the translation of the desired $ amount into ETH when the proposal goes on-chain
>- the value of ETH when the proposal passes
>- in the case of v1, the value of shares when the proposal passes
>- for v1, you could also argue that the value of one share and ETH on the day the user ragequits the funds is a valuable measure of value released into the ecosytem.

### Grant allocation

This chart shows that MolochDAO's priorities were split between ecosystem development and ETH 2 development in 2019. In 2019 and 202 there was work done on DAO ecosystem development, including work on Moloch v2. In 2021, priorities are centered on ecosystem development in a range of subject areas.

<iframe width="751" height="465" seamless frameborder="0" scrolling="no" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRcFV99f9dFNWf1HhLtAlvkxFMowC2AWJ3HAgh2tpRwzohiaq-4jECiXWROPHq8GB2TzFkuYd75EHcx/pubchart?oid=1702005325&amp;format=image"></iframe>

The chart below shows a snapshot of the DAOs funding priorities from 2019 - 2021. You can see that in 2021, grants largely continued and extended the grant priorities from the prior year.

<iframe width="600" height="371" seamless frameborder="0" scrolling="no" src="https://docs.google.com/spreadsheets/d/e/2PACX-1vRcFV99f9dFNWf1HhLtAlvkxFMowC2AWJ3HAgh2tpRwzohiaq-4jECiXWROPHq8GB2TzFkuYd75EHcx/pubchart?oid=606323245&amp;format=image"></iframe>

> Note that Comms (member & public-facing communications) is not shown for 2021 because it was absorbed into Really Boring Guild's budget.
> The one new item in 2020 was Grant Matching - which is the MetaMoloch initiative. This initiative is a collaboration with MolochDAO, so to some degree it can overlap with Moloch's funding interests (but may also diverge in some areas.)

### The Really Boring Guild

### 2021 Grant Recipients

**The Really Boring Guild's** [most recent grant proposal](https://www.molochdao.com/apps/really-boring-guild) articulated a variety of operational duties with a focus on grant coordination. MolochDAO's all-time operations cost averages 8.6% of the grants program. It was 10% in 2019 and 2020, and 7.6% in 2021. $56,400

**[Trueblocks](https://trueblocks.io/)** is a lightweight & local index of the Ethereum blockchain. RBG recently published [this interview with founder Thomas Jay Rush](https://medium.com/molochdao/molochdao-interview-with-thomas-jay-rush-of-trueblocks-b019ea348ec6). TJay remained a member of the DAO after getting his grant, which he used to add a developer to provide additional functionality. $75,000

**[Ethereum Cat Herders](https://ethereumcatherders.com/)** has been supported in part by MolochDAO since 2019. Headed by Pooja Ranjan, who recently joined MolochDAO, ECH is a decentralized project management group for Ethereum blockchain. In particular they work with processes around Ethereum Improvement Proposals (EIPs). RBG recently [interviewed Pooja about Ethereum cat herding](https://medium.com/molochdao/molochdao-interview-with-pooja-ranjan-of-ethereum-cat-herders-be037f115961). $10,000

**[Apache Tuweni](https://tuweni.apache.org/)** is the brainchild of Antoine Toulme, who has been involved with Moloch since 2019. It is a set of libraries and tools to help people develop for blockchain An RBG interview with Antoine is forthcoming soon. $50,000

**DeathGuild** is an ambitious research and content production project which is probably best described [by grant recipient Travis Wyche](https://medium.com/molochdao/molochdao-interview-with-travis-wyche-of-deathguild-7b5f71d3266)! $26,650

**[Rotki](https://rotki.com/)** is a privacy-focused and open source crypto portfolio manager. $100,000

**[Flashbots](https://writings.flashbots.net/writings/frontrunning-mev-crisis/)** is a research and development organization concerned with miner-extractable value (MEV) and the risks to smart-contract blockchains. $100,000

The proposers of **[EIP-3074](https://eips.ethereum.org/EIPS/eip-3074)** turned to MolochDAO to support their work on this issue. The EIP is currently under review. $18,0000

**[Umbra Protocol](https://www.scopelift.co/blog/introducing-umbra)** is a protocol for simple stealth payments on Ethereum. $100,000

**[Stereum Ethereum Node Setup](https://stereum.net/ethereum-node-setup/)** is meant to help Ethereum scale by making it easy for anyone to run an Ethereum node. You can see the funding proposal [here](https://forum.daohaus.club/t/stereum-ethereum-node-setup/5391). $50,000

**[Sybil Resistance](https://forum.daohaus.club/t/moloch-grant-proposal-62-sybil-resistance/3446)** is a proposal from Ameen which focuses on adversarial testing of identity systems Proof of Humanity and BrightID. $100,000

**MetaMoloch** is [an innovative proposal](https://forum.daohaus.club/t/mgp-nov-2021-metamoloch-a-grant-matching-and-ecosystem-development-initiative/4039) to create a matching grants program as a collaboration between [MetaCartel](https://www.metacartel.org/) and MolochDAO, creating signaling between the two DAOs, and exploring grant strategies in common, as well as leveraging the different spins on grant-making in each DAO. It is proposed as large grant in tranches, and MolochDAO agreed to test the concept with an initial grant of about $20,000.

A working history of all grants can be found [here](https://docs.google.com/spreadsheets/d/1AEirC_nRhiW3eYpXNnJbfgZovRkrUvva5GAaFUMXRVU/edit?usp=sharing).

### DAO-to-DAO Relationships

In addition to grants coordination, The Really Boring Guild prioritized collaboration with other DAOs in 2021. An entire ecosystem of DAOs grew up around MolochDAO since it was summoned,but because it was not very active, many assumed MolochDAO itself was dead. We felt it was important to establish its unique history and place, and to reinvigorate and inhabit the brand. We found there was significant interest from the community in MolochDAO's revival. We also found it valuable to engage with the community and collaborate on the DAO upgrade.

Here are our main collaborations in 2021:

#### DAOHaus
The purpose of the DAO upgrade was enable easier flow of the grant pipeline. We realized that some of the pain points and issues we were solving for had already been addressed in Moloch v2. It was essential engage with experienced devs who could help conduct both a community outreach process and a technical execution. Ven Gist, Dekan Brown, and Spencer Graham were incredibly generous with their invaluable time and guidance.

#### Meta Gamma Delta
Meta Gamma Delta is an early Moloch DAO (summoned at ETHDenver in 2020) that supports women-led projects through their grants program, and is known for their inclusive and friendly onboarding. Both DAOs benefited from collaboration and bringing women from each DAO into the other.

#### Uberhaus
UberHaus is a DAO comprised of DAOs, and Travis is MolochDAO's Uberhaus rep. We are one of the largest holders of Haus tokens in UberHaus.

#### MetaCartel
The MetaMoloch grant grew from many conversations with MetaCartel, which was the first to fork Moloch v1. With the creation of DAOHaus, a no-code method to put up a DAO, the number and kind of DAOs exploded. This collaboration is two-fold: it claims a respected position in the community for MolochDAO, and enables the DAO to make impact in the ecosystem with influence as well as grants. Both Moloch DAO and MetaCartel have a mission to accelerate and drive mass adoption of Web3.

#### Raid Guild
We sponsored a Raid Guild cohort for $20,000 in return for an ambitious slate of work to be picked up by members of the cohort. Essentially, cohort members work pro bono, but are rewarded for successful work from the sponsorship. They get experience working on projects, and successful project members will be able to onboard to Raid Guild.

This was a valuable way to temporarily increase the pool of hours and skills available to Raid Guild, and the funds paid for the sponsorship replaced work that would have otherwise been done by Really Boring Guild members over several months. We also provided a great learning opportunity for new members onboarding to Raid Guild.

We provided [an initial list of possible work](https://hackmd.io/@rbg/RG-Moloch-season3cohort-projectoverview) to Raid Guild for the cohort to choose from.

Raid Guild members selected tasks, formed into teams on the following projects:
- This annual report, providing research and writing, as well as analysis for the sustainability model, below
- A new brand design and website (in progress)
- Community-building strategy (in progress)

## 5. Grant strategy

The RaidGuild team reviewed the grant strategies of four other Ethereum ecosystem funders (Gitcoin, Ethereum Foundation, Metacartel, EF RFP) and have some recommendations for MolochDAO to consider for its own grant making strategy in 2022. They include:

#### #1: Increased clarity

These programs often were very explicit about what they do and don't fund as well as their process. This helps people know when to apply and what to expect as they consider grant options.

Some programs offer informal conversations with select grant proposers to help answer questions and give guidance on what would help the grant get approved. Really Boring Guild offers this as well.

> In our v2 DAO, proposals can be made from non-DAO members and there is a refundable fee of 1 ETH to do so, as a spam prevention measure. We therefore can no longer require proposers to have these sessions; it is voluntary. In the last grants round some used this service, and others did not. In 2022, we could promote the availability of this, as it can help increase the likelihood of success (though there is no guarantee that the advice will result in a passed proposal - the DAO votes as it will.)

#### #2: Beyond money

The EF Ecosystems grant process offered many kinds of support beyond just monetary support. Some public goods goals require connections, publicity, mentorship, and advice. Offering incentives beyond money is a big value add to the ecosystem.

MolochDAO provides some publicity through RBG, but the DAO can grow its support for grantees in 2022.

#### #3: Quick responses

Some of the best programs we examined both mentioned fast responses and others said they heard back quickly.

MolochDAO has multiple grants rounds per year and we can evaluate the idea of a rolling grants round in the future.

#### #4: Matching donations

By the time someone has gotten a grant approved they often have an exciting project. Some of the other grant programs examined offered matching donations as a way to multiply the effort of the grant application and impact of the proposal.

MetaMoloch is a first effort; we can also look ahead in 2022 and how we can collaborate with other relevant DAOs to provide signaling and help leverage the opportunity for grantees.

## 6. MolochDAO Fund Sustainability

### Purpose of this Framework

The goal of this analysis is to present a framework for allocating the MolochDAO treasury to the grant program. The amount the DAO should give away annually depends on the following:
<ul>
<li>The desired goal of the DAO - would we like to expend funds quickly, or create a longer-term path for sustainability?
<li>The average price of ETH each year
</ul>
<br/>

The DAO can look ahead, and evaluate these factors on an annual basis, setting a target amount to give away each year. This will inform the budget for each grant round, but will not restrict the DAO regarding the exact allocation of funds.

Specifically, this analysis considers three main factors: (1) the yearly USD price increase of ETH, (2) the increase in grant budget as a proportion of the ETH price increase, and (3) the budget allocation to the ReallyBoringGuild (RBG), for managing MolochDAO's operations. The model starts from 2021 and runs until 2035.

Of these factors, the most important and most complex factor is the price increase in ETH. It is difficult to know exact pricing trend of ETH on an annual basis given the many factors that go into its price. Modeling out a scientific ETH price prediction model is beyond the scope of this report. Therefore the main assumption that has been made is that the price will continue to increase on a yearly basis and the only difference will be how much it will increase.

Regarding the RBG budget allocation, this was projected at a constant 15% of the grants budget per year. However, it has typically been 10% or lower, and can be adjusted annually.

Lastly, the budget allocated to grants has a starting point of 20% based on 2021 numbers and is capped at 80% as it increases on a yearly basis. The cap is needed so the allocation does not exceed 100% of the treasury. Without the annual increase, the amount of grants given becomes too low as the price of ETH rises.

#### Scenarios

| | Scenario 1 | Scenario 2 | Scenario 3 |
| -------- | -------- | -------- | -------- |
| ETH Price Increase | Non-Linear | 50% annual increase | Doubles annually
| Grant Budget Increase as a proportion of ETH price increase | 100% | 50% | 30%
|RBG Operations Budget Percentage | 15% | 15% | 15%

#### Findings
##### Scenario 1
This scenario reaches a peak of USD 5 million in annual grants given by 2023. After which, it steadily decreases to less than USD 1 million by 2027 and runs out by 2035.

##### Scenario 2
With a more predictable and larger price increase in ETH, this scenario peaks at USD 5.8 million in grants given by 2026 and decreases to less than USD 1 million in grants by 2030. The treasury also effectively runs out by 2035.

##### Scenario 3
The most aggressive scenario reaches a yearly peak of USD 28 million in annual grants given by 2027 after which it decreases to sub USD 1 million by 2032. It also runs out 2035 in term of ETH but given the high ETH price increase assumed, there is some dollar value left albeit not much to make a significant impact.

### Recommendations
Further scenarios can be explored by adjusting the factors. As one can see, the change in ETH price has the biggest effect on the grant allocation. Other pricing trends can be explored based on market action and ecosystem developments that help appreciate ETH's value.

The proportional increase in grant allocation can be pushed higher as well to see more aggressive and higher impact scenarios in terms of ETH ecosystem development. This would potentially expend the fund more quickly; the DAO can then use the model to see when we would need to raise additional funds, if so desired. We can also downward adjust the grant allocation in a particular year to compensate for lower-than-expected rise in ETH.

> For now grant value is assessed in USD to normalize historical data and to be able to compare impact year-to-year.

Hopefully this serves as a useful tool for MolochDAO to evaluate and decide how much to give away in each grants round.

A detailed breakdown of the MolochDAO-PlanBudget Model can be found [here](https://docs.google.com/spreadsheets/d/1uUMVfrKou-QKwfAe9Tr-JLqivDA7AO_l4GS64PdZmDQ/edit#gid=0).

## 6. RBG 2022 Priorities

RBG plans to conduct three grant rounds this year: April, August, November, following the process established in 2021. See the [Annual Grant schedule](https://molochdao.gitbook.io/handbook/grant-pipeline-procedures/how-and-when-to-put-a-proposal-on-chain/annual-grant-schedule) for details.

Really Boring Guild's additional priorities include:
- Continue evolving grant strategy by gathering information and expertise directly from members
- RBG is assessing the impact of past grants by interviewing grantees [link to medium]
- Create a community strategy
- Consider ideas for progressive decentralization of RBG
- Migrating all of our RBG documentation into Github to increase transparency to the ecosystem
- Providing a roadmap of proposed work to the members

## 8. Moloch Rises!

The DAO has risen on [DAOHaus](https://app.daohaus.club/dao/0x1/0x519f9662798c2e07fbd5b30c1445602320c5cf5b).

>Moloch who entered my soul early! Moloch in whom I am a consciousness without a body! Moloch who frightened me out of my natural ecstasy! Moloch whom I abandon! Wake up in Moloch! Light streaming out of the sky!

Connect with MolochDAO on [Discord](https://discord.gg/4bSpC4hy) and [Twitter](https://twitter.com/MolochDAO)