[Proposal][TFL][TextProposal] Establishment of CommunityPoolSpend Committees and Establishing Proposal Guidelines

Proposer: 0xwagmi, Ecosystem Lead, Terraform Labs.

This is a proposal on behalf of the Terraform Labs Ecosystem Team and below cited Committee.

Context

  • These changes are proposed as fast-follow changes given the announcement of the $150M Ecosystem Fund.
    The Ecosystem Fund was designed to help projects with committed teams access institutional capital from top-tier investors. Prior to reaching milestones that make sense for Ecosystem Fund investors, we expect projects and teams to need resources at an earlier stage. Thus, we are proposing the following changes to our community guidelines, governance, and the tools at our disposal to ensure benefits to the Terra community. These changes aim to address gaps in funding and the problems detailed below.

Pre-Reading

  • This is a sister proposal to the Rapid Grants proposal. This proposal document is designed to be read first, then the Rapid Grants proposal to understand the full scope of the changes proposed. The separate rapid grants proposal is linked at the bottom in the “Further Reading” section.

  • There is a single FAQ to address common concerns to both proposals live at the bottom of this page that is to be reviewed prior to discussion to address common questions for both proposals.

Goals

  • Our goal is to help support dozens of 3rd party projects within a flourishing Terra ecosystem. This grants framework attempts to leverage the community pool and community willpower to scale up our Ecosystem programs as we prepare TFL for the future.
  • The proposals encompass the current proposal to establish a commitee and integrate a milestone based structure, as well as a sister proposal titled “Rapid Grants” to increase the velocity of development within the Terra ecosystem.

Overview

  • Provide funding and grants to expand the Terra ecosystem

Problems

We have identified a few issues given feedback from our ecosystem of community members, investors, validators, and internal team members.

  • Lack of transparency related to project milestones and when / if they are ever met.
  • Projects receiving upfront lump-sum funding in addition to a lack of transparency with regards to meeting project milestones.
  • Teams asking for funding for services (auditing and legal services) prior to having a need for such services and receiving lump-sum payments. We have pre-existing relationships with auditing and legal firms with discounted rates, and separate these services into the Terraform Capital.
  • Governance process taking too long to support teams that need relatively immediate answers on working on a project within the Terra ecosystem (this problem to be addressed via a seperate proposal linked below for Rapid Grant).

Solution Overview

  • Creation of TFL Committee to provide professional recommendations on Community Pool fund resources and the distribution of grants. Said committee to represent the best interests of the Terra community.

  • Set up a structure that can be extended to support even greater community governance structure, for example, adding support for Pylon and principal withdrawal in the future in the form of another community text proposal.

  • Special grants mechanisms reserved to allow for TFL sponsored special projects to be capitalized with community fund resources. For example, stablecoin distribution initiatives initiated by TFL employees: https://agora.terra.money/t/bringing-terra-stablecoins-to-solana/1537/22

  • Creation of a Community-Pool Spend proposal to establish a rapid grants to support teams that require funding on a smaller scale and short time horizon. Again, this is a separate proposal detailed below.

Project Categories

These are the categories we consider that apply to all grant mechanisms.

  • dApps: applications that have decentralized backends and/or frontends (smart contract based) and associated with the Terra Ecosystem either by integrating UST, mAssets, other Terra assets in a meaningful way or deploying on Terra main-net.
  • Open source and public tools - **code explorers, developer tools, etc.
  • Ecosystem Initiatives - tutorials, documentation, videos, workshops, developer empowerment, marketing initiatives, sponsorships, etc.
  • Other - more special initiatives that will require individual review on a case-by-case basis such as event sponsorships and special projects.

Terraform Community Grants (Community Pool) Overview

Community Pool Grants are designed to allow teams to make proper use of our community pool by setting actionable milestones to be audited by both the community and Terra Ecosystem Committee members. Through this process, we aim to support teams in developing and adhering to actionable milestones that deliver value to the Terra ecosystem.

Grant Sizes

  • $1k to $30k - grant size for teams that are developing within the Terra Ecosystem that have a new concept they are attempting to work on. All teams that have never received community pool funds will be defaulted into this grant size unless all team members have previously (1) accepted funds from the Community Pool and (2) successfully implemented all milestones with success.
  • $30k to $100k - only available as follow-on funding to teams that have met initial milestones and have previously successfully executed on a smaller grant size.

Community Funding Process - Proposal Stage

Proposals will be submitted to a new Terra Ecosystem Committee comprising 7 members, outlined below in the “Terra Ecosystem Committee Structure” section.

The Terra Ecosystem Committee will render an independent verdict about the proposal within ~2 weeks of the proposal’s posting on the forum. The Committee’s review process will produce a detailed chronology of the reasoning behind their decision, with verdicts falling into 2 categories:

  1. Approved — Invited to interview with a member of Terra Ecosystem Committee and submit an on-chain vote.
  2. Needs Work – Work with Committee and TFL to restructure proposal and re-submit once feedback has been implemented into the new proposal.

NOTE – The Committee’s decisions are non-binding, meaning that they DO NOT control who can submit on-chain proposals for requests for community pool funds. The Committee’s decisions strictly serve as an influential, independent opinion that represents the best interests of the Terra ecosystem. The Committee offers resources and the option to incorporate necessary feedback for denied applications as a means to improve the quality of submissions and allocation of funds from the community pool.

Proposals submitted to the on-chain governance vote process via a 512 LUNA deposit without following the proposal guidelines or waiting for the Committee’s independent review and feedback will be listed as “Not Reviewed” be members of the Committee and recorded on a public document for community members to be aware of.

As a result, it’s in the best interest of prospective proposals to go through the process of following the new community pool proposal guidelines and working constructively with the Committee.

The process for submitting a proposal is outlined as follows:

  1. Choose a category for your project.
  2. Submit a proposal by filling out the Community Proposal Form. This form aligns with strict community proposal guidelines and is detailed via the template below. The template must be duplicated and adhered to or the Committee will automatically ask for the proposal to be re-reviewed.

Terra Grant Proposal

  1. Terra Ecosystem Committee will review proposals within 2 weeks. If your team meets our criteria, you will be invited to an interview with a member of the Committee. We will submit a formal response to your proposal as a Agora comment within 2 weeks of initial form submission.
  2. Acceptance or Needs Review Status of Proposal Updated. Applicants will be notified of the results of their proposal submission - if the proposal and milestones are approved, we will whitelist the proposal for community discussion. The on-chain vote may also begin at any time before or after the proposal is accepted by the Terra Ecosystem Committee and will have a voting deadline of 2 weeks for the community to ultimately decide on funding the proposal. The recommendation from TFL is to wait for the Committee to provide their comments before posting on-chain as the proposal will still be in a “Needs Review” status.
  3. Governance submission - as teams will be funded from the treasury they will submit an on-chain vote with the address being an auditable address which will act to distribute funds.
  4. Onboarding - if your application passes we will onboard you into the ecosystem. This means setting clear timelines, accountability metrics, and expectations for milestones.
  5. Project Launch - when projects are ready to ship we will support your launch and share your work with the Ecosystem.
  6. Reporting Ecosystem Committee will report back to the community the results of such grants from the pool on a quarterly basis at minimum.

Approved submissions will be allocated funding via the wallet in a lump sum based on the approved parameters of the proposal.

Ecosystem Committee(s) Overview

This section provides an overview of the Committee structure to kickoff these changes.

  • The Terra Ecosystem Committee has the responsibility of reviewing projects and commenting to the community via Agora discussions their views on project and milestone feasibility.
  • This group is also responsible for releasing funds associated with project milestones.
  • External Ecosystem Representatives (i.e., outside of TFL) are approved members that maintain robust long-term interests in the success of the Terra ecosystem to properly incentivize constructive and honest behavior. They will consult with specific project-related issues and concerns. They are not responsible for releasing or managing Treasury funds.
  • If this proposal is approved, we will create a follow-up procedure for updating the Terra Ecosystem Committee pending feedback from the community including adding/removing members.
  • Depending on the amount of work we will discuss a fair compensation scheme for this committee that will be publicly auditable.

Initial Terra Ecosystem Committee

We have established the initial committee to represent, as a whole, a total view of the Terra ecosystem including researchers, project leaders, community members, investors, partners, and TFL leaders.

  1. TFL Leader - 0xwagmi, Ecosystem Lead, Terraform Labs
  2. TFL Leader - Stanford Liu, Researcher, Terraform Lab
  3. Community Leader - @treehugger
  4. Community Leader - @SebNondzee
  5. Partner Protocol Leader - @tansawit, Band Protocol
  6. Ecosystem Fund Leader - Ninor Mansor, Arrington XRP Capital
  7. Ecosystem Tech Leader- @Larry0x, Delphi Digital

Committee Structure

Community member representatives of the Committee will be re-evaluated in subsequent quarters. The initial Committee representatives were determined by TFL and were selected to help bootstrap the new funding process but will be open to changes pending community feedback as the Committee and proposal system evolves.

  • Over time, we plan to decentralize the Committees to represent the greatest interests of the community.
  • Applications for additional community members are already live here and anyone can be nominated: https://airtable.com/shrwRT85mFnwzelVn
  • The schedule of replacing and adding committee members is to be evaluated on a quarterly basis.

Special Community Pool Spend Requests Overview

TFL will maintain the right to propose special uses of community funds, still subject to community-pool spend mechanisms and on-chain voting, but for larger amounts for strategic initiatives such as those detailed below. These special community pool requests are to be outside the normal spend parameters and might be larger ticket items.

  • Major Integrations - these are major grants that are initiated under special circumstances. These are usually to fund integrations with external teams and to provide liquidity. These are key strategic priorities for TFL and are often initiated by Committee or internal TFL team members. An example below includes Mercurial’s (Curve-like AMM on Solana) recent proposal initiated by the BD team at TFL. Examples include a core TFL priority of distributing Terra opportunities. https://agora.terra.money/t/bringing-terra-stablecoins-to-solana/1537
  • Bounties - these are specific initiatives we would like applicants to build in the ecosystem. We have pre-defined ranges of grants we will make for teams to build out these. An example is our content bounties program which since launch has helped produce dozens of pieces of quality content. We would likely initiatie a special proposal for Community Funds to fund this program in the future.

Rationale

  • Our goal is to support as many teams as possible to take advantage of our community treasury to deliver projects that benefit the overall ecosystem. We will provide feedback on all proposals and delivered milestones accordingly.
  • We have spoken to all stakeholders in the community to craft these sets of proposals in a way that is most beneficial to the Ecosystem.

FAQ

What types of milestones can be included?

  • Milestones are defined as mission-critical project features and should be in the form of contract details that can be audited by the community and the Terra Ecosystem Committee. These should be highly detailed, technical, and verifiable, ideally with some form of unit testing.
  • Professional services such as auditing services and legal services are best addressed after the development of a software or project artifact. We will only cover these funds from pre-approved sources from our Terraform Pro program (see “Other Funding Sources” below). These types of services should NOT be included as “milestones” in your initial proposal.

How much LUNA will be in the community pool after Ozone and Col-5 launches?

  • We expect there to be >5M LUNA in the community pool depending on the amount used to bootstrap Ozone and given changes to the pool with Columbus 5 launch.

How did you determine grant sizes?

  • These are the size of grants we believe teams can execute the core milestones successfully based on past experience working with dozens of teams in the ecosystem. Grant size consideration includes the development of an MVP that has been deployed to a test-net or otherwise a usable artifact of software even in a test environment. Teams are always eligible to submit applications for follow-up funding once they reach certain milestones. We also take special circumstances under consideration and treat each project on a case-by-case basis. For larger projects, there exists the Ecosystem Fund and the Rapid Grants program to fill gaps in funding needed by the ecosystem.

Can I apply if I am not a developer?

  • For dApps and infrastructure-related projects, we highly recommend having a developer familiar with blockchain programming paradigms if you are submitting to the applications track. If you are submitting to the infra track we recommend strong programming knowledge as well. If you are not a developer, we recommend building a team with development skills or submitting it to another track. We will verify if you are a developer. In addition, it will be difficult to achieve project milestones and receive approvals on milestones if you do not have technical talent on your team.

What if I want to work on a project that is not related to infrastructure or applications?

  • You can submit a special proposal to the community. We still value the milestone-based approach of up to $30k as an initial grant and for new team and $100k for teams that have shown value to the ecosystem that are working on projects that show a clear need for additional follow-up funding.

What is the purpose of the community forum?

  • Treat the community forum as a temperature check on the quality of your proposal and general feedback from the community. The forums are for discussion and community engagement and do not directly impact what happens on-chain. Discussions help to inform voting participants as well as validators.

How does voting work?

  • Voting happens on-chain. Anyone can submit a proposal and send funds to any address for a community fund proposal.

How do I submit an on-chain vote? Won’t a discussion period + on-chain vote be too long of a wait?

  • Teams must submit a New Proposal in the Governance tab of Terra Station to formally create a proposal. We suggest having a clear 2-week discussion period to get feedback before submitting to Terra Station. This allows committee members to render a proposal within 2-weeks on new projects submitted to forums. We realize this is a slower timeline, but believe it is best for the community. Also, that is why we are establishing the Rapid Grants fund to bypass certain governance mechanisms on a case-by-case basis and maintain agility as an ecosystem.
  • For most of these projects, teams should be commited to longer than just a month of work. We believe getting things right from the on-set is worth some thoughtfulness in the initial stages of project design and kickoff.
  • For more information on governance and voting logistics: https://docs.terra.money/dev/spec-governance.html#message-types

Do I quality for Terraform Capital?

  • You will ideally have a repo of smart contracts if you are a dApp to quality for Terraform Capital and the Ecosystem Fund. You can submit the project update form whether you have received community funds or not and a TFL team member will reach out about Terraform Capital requirements. Terraform Labs - Ecosystem Project Updates

I am a talented member of the community that wants to contribute? How can I help?

I am a project that does not need community funding but is interested in professional services

  • See above response. Same thing.

Why add more committees and structures?

  • We believe in a philosophy of progressive decentralization. Just like how TFL has created many dApps within the ecosystem by building MIR, ANC and then slowly opened up our platform, we believe ecosystem development should evolve in a similar way. In that vein, we fully expect to cede grants and governance mechanisms to the community over the long run. In the past, we have seen projects cede large amounts of capital without delivering on milestones. As the community fund will not be replenished in the future due to Columbus-5’s economic changes to “Burn All Seigniorage,” we believe this is the best way to preserve our community resources and support a flourishing ecosystem.

What happens during the application process?

  • We go through initial screens, technical reviews of the project, interviews with the team, and a committee review and decision.

Why do we need rapid grants?

  • No funding pool currently allows TFL discretion to make rapid decisions to lock in opportunities. Given the speed at which our industry moves, this is a massive disadvantage.
  • On-chain voting is a 2-week mechanism.

What happens to grant needs above 100k?

  • Teams can submit multiple follow-ups for funding 100k milestones.
  • For really large projects, teams should submit to Terraform Capital (i.e., this encompasses the new ecosystem fund) the fund will consider an institutional investment if it makes sense to our ecosystem and your project team and this is outside the scope of how the CommunityPool is run. Keep in mind, not all projects are a good fit for all pools of funding!
  • Please submit via the form for those where Terraform Capital and the Ecosystem Fund is a better fit: Terra Ecosystem Interest Form

Other Funding Sources

  • Terraform Capital various high-ticket items covered for teams looking to professionalize their offerings. Covered services include auditing through our audit partners, specialized and complex legal services, and institutional investment via Terraform Labs Ecosystem Fund. This is for projects later in their development cycle that have live products with users (in most cases).

Further Reading

Housekeeping and Next Steps

  • Read the sister CommunityPoolSpend proposal, to establish a process for Rapid Grants.

  • We will likely introduce deposit contracts with Pylon to fund most of these initiatives through future yields similar to what Larry proposed here: https://twitter.com/larry0x/status/1415075152593829888

  • The proposals will go live after TFL team has integrated relevant community feedback.

Execution

  • Proposals Posted to Community Discussion
  • TextProposal Committee Audited CommunityPoolSpend Restrictions Proposal Posted to Terra Station following community feedback.
  • CommunityPoolSpendProposal Rapid Grants Posted to Terra Station following community feedback.
10 Likes

In summary:
name - speed - amount - approval:

  • Rapid Grants - 72 hours - unknown amounts - Approved by Committee.
  • Community Grants - 2-week approval and 2-week vote - 1k-30k and 30k-100K - Checked by Committee and approved by on-chain vote.
  • Special Community Pool Spend - 2 weeks - >100K - Can only be proposed by TFL and approved by on-chain vote.
  • $150M Ecosystem Fund - $$$$ - Only for top tier teams, apply via form, approved by investors.

Did I get this correct?

  1. I am very excited by the community grants and the committee: More scrutiny over community pool spends + accountability to teams in the form of metrics, timelines and milestone.
  2. Quarterly feedback on the results of Community Grants from the Committee.
  3. Rapid Grants can be used to spearhead marketing, education, and sponsorships that do not make sense to vote on-chain for.

All in all, this is excellent.

7 Likes

Fantastic proposal. 100% support from me.

  • Correct. Will add that “unknown amounts” is more vague than we intended. We expect the majority of rapid grants to be <$100k with rare exceptions based on the quality of a proposal. In any case, there will always be clear and auditable milestones for teams to be evaluated and accountable to.

  • For the Special Community Pool Spend we do hope the community can introduce these proposals, and merely have a TFL member sponsor the proposal. The North Star is to decentralize decision making for the Terra community entirely, so for special cases like UST incentives we’d like the community to introduce these over time and merely have TFL involved in a limited capacity.

Overall though, great summary! Thanks for commenting.

2 Likes

Terrific. Good approach that I fully support

Good proposal would support it

I have been discussing with multiple members of the community, we all like the idea of rapid grants. However, anything that does not require the vote of the community should have a much lower cap than $100K. (This comes from a discussion on the weekly terra bites telegram call).

For Rapid Grants, which are under the sole discretion of the Committee, the limit should be in the order of $1-10K. Anything else we should sacrifice some speed for higher scrutiny and democracy.

Perhaps, if the model works and the committee can show a high need for higher limits, we can increase the limit in the future. Otherwise, I do not think it is reasonable to start with $100K as a cap.

3 Likes

Agree with Pedro on the Rapid Grants. Personally, I have no concerns with numbers even up to 20k. Thanks for working this great proposal out!

$100,000 threshold is reasonable to me. It is a large sum but relatively small amount for a software project. Bumping the threshold down to $20,000 makes community feel safer, but limits the rapid grants committee’s ability to serve it’s purpose. I think trusting our committee with the $100,000 limit and holding them accountable for mistakes is preferable to limiting them.

Thanks for the feedback everyone. We took into account the larger rapid grant size concern, and will keep things in the less than 6 figure range unless there is extenuating circumstances, but don’t want to hard commit to a number. We are actually seeing some scenarios where there are some pretty great projects that actually could be a good fit for a larger initial grant size!

Happy to discuss this further with you @pedro_explore - you can always reach me at @wagmidao on TG

Posting on-chain vote now.

I would like to ask what means of communication and marketing are used to promote Terra Grants? what channels are being used to bring more people and devs to apply for a grant? Thanks