RRC-25 Lock-up revision for Ecosystem Grants

[xenias]

Abstract

This proposal revises the lock-up period for $RARI tokens awarded to grantees of the Ecosystem Grants Program from the RARI Ecosystem Growth Fund. It builds on the previous proposal, RRC-12: RARI Ecosystem Growth Fund.

Previously, RRC-12 stated: “The individual grants should take the form of locked RARI that is revocable for a period of 6 months in the following tranches: 50% upon grant approval and 50% upon project delivery. This mechanism aims to ensure the grant recipients deliver their projects in full.”

Based on insights from Sprint #1, the Ecosystem Growth Fund (EGF) Committee proposes these changes:

• Remove the lock-up period for $RARI after full project delivery.
• Allow the EGF Committee to decide on a case-by-case basis if $RARI tokens should be locked until project completion and hitting the last milestone.

Motivation

The EGF Committee recommends revising the lock-up period to remove barriers for accessing funds earlier while ensuring projects are delivered fully and on time. Most grants involve short-term projects, making a 6-month wait impractical. This change would also attract more established projects requiring upfront payments.

Rationale

The proposal aims to:

1. Attract more mature projects with proven track records to the RARI Ecosystem that require upfront payment.
2. Remove barriers to accessing funds for projects that need the grant to cover development costs.

Specifications

From Sprint #1, the EGF Committee noted that most projects do not exceed 2 months. A 6-month lock-up period can cause frustration. Therefore, the Committee suggests granting immediate access to funds upon full project delivery.

Additionally, the Committee proposes that while it is generally reasonable to lock $RARI until project completion, some projects might need a portion of the grant upfront to cover initial costs.

The Committee suggests evaluating on a case-by-case basis whether a project can access a portion of funds after grant approval, this is only for exceptional cases where the project needs to cover development costs.

Maintaining milestones as a part of grants will help protect RARI DAO from potential grants’ mishandling.

Steps to Implement

As Sprint #1 of the Ecosystem Grants Program concludes and participants are selected, the results of this proposal will be applied immediately, affecting Sprint #1 applicants. The lock-up period terms will be outlined in grant agreements and managed via Hedgey Finance.

Timeline

The voting period is advised to conclude by June 10th on Tally, followed by a cooling-down period.

Overall Cost

There is no cost associated to implementing the proposal.

[Jaf]

I fully agree that this improvement to RRC-12 will have a positive impact in making Rari grants much more attractive and useful for builders. It’s in Rari’s best interest to create long-lasting relationships with projects and help them grow. If they grow, Rari grows.

[WinVerse]

The Grants Committee have talked about this prior to Xenia posting here and we see it as a necessary step to be taken as we continue to iterate on grants. Will appreciate community support on this and we welcome any comments if further clarifications are needed. Thanks!

[lionmsee]

Fully in support of this proposal, as it will make the grants more accessible in a reasonable timeframe.

Just a slight correction to be made with the RRC number, should be RRC 24; as there’s already RRC 22 on Tally.

[lionmsee]

Apologies, RRC 24 is also being discussed on the forum currently, so I believe it should be RRC 25.

[forexus]

I will support this!

[coffee-crusher]

I support this proposal. Allowing for removal of locked $RARI after successful (and accepted) completion of a project at delivery will incentivize a completion of a grant, with the intention of more grants being submitted.

[bitblondy]

Support the proposal as well. Solid argumentation, and deciding on a case by case basis is manageable.

[Sixty]

Hey @xenias, I am supportive of this proposal. The best way to disburse grants is to distribute a percentage (25 - 50%) upon grant approval and the remainder after milestone completion.

An alternative way is to stream the grant throughout the expected period of the grant (e.g., if a project says it will complete its milestones in 3 months, a bi-weekly unlock until the 3 months is over). Receiving the full grant upfront, however, is not advised as this will misalign incentives.

[xenias]

Hi @Sixty thank you for sharing this opinion. This proposal does not reflect on how milestones should be applied, and here we should refer to RRC-12. For your visibility, currently milestones are proposed by the project depending on the scope and approved by Committee. The first milestone that unlocks the first portion of the grant is signing the contract and successful KYC.

[xenias]

Hi @Sixty thank you for sharing this opinion. This proposal does not reflect on how milestones should be applied, and here we should refer to RRC-12. For your visibility, currently milestones are proposed by the project depending on the scope and approved by Committee. The first milestone that unlocks the first portion of the grant is signing the contract and successful KYC.

[AlexQ]

I have some doubts about this proposal.
I recently analyzed grants and the results were better for those that had awards vested. And for other projects that immediately distributed all the awards, all indicators immediately fell after the grant.
I understand that an individual approach remains, but this entails a disadvantage: some projects will have an advantage over others.

[bitblondy]

@AlexQ Interesting insight, do you have your analysis posted somewhere?

As far as I understand the proposal, the lock-up (of the remaining 50%) can be removed after full project delivery (if that’s earlier than six months), and they want to include some case-to-case variation.

So it won’t be the case, that all the rewards are distributed immediately.