Introduction
Token Engineering the Superchain Grants Round: Summer/Fall 2024 was designed as a dual-phase initiative to advance token engineering within the Optimism and broader Superchain ecosystems. The first phase, completed in August 2024, was a Tunable Quadratic Funding (TQF) round on Gitcoin Grants 21 aimed at funding high-potential projects. The second phase, a Retroactive Funding round, is scheduled for later this year to reward grantees based on completed milestones and demonstrated impact.
Grant Round Objectives
The primary objectives of the TQF grant round were to:
- Advance Token Engineering field: support projects that demonstrate potential to advance the token engineering field and contribute to the OP and broader Superchain ecosystems.
- Drive Superchain impact: support initiatives with the potential to create measurable, positive effects within Optimism and its broader Superchain ecosystem.
- Prepare for Retroactive funding round: set the foundation for a follow-up Retro Round using Gitcoin’s RetroPGF platform, which will reward projects based on the milestone achievement and demonstrated impact.
Grant Round Overview
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Total donations: $5,792.59
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Number of contributions: 914
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Average contribution: $16.6
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Unique donors: 349
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Participating projects: 18
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Average grant size: $3,333
The round focused on funding projects with strong alignment to both token engineering and the OP ecosystem, selecting projects based on their potential to drive significant impact.
The grant round targeted projects advancing token engineering through various means, such as:
- Tooling and Social Infrastructure: building tools and infrastructure that enhance token engineering practices within the Superchain.
- Research and Education: conducting research and creating educational resources to expand the understanding and application of token engineering.
- Consulting Services: offering services that support the community’s capacity to apply token engineering principles effectively.
Setup and Management
The TQF round built on the lessons learned from previous rounds, further refining the [Tunable Quadratic Funding TQF approach. This round also introduced new criteria for evaluating the potential impact within the OP ecosystem. By incorporating token engineering expertise signals (Token Engineering Academy NFT credentials, $TEC holdings) and boosting them with Optimism Delegate, Badgeholder and $OP holdings as signals, TQF ensured funding aligned with stakeholders knowledgeable in both token engineering and OP ecosystems.
Challenges and Solutions
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Volume of applications: despite a more focused round, the unexpected volume of last-minute applications created challenges in evaluation. To address this, future rounds will consider increasing evaluation capacity by engaging more reviewers to manage the load more effectively.
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Superchain alignment: many projects struggled to clearly articulate both token engineering relevance and OP ecosystem impact. We supported these grantees through application revisions but recognized that more upfront guidance might be needed in future rounds to help projects fully align with our goals.
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Time management and appeals: the short timeline between application deadlines and the start of the donation period, combined with managing late appeals, stretched resources thin. Moving forward, we might consider separating the closing of applications from the donation period to better manage both processes.
Outcome and Statistics
Passport Model Based Detection System
Since GG19, Gitcoin implemented the Passport Sliding Scale. In GG21, donors received partial to full matching for project votes based on their ‘human score’:
- Scores below 25: No matching
- Scores 25-49: Partial matching
- Scores 50 and above: 100% matching
In this round, out of 350 voters:
- 139 Voters - 39.7% received full matching
- 39 Voters - 11.1% received partial matching
- 172 Voters 49.1% received no matching
The graph below illustrates how this passport model score adjustment affected the distribution of donations, comparing original contributions to final adjusted amounts.
Quadratic Funding vs Cluster Mapping
For the past three rounds, TEC employed Cluster Mapping to adjust Quadratic Funding (QF) before applying Tunable Quadratic Funding (TQF). This method groups donors based on similar project support patterns, using binary vectors to represent donations. Donations within each cluster are aggregated, and funding is calculated by summing the square roots of cluster donations, then squaring the result.
This approach aims to group similar donors and flatten the results of these similar donation patterns, incentivizing a more variable spread of donations across projects. TEC uses Cluster Mapping primarily to mitigate the effects of suspicious donations by identifying patterns that might indicate donation spamming or other forms of coordinated ‘attacks’ on a grant round.
See replies for comparisons.
Connection Oriented Cluster Mapping
In the evolving landscape of quadratic funding, Connection Oriented Cluster Mapping(COCM) represents a significant advancement. COCM is an advanced approach to identifying and grouping similar donation patterns, taking into account the strength of connections between donors based on their donation behaviors. This method can potentially capture more nuanced relationships between donors and projects, leading to a more refined distribution of matching funds.
While COCM offers intriguing possibilities and has shown a substantial impact on rebalancing results, we at TEC chose to implement a simpler version of cluster mapping for this round. Our decision was primarily driven by the existing impact of the Passport Model Based Detection System. Some projects were already significantly affected by this system, and we didn’t want to introduce too many changes alongside TQF implementation. We believed in taking a measured approach to refining our quadratic funding mechanisms, allowing us to assess the impact of each change individually.
Notably, COCM had a significantly greater impact on the results compared to our cluster mapping approach. While it effectively reduces the influence of coordinated clusters and single-project donors within a funding round, this strength could also be seen as a drawback.
COCM might sometimes overly penalize legitimate communities of donors with similar interests. Its more nuanced approach can make it harder for participants to understand and predict how their donations will impact the final funding distribution.
As we continue to refine our quadratic funding mechanisms, we may consider incorporating aspects of Connection Oriented Cluster Mapping in future rounds. This could potentially enhance the accuracy and fairness of our funding allocations, but we’ll need to carefully balance its benefits against the potential drawbacks and the overall complexity of our system.
See replies for comparisons.
Cluster Mapping vs TQF
In this round, we compared the Cluster Mapping baseline to the Tunable Quadratic Funding (TQF) signals we applied. We incorporated five signals, prioritizing OP Signals to amplify voter donations:
- TEA NFT Certificate Counts (6x)
- $TEC Holdings (2x)
- $OP Holdings (2x)
- OP Delegate Tokens Delegated (7x)
- OP Badeholders (8x)
We placed particular emphasis on OP Delegate and Badeholder signals for voters in our round, aiming to reward the projects they supported most significantly.
See replies for comparisons.
Overall Payouts
| Grant name | Total Funding (USD) |
|---|---|
| Pairwise: Simplifying Choices, Amplifying Voices | 9000.00 |
| Inverter Network | 8928.09 |
| Superchain Innovation and Competition | 8239.55 |
| Bonding Curve Research Group (BCRG) | 5227.51 |
| Token Swaps as a Mechanism for Superchain alignment | 4445.47 |
| Treegens DAO | 3732.94 |
| Valueverse Labs | 3600.49 |
| TPRO Network | 3090.28 |
| Flow State (Streaming Quadratic Funding) | 2963.42 |
| GovGraph | 2285.61 |
| EVMcrispr | 2159.55 |
| Breadchain Cooperative | 1749.53 |
| 1Hive Gardens | 1398.04 |
| Change Code: Permissionless Results-Based Fund | 930.92 |
| Super DCA: The Time-Weighted Average Market Ma… | 841.54 |
| Simplicity Group | 574.94 |
| Regen Atlas | 501.28 |
| Eisodos Multimodal | 330.86 |
TEGR4 vs Token Engineering the Superchain- Project & Funding Changes
| TEGR4 (April 2024) | Token Engineering the Superchain | Difference | % Change | |
|---|---|---|---|---|
| Total projects | 32 | 18 | -14 | -44% |
| Recurring projects | 9 | 10 | +1 | 11% |
| New projects | 23 | 8 | -15 | -65% |
| Unique donors | 554 | 349 | -205 | -37% |
| Total crowdfunded | ### $9,363.07 | $5,792.59 | -3570.48 | -38% |
| Total contributions | 1,579 | 914 | -665 | -42% |
| Average contribution | $ 16.9 | $ 16.6 | -0.3 | -2% |
- Total projects: in the previous round (TEGR4), we had 32 projects, while the current round focused on OP/Superchain had 18 projects, reflecting a more selective approach aligned with OP ecosystem goals.
- Unique donors: the previous round had 554 donors, whereas this round saw a drop to 349, likely due to the more focused nature of the round.
- Crowdfunding amount: TEGR4 raised $9,363.07, while the current round raised $5,792.59, reflecting the narrower focus but also the strong support within the OP/Superchain community.
- New projects: in the previous round, there were 23 new projects, whereas this round saw only 7 new projects, as many returning projects already had ties to the OP/Superchain.
- Average contribution: both rounds had similar average contributions, around $16.9, indicating stable community engagement per donor.
Conclusion
While participation numbers and funding were lower compared to previous rounds, this was expected due to the more selective approach. Additionally, this round is only phase 1, with a follow-up retro round to come. The overall focus for this dual-round approach is to emphasize long-term impact and reward the progress made by grantees in the months to come.
Reflections
Gitcoin’s innovative approaches to sybil resistance and fair fund distribution were prominently featured in this round, with widespread adoption of their Passport Model Based Detection System and Coordinated Cluster Moderation (COCM) by most round operators. These cutting-edge technologies demonstrate Gitcoin’s commitment to evolving the quadratic funding landscape.
The Passport Model Based Detection System proved highly effective in thwarting sybil attacks, showcasing Gitcoin’s prowess in developing robust security measures. However, this system’s strength in favoring established Web3 identities had an unintended consequence: newer entrants to the Web3 space or those with limited on-chain history with the transactions incorporated by Passport often received reduced matching rates or were excluded entirely. This tradeoff highlights the challenge of balancing security with accessibility for newcomers.
Although we didn’t implement COCM in our round, its performance in other contexts was noteworthy. The mechanism successfully rebalanced results, mitigating the outsized influence of coordinated clusters and single-project donors. On the upside, this demonstrates COCM’s potential to enhance the fairness and diversity of funding distribution. The downside is that it can suppress funding for projects that are new to Gitcoin and whose donors are not giving to other projects in the round.
We applaud Gitcoin’s pursuit of innovation in sybil protection strategies. Their willingness to experiment with and refine these mechanisms is pushing the boundaries of what’s possible in decentralized funding. As the ecosystem continues to evolve, we look forward to integrating and adapting these technologies to create an ever more robust and equitable funding environment.
Lessons Learned and Next Steps
This round provided several valuable insights that will shape our approach to future grant rounds:
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Clearer guidance on Token Engineering & Superchain alignment: we learned that some grantees struggled to articulate both token engineering relevance and their impact within the OP ecosystem. To address this in future rounds, we will:
- Provide more detailed, upfront guidance and templates during the application phase to help grantees align their project goals with both token engineering and Superchain impact.
- Host pre-application workshops or AMAs to clarify expectations and offer Q&A opportunities for prospective applicants.
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Managing last-minute applications: the high volume of last-minute applications created a challenge in ensuring thorough evaluation. In future rounds, we will:
- Expand the reviewer pool and ensure more time is allocated between the application deadline and the start of the donation period.
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Grantee marketing support: several grantees did not fully leverage the opportunity to promote their projects and attract contributions. To improve this, we will:
- Offer marketing toolkits and resources earlier in the process, including sample social media posts, graphics, and outreach strategies.
- Provide incentives for projects to engage with the community to boost visibility and increase their chances of success.
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Refining impact metrics and evaluation criteria: setting and tracking meaningful metrics has proven to be a challenge in terms of capturing both short-term milestones and long-term impact. To improve this:
- For future rounds, we will implement clearer milestone-setting requirements that include both quantitative and qualitative impact metrics (e.g., community engagement, adoption rates, technical milestones).
This focus on refining guidance, streamlining processes, and enhancing grantee support will help us to improve our future rounds and create greater alignment between grantee projects and community priorities.
Key Successes
- Strong alignment with Superchain objectives: despite being a more focused round, the projects selected demonstrated clear potential to impact both token engineering and the broader OP ecosystem.
- Optimized use of Tunable Quadratic Funding (TQF): this round successfully built upon the TQF model, incorporating expertise signals from Optimism delegates and badge holders. This enhanced the quality of decision-making and ensured funding aligned with community priorities, demonstrating the power of fine-tuned quadratic funding mechanisms.
- Increased returning grantees: we saw a 22% increase in returning grantees, which indicates that previous participants continue to see value in our rounds. These returning projects showed strong progress and further alignment with OP ecosystem goals, solidifying their role as key contributors to both token engineering and Superchain.
Net Steps: Preparing for Retroactive Funding Round
The Retro Round, scheduled for October- December, 2024 will use Gitcoin’s RetroPGF platform to allocate additional funding based on demonstrated impact. Grantees will need to submit reports and proof outlining:
- Milestones achieved
- Impact metrics
We are currently finalizing the timeline and milestones for the Retro Round and will keep all grantees informed as we approach the next phase.
Collecting Grantee Feedback
We were unable to collect grantee feedback in time for this report but will collect detailed feedback as part of the Retroactive funding process to ensure continuous improvement in future grant rounds.
Closing Thoughts
This round has shown that combining Quadratic Funding with Retroactive Funding presents an exciting opportunity for incentivizing long-term impact. We are committed to refining our approach and ensuring alignment with both token engineering and OP ecosystems.
We look forward to the Retro Round, where we will continue this journey of funding impactful projects and rewarding meaningful outcomes.
