Overview
Direct grants -- where a committee, council, or designated expert evaluates proposals and allocates funds -- remain the single largest mechanism for distributing capital in the blockchain ecosystem. While quadratic funding and retroactive mechanisms attract more attention for their novelty, the majority of ecosystem funding still flows through some form of expert-driven allocation. This is not a failure of innovation; it reflects the reality that certain types of work -- large infrastructure projects, security audits, protocol research -- require domain expertise to evaluate and are poorly served by popularity-based signals. The modern direct grants landscape has evolved well beyond simple discretionary giving into a sophisticated ecosystem of milestone-based releases, RFPs, bounties, domain-specific allocators, and grants-as-a-service platforms.
Core Mechanism: Committee-Driven Funding
At its simplest, direct grants involve a funding body reviewing applications and making allocation decisions. The committee model introduces expert judgment into the process: reviewers with domain knowledge assess technical feasibility, team capability, ecosystem fit, and expected impact. This approach excels when the evaluative task requires specialized knowledge that a broad community vote cannot provide. The tradeoff is centralization -- committee members become gatekeepers, and their biases, blind spots, and social networks shape which projects receive funding.
Milestone-Based Funding
To mitigate the risk of funding projects that fail to deliver, many programs have adopted milestone-based release structures. Rather than disbursing the full grant upfront, funds are released in tranches tied to predefined deliverables. This creates accountability without micromanagement: builders retain autonomy over how they execute, but must demonstrate progress to unlock subsequent funding. Milestone-based funding is particularly well-suited to large, multi-month projects where the risk of non-delivery is highest.
RFPs and Bounties
Requests for Proposals (RFPs) invert the traditional grants model: instead of builders proposing what they want to build, the funding body specifies what it needs and invites proposals. This is effective for well-defined problems (audit a specific contract, build a specific integration, write a specific specification) where the funder knows what outcome is needed but not who should deliver it. Bounties operate similarly but at smaller scale and with faster turnaround -- a specific task with a fixed reward, often used for bug fixes, documentation, or small feature additions.
Grants-as-a-Service and Domain Allocation
As ecosystem treasuries grew, a new operational layer emerged: grants-as-a-service providers that manage the full lifecycle of grant programs on behalf of DAOs and foundations. These entities handle application intake, review, due diligence, milestone tracking, and reporting, allowing funding bodies to deploy capital without building in-house grants infrastructure. Closely related is the dedicated domain allocation model, where funding is earmarked for specific verticals (security, developer tooling, education, research) and governed by domain experts rather than generalist committees. This specialization improves allocation quality but fragments governance.
Key Programs
Ethereum Foundation Ecosystem Support Program (ESP) is the longest-running and most influential direct grants program in the ecosystem. ESP funds research, development, and community initiatives across the Ethereum stack, with a reputation for rigorous technical evaluation and long time horizons. Its funding decisions often signal ecosystem priorities and legitimize emerging areas of work.
Arbitrum DAO Grants represents the L2 treasury model at scale. With over $117M deployed through various grants mechanisms, Arbitrum's program combines direct grants with domain-specific allocators and community-governed funding streams. The scale of Arbitrum's deployment has made it a testing ground for how DAOs manage large-scale capital allocation.
Polygon Grants funds builders across Polygon's ecosystem through a combination of direct grants, RFPs, and ecosystem incentive programs, with particular emphasis on real-world adoption and emerging market use cases.
