Summary:
This proposal introduces a recoverable grant mechanism for VeBetterDAO, requiring grant recipients to repay a capped portion of their grant over time via a percentage of their weekly token allocation. The objective is to improve treasury sustainability, reinforce accountability, and shift grants away from being perceived as entirely free capital, while avoiding hard repayment deadlines or loan-like obligations.
Under this framework, grant recipients will be required to return up to 10% of the total grant amount, recovered gradually through an automatic forfeiture of a fixed percentage of their weekly allocation until the recovery target is met.
Motivation:
VeBetterDAO currently distributes treasury funds through two primary mechanisms: grants and weekly allocations. While this model assists with ecosystem growth, it has also created a persistent one-way flow of capital out of the treasury, with limited mechanisms for recycling funds back in.
This has led to several challenges:
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Perception that grants are “free money” with limited accountability
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Limited incentive for teams to plan for long-term sustainability beyond weekly allocation
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Growing scepticism around treasury longevity
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Increasing strain on the treasury as the ecosystem scales
This proposal introduces a lightweight, fair recovery mechanism that maintains accessibility for builders while establishing clear expectations around responsibility and sustainability.
Detailed Specification:
All approved grants will include a mandatory recovery obligation equal to 10% of the total grant amount.
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The recovery amount is capped and does not increase over time.
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There are no interest charges, penalties, or time-based deadlines.
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Once the recovery target is met, no further recovery applies.
Recovery will occur automatically via a fixed percentage (2%) forfeiture of the dApp’s weekly token allocation.
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The forfeiture percentage will be predefined and consistent across grant recipients.
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It is strictly forbidden to take any more funds from the user reward or development allocation. If the grantee wishes to repay the funds sooner, they must take it from their team share or find alternate means of funding.
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Recovery only occurs while the dApp is listed and actively receiving allocation, ensuring proportional scaling and avoiding debt-like obligations.
To avoid early-stage pressure, recovery will begin only after 8 rounds (2 months) following grant completion and dApp listing.
- The grace period allows teams to onboard users, build a userbase, and stabilise operations before recovery begins.
To encourage faster self-sustainability and proactive treasury contribution:
- Teams that complete recovery early will benefit from a reduced total recovery cap (see below).
| Grant Size | Early Repayment Target | Discount on Total Recovery |
|---|---|---|
| Small (< $10,000) | Repay 10% within 3 months | Recovery reduced from 10% → 8% |
| Medium ($10,000–$20,000) | Repay 10% within 6 months | Recovery reduced from 10% → 7% |
| Large ($20,000–$30,000) | Repay 10% within 12 months | Recovery reduced from 10% → 6% |
This rewards teams that generate traction or alternative revenue sooner without penalising slower but legitimate projects.
5. Enforcement and Delisting Conditions
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If a dApp is receiving allocation and refuses or circumvents the recovery mechanism, it will be delisted until compliance resumes.
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If a dApp is listed but receiving negligible or zero allocation, no recovery is required and no penalty applies.
Risk Analysis
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Reduced appeal for some applicants:
Introducing recovery may deter teams seeking no-strings-attached funding. This is an intentional outcome, but may also reduce participation from some early-stage or experimental teams. -
Long recovery timelines for large grants:
Large grants combined with low allocations may result in multi-year recovery periods. This is mitigated by the capped nature of recovery and absence of disciplinary deadlines. -
Perception of grants becoming “debt”:
While not a loan, some teams may perceive recovery as debt-like. Clear communication and consistent framing as allocation recycling is essential.
Success Metrics
The effectiveness of this proposal can be measured by:
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Treasury recycling visibility:
Clear, ongoing inflow of recovered funds from grant recipients. -
Improved grant perception:
Reduced sentiment that grants are risk-free or purely extractive. -
Applicant quality:
Fewer low-effort proposals and clearer sustainability considerations in applications. -
Voter confidence:
Increased trust in treasury management and grant discipline. -
Process adherence:
Consistent, automated recovery across grant recipients without discretionary enforcement.
Conclusion:
There’s no doubt that grants are essential at this stage of the DAO. This proposal ensures the long-term sustainability of the DAO treasury by requiring the partial recovery of grant funds. It encourages dApps to explore external revenue streams in order to pay the reduced rate, thus reducing reliance on weekly allocations. By creating incentives for self-sustainable growth, it:
- Strengthens the ecosystem
- Supports high-quality projects
- Protects user rewards while maintaining flexible funding
- Strengthens the treasury, contributing to the health and longevity of VeBetterDAO
- Enables the potential for more grants in the future by recycling funds back into the treasury.
Proposal Changes
Added Features:
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Recoverable Grant Requirement: Mandatory recovery of a capped percentage of grant funds.
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Allocation-Based Recovery: Automatic forfeiture of a small portion of weekly allocation.
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Early Recovery Incentive: Reduced recovery cap for faster repayment.
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Grace Period: Delayed recovery start to protect early-stage teams.
Modified Features:
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Grant Lifecycle Expectations: Grants now include explicit post-completion capital responsibility.
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Treasury Flow Model: Introduces partial recycling of distributed funds.
Removed Features:
- N/A