Grants do not always involve members of the community – and in some cases, the process can be a bit opaque.
In an article a few months ago, Lane Rettig said: “I have yet to see a well-run grants program in the blockchain space.”
Given how widely used grants are across the industry, this is a pretty damning indictment. Rettig argued that these plans tend to be incredibly centralized. Not only does an organization ultimately set the agenda for development, but in many cases, founders give large grants to people they already know. He pointed to the Ethereum Foundation as an example, stating: “Some of the largest grants have been awarded to projects led by individuals who are close friends of Vitalik Buterin.”
Grants struggle to achieve “unauthorized innovation,” said Rettig, who described it as a “blockchain superpower.” This is what enables a teenager to start crypto mining from their laptop at home, without needing a credit card or going through Know Your Customer checks.
Ultimately, the main risk associated with grants is that they can be output to people with bright ideas but who are intimidated by completing an application form. Innovative concepts can be excluded and overlooked because they do not fit the rigid parameters of a grant program. Allegations of nepotism and unfairness can start to swirl around – and even worse, community members may feel they have no say in the future direction of the ecosystem.