Harmony Grant Controversy Illuminates Shortcomings in DAO Funding

Those involved in the crypto grant world are beginning to realize there’s no such thing as a free lunch.

The Harmony-funded women in Web3 project Blu3 DAO faces accusations of misspending its grant money. Blu3 is the latest example of a network-focused project taking DAO grant funding for seemingly minimal payoff.

Shortly before being hacked for $100 million, the cross-chain crypto bridge Harmony pledged $50 million in funding for DAOs meant to build Harmony’s ecosystem.

Last week, a viral Twitter thread compiled a list of Harmony-funded DAOs — mostly geared towards Web3 onboarding — that received tens of thousands of dollars in grant money for lackluster results.

1/ Wanna get rich quick?

Don’t trade, submit DAO funding proposals.

I saw a thread highlighting that DAO funding is a serious problem so I checked out previous @harmonyprotocol funded grants.

It does not take much to receive a decent chunk of money.

?A few of my favorites:

— Luke Martin (@VentureCoinist) October 14, 2022

Embattled Harmony DAO Blu3 appeared on the list. Blu3 received a $1 million grant from Harmony to bring women into Web3, of which $75,000 has been paid out, according to Harmony. Blu3 is a fixture on the Ethereum conference circuit, sending female coders to network with other Web3 developers.

But when the husband of Blu3’s co-founder’s self-assessed $175 hourly wage raised eyebrows, Blu3 scrubbed its website, drawing criticism from the Harmony team. For context, software engineers at Google make between $76 and $124 per hour, according to data from Glassdoor.

Harmony community members also questioned Blu3 for receiving $50,000 for a book about creating wealth in Harmony and for denying the relationship between the founder’s company and the DAO.

In a statement to Blockworks, Harmony said it pays grant money based on a project’s performance, and “grantees are asked to write public updates with deliverables and metrics.” The protocol is standing by Blu3 and considers its grant program a success in expanding Harmony’s online footprint.

Grants are common throughout DeFi, with major industry players Aave, Curve and Lido all running grant programs. But crypto winter belt-tightening could cause a reckoning with shortcomings in how the crypto grant system works.

Zane Huffman co-founded Governor DAO, a group of coders developing Sybil resistance technology — essentially protecting governance votes from bots. His project applied to the 20 biggest grant programs with minimal success.

“It’s been somewhat of a let down to not feel like grants have been a viable option for us when there is objectively a lot of grant money flowing around in the ecosystem,” Huffman said.

While applying for grants, Huffman’s team interacted mainly with business development staff lacking the technical expertise to vet Governor DAO’s products.

“We never spoke with an engineering team with the exception of maybe once or twice” during the grant application process, Huffman said. As DeFi protocols compete to onboard users, grant teams are receptive to projects promising to get users in the front door, while those building inside protocols are neglected.

“There [are] systematic shortcomings with how grants are allocated” in crypto, Huffman said.

Blu3 DAO did not respond to a request for comment.

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