Admit it! Startups are hard, why? Because in startup space we are looking at a problem that no one is solving or an incumbent is making lives miserable there and we improve the state, we add value, we find a new business model while doing so and somehow make that startup - now turned into a business - ! self sustainable Of course! You know all of that stuff then why am I repeating it? To give you context! Start-ups are hard because of the uncertainty of new - the unavailability of examples of business models, what to charge, how to charge, who will pay, whether customer wants it or not, etc. Apply that context to the dapps now - being born out of layer 1 blockchains, the first one of whom is merely 10 years old, we are in a nascent industry. The community is small, - on one side we see Bitcoin OGs whom you will rarely find (and imaginably they are well-funded because they were there when BTC was of $1 so don't need to show their face to anyone) self-righteousness is out of proportions On the other side you will see youngsters who just got into Ethereum development right in college or as first job and are ok with going about propagating the means of decentralisation, attending hackathons and just work for the common public good! Then there are some 35+ years olds who never made money as part of core-devs group, are dapp developers and you will find a tweet every now and then from them telling the world that how their kids are living without medical insurance and how hard it is to put food on the table with what is being offered as a salary or a grant in this space - mind you - these are the same developers who could go into mainstream tech at anytime and earn decent but they are also infected with decentralisation bug, enjoy the community and social bonding and don't want to leave the space. The point that I am raising here is that everyone has to find an earning source, everyone has to sustain themselves first and then they also need to sustain the project they are working on! Without positive cash-flows no one is going to pay for the electricity that you burn to power your laptop or to buy that black cup of coffee! Here I will dissect various funding sources that I am aware of and also would dissect them candidly, just so you can be aware of all the pitfalls (if you are not agreed with me, you can always reach out to me, I will be happy to listen your point of view). General Observations about funding avenues Let me start from hard to digest observations: Off-loading the deal with regulations - most layer 1 projects want to declare themselves decentralised, eat up most of the investor money and push the responsibility of dealing with regulators to the front-end dapp developers Almost all of the I pay dapp developers from the tokens minted from thin-air CO'ed projects Poorly designed dapp developer programs eventually hurt the end retail investor who are holding these tokens and developers eventually get paid on the investor's expense The grants/money on offer is too low for dapp developers to sustain themselves; as opposed to sustaining their projects and cover development and market costs I can keep filling this observation list but I am assuming I have set the stage, let's move on to some of the funding avenues available: Developer Grant Programs Nearly every project has them. They typically have the RFQs that you can choose from and afterwards you will fill in a grant application, give them a well-defined scope and they approve your application in 2-4 weeks. The funding available for these types of grants was still relatively good until the start of 2019 but bear market of last year has dented here the hardest. Let's say a grant that was coming around $5-$7k for a project, is now down to $1-$2k - yes, this is for a project whose MVP can take couple of months for a single developer. While we live in a an open world now, this range can be good for a fresh grad - this is however, not attracting any quality developers anymore - and from dapp developers to grant approvers, everyone is suffering in the process! The easiest way to find these grant programs is to write the name of the project in google along with developer grants keyword, you will find Polkadot, Nervos, Binance DEX, Aave, etc. - what you choose is up-to-you, these can be good or bad! Hackathons I attended about 4-6 online and in-person hackathons last year. While, these hackathons were once seen a good opportunity to on-board beginner developers to a specific blockchain by offering bounties - these are never the avenue for earning a living for the developer or finding a good future project for bounty sponsors (although I know several good projects came out of hackathons but these were usually pre-formed teams, who knew what and when to do and just used hackathon as an accelerator). For the starters, most developers at the hackathons are beginners who do not possess good knowledge or subject matter grasp to learn and execute a project in a domain that is entirely new while the cherry on top is most sponsors also don't know what they want from a project. The end result is, contrary to popular belief, a good developer only has 50% chance of earning a bounty at a hackathon that also merely covers his/her traveling cost to the hackathon. The average bounty in these hackathons is $200 to $1000 range. While EOS tried running their own hackathons, only successful ones are in Ethereum ecosystem being run by and . ETHGlobal Gitcoin Gitcoin CLR Grants is an Ethereum project that allows other blockchain projects to post bounties in their monthly hackathons, however, their other program Gitcoin CLR grants is just available for Ethereum projects at the moment. Gitcoin The program started in 2019 and just concluded its 4th round. This round was the craziest as for the first time everyone was allowed to participate (of course the application was to be approved by the Gitcoin team itself) but given the context of distributing development funds that Ethereum Foundation holds and wants someone else to come forward and manage the distribution process, this project actually ticked many of the boxes - not perfect - but better than others! Gitcoin CLR grants work on a concept called Quadratic funding, Vitalik wrote about the technical details in depth in his article . From the top, the concept is that public vote for projects with their hard-earned tokens, either DAI or ETH or any other supported tokens - the emphasis of Gitcoin is to give projects a style subscription, means if you are pledging to support a project by giving them 1 DAI, you can put that on subscription and project will get paid 1 DAI every month. here patreon You can also provide one time sponsorship. The project is designed in such a way that most number of fundings is given higher weight in the algorithm as opposed to the amount of the funding. Gitcoin then matches your funding with its own pool of sponsored funds - sometimes up to 4x. 4th round of CLR funding saw some Twitter brawls as well since media projects were also allowed to put in applications and some opponents also accused the community to just use their friends to increase their bag of total funded amount. However, I never participated but dug into how hard it was to game the system and found an that could be used to find which projects were susceptible for gaming the system. I can safely say it wasn't that easy but since the system is not bulletproof yet, gaming could happen and should have happened. analysis project You can find the result of 4th round of Gitcoin CLR grants and information about upcoming 5th round . here Blockstack's App Mining Program If you ever want to run a developer program, what follows is a classic example of what not to do! On technical and conceptual grounds, I liked Blockstack since the beginning and even wrote a great promoting them on hackernoon. However, it's time to introduce their and equally run program called App Mining. blog post bold poorly App Mining is a program that is conceptually formed to release a developer from the burden of running ads or selling user-data in order to sustain their app. The idea is that protocol somehow will keep the dapps supported while developers can focus on their work - so no monetisation is required, developers can just go on to build great software - perfect utopia - but how? You may remember hearing Blockstack's name as part of first ever SEC approved token sale. The project, however, is operating on a turf much difficult than Bitcoin and Ethereum. Instead of democratising finance, Blockstack went after democratising the social media, auth and storage space. This is difficult because first of all, even after Cambridge Analytica, there are still billions of users who log-in to Facebook every month, hence privacy and owning your data (and paying for its storage) does not resonate with general public yet! With App Mining, the project went into even much tougher turf by thinking of ranking apps against each other, something that Apple and Google struggle with despite being old, in possession of full analytics, having hundreds of thousands of apps, in access of thousands of thousands of dollars and running full fledge app quality teams. Blockstack's version of ranking the apps was to: Delegate the review process from day one to 3rd parties in the name of decentralisation They couldn't create any categories of apps because total submissions were low - so imagine, Slack being scored against Bitcoin memes website Employed a academic formula to stop developers from gaming the system Blockstack's App Mining program started it's pilot in October 2018 and my app was included in the second run of the program in November 2018. Timski The 3rd party reviewers at the time were: TryMyUI DemocracyEarth ProductHunt The problem with DemocracyEarth at the time was that Blockstack was expecting accredited private investors (by definition each with net worth of above $1M to log in each month and review 50+ apps and vote - not even with their own money!). The second problem was with ProductHunt that despite the claims is too easy to manipulate especially when someone is offering you money to do so - (literally you just had to buy upvotes from regular members of the PH). App mining discontinued DemocracyEarth after 5 months and discontinued using ProductHunt upvotes after a whole year. Instead Awario was introduced in the mean time to quantify social and web/news mentions. Current app mining reviewers and process can be seen . here The pilot program offered $25,000 in grant money at the start and has recently been giving away $400,000 every month, however, app number still remains under 300. There were great apps as part of the project initially, such as and who also believed on the vision of the Blockstack, however, I believe as the team behind App Mining refused to iterate quickly, these projects left the program as well. Stealthy Graphite Docs I also pulled Timski just after 1st month, there was no way to keep pounding my head against the wall while the effort on a decentralised group chat iOS app was 4x higher than a normal Firebase powered app while the competition that I would need to go in was with Discord and Slack, both of which were already unicorns in this category. As Blockstack's STX tokens are now on Binance, the Blockstack PBC now wants to outsource App Mining program to a 3rd party. Only 2 years worth of STX tokens were pre-mined for App Mining. It's a tough task for anyone in the world to run a program like this where you are actually giving away money to improve the apps - as this becomes a honey-pot for developers to just game the system and draw as much money as they can! Also, the biggest task is to bake App Mining into the protocol itself, so imagine protocol deciding which app should get the money based on user statistics, domain its operating in, user profiles, etc. To be fair to Blockstack PBC, while trying to close all the gates of gaming, they went on to declare the iOS and Android (subsequently penalising everyone who had already invested in making those apps). native apps are not good for digital rights This makes me wonder if Tor was a better alternate choice than making a whole other blockchain if we do not want to include mainstream in the fight for digital privacy. After Timski that was 100% decentralised app (even the notifications were decentralised), I re-entered the App Mining program in November 2019 with my iOS app. Vegan Scanner - Is it Vegan? This time I am just testing the water and doing what everyone is doing, as I said doing a startup is hard, doing a dapp is hardest especially if you are operating in a wild-west kind of environment. The App Mining program was due to grow to $1M by May, 2020, however, since no good apps were coming up, Blockstack PBC is deciding to pause the program from February 1, 2020 and has asked the community for suggestions on how to go forward from here. EOS Block Producer Developer Programs I will just mention EOS here as I am not a subject matter expert in the world of EOS, however, I have met block producers coming to meet-ups to recruit developers. EOS seems heavily gamified and each block producer is required to come up with quality dapps as well. What you deal with that block producer is up to you but these are mostly service projects and be-aware of the fact that you are dealing with a full-fledge business here, instead of a startup or layer 1 blockchain project. NEAR Protocol I will just put in the name of another developer program here, NEAR protocol is helping dapp developers to raise from VCs and a few of them are already able to raise. This again brings us back to the philosophy of what we are doing here? Are we making self-sustainable business apps or are we creating thin-clients on top of blockchains and distributing them for free? I would rather go with the former, no amount of funding can manage the load of sustaining hundred of thousands of dapps for the foreseeable future! Funding from DAOs This also came into light with-in 2019 by the rise of different DAOs. I wouldn't name them, you know where they are, again a much novel concept. I only had the pleasure of pitching one of my apps to the founder of a DAO and also met a few founders whose apps were actually bought by these DAOs. That deal would go through like this that some one had made a mixer on Ethereum, a DAO approached them and asked if they can re-skin the mixer for the DAO and the guys did that, so it was actually a software sale! We will have to wait and see how DAOs can improve the funding landscape of the dapps. Conclusion Dapp funding is an interesting space, of course we are all experimenting and still fighting if sharding works or if PoS is better than PoW, similarly, dapp funding is a much harder nut to crack as well. However, utopia or dystopia, do think about your bills every now and then as well and keep things in perspective. For me I have now moved into core development of tendermint/cosmos sdk and learned to use elliptic-curve cryptography. This is quite an important skill to grasp if you want to stay in blockchain for long and this is where you get to do most exciting work as well. If you would want to discuss anything, you can reach out to me on or find me at one of the crypto conferences. Twitter
