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Key goals for the Alliance as we move into Q3 include:

• Build for Gitcoin Grants 2024 (GG24): Develop the tooling needed for the next Gitcoin Grants program in the most interoperable way possible.

• Expand to New Markets: Identify 5–10 markets that are ripe for on-chain allocation tooling and pilot solutions there.

• Collaborative Support: Actively support each other’s projects in areas of need (e.g. code reviews, user testing, integrations).

• Sustainability: Secure funding opportunities (grants, investors, or partners) to sustain these efforts over time.

This collaborative development model mirrors the ethos behind Squad Staking. Just as squad staking brings together expertise and resources to strengthen Ethereum’s network, the Allo Alliance brings together knowledge and talent to fortify the infrastructure for funding public goods. By banding together, the Alliance’s builders can iterate faster and learn from each other, accelerating the pace at which new allocation models are tested and deployed.

“One of the most powerful things about the Allo protocol isn’t merely its contracts, but the network effect it’s has in cultivating a strong community of builders – and the Allo Alliance exemplifies that.” - Paul Galvin

Why use onchain allocation mechanisms at all? What makes them better than traditional means of allocating capital? Understanding the benefits of on-chain fund allocation helps clarify the problems these tools solve and the value they bring to communities:

• Transparency & Auditability - Immutability is powerful. Every transaction on a public blockchain is recorded on an open ledger, creating a transparent trail of how funds flow. This means anyone can verify that funds went where they were intended, which is a luxury increasingly craved in a world where trust can be hard to establish. By using smart contracts, Allo Alliance tools enable funding processes that are auditable end-to-end.

• Premissioneless Access - Once a capital allocation mechanism is deployed onchain, anyone can access and utilize it. There are no gatekeepers deciding who gets to create or participate in a grant program or funding round. This openness enables broader participation. A small community in one part of the world can spin up the same funding tooling used by a large DAO elsewhere, leveling the playing field. Permissionless systems invite innovation from the edges – people can adapt mechanisms to local needs without asking for permission.

• Composability & Network Effects - Onchain mechanisms benefit from the composability of blockchain “money legos.” When funding tools live on a public blockchain, they can plug into each other and into existing Web3 infrastructure. For example, a grants pool contract could integrate with an identity or reputation system (like Human Passport or GreenWill) to weight contributions, or a streaming payment contract (like Superfluid) to distribute payouts. Because everything is open and interoperable, the network effects can compound – successful mechanisms can be combined to form robust protocols that would be impossible in siloed traditional systems.

• Speed and Efficiency - Blockchain transactions settle in minutes or even seconds, as opposed to the days or weeks typical of traditional finance. For instance, stock trades in traditional markets often take T+2 (two business days) to fully settle, whereas an Ethereum transaction reaches finality within minutes (with each block in ~12 seconds). On-chain allocation can therefore distribute funds almost instantly once decisions are made. Faster settlement not only gets resources in the right hands sooner, but also reduces administrative overhead – no need for lengthy manual disbursement processes or escrow periods.

• Trust through Code - Finally, automating allocation with smart contracts minimizes the need to trust a central authority or committee. The rules (for example, how matching funds are calculated, or under what conditions a payout is released) are encoded in code that executes predictably. This credibly neutral execution can give stakeholders greater confidence in the fairness of the process. Of course, human governance still matters (people write the rules), but once set, on-chain mechanisms can enforce those rules impartially.

In summary, onchain allocation tools bring transparency, openness, interoperability, and speed to the act of funding – qualities that can dramatically improve how public goods and community needs are financed. With those benefits in mind, let’s look at some of the novel mechanisms emerging from the ecosystem.

The ecosystem of on-chain allocation tools is young yet thriving with innovative mechanisms to distribute capital. Builders within the Alliance are experimenting with everything from quadratic voting and Cookie Jars (micro-grants) to AI-assisted funding, shaping what the future of allocation might look like. Below are a few examples of these diverse mechanisms:

• Quadratic Voting - A voting mechanism that lets participants express the intensity of their preferences, not just their top choice. In quadratic voting, voters are given a budget of credits to allocate across options; casting multiple votes for the same option costs progressively more credits (following a quadratic curve). This way, a participant can strongly support an option they care deeply about, but at significant cost – preventing wealthy stakeholders from simply buying out all the influence. QV aims to reflect the will of the many over the money of the few. It has been used in both Web3 contexts and real-world civic experiments to make collective decisions more fair and nuanced.

• Conviction Voting - A continuous decision-making mechanism where community members signal support for proposals over time rather than in a single up-or-down vote. Each user can stake tokens or voting power behind a proposal, and that support (“conviction”) accumulates gradually. Once a proposal’s conviction crosses a certain threshold (which often depends on the proposal’s requested budget), it becomes eligible for funding. This approach balances momentum with patience – only initiatives with sustained support pass, preventing last-minute vote swings or whales pushing through big proposals without broader buy-in

• Grant Ships - A gamified, modular grants program model developed on Allo Protocol. Grant Ships are essentially “plug-and-play” funding rounds – each a self-contained vessel (hence the space metaphor) with its own scope, team, rules, and budget. Instead of having one giant grants committee trying to handle every proposal, an ecosystem can launch many small grant rounds (many ships) in parallel, each focused on a domain or region. For example, a large DAO might run separate Grant Ships for different regions or project categories simultaneously. This model encourages experimentation with different allocation methods too; one ship could use quadratic funding, another could use a review committee, etc., all within the fleet.

• Streaming (Flow State, Flows) - Not all funding needs to be a one-time grant. Some new mechanisms use streaming payments, where money is distributed continuously over time. Flow State (by Flowstate Cooperative) and Flows.wtf are examples experimenting with streaming quadratic funding and donations. Using Superfluid’s technology for real-time finance, these platforms allow funders to stream money to projects second-by-second, and even adjust streams based on feedback or quadratic formulas. For instance, flows.wtf has been used to funnel donations from NounsDAO to public causes on an ongoing basis, rather than lump sums – it has funneled over $186k via 229 grants since launch. Flow State is bringing quadratic funding into a streaming context, meaning matching funds could be allocated continuously as people donate, smoothing out the funding process. This approach can improve recipients’ financial stability (they receive a steady drip of funds) and give donors flexibility to redirect support dynamically.

• Cookie Jars - “Cookie Jar” is a cheeky name for a mechanism that provides small, on-demand grants for contributors. The idea is akin to having an actual cookie jar of funds that trusted community members can dip into whenever they do useful work. In practice, Cookie Jars are smart contracts from which eligible contributors can withdraw a tiny grant (say $50 or $100) after completing a task or making a verified contribution. This approach is low-friction and fast, avoiding lengthy proposal processes for small needs. For example, a DAO might use a Cookie Jar to reward volunteers who translate documentation or fix minor bugs – they can instantly claim a preset reward from the jar rather than waiting for a quarterly payout.

• Impact QF (AI Evaluation) - One of the more novel frontiers being explored is combining Quadratic Funding (QF) with AI evaluations to enhance the allocation process. Traditional QF uses the wisdom of the crowd (via donations) to direct matching funds, but it doesn’t inherently assess the quality or impact of each project – it just matches based on amount and breadth of support. What if an AI agent could help evaluate the relative impact or importance of proposals, and adjust matching accordingly? Regen Coordination is pioneering a QF with AI/Human evaluation framework that uses the Common Approach to capture regenerative actions with a new methodology named Common Impact Data Standard (CIDs). This was piloted in the Regen Coordination Global round in GG23 and it saw good results with many insights for improvement.

These are just a few of the mechanisms in the toolbox of on-chain allocation. The space is rapidly evolving, with new hybrids and ideas popping up regularly (bonding curve funding, futarchy, and more. The Allo Alliance is playing a key role in incubating and integrating these approaches. Importantly, each mechanism has its strengths – there is no one size fits all. Part of the Alliance’s mission is figuring out which tools work best for which contexts, and ensuring they can be implemented in a user friendly way.

Developing a suite of allocation tools is great, but choosing the right tool for the job is the next challenge. Different communities, whether digital or physical, will benefit from different funding mechanisms and governance models. Here, the interplay between allocation tools and community governance becomes critical.

In local contexts, we’re seeing the rise of Ethereum localism – where smaller regions or city-based communities experiment with blockchain tools to fund local public goods and civic projects. A mechanism like quadratic funding might empower residents of a town to support neighborhood initiatives, whereas a community currency or commitment pooling might make sense for a tightly knit group addressing local needs. Imagine a city council giving each district a “Grant Ship” to run their own participatory budgeting rounds, or a network of climate action groups using conviction voting to decide which projects to tackle first. By tailoring the mechanism to the community, on-chain allocation can reinforce civic engagement rather than replacing it.

In the digital domain, DAOs (decentralized autonomous organizations) continue to evolve and often need a multitude of tools for various use cases and goals. Governance in many DAOs today is driven by token voting, which has well-known drawbacks – voter fatigue, plutocracy (large token holders dominating votes), low turnout, and so on. Many members simply don’t have the time or context to vote on every proposal, leading to participation disparity. Many DAOs have struggled with these issues: keeping up with every proposal, all-or-nothing votes that fail due to lack of quorum, last-minute voting swings, and other governance pain points. This has prompted communities to explore alternative means of signaling preference and making decisions, beyond just 1-token-1-vote.

One approach, as discussed, is to use new voting mechanisms like conviction voting, quadratic voting, or ranked-choice polling to better capture member sentiment. Another emerging idea is to incorporate AI into governance as a decision support tool. For example, an AI could digest lengthy proposals and provide summaries or risk assessments, helping voters make more informed choices. Some go further and envision AI directly making certain allocations or serving as an impartial arbiter in grant selection (with human oversight).

Ultimately, finding the optimal governance structure is an ongoing journey. Voting in any form works best only up to a certain scale or scope. If a community is voting on too many things at once, or on a very large pool of candidates/projects, the quality of those votes tends to drop. Voters either default to familiar names (turning elections into popularity contests) or opt out entirely due to overload. One promising solution is to organize governance in layers or pods: small groups handle decisions within a focused context, then their results feed into higher-level decisions. This is analogous to how cells form organs, which in turn form a body – each unit makes decisions appropriate to its scale.

For instance, a DAO could have domain-specific sub-councils (for tech, for marketing, for community initiatives) that use detailed allocation tools to make decisions locally. The broader DAO would only vote on aggregated outcomes or big-picture strategy, possibly incorporating quantitative metrics or recommendations from AI. By keeping each “context window” limited, participants can be well-informed and engaged on that slice of governance.

“The wise speak only of what they know.” — Gandalf, The Two Towers

Additionally, combining different governance inputs can yield better results. Rather than relying on a single token vote, a DAO might use a multi-body system: for example, one chamber of long-term token holders using conviction voting, another chamber using quadratic voting open to a broader community (to amplify smaller voices), and perhaps an AI advisory “vote” or analysis – with a proposal needing some degree of consensus across these to pass. This kind of layered approach can mitigate the flaws of any one method and create more resilient decisions.

Importantly, many issues we see with voting (Sybil attacks, vote buying, lack of privacy) can be addressed with blockchain and zero-knowledge primitives. Decentralized digital identity and reputation systems (for Sybil resistance), ZK-SNARKs for private voting, and smart-contract-enforced voting rules can all improve the integrity of governance. The Allo Alliance’s work on funding mechanisms goes hand-in-hand with these governance advances – after all, allocating funds is a form of governance, and better governance means more effective and trusted fund allocation.

As we connect the dots, it’s clear that Squad Staking and Allo Alliance are complementary pieces of a bigger puzzle. Squad Staking demonstrated how the infrastructure and ownership of a network (Ethereum) can be made more accessible and community-driven. Allo Alliance has focused on how resources in those communities (funds, capital) can be distributed more wisely and fairly. Next up is GreenWill, which takes aim at measuring and rewarding the human contributions that fuel the regenerative finance ecosystem. We’ll dive into how on-chain reputation and credentialing (via GreenWill) can further empower regenerative communities. Read about GreenWill here.