AllocationSince 1950

Milestone-Based Funding

Funding released in tranches as projects complete predefined milestones, reducing risk and ensuring accountability.

How It Works

1. Project and funder agree on milestones and amounts 2. Initial tranche released to start work 3. Project completes and reports on milestone 4. Evaluator verifies completion 5. Next tranche released, process repeats

Deep Dive

Milestone-based funding releases capital in stages as projects complete agreed-upon deliverables. This approach balances the needs of funders (reduced risk, accountability) with grantees (sufficient capital to execute). It's particularly common in larger grants where the funder wants to ensure progress before releasing additional funds. Smart contracts can automate milestone verification and fund release.

Advantages

Reduces funder risk
Ensures accountability
Provides clear checkpoints
Aligns incentives
Can be automated with smart contracts

Limitations

Milestone definition is challenging
Less flexible for exploratory work
Administrative overhead
Can slow down fast-moving projects
Evaluation bottlenecks

Apps Using This Mechanism

Arbitrum DAO Grants

Funding the Arbitrum ecosystem

The Arbitrum DAO runs various grant programs to fund the ecosystem. The Short-Term Incentive Program (STIP) distributed 71.4M ARB to 56 protocols in 2023. The Long-Term Incentive Pilot Program (LTIP) is distributing 45.8M ARB with improved measurement frameworks. Additional programs include the Gaming Catalyst Program and Questbook Domain Allocators.

DAOActive

$200M+ funded

Arbitrum

Allo Protocol

The infrastructure for capital allocation

Allo Protocol is an open-source protocol for capital allocation built by Gitcoin. It provides modular building blocks (strategies) that developers can use to create any type of funding mechanism. Allo V2 powers Gitcoin Grants Stack and enables custom allocation strategies for quadratic funding, direct grants, and more.

PrimitiveActive

EthereumArbitrum+5

Best Used For

Large development projects
Infrastructure builds
Long-term initiatives
Higher-risk projects

Resources

Allo Milestone Strategies