Overview of the Allo Protocol launched by Gitcoin: The protocol layer infrastructure for community grant programs

Author: Frank, Foresight News

Allo Protocol is an open-source, decentralized, modular digital public good launched by Gitcoin, aimed at enabling any community project to establish corresponding grant funding programs based on its needs, facilitating fundraising and distribution of funds.

Currently, the ongoing Gitcoin Grants Beta Round donations are running on the decentralized Gitcoin Grants Stack based on Allo Protocol. In this article, Foresight News will provide a brief overview of the basic situation, mechanism design, and unique advantages of Allo Protocol.

Allo Protocol: Supporting Any Community-Led Funding Program

Since its launch in 2019, the Gitcoin funding program has provided substantial support for community projects in areas such as Ethereum infrastructure.

At the same time, different types of communities also wish to implement similar grant programs, but Gitcoin's traditional grant platform, cGrants, does not support customized community funding functions due to design limitations.

Therefore, Allo Protocol is the solution specifically launched by Gitcoin to address this issue. It has undergone more modular technical improvements based on cGrants, allowing anyone to establish a grant system in their own community to raise funds for their respective development needs.

In short, as a decentralized open-source platform, Allo Protocol aims to massively support any other community-led funding programs beyond Gitcoin community-led funding efforts (i.e., Gitcoin Grants), thereby providing financial support to a wide range of developers and innovators and promoting the success of their projects.

Mechanism Design of Allo Protocol

The core goal of Allo Protocol is to make open-source collaboration fairer and more inclusive, thereby promoting innovation and progress, and its mechanism design revolves around this vision.

Modular Design

Normally, communities need to make many key decisions during the distribution of grant funds (who is eligible, who can vote, how much funding is available, etc.), and Allo Protocol has modularized these key components, allowing communities to plug and play, using ready-made tools to establish and upgrade their grant programs.

Integrability

The design of Allo Protocol also allows for easy integration with a range of tools. It has currently integrated Gitcoin's Passport protocol and anti-sybil mechanisms while retaining user interfaces that are easy to integrate with payment protocols and others.

Democratic Fundraising Mechanism

Allo Protocol enables funding program or grant ecosystem builders to launch customizable funding mechanisms, while community members vote on which projects should receive financial support, ensuring reasonable allocation and use of resources.

Decentralization

Allo Protocol does not rely on any centralized institution; all data and funds are stored on-chain, ensuring transparency and fairness, making it easier for project applicants to obtain funding support, avoiding the limitations of traditional centralized institutions, and allowing any developer to write and extend its functions without permission.

Rounds

The core mechanism of Allo Protocol is rounds. Each round is a cycle that lasts several weeks or months, allowing community members to vote on which projects should receive financial support.

Each round consists of four phases: application, selection, voting, and payment, all of which have timestamps to ensure that all activities are completed on time:

• In the application phase, project applicants can submit their projects;
• In the selection phase, community members can choose the projects they want to support;
• In the voting phase, community members vote on the selected projects;
• In the payment phase, funds are allocated to the projects with the highest votes;

The rounds mechanism of Allo Protocol ensures that all projects have the opportunity to receive financial support while avoiding the abuse and waste of funds.

Voting Strategy

The voting strategy determines how community members vote, which can influence the fairness and rationality of decisions. Allo Protocol's quadratic funding model is based on a quadratic function calculation method, which gives more weight to small votes and less weight to large votes, encouraging more people to participate in voting while avoiding monopolization by large contributors.

Payment Strategy

The payment strategy determines how to allocate financial support, ensuring reasonable distribution and use of funds. Allo Protocol offers various payment strategies, including Merkle payment strategies and proportional payment strategies.

Merkle Payment Strategy

The Merkle payment strategy uses the Merkle tree algorithm to ensure the security and transparency of funds. Each beneficiary has a unique address that can be found in the Merkle tree. When funds are allocated, only the corresponding "leaf node" in the Merkle tree needs to be updated.

Proportional Payment Strategy

The proportional payment strategy allocates funds based on each beneficiary's share, ensuring that everyone receives corresponding financial support.

Gitcoin Grants Stack Based on Allo Protocol

Currently, Allo Protocol has become the protocol layer infrastructure for Gitcoin's community funding program solution, Gitcoin Grants Stack. Any Web3 project can design community funding programs through the Gitcoin Grants Stack developed based on Allo Protocol.

In a sense, Gitcoin Grants Stack is to Allo Protocol what Lenster is to Lens Protocol, meaning that Gitcoin Grants Stack is one of the DApp applications built on the protocol layer of Allo Protocol.

Gitcoin Grants Stack provides a simplified management process for grant projects—from grant program setup, application management to fund allocation—helping them easily manage and develop their grant programs.

It mainly includes three components: Builder, Explorer, and Manager to provide support:

• Builder allows project owners to create corresponding profiles to build reputation and manage programs while directly accepting donations;
• Explorer encourages donors to discover and support different programs and projects;
• Manager is used to deploy programs, track and manage beneficiary applications, and streamline the approval process;

On this basis, Gitcoin Grants Stack can be seen as a self-service product suite for hosting grant projects, allowing users to run Gitcoin-style grant forms in any ecosystem.

In the future, it also plans to expand to other forms of grants. Currently, this product suite provides everything needed to run grant mechanisms, and users do not need to write any code.