Jack Kubinec

<div id="highlights-block_634f17893db93" class="highlights">
 <ul>
 <li>Harmony-funded Blu3 DAO faces accusations of financial mismanagement </li>
 <li>“There [are] systematic shortcomings with how grants are allocated” in crypto, a DAO co-founder said</li>
 </ul>
 
</div>



The crypto grant world is beginning to realize there’s no such thing as a free lunch.



The Harmony-funded women in Web3 project Blu3 DAO has faced accusations of overspending its grant money. Blu3 is the latest example of a network-focused project taking DAO grant funding for seemingly minimal payoff.&nbsp;



Shortly before being <a href="https://cms.blockworks.co/defi-cross-chain-horizon-bridge-hacked-for-100m/" target="_blank" rel="noreferrer noopener">hacked</a> for $100 million, the cross-chain crypto bridge Harmony <a href="https://open.harmony.one/300m-on-bounties-grants-daos" target="_blank" rel="noreferrer noopener">pledged</a> $50 million in funding for DAOs meant to build Harmony’s ecosystem. 



Last week, a viral <a href="https://twitter.com/VentureCoinist/status/1580742921745494018?s=20&amp;t=zrUbXRVvgEeLtxmyYA8Kyw" target="_blank" rel="noreferrer noopener">Twitter thread</a> compiled a list of Harmony-funded DAOs — mostly geared towards Web3 onboarding — that received tens of thousands of dollars in grants for lackluster results.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ Wanna get rich quick? Don&#39;t trade, submit DAO funding proposals. I saw a thread highlighting that DAO funding is a serious problem so I checked out previous <a href="https://twitter.com/harmonyprotocol?ref_src=twsrc%5Etfw">@harmonyprotocol</a> funded grants. It does not take much to receive a decent chunk of money. 🧵A few of my favorites:&mdash; Luke Martin (@VentureCoinist) <a href="https://twitter.com/VentureCoinist/status/1580742921745494018?ref_src=twsrc%5Etfw">October 14, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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. The grant has since been terminated, with a Blu3 representative attributing the move to the broader crypto market downturn.&nbsp;



A spokesperson for Blu3 did not respond to a request for comment before this article was published.&nbsp;



After publication, Blu3 said any allegations of misspending its grant funding are “false and untrue.”&nbsp;



“Blu3 [founders] and core contributors have intentionally made the decision to not pay themselves, and instead work for sweat equity to preserve the [treasury] for important and necessary expenses to weather the crypto winter,” the company said in a statement.&nbsp;



Blu3 is a fixture on the Ethereum conference circuit, sending female coders to network with other Web3 developers.&nbsp;



But when the husband of Blu3’s co-founder’s self-assessed $75 hourly wage raised eyebrows, Blu3 Notion&#8217;s website was temporarily scrubbed, drawing <a href="https://twitter.com/GlobeyNFT/status/1581179988908253184?s=20&amp;t=XQ7MTXxggP8hz8O44JmGbQ" target="_blank" rel="noreferrer noopener">criticism</a> from the Harmony team. For context, software engineers at Google make between $76 and $124 per hour, according to <a href="https://www.glassdoor.com/Hourly-Pay/Google-Software-Developer-Hourly-Pay-E9079_D_KO7,25.htm" target="_blank" rel="noreferrer noopener">Glassdoor data</a>. The company denied that it intentionally removed content from the site. 



After publication, the Blu3 spokesperson said the co-founder&#8217;s husband personally removed the page for a time after receiving online threats. 



In a statement, 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 <a href="https://en.wikipedia.org/wiki/Sybil_attack" target="_blank" rel="noreferrer noopener">Sybil resistance</a> technology — essentially protecting governance votes from bots. His project applied to the 20 biggest grant programs with minimal success. 



“It&#8217;s been somewhat of a letdown 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.&nbsp;



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



“We never spoke with an engineering team with the exception of maybe once or twice” during the grant application process, Huffman said.&nbsp;



As DeFi protocols compete to gain market share, grant teams have been increasingly 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.



Editor’s note, Nov. 8, 2022: After this story was published, a spokesperson for Blu3 said its $1 million Harmony grant was terminated after $75,000 was paid out. The spokesperson added that its DAO members won more than $90,000 in prize money from hackathons — and several received full-time job offers in Web3.



The company also denied any allegations of misspending grant funding. The article has been updated to reflect comments and clarifications. It has also been corrected to reflect that the husband of Blu3’s co-founder was paid $75 an hour, not $175, and the DAO’s Notion site was only temporarily taken down and not by Blu3.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

Harmony Grant Controversy Illuminates Shortcomings in DAO Funding

Sebastian Sinclair

<div id="highlights-block_62ba4ef136752" class="highlights">
 <ul>
 <li>Thieves appear to be trying to launder funds with move of $35 million stolen from the cross-chain bridge</li>
 <li>Stewards of the bridge, Harmony, offered a $1 million bounty in exchange for returning the stolen funds but has so far received no response</li>
 </ul>
 
</div>



Around a third of the $100 million stolen last week from Horizon Bridge — a cross-chain interoperability platform between Ethereum, Binance Smart Chain (BSC) and Harmony blockchain networks — has been transferred to an address belonging to crypto mixing service Tornado Cash.



Blockchain security company Peckshield did not immediately respond to attempts by Blockworks to confirm details of the transfer. <a href="https://cms.blockworks.co/defi-cross-chain-horizon-bridge-hacked-for-100m/" target="_blank" rel="noreferrer noopener">Last week&#8217;s hack</a> saw more than $98 million in various tokens siphoned off the Horizon Bridge platform and subsequently swapped to ether.



Steward of the bridge, Harmony, said in an updated <a href="https://medium.com/harmony-one/harmonys-horizon-bridge-hack-1e8d283b6d66" target="_blank" rel="noreferrer noopener">blog post</a> Sunday it was aware the hacker had begun moving funds through Tornado Cash and is reviewing various options for users and partners.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Transparency is important in blockchain and we aim to be transparent with our community but we ask the community to remain patient during this investigation and confidentiality at this time,&#8221; Harmony said in its post.</blockquote>



Mixers or tumblers, such as Tornado Cash, are services providing users the ability to <a href="https://cms.blockworks.co/the-purpose-and-perils-of-crypto-privacy-tools/" target="_blank" rel="noreferrer noopener">conceal the transaction history</a> of certain cryptocurrencies by pooling and mixing them together with other users&#8217; funds.



The team at Harmony offered a <a href="https://twitter.com/harmonyprotocol/status/1540904433525088256?s=20&amp;t=7Rg64bZzGnnHMVBOZ0irCA" target="_blank" rel="noreferrer noopener">$1 million bounty</a> for the return of the funds on Friday and advocated for no criminal charges to be filed, though the call remains unanswered.



&#8220;The desire to work with the hacker remains but we will continue the full investigation until resolution or the funds are returned,&#8221; Harmony said Monday.



In the post, which has been updated regularly since the hack took place last week, Harmony said its incident response team found no evidence of any breaches in its smart contract codes nor to the Horizon platform.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.