Web3 grants are evolving, and the numbers are showing it.

In Q1 2025 alone, the Ethereum Foundation (EF) disbursed $32.65 million across more than 90 projects under its Ecosystem Support Program.

Now, programs from Arbitrum DAO, Optimism Collective, and other ecosystem-level grant funds have shifted toward milestone-based models, where funding is released only after measurable progress is verified.

Every milestone, update, and metric can determine whether you move to the next step or get filtered out.

This guide digs into that shift, how milestone-based funding works in 2025, what ecosystems really look for, and how founders/builders can structure proposals so they survive scrutiny and unlock capital.

Let’s dive in.

How Milestone-Based Funding Models Work in Web3 Grants

Milestone-based funding is how DAOs now keep funding accountable. Instead of full upfront payouts, teams receive funds in stages, each unlocked only after verifiable progress.

For teams, funding is no longer a one-time approval. It’s a continuous process where every milestone must earn its release.

This model protects DAO treasuries, increases transparency, and rewards consistent execution.

Types of Milestone-Based Funding Models

Web3 programs now use several variations depending on how progress is tracked and verified:

• Linear Milestones: Funding is divided into fixed parts, and each part is released only after the previous deliverable is completed and verified.
• Hybrid Milestones: Mix upfront funding with retroactive bonuses once KPIs like user growth or TVL are achieved (common in Optimism Missions).
• Retroactive Milestones: Reward completed projects based on measurable impact, often using milestone proofs as input for RetroPGF rounds.
• Quadratic-Linked Milestones: Add community-weighted matching where quadratic voting amplifies verified outcomes(tested by Gitcoin DAO).

How the Model Operates

Most milestone-based programs follow a clear sequence of:

Proposal & Milestone Definition → Verification → Disbursement.

These milestones are mapped directly in the Arbitrum DDA 3.0 in their Rubrics - New Protocols and Ideas which mentions to ecosystem KPIs like TVL growth, transaction volume, cross-protocol integrations, or unique active users.

Once a milestone is submitted, reviewers validate results through on-chain activity, open dashboards, or product usage data.

Many DAOs now require publicly auditable verification, reducing subjectivity and making progress visible to the community.

If the milestones meet expectations, then the next round of funding is released. If they don’t, payments are paused or withheld.

Once your structure is solid, the next step is knowing what to measure and how to design milestones that strengthen your chances of getting funded.

How to Define Milestones That Secure Web3 Grants and DAO Funding

Before you start writing your milestones, it’s important to know where your project currently stands.

Every product sits at a different stage; some are just starting, others are testing, and a few are already live.

Here are three common stages where a project can be, and how you can structure milestones for each one:

• Building from Scratch - when you have an idea and want to reach the Mainnet launch stage.
• Building from Testnet - when your product is already on the testnet phase, and you are preparing for mainnet.
• Building from Mainnet - your product is at the mainnet stage, and you are focused on adoption, scaling, and sustainability.

When you begin defining your milestones, there are several factors to keep in mind. Each milestone should be tailored to your product’s stage, goals, and overall vision.

Below are example frameworks you can adapt to your own project and use as a guide while designing your milestones.

Path 1: Building From Idea to Mainnet Growth

If you’re starting from zero, your early milestones should focus on making your idea tangible.

This stage is about turning concepts into code and proving that the foundation works before any users ever touch it.

Step 1: Architecture & Initial Setup (Weeks 1–4)

At this stage, you’re not launching a product yet; you’re building its foundation. Set up your core architecture, deploy initial smart contracts on testnet, and connect backend systems with a working CI pipeline.

You should look for KPIs like -

• The number of contracts deployed
• Successful test transactions
• Passing CI builds.

You can verify progress through -

• Your GitHub repo
• Testnet contract addresses
• Short demo clips
• Architecture docs

This step is about proving your idea works in a real environment, creating a solid base for everything that follows.

Step 2: MVP Launch & Testnet Validation (Weeks 5–8)

At this stage the goal is to launch your MVP on a testnet, validate that core flows work end-to-end, and collect feedback from early testers or developers.

You can realistically do this by deploying the working frontend (even a basic one), integrating one partner protocol or API, and enabling users to interact with smart contracts through real transactions on testnet.

You should look for KPIs like-

• The number of active testers (around 100)
• Total on-chain actions (300+)
• At least one full integration working from start to finish.

You can verify this through -

• A live MVP link
• Testnet dashboard on Dune or Flipside showing on-chain usage,
• A short summary of user feedback or issues logged publicly.

This step demonstrates that your concept is functional, tested, and gaining early traction before mainnet deployment.

Step 3: Auditing & Quality Assurance (Weeks 9–10)

Here, the focus shifts from building to validating. You’ll conduct smart contract audits, fix critical issues, and improve performance before the mainnet release.

In real-world terms, this means running internal QA tests, engaging an external audit team, and optimizing gas usage through benchmark comparisons.

You should look for KPIs like-

• Zero critical vulnerabilities
• At least 95% test coverage
• Measurable gas reduction in core functions.

You can verify this through -

• Published audit reports
• Benchmark summaries
• A changelog of resolved issues.

This step ensures your product is secure, stable, and ready for public use.

Step 4: Mainnet Launch (Weeks 11–13)

This is where your project goes live. Deploy the verified version to mainnet, enable user access, and ensure integrations run smoothly.

Realistically, this includes setting up production RPCs, running initial transactions, monitoring contract performance, and verifying deployment through explorers.

You should look for KPIs like -

• 1,000 mainnet users
• Over $50K in transaction volume
• At least two active ecosystem integrations.

You can verify this through mainnet contract links, public dashboards like Dune or Flipside, and audit partner confirmations. This milestone proves you’ve moved from testing to delivering real value on-chain.

Step 5: Marketing & Growth (Weeks 14–16)

Once live, your focus turns to scaling adoption and building visibility. Run targeted marketing campaigns, launch community initiatives, and form partnerships with ecosystem players.

In practice, this could mean incentivized campaigns, collaborations with DAOs, or integrations with other Arbitrum protocols.

You should look for KPIs like -

• 2,000 users
• $100K+ TVL
• Five ongoing ecosystem collaborations.

You can verify this through -

• Analytics dashboards,
• Campaign performance reports
• Public partnership updates.

This phase shows that your product is not only live but also growing with measurable community traction.

Path 2: Building From Testnet to Mainnet Adoption

If you already have a functional product running on testnet, this phase is about making it mainnet-ready. The goal is to optimize performance, complete audits, deploy securely, and then drive user adoption.

Step 1: Testnet Optimization & Audit Preparation (Weeks 1–4)

At this stage, your product is live on testnet, but not yet refined for production. Focus on improving gas efficiency, fixing performance issues, and preparing for audits.

This typically includes running benchmark tests, simulating real-world usage, monitoring contract execution, and setting up alert systems.

You should look for KPIs like -

• A 15% or more reduction in gas costs
• Zero major open issues
• And at least 300 active test users or transactions.

You can verify this through -

• Testnet dashboards (Dune, Tenderly, or custom analytics)
• Benchmark comparison reports
• And an issue log showing fixes.

This step ensures your testnet build performs well under realistic conditions and is audit-ready.

Step 2: Auditing & Security Validation (Weeks 5–7)

Once testnet performance is stable, move to a full security audit. Engage external auditors, review code internally, and patch all vulnerabilities.

In real practice, teams collaborate with firms like Code4rena, Hacken, or independent auditors to validate contract integrity.

You should look for KPIs -

• Like zero unresolved high-severity issues
• 100% implementation of audit recommendations.

You can verify this through -

• Published audit links
• GitHub pull requests showing code updates
• Final deployment notes

This step ensures technical assurance and builds reviewer confidence before mainnet deployment.

Step 3: Mainnet Launch (Weeks 8–10)

Now you transition from validation to production. Deploy the verified build on mainnet, complete explorer verification, and make your launch announcement.

This includes initializing production RPCs, monitoring contract execution, and confirming successful user transactions.

You should look for KPIs like -

• 2,000 mainnet users,
• $100,000+ transaction volume
• 98% uptime.

You can verify this through -

• Mainnet contract links
• Analytics dashboards
• Auditor confirmation of final deployment

This milestone marks your project’s entry into real-world usage.

Step 4: Marketing & Growth (Weeks 11–14)

With your mainnet live, focus on adoption and ecosystem expansion. Launch campaigns, partner with DAOs or protocols, and host workshops to onboard users and developers.

In real-world cases, this includes liquidity programs, developer tutorials, and collaborations with ecosystem projects.

You should look for KPIs like -

• Five or more ecosystem partnerships
• $250,000+ in total value locked (TVL)
• 90-day retention metrics.

You can verify this through -

• Public dashboards
• Growth analytics
• Partnership announcements

This phase transforms your project from a successful launch into a growing ecosystem participant.

Path 3: Building From Mainnet → From Launch to Sustainability

If your product is already live on mainnet, your milestones should focus on reliability, growth, and long-term sustainability. The goal here is not just to stay live, but to scale efficiently, build trust, and create lasting impact within the ecosystem.

Step 1: Mainnet Launch & Reliability (Weeks 1–4)

At this stage, the focus is on ensuring your mainnet deployment runs smoothly and reliably.

You’ll deploy on Arbitrum One or Nova, set up monitoring systems, and establish clear playbooks for handling incidents or downtime.

You should look for KPIs like -

• 250 active wallets
• Over $250,000 in TVL
• $1 million in total transaction volume
• At least 99% uptime

You can verify this through -

• Public on-chain dashboards,
• Uptime status pages,
• LP or transaction records
• Incident logs

This milestone builds operational trust and proves your product can perform under real user activity.

Step 2: Growth, Retention & Transparency (Weeks 5–8)

Once reliability is established, the next step is driving consistent growth and user retention. Launch co-marketing campaigns, ecosystem collaborations, and transparent reporting dashboards that track real usage and revenue metrics.

You should look for KPIs like -

• 1,000 monthly active users
• 70% week-one retention
• At least three ecosystem partnerships driving measurable engagement.

You can verify this through -

• Retention analytics
• Open dashboards
• Partnership attestations

This milestone shows that your product isn’t just live, it’s thriving and adding verifiable value to the ecosystem.

Step 3: Post-Grant Continuity & Reporting (Weeks 9–12)

In this final phase, focus on sustainability and accountability. Deliver a detailed impact report, outline your next roadmap, and document how the project will sustain itself beyond grant funding.

You should look for KPIs -

• Like three active integrations generating ongoing activity
• Improving unit metrics
• A defined path to breakeven

You can verify this through -

• Governance forum posts
• Financial summaries
• Updated public dashboard

This milestone proves that your project is not only successful today but prepared for long-term ecosystem contribution.

By the time your milestones reach the mainnet stage, your structure should tell a clear story of progress and proof.

But this is also where many projects stumble, not because their ideas are weak, but because their milestones lose clarity or evidence along the way. This is what is mentioned in the next section that where they fail.

Why Most Teams Struggle With Milestone-Based DAO Grants

Even capable teams lose momentum under milestone-based review. The common blockers are:

• Vague milestones: Goals like “improve UX” or “grow community” don’t mean much unless they’re measurable.
• Over-optimistic KPIs: Claiming 10× user growth in three months with no traction data.
• Verification gaps: Lack of public dashboards, GitHub commits, or on-chain evidence.
• Ecosystem misfit: Cloning an existing DEX or wallet with no novel angle or integration.

In most cases, the real issue is a lack of precision. Without measurable checkpoints, even strong ideas look uncertain.

That’s why many Ethereum and L2 grant proposals fail. Short, unclear structures and unverifiable milestones make it hard for reviewers to trust the plan.

Once your milestones are designed, the real challenge begins: executing them with precision, timing, and transparency that turn approval into lasting credibility.

Web3 Grant Execution Strategies: Timing, Milestone Renegotiation

Once milestones are approved, delivery becomes the real differentiator. Funding no longer depends on potential; it depends on how predictably and transparently you execute.

Top builders treat milestone execution like product operations, measured, documented, and paced for compounding trust.

Master Verification Timing

Timing decides momentum. DAO reviewers operate in fixed cycles, usually monthly or quarterly, and missing one can delay payouts for weeks.

High-performing teams plan around those rhythms:

• Pre-submission alignment: Share progress snapshots before formal review windows to shorten feedback loops.
• Batch verification: Group related deliverables under one review to reduce friction.
• Predictable cadence: Post public updates on a fixed schedule (bi-weekly or monthly) to build reviewer confidence.

Projects that time submissions with DAO calendars consistently see faster approvals and fewer clarifications, especially in programs like Arbitrum and Optimism Mission Rounds.

Deliver early. Verify often. Make your progress visible before anyone asks.That visibility compounds into trust, and trust is the fastest currency in DAO funding.

Renegotiate Without Losing Credibility

Every serious team hits scope changes. What separates trusted builders from the rest is how they handle them.

A successful renegotiation feels like risk management, not damage control:

• Notify early of request adjustments before deadlines lapse.
• Show proportional progress, document what’s done and what remains.
• Re-anchor metrics swap outdated KPIs for measurable ones (e.g., replace unique active addresses with transaction volume per wallet if funnel metrics shift).
• Reframe describes pivots as optimization, not delay.

DAO review data from 2024 - 2025 shows that milestone renegotiations submitted before the due date achieved roughly 70 % approval, while post-deadline requests dropped below 40%. Timely communication isn’t bureaucracy, it’s insurance.

Conclusion: The Future of DAO Grants

Milestone funding is not the finish line, it is the foundation for the next era of Web3 capital.

Ethereum’s grant ecosystem is moving toward programmable funding that verifies progress automatically and rewards execution in real time.

By 2026, hybrid models like milestone + retroactive funding, quadratic reward pools, and streaming contracts will define how grants flow continuously, transparently, and based on verifiable proof.

At Lampros Tech, we help teams turn grant proposals into verified milestones and milestones into measurable success.

Through our Grants Motion Support service, we guide builders from strategy to execution, helping them design clear proposals, define fundable milestones, and deliver outcomes that build lasting credibility across ecosystems.

Barsha Mandal

Growth Lead

Barsha is the Growth Lead at Lampros Tech, a blockchain development company helping businesses thrive in the decentralized ecosystem. With an MBA and expertise in content strategy, technical writing, SEO & scaling blockchain development initiatives and translating complex Web3 concepts into accessible communications that drive engagement and business growth.

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