The evolution of crypto funding for public goods is shaping the future of Web3 in exciting ways. As the importance of supporting essential resources for all members of society becomes increasingly recognized, key figures like Vitalik Buterin and organizations such as Protocol Guild, Octant, Optimism, and Gitcoin are taking innovative approaches to ensure the sustainability of public goods funding in decentralized networks.
Reimagining Public Goods in Web3
In the traditional sense, public goods are commodities or services provided without profit to all members of society by the government or private organizations. These can include essential resources like clean air, roads, bridges, and libraries that benefit everyone, regardless of individual contribution. However, in Web3, the concept of public goods takes on a slightly different meaning.
According to a16z, decentralized networks in Web3 present a unique challenge as they are public goods without a central entity to control decisions and capture profits. This decentralized structure requires a new model of sustainability that relies on decentralized coordination and economic incentives for development. The power is shifted to communities rather than corporations, emphasizing the importance of community-driven initiatives in funding public goods.
Innovative Models for Public Goods Funding
Several innovative models have emerged to make public goods funding self-sustaining in Web3. One such example is the Protocol Guild Pledge, introduced by the Ethereum Foundation, which encourages projects built on Ethereum to donate 1% of their native token to support Ethereum L1 research and development. This initiative aims to normalize the idea of giving back to the community and supporting the infrastructure that sustains decentralized networks.
Octant is another organization that is pioneering a self-sustaining model of public goods funding through crypto altruism. By leveraging staked ETH from the Golem Foundation’s treasury, Octant supports impactful community projects through governance and has distributed over 1150 ETH to more than 40 projects in just a year.
Optimism’s Retroactive Public Goods Funding (RPGF) is another notable initiative that supports projects based on their impact through community voting and grants rounds. To date, over 50 million $OP tokens have been distributed across various RPGF rounds, highlighting the community-driven approach to funding public goods in Web3.
Gitcoin, a platform that runs grants rounds using quadratic funding, has distributed over $60 million to support projects in the Ethereum ecosystem. This unique capital allocation method has enabled many projects to thrive, with some recipients going on to become successful companies in the space. By engaging the community in the funding process, Gitcoin has been able to support a diverse array of public goods initiatives.
A New Model for Public Goods Investment
While charitable models have been effective in funding public goods, there is a growing interest in privatizing public goods investment to ensure long-term sustainability. This new model would involve companies benefiting from public goods funding returning a portion of their success to the community, creating a self-reinforcing cycle of support.
One proposed approach is to establish a structured venture fund specifically designed to support public goods in Web3. This fund would be managed by experts in capital allocation and would allocate a percentage of proceeds or profits from successful projects back into the fund. By aligning incentives and creating a sustainable funding mechanism, this model aims to make public goods funding an integral part of business operations in Web3.
By leveraging venture capital principles and incentivizing companies to give back to the community, this new model of public goods investment could have a significant impact on the sustainability of decentralized networks. It would signal a commitment to supporting the broader ecosystem and create a positive feedback loop that benefits both investors and the community at large.
Rethinking Public Goods Funding in Web3
As the landscape of public goods funding continues to evolve in Web3, it is essential to explore new models that align incentives and ensure the long-term sustainability of essential resources. By leveraging innovative approaches like the Protocol Guild Pledge, Octant’s self-sustaining model, Optimism’s RPGF, and Gitcoin’s community-driven grants rounds, the Web3 ecosystem is paving the way for a more sustainable future.
The idea of privatizing public goods investment and creating structured venture funds to support public goods could revolutionize the way essential resources are funded in decentralized networks. By aligning incentives, creating sustainable funding mechanisms, and engaging the community in the investment process, Web3 can ensure that public goods become an integral, self-sustaining part of its long-term growth.
In conclusion, the future of crypto funding for public goods in Web3 is bright, with innovative models and initiatives paving the way for a more sustainable and community-driven approach. By reimagining public goods funding, aligning incentives, and creating new funding vehicles, Web3 can ensure the continued growth and development of decentralized networks for the benefit of all.
