Public Goods Funding Ecosystem on the Blockchain

Discussion

Noah Chon Lee:

"In the public goods funding ecosystem, there is a balance to be found between confidence for funders and stability for builders.

On the one hand, we have upfront funding such as Gitcoin grants in which projects that qualify for a certain category such as open source software may accept donations which are quadratically matched with additional funding. The more verified unique people donate, the more matching funds there will be (the formula to calculate the matching amount is to take the square root of every donation, add up each of those square roots, then square the sum.) Upfront funding such as grants provides assurance to builders that they have resources in hand with which to move forward with their project. However, from the funders perspective they are handing over money simply hoping that it results in worthwhile outcomes. There is no guarantee of results.

On the other hand, we have retroactive public goods funding programs like the one the Optimism Council runs. In that program, community members distribute a fund to existing projects they vote as being worthwhile. This provides assurance to funders that they can already see the results of projects and then distribute rewards, but provides no security to builders because they have no idea if, when, and how much "bonus" funding they might receive through this program at some point after they build something.

These existing systems serve their purpose well. For example, the uncertainty and speculation of Optimism's retroactive public goods funding may be a feature because this adds the same sort of gamification that makes casinos so succesful (in psychology according to RF Skinner's classical conditioning models this would be referred to as variable interval and variable reward.) However, their purpose is not to find a balance. There is one for builder security and the other for funder confidence, but where is the option that includes both?

There's the additional issue that these options only exist because funds are being funneled from profitable projects to these more "charitable" programs, but the programs are not sustainable in and of themselves. How can someone else launch their own public goods funding programs if they don't already have a pool of funds?

There is a solution to find a middle path between funder confidence and builder security through a type of public goods funding program that any community may launch even without a fund."

(https://www.noahchonlee.com/post/prizes-as-the-missing-middle-road-in-public-goods-funding)