INFOGRAPHIC: Web3 Innovations in Public Goods Funding
Web3 is at the forefront of a movement revolutionizing how public goods are funded. Experimentation with new Web3-powered funding mechanisms has led to exciting improvements over traditional public goods funding models, including greater transparency, community participation, global engagement, and the rewarding of proven impact over lofty promises.
Web3 Innovations in Public Goods Funding
Quadratic Funding
A matching funds mechanism that places greater value on the total number of unique individuals supporting a project, rather than the total funding the project receives. Individuals "vote" for their favorite projects by donating to them, signaling to the QF algorithm which projects deserve the most matching funds. This ensures everyone has a voice, no matter the size of their donation.
Retroactive Public Goods Funding
A model that funds public goods based on the value & impact they’ve already created for the community. By allocating funds retroactively, this encourages builders to prioritize real-world impact, rather than merely appealing to funders' interests or speculations about potential success. This ensures resources are directed to initiatives delivering tangible public good impact.
Incentive Mechanisms
Web3 enables new incentive mechanisms that can reward community members for participating in the funding of public goods. This could include token rewards for those who participate in governance or donate to public goods projects.
Decentralized Governance
Web3 enables a shift in power from centralized funding bodies (like grant- making boards or govts), to the community. They harness the wisdom of the crowd by giving community members the power to decide how funds are allocated.
Measurement, Reporting, and Verification (MRV)
New Web3-powered MRV tools, like on-chain attestations and impact certificates, help projects track and report their impact to the community. By bringing these tools on-chain, it creates an immutable record of impact that is easily verifiable, and can even be tied to future funding. Notable projects include Hypercerts and Karma’s Grantee Accountability Protocol (GAP).
On-Chain Reputation and Identity
On-chain reputation & identity tools like the Gitcoin Passport allow builders and donors to prove their humanity, helping prevent against “attacks” from bad actors looking to game the system. At the same time, these tools can help builders grow their reputation over time by recording their impact on-chain, leading to greater trust and efficiency when evaluating impact and allocating funds.
Case Studies
Gitcoin
Through their quarterly grants program, Gitcoin leverages quadratic funding to fund early stage public goods projects in the areas of open source software, Web3 community & education, climate solutions and more. Their Grants Stack allows any community to run an independent QF granting round. To date, they’ve provided $56M+ in funding to public goods.
Learn more: grants.gitcoin.co
Optimism
Optimism is a low-cost Ethereum L2 blockchain. Through their RetroPGF program, they are hoping to build a sustainable public goods funding ecosystem by utilizing protocol revenue to fund projects that have supported the development and adoption of the Optimism ecosystem. To date, they’ve provided $1M & 10M OP tokens in public goods funding.
Learn more: app.optimism.io/retropgf
Giveth
Giveth is a community-driven donations platform that leverages blockchain to connect public goods projects with funding. They’ve operated multiple QF rounds through their platform, and have a unique incentive mechanisms that rewards donors with their $GIV token. To date, they’ve facilitated $2.2M+ in donations to nonprofits & public goods projects.
Learn more: giveth.io
Resources and Other Examples
wtfisqf.com - A great resource to learn all there is to know about Quadratic Funding
artizen.fund - A community-driven fund for projects building in art, science, tech, and design
clr.fund - A public goods funding protocol for the Ethereum ecosystem that leverages QF
octant.build - An experimental platform that rewards participation in public goods funding
hypercerts.org - Impact certificates for tracking and rewarding positive impact
gap.karmahq.xyz - A tool for tracking grant progress and building on-chain reputation
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