Public Goods Funding: The New Meta | Kevin Owocki - Gitcoin

scenarios. Remember that there will be talks throughout the day until 6 p.m. m. In addition to our wonderful speakers, we have many fun activities, including an art gallery.

There's the Zen Zone. I have a grounding station . If you need to release some extra energy, don't hesitate to head to the Zen Zone. It has a music room with a DJ, who's been playing amazing music lately . So please support our DJs there.

There is a podcast studio if you would like to book some time. And there's the board game arena. So , go ahead and play table tennis if you're interested. Again, there's a lot to do here in Denver. It's a splendid day.

The Sport Castle and the Bidd Hub. Today is the last day of the hackathon. We will announce the winners tomorrow. If you have teams participating tomorrow. If you have teams participating , good luck to everyone!

And without further ado, let's introduce Mr. Kevin Owocki. Thank you. Hello everyone, my name is Kevin Owocki. I'm mostly known as the founder of Gitcoin, and we're going to talk about public goods funding and why it's the next "meta".

It is the competitive advantage for your ecosystem. And then I'll talk a little bit about Gitcoin 2.0, whose white paper we launched yesterday, and how it supports that vision. Has anyone in the audience used Gitcoin? Very well, the faithful present at 10:00 a.

m. m. What about you guys who are passing by ? Have you ever heard of Gitcoin? Very well, a friendly greeting.

That's ok. If you would like to come and learn about the financing of public goods, you are welcome to join us. Well, financing public goods is the next "goal". "Meta" means the most effective tactic available. Basically, the idea is that in crypto there is an evolving "meta" of things you can do to be more effective at whatever it is you 're doing.

And that "goal" is always evolving. Part of the game in crypto is moving from the "meta" of ICOs to that of "veggie coins" and to that of Loot. I don't know if you remember Loot, but I think this cycle will be about DAOs allocating capital to the public goods of their ecosystems, which will be a way for them to compete for talent and to create the best tools. So the financing of public goods is the next "goal" and I want to elaborate a bit on what that means at an objective level. Justin Drake in Bankless in January 2024, this is new information from last month, noted that L2 companies compete in tools, liquidity, virtual machines, tokenomics, public goods virtual machines, tokenomics, public goods , security and business development.

And I think it's very important to bring this up because there's a multi-billion dollar war going on, a competition to see who can consume the most block space and attract more developers to their layer 2. But I don't entirely agree with Justin's approach, because I believe that public goods are precisely the way to achieve everything else on that list. Basically, if you want to win the L2 wars, whether you're Polygon, Arbitrum, Optimism, or anyone else who needs to invest capital to compete in the market, you need to figure out how to get tools, liquidity, virtual machines, tokenomics, security, and business development for your ecosystem. And the naive way to do it is simply to hire people. But the scalable way is to use the novel forms of capital allocation available in the ecosystem to generate growth in those areas for your ecosystem.

So you have a treasury with billions of dollars and a political economy built on how you deploy them. And if we can create the right capital allocation machine to issue grants that generate growth, we can achieve all of this with unprecedented accuracy and scale . What does this capital allocation machine look like? I think that, broadly speaking, it simply receives money and data, and there's some kind of function. Is there some kind of mechanism that gives money to those who build your tools, your liquidity, and your virtual machines, and hopefully strengthens the best projects in your ecosystem without the political costs and power games associated with traditional grant ecosystems?

That's why I believe the opportunity of bringing these financing mechanisms to the blockchain is that we no longer have to deal with the gatekeepers or power brokers of traditional allocation methods. One way to make a lot of friends is to have millions of dollars in grants to give away. I don't know how many of those who appear will be your true friends. But we can move capital allocation to the blockchain, which means less control and fewer obstacles. We can build more scalable and precise capital allocation mechanisms than ever before .

So, I'm very excited to solve capital allocation problems in this space. I believe that Web 1 and Web 2 gave us massively multiplayer online role-playing games. I think Web 3 is going to give us massive multiplayer crowdfunding games. The future of crowdfunding will be in the chain, and we will create strange, powerful, democratic, transparent, and accessible ways to allocate capital. So , Gitcoin is simply in a position to make this happen.

We have delivered $56 million in funding to the Ethereum ecosystem so far. Can I ask for another round of applause for the people who have received money from Gitcoin? Very good. Hey, you, over there. Hey, you.

Have you ever received money from Gitcoin grants? Very good. Not yet . Not yet . You'll do it eventually.

We will allocate capital to people who are funding or working on the Ethereum ecosystem. We have made $4.2 million in one-time donations so far for 4,000 projects. And we've learned a lot about how to perform capital allocation at scale for the Ethereum ecosystem and how to do it on-chain. Gitcoin is primarily known for quadratic funding.

And quadratic funding is really great for the democratic allocation of capital to your community. But we are expanding to offer a menu of complementary capital allocation mechanisms for your ecosystem. Direct subsidies turn out to be really great because of their simplicity. Set aside a fund of money. Tell them to apply and we'll give it to them if they're doing good things for the ecosystem.

And then there's the retroactive financing of public goods. retroactive financing of public goods. Anyone benefiting from OP's PGF retroactive payment ? Humpty is. Okay.

Alright. I won't bother anyone on the periphery now that we have a real audience here, but Optimism is doing it. I am very proud of Optimism. The whole concept of Ether Phoenix's retroactive funding of public goods is really cool. We have partnered with them to build a tool called easy retro pgf.

xyz that allows anyone to allocate capital the way Optimism does to summon the Phoenix of Ether in their own DAO. And so, Gitcoin focuses on creating software that allows you to put this theory into practice. We have a tool called Gitcoin Grant Stack that allows anyone to run a quadratic funding, direct grant, or retroactive public goods funding campaign . And we also have Easy Retro PGF, which will allow people to run retroactive public goods funding rounds . So, we're taking this capital allocation theory and putting it into practice, and I'm very excited to explore the design space.

Speaking of the design space, one of the cornerstones of our exploration is something called the Aloe Protocol. Can anyone guess what Aloe stands for? Very well, someone already had their coffee early this morning. Very good. Basically, there are a couple of components in the Aloe Protocol, which is a capital allocation protocol.

For those just getting up to speed, data and money come in, and money goes out to the beneficiaries of their ecosystem who support their tools, their liquidity, their EVM compatibility, and everything else necessary to compete in the market. OK? So they put money from their treasury and we build a project registry together with their community. They put it in ALO and then there's a component called strategy, which is what decides how to allocate capital to your community. The wonderful thing about the Aloe protocol is that it supports multiple capital allocation strategies.

Good. And the way we're going to explore the design space is by sweeping through the parameters of all possible configurations of these modules. Good. Gitcoin Grants has a registry called the Aloe registry. But we are also building interfaces with the GTH registry, the Clear Fund registry, and the Optimism registry to abstract those registries in a way that is understandable to the Aloe protocol, allowing all strategies on Gitcoin Grants to communicate with all existing registries.

Next, we will continue innovating to create better quadratic financing systems and retroactive financing of public goods. We have some unusual capital allocation mechanisms that we will also integrate here. And they will be able to exchange all the different strategies for capital allocation in their ecosystem capital allocation in their ecosystem . And what we will do is build new ways of financing these projects, not only with their treasury and governance proposals, but we envision Superfluid and Radical Drips-type flows that feed this trustless capital allocation machine . So imagine building a DAO in such a way that you don't have to send all the funds to a treasury and go through a lot of governance to distribute them.

You can simply send it in a decentralized way to the Aloe protocol and Aloe will automatically convene people to conduct quadratic funding rounds and retroactive public goods funding rounds for your ecosystem. So it's a form of streamlined governance to effectively allocate capital to your ecosystem. Okay, this is all the design space for capital allocation. As capital allocation moves to the chain, there will be many massive multiplayer funding games that we will invent, and we are doing a parameter sweep of all the possible ways you could put money into that system, what tokens you could put in, how to represent a ledger, and what kinds of capital allocation strategies are possible within this space. Okay, so we're building all these different types of capital allocation machines.

And now that Gitcoin is decentralized and modular, it's very easy to exchange these pieces with each other. Wow, Gitcoin 1.0 was a centralized monolith. And we were stuck with a single mechanism and a single record, unable to explore the design space. But now that we are modular, we follow the Unix philosophy.

We can make each of these components do one thing and do it well, and we can simply swap them around as we explore the design space. That's why I'm so excited to explore the search space for potential capital allocation mechanisms and find the ones that create the most value for ecosystems. We're going to reason a priori, which means through theory, by talking to great minds like Vitalik and Glenn Weyl. And we're also going to reason empirically, which means in practice, about how these things actually work. And what we will do is iterate towards the local maxima of the best possible quadratic funding tools , the best retroactive public goods funding tools , the best conviction voting tools, the best tools for, I don't know, things we haven't even invented yet.

Try explaining to someone in the 90s what Twitter was like. That's what it means to try to explain to someone in 2024 what capital allocation will look like in 2035. We don't know what's on the horizon, but we're building a machine to navigate the design space. OK? And the only thing I want to make very clear here is that it is a pluralistic design space.

There's a reason I wear rainbows everywhere I go. And it's not just because we love rainbows and unicorns. It is because we believe in the plurality of different capital allocation mechanisms. OK? So you can imagine the design space rather as something that has multiple local maxima that we are going to discover.

And well, I think it's important not to try to build one big monolithic capital allocation mechanism for everyone. What we want to do is build small components that reach their local maximums, that do one thing and do it well. So direct grants will be really good for the simple delivery of funds, for making RFPs, and for quadratic funding. We are really looking to find the most local information on how to carry out a democratic capital allocation that your community funds together with you. Retroactive funding of public goods will be really good for rewarding contributors retroactively.

Okay, so this isn't a design space where there will be only one winner. We will have a multi-tool of capital allocation mechanisms that will each achieve its own local maximum of what is possible. And then we will make that available to everyone in the DAO space who wants to allocate capital to themselves or their ecosystem at scale. And, again, funding your public goods is a competitive advantage. And this is the most effective way to do it because we're thoroughly exploring the design space and making those tools easily accessible to you, so you can compete in whatever you do.

And we will take care of capital allocation with these, with these, uh, with these strategies. I believe this is a trillion- dollar market. Good. As more and more assets move to the chain, as the EVM takes over the world, as everything becomes tokenized, more and more ecosystems will have to fund their public goods, because funding your public goods is a competitive advantage. So this isn't some cute, hippie side project .

And, like, we do n't finance public goods just out of altruism. This is a competitive advantage. And as more assets move into the chain, I think this is a huge market. Uh, right now Gitcoin does direct grants, quadratic funding, and retroactive funding of public goods. There are a couple of mechanisms that we haven't even talked about yet.

Voting by conviction and quadratic funding via streaming. I can explain what they are later if you're a mechanism design fanatic like me, but, um mechanism design fanatic like me, but, um , I'm really excited to build delegated domain allocation, private voting systems, and angel investing 2.0. I envision a future where we are all funding the next projects in the ecosystem, not just Andreessen Horowitz ecosystem, not just Andreessen Horowitz . Although I like Chris Dixon.

I like his new book. Read, Write, Own. It's great. Um, gift circles, self-curated registries, direct contract incentives, impact certifications. You probably don't know what they are, and you don't really need to know until you can use them in the Aloe Protocol.

But in 10 years, you will receive rewards for generating an impact on ecosystems through these mechanisms. So, if you want to get ahead, maybe you can learn what they're all about . The final form of Gitcoin, I believe, becomes an attractor. An attractor is basically a dynamic social system that changes the behavior of agents within the system. OK.

Therefore, Gitcoin is an attractor that builds a better allocation of capital. Uh, and basically, it has a social layer. So if you've read the book Green Pill or if you've attended my talk, then you're part of the social stratum. We are spreading memes about public goods and creating a regenerative culture around their financing in the ecosystem. There is the technological layer that I just told you about .

We are building capital allocation machines and hope that one day there will be a pluralistic, well- documented, and audited ecosystem of tools. And then the economic layer where we will eventually have a revenue engine for Gitcoin and will probably do token swaps with other DAOs to build a 3.3 relationship between us and our partners. Okay, we're building an attractor for capital allocation that has three layers, and every new partner that integrates with Gitcoin and uses that mechanism to fund its own ecosystem strengthens the Gitcoin attractor. Each new integration and each new capital allocation mechanism we build in Gitcoin 2.

0 also strengthens the attractor. Every time you create a meme about regeneration and public goods, you are strengthening the attractor. And because these things are reflexive, momentum generates more momentum; The attractor gets stronger over time as more people allocate capital to their ecosystems. We obtain more data on what allocates capital well in these ecosystems. And then we can iterate in the design space and build more effective capital allocation machines.

Basically, I think this is the final form of Gitcoin: it's an attractor for those who want to build their own ecosystems and do so more effectively than they could with a grant program. And keep in mind that there are hundreds of DAOs that have tens of millions of dollars in capital. There are dozens of DAOs that have billions of dollars in capital. Understood? So, if we can build better capital allocation machines, this will only get stronger over time.

Eventually, we will reach escape velocity and be funding the world's public goods , not just those of Ethereum. Well , not just those of Ethereum. Well , in short, if you want to win the L2 wars, the LRT wars, the DeFi wars, or any ecosystem you're in, you need grants to fuel your growth; Gitcoin has the best capital allocation machines and also a plurality of them to fund what matters in your ecosystem. We are going to build a world where we not only have a diversity of clients in the Ethereum base layer of clients in the Ethereum base layer , but also a diversity of public goods funding mechanisms. And there will be quadratic funding supplementing retroactive funding of public goods, supplementing direct grants, and things we haven't even imagined yet.

And it will all be available through Gitcoin grants. Funding public goods in your ecosystem is a sustainable competitive advantage . And that's why I'm so passionate about building these tools, so that you can all be more effective at creating crypto assets and making them truly useful in the world. Right now, we have direct grants, quadratic funding, and retroactive funding of public goods. If you're interested in integrating that into your ecosystem, look for me or anyone around here wearing a Gitcoin sweatshirt.

We'll set them up on Gitcoin grants and do a pilot round with you. And public goods are good. Thank you for attending my talk. I have, I have 40 seconds. So if you have a short question, you can ask it.

Forward. Yes. And all of this is built on the EVM. Any ERC20 token can be used. Yes.

be used. Yes. When did we get to the moon? Dude, the market is going straight up to hell. Have straight up to hell.

Have n't you looked at your phone? Yes. Yes, me too. I never look at prices either, but the numbers keep going up. Okay, this has been fun keep going up.

Okay, this has been fun . Thank you all.