Scaling RPGF With Retro Public Goods Organizations | Scott M. - Gitcoin, Justine H. - Optimism Fdn.

Applause thank you guys for coming see you [Music] later all right thank you we are on the wrong page but that's okay are you on Chrome is that where your presentation is oh no it's on it's on Brave or something but it's like a different let's see it's right here that's the one does that work yeah yeah oh there we go all right we'll um get this going in a second thank you for coming when they asked us to headline tonight we couldn't believe it but here we are stream come true all right and this clicker is just going to work yeah in business Okay so it's just us it's us too we had a couple of co-hosts leave because of flight issues that's that's what happens late in the evening on a Friday night but we're here to close it down uh so we're going to be talking to you as you may maybe can see about retrofit organizations a new type of org that might help support the Retro public goods funding you have heard so many things about and if you haven't we're going to talk about that too so you know spoiler light mechanism design here maybe that's exciting Maybe that's not but okay so retr public goods we'll just kind of intro it what's interesting about a retr public good there's two qualities one is you don't know it's useful until after it's built pretty much right and then the second is it's a public good and what is a public good well you know it's something that kind of lacks some sort of Market power it's something that's maybe useful but hard to hard to build out via familiar Market mechanisms or Price VI familiar Market mechanisms uh there's there's some other definitions some examples uh right there's this great Henry Ford quote if I'd asked people what they wanted they would have said Faster Horses instead of cars that's kind of the flavor of what the Retro piece is Right which is to say you ask people hey I'm going to build this and they don't understand what a car is but you build it and they're like oh cars are great but of course we know cars are able to be supported in Market mechanisms so not a public good so what's a public good that's not retro like a fireworks show right uh you can't keep people from not looking at fireworks you put them up there if they're you know if they have a view they get to see them right so it's a pure public good but it's not retro cuz you tell people hey I'm going to have a great fun fireworks display and everybody goes yay I'll buy a ticket so retro pgf or uh retr public goods are this sort of hybrid right these two qualities uh combined where you have the public goods quality which is that hard to support via Market mechanisms and you have the Retro quality which is it's hard to explain it to people up front and uh for Here We would like Justine over to you to tell us about rpgfan lead at optimism and retroactive public goods funding is core to uh optimism's approach so actually 20% of the initial token Supply is reserved for retroactive public goods funding grants and it is our economic and and growth engine so to date we've done three rounds where governance participants have decided which projects will receive basically grants retroactively after having built the thing that they've built um and so that has totaled across three rounds around 40 million op yeah so uh I believe across all the ecosystem experiments with rpgfan that's been deployed in rpgfunny value and and a lot of the cool experimentation that's been done has been about trying to trying to ensure that's true and ensure that the capital is connected to those projects so let's talk about why a new organizational form this idea of retrofit organizations could be especially useful here right um so one of the things that happens and maybe Justine you can speak to this a little bit is just that uh if you if you deploy retr public goods funding via voting who gets to show up to the voters and say hey we're a public goods organization figure out whether we deserve some of the money so how how have you kind of handled that yeah so to date we've had all um the government participants that are eligible to vote on this we call them citizens all citizens have voted on all projects in the last round it was I think around 800 projects so it's a high cognitive overhead for uh one of those governance participants to go through 800 projects and determine what is or isn't a public good and then they have to evaluate the impact that those projects have had um so it's it's a very difficult task the badge holders were very fatigued in in the previous rounds will adjust parameters to make their their lives easier but they really need strong indications um when they're evaluating impact um and they like to look at parameters like um the previous grants or or funding these projects have had uh and and other what we call impact metrics to try to evaluate these things so I think one of the controversies that came up last time was about whether you should allow a VC funed company to have funding yeah yes this was a big controversy uh among bad shoulders so um again like core to optimism's kind of uh approach is that people need to build an expectation that they'll receive retro pgf we're super early in in that being possible retrop pgf needs to become more frequent more reliable uh in order for for Builders to be creating things with the expectation that they'll receive retr pgf in the future um they're also in the beginning while that market develops needs to be some sort of like bootstrapping mechanism because sometimes you can't build the thing because you don't have resources so you need resources uh to be rewarded after the fact and so uh grants proactive grants can play that role and so that can be from uh gitcoin it can be optimism token house makes um proactive grants that can later be rewarded uh and there you can kind of I think you're going to get into this later but you can kind of see if The Upfront Grant fully recognized the value that was going to be generated or overestimated that value Etc yeah so just to summarize right like two crucial things a lot of times these things do require Capital to build right right these are valuable important things these retr public goods and so you might want them to have some way to get Capital upfront rent office space whatever it is pay early employees through Equity um but since we've already said and Justine just pointed out they're often hard to explain upfront right like that's the whole essence of a retr public good is it's hard to tell people why why it's useful until it's built so even though grant funding can in theory play a role right like the challenge is naturally these things are defined as things where it's hard to show up and say hey everybody give me some Grant money it's not like building a bridge where everybody goes oh yeah it'd be useful to have a bridge across to that other town they go yeah I don't really know what this thing's about right and so uh so one of the ways you might think you know and actually you positioned me well to uh to talk about this is there's a little Gadget where you might be able to hook together the uh the grant funding that we have through like for instance gitcoin which is done it well uh Scott was going to be on stage earlier uh who is a getcoin co-founder right but quadratic quadratic funding is a very cool mechanism to fund projects that people can understand up front right it's it's a sort of like nice broad-based way for people to get their voice heard and so you could imagine a way of integrating like upfront grants uh wait wait I have a clicker what am I doing um with retrop pgf funding in a particular way thus begins a little bit of the mechanism design portion of the uh of the talk here right so if you look at this graph and you just think of the Y AIS as being like number of number of people number of votes right and and on the X we have perceived usefulness now we'll just think of these two curves as being two different types of project right so an orange project is one where most people don't get it right you can basically see that the mass is on the sort of not useful side and the thin tail out there on the right is going to be not there are very few people who get why it's such a big deal right so we can consider this kind of like um uh an a classic rpgfunny recursor to an RPF thing um and then the grant Zone in blue is one where there is this kind of like fatter tail out to the right where you can explain to enough people that maybe it's useful and maybe you could get enough grant funding to actually build it and that's great so now we could think about this as a little more of a before and after Story not about two projects right so now you start a project and you show up to getcoin and you try and convince everybody that it's super useful and your gitcoin funding looks orange which is to say most people don't get it you don't get a lot you try right but then you manage to build it anyway however it works maybe we're able you know maybe there's some Venture funding maybe you take money out of your own pocket who knows right um and you show up to an R pgf round and the usefulness looks like the blue curve right suddenly everybody gets this is actually a really cool project well so that that transition from Orange to Blue is kind of surprising usefulness right is is one way we could call that right of up front you tried to explain it to everybody nobody got it but then once you built it you showed up to rpgfantasy measure theorists in the crowd measure theorists raise your hand okay no measure theorists that's fine nobody's going to be mad at me here I'm skipping over all the interesting things the colback liebler divergences and the the helinger distances basically we didn't have the data um to do it the data exists though it just so happens that we weren't able to get it in time so we we we ran this project my uh my my uh colleague Lauren who was also going to be here uh and I downloaded the data from the optimism rpgfinal and then tried to look at what was maybe unique about these organizations and how much attention they got across each round right and so what we created is this metric uh it's just basically log odds plus one uh it makes sense given the way the data looks we don't have individual voter data and what you can see is basically what are the how much more did people get it uh once you were in the rpgfan the gcoin round right so it's rpgfinal and so when you run this and you look at the orgs you get these are the top five in most surprisingly useful the ones that showed up for gitcoin and got less compared to the proportion they got when they showed up to RPF um I forget did you have any thoughts on these that you wanted to offer or is that a or no on that yeah I won't comment on that's a no on that no problem okay understandable that I believe that was that was Scott's Department these organizations look pretty good to to me at first pass it feels like an interesting validation of the mechanism but it's imperfect and experimental that said it represents a way to sort of connect two of the most interesting Grant projects we have in our space right we have gitcoin for upfront and we have retrop pgf for what you might call sort of expost and this is an interesting way to bridge between them and maybe make um at least the rpgfan journey it would look like you show up you apply for a gcoin round or some upfront grants if you don't get what you thought you wanted you become a retr profit organization and you seek some other funding right and then you apply for a retro pgf round maybe bonused in the way I just discussed maybe not and then that can become the sort of Grants life cycle and just to sort of like reiterate what what you mentioned well Justine what it does when you commit to being a retrofit organization is it means you're committing to not take regular profits and as a result a voter could for instance say okay well you're not a VCB company right you knew you were going to be making a public good you're not just a failed company with your handout and so that commitment might enable more voters to take you seriously more voters to look at you and reduce some of that cognitive load so I think unless you have do you have any uh thing to add to that uh no just that this need for a bootstrapping mechanism while the market for retr pgf develops is actually mentioned in vitalik's first post about retr pgf in the first round he talks about um projects launching their own tokens and then people could um invest in those tokens with the expectation that that project would later receive retr pgf you can facilitate a similar mechanism through grants funding or through Venture funding um as well great all right well do we have any questions feeling good okay oh oh we have some there was a graph oh I would love to is it this one okay I I got you okay cool yeah so so the ideas are right we have on the y- AIS maybe we'll just say like votes or numbers of people right and on the and on the x-axis we have perceived utility so just think of people voting on the utility of a particular project right and um if you the orange Pro is one where you have people vote and you can see that the mass is really on toward toward the Y AIS so really on the like low perceived utility right nobody gets it is basically the idea so this is the getcoin phase the getcoin phase or you know I mean it can be anything but uh if you showed up and nobody got it and then you became a blue organization which is under the blue curve you can see that there's this Mass tire out in the perceived utility out there on the right um that would look like surprising useful right because you ask people before you build it in this orange phase um is this useful everybody says no you build it now we're in the blue phase people get it they say yes and so what we're trying to capture with this measure is some notion of surprise right this this this retroness of the public good if that makes sense does that does that clarify at all okay cool yes yeah what happens a lot with proactive grounds is people overestimate the impact the project is going to have or whatever they're going to build and with retro pgf people are underestimating the impact that that project um or that project couldn't get resources upfront because people underestimate it and then after the fact they can you can correct for that imbalance through retro pgf thanks it's a it's a good question so uh the question is asking about the the shadow area between the two if you were going to use one of the advanced metrics that I sort of like crossed out um if if for instance you had fine grain data about what each voter was allocating you could use something a little more fancy and measure theoretic um called like called helinger distance and that's measuring something about the overlap between the distributions the way the way they differ in these particular areas it turns out that what we wind up using log odds does not do that but conceptually you're on to something the idea being that like there's something about the way these things overlap and the distance between them that's going to give you the interesting measure of surprise right sure you're saying uh say one more time if you would so the question is can this make Capital allocation more efficient right um before and after I mean it's it's an interesting question I guess uh do you have a thought on it by the way that's the that's like the core concept right is that it's easier to evaluate what has been useful than what might be useful in the future uh so that's kind of yeah that's one of the core ideas behind the mechanism being retroactive yeah but I I would say to to build on that what you're getting when you become a retrofit organization is you're credibly committing to a to a structure which is not going to be for-profit and we saw in you know with the recent open AI stuff that these commitments to organizational form deciding you're going to be a nonprofit deciding on your mission can be extremely binding and hard to change right and so the idea that you are credibly committing upfront could give people a bright line to decide on what they're going to invest in and what they're not so in that sense I think it could make it could make it much more efficient in that it just reduces the sort of like cognitive load or the amount of things you have to look at if you want to specialize in one particular thing for sure it it can also create basically a business model for public goods that otherwise wouldn't um have been investable or wouldn't have been created right because if um retroactive public goods funding is an effective allocation mechanism then if you create a public good that has a lot of value you should um you have a chance to receive retr pgf in the in the future and then you can maybe get upfront resources um with the understanding that at the end if you've created value you will be rewarded for it great one question back there is what results Oracle yeah oh sure yeah yes yeah so yeah in the original post um Vel references something called the results Oracle in optimism that's essentially the citizens house and the question is how accurate is are the governance participants at allocating um the rewards retroactively it's early and it's hard to measure um because you yeah when you get into this conversation there's like AC how do you define accurate and what do you compare against and it's something that the um the citizens the governance participants are going to have to do a lot of work on is defining the type of impact that should be rewarded and then how you measure that impact which metrics and then once you've nailed those two things down what is the distribution um of rewards look like based on those metrics so these are things we need to work on in the next year it's why we do experimental rounds right uh we have to build this up over time in the meantime we need the bootstrapping mechanism while the results Oracle gets more accurate I would say just to plug the plug the mechanism from my own perspective I think it does make things slightly better in that like one of the one of the failure modes of the results Oracle we have right like at scale is that people could just be funding things that were useful X ant right uh right that that's not the only failure motor that's not the only difficulty but that's one of them right and that that means you're not funding retr pgf and so in so far as you have some credible difference uh that can make it a little better but does not solve all the uh you know oracle problems that we uh famously have to face cool uh anything else oh hey I mean I I think it could be cool like I think retro retrop pgf is a big important idea it identifies a real class of things and so the idea that people should take it seriously and that the experiments we do have a lot of relevance I say absolutely so generally yeah I mean I think we're proving out very interesting things that apply to real problems uh you know I'm far away from having people's ear to like get that stuff done but actually around here it seems like that's been done a little bit so hopeful there um you have any thoughts on that one yeah I think for now optimism were focused on refining the mechanism in web 3 but yeah I mean that's a a great outcome if real world analoges can can learn from the experiments that we're running that'd be great well thank you all for staying out and coming appreciate [Applause] it