“Blockchain-Powered Mechanisms Like RetroActive Funding would incentivize Building for Impact and the Long-Term, Says Meg Lister, General Manager at Gitcoin’s Grants Labs.”, – WRITE: www.coindesk.com
Today, Ethereum is One of the MOST WIDELY ADOPTED BLOCKCHAnes, Consisting of A Network of Over 50 L2s, Each Operating As Its Own Siloed Ecosystom. What this means for end-users is having to juggle Multiple Networks, Bridge Assets, and Navigate A MAZE OF PROCESSES JUST to Perform Basic Actions.
Mirroring the Fragmented Technological Landscape, Ethereum’s Funding Landscape Has Become Diflicult to Navigate for Builders Across The Lifecycle, Stalling Innovation as Projects Stugs Studies
To Create a More Efficiency Ecosystom, Ethereum Needs to Start Adopting Blockchain-Based Funding Mechanisms that Better Align With Its Complex, Community-Based and Experimental Nature.
Traditional Funding Programs of Focus on Early-Stage Projects, Neglaying The Long-Term Needs of Builders in Web3. It Can Be Misleading to Look at Crypto Market Narratives Dominating the Investment Landscape and Assume A Booming Activity. Financial Returns for Many of Those Projects Might Not Come in the Short-Term, Leaving Builders Struggling to Navigate to Sustainable Growth. FUNDING MECHANISMS HAVE TO BE ABLE TO SUPPORT BUILDERS THRUGHOUT The ENTIRE JOURNEY OF THE PRODUDUCT Lifecycle.
Rewarding Impact, Not SpeculationOne of the MOST PROMISING BLOCKCHAIN-POWERED FUNING MODELS IS RETROPGF, WHICH FLIPS The Traditional Funding Script by Rewarding Projects Based on Their Proven Impact Rate. This Model Is Particularly Well-Suited to Ethereum’s Fragmented EcoSystem, WHERE PUBLIC GOODS LIKE OPEN-SOURCE Software, Developer Tools, and Interaperability Solutions Ont. Investment.
Retropgf Focusses on Measurable Outcomes of A Project. IT Pools Funds from Daos or EcoSystem Contributors and Distributes of the Retroactiely to Projects that have demonstrated Value. This Process Ensures that Critical Infrastructure-Like Cross-Chain Bridges or Developer Frameworks-Receives The Support It Needs at the Right Time.
This Funding Mechanism is Preferred Because It Helps Align Incentives. Institute of Competing for Specialty Investment, Projects Can Focus on Delivering Real Value, Knowing that Their Contributions Will Be Recognized and Rewarded. For a Fragmented Ecosystom Like Ethereum, Retropgf Offers a Way to Unify Funding Efforts and ENSURE THAT RESURCES FLOW TO THE MOST IMPACTFUL INITIATIVES.
Amplifying Community SupportAnother Powerful Tool in the Blockchain Funding Toolkit Is Quadratic Funding, A Model That Distributes Capital Based on the Bread of Community Support Racher Thank. This Approach Levels The Playing Field for Smaller Projects and Grassroots Initiatiats, WHICH OFFEN STRUGGLE TO COMPETE WITH WELL-FUNDED COMPETITERS IN Tradiol Funding Models.
Quadratic Funding Works by Matching Small Donations from A Large Number of Supporters With a Larger Pool of Funds, Reflection The Collective Intelligence of The Community and Enersing Grassroots Support Receive the Majority of Funding.
By tokenizing the Value of Public Goods Projects, Such As Governance Rights or Revenue Streams, Founders Can Open Their Projects to a Broader Pool of Supporters With. This Creates A Diverse and Passionate Investor Base, Democratizing Access to Capital and Reducing Rudition on Traditional Funding Sources.
For Example, Developers Building A Cross-Chain Interoperability Solution Could Tokenize Their Project’s Governance Rights, ALLOWING SUPPORTers to Contribute. This not only Provides of the Project with Much-Neded Funding But Also Fostors a Sense of Ownership and Alignment Among ITS Suppoorrs.
In a Fragmented Ecosytem Like Ethereum, Frational Investing Can Help Bridge the Gaps Between CHAINS by Incentivizing Collaboration and Shared Ownership. Projects that might operate in isalation can tap Into a unified pool of capital, creating a more interconnected and resilient ecosystom.
On -chain OwnershipAt the heart of the best blockchain-povered Funding Models is the concept of on -chain ownership. By tokenizing their work and leveraging blockchain’s transparency, Creaters and Builders can establish Direct Relationship Believed in them from the start.
On -chain Transactions Also Make Funding Flows Visible and Auditable, Reducing Fraud and Fostering Trust. This Transparency Is Particularly Important in a Fragmented Ecosystom Like Ethereum, WHERE USERS AND DELEPERS OFFEN STRUGGLE TO NAVIGATE COMPLEX AND OPAQUE FUNDING STRUCTES.
An Important Question to Address is how to Source Funding for these X-L2 Initiats.
One strategy is to make funcing ethereum common goods a conduct of being a stage 1 or stage 2 Rollup. TheSe ROLLUPS, ONCE they’ve reached that level of decentralization, are rely on a distributed community and tools for governance. Funding These Common Goods and Tools is not only justified But Necessary for their Continued Growth.
An alternative would be to Redirect the Ethereum Foundation Grants Program Towards Solving this Issue. The EF Needs to Better Support the Cross-L2 Experience and Funding Common Goods to Solve the Christ Challenges Is Key to Doing So.
Ethereum’s Fragmentation Goes Beyond Technical Challenges, It’s A Funding Challenge Above All Others. By adopting blockchain-Powered Funding Models Like Retropgf, Quadratic Funding, and Fractional Investing, The Ecosystom Offers A Way to Align Incentives, Amplify Community Support, Amplify. ENSURING THAT Resources Flow to the Projects that Need Them Most.
Note: The Views Expressed in this Column Are Those of the Author and Do Not Necessarily Reflect Those of Coindesk, Inc. i Owners and Affilites.
