While blockchain offers transformative potential in revolutionaising digital ownership, money and governance, public goods funding is another area where the technology can drive positive changes and solve pain points. During Consensus 2024 - one of the world's largest gatherings of the blockchain and Web3 community - Sophie Dew gave a speech on how blockchains offer new ways of allocating capital for public goods.
According to the Giveth , a crypto fundraising platform, public goods are
commodities or services that benefit all members of a community, often offered free of charge. The cost is typically covered by government entities, meaning that public goods are often financed via taxes. Some examples are public education, roads, street lighting, parks, law enforcement and military.
In Dew's speech and an article she wrote for CoinDesk, Dew presented her arguments on the premise that the power of money can incentivise and drive world-changing innovations. Drawing analogy to how government funding for research since the 1950s has led to breakthroughs in science, and how the growth of venture capital has led to the acceleration of startups and innovations, Dew argued that crypto can similarily power a bottoms-up scalable way of distributing funding into public good areas that need it most.
Dew raised the example of GainForest, which aims to:
tackle deforestation through a transparent and automated system that distributes funding directly to locals who show proof of conservation efforts.
She also mentioned VoiceDeck, which enables
journalists to receive retroactive funding through community-driven decision making.
Dew argued that these projects show what blockchain could do for the world, though she conceded that this is so far just a tiny corner of the industry's focus.
In Dew's case, she has lead the technical development and adoption of Public Goods Network, a Layer 2 blockchain aimed at creating sustainable and durable funding for public goods through sequencer fees. Dew said some of the programs under the network were effective, such as Optimism’s RetroPGF, a mechanism that retroactively funds the most impactful projects based on the collective wisdom and decision making of the community.
Blockchain projects like Gitcoin have pioneered new ways of distributing public goods funding through mechanisms like quadratic funding, which aims to democratise the allocation of matching funds to public goods projects in the blockchain ecosystem.
According to Dew, RetroPGF as a funding mechanism is now powering a coordinated, transparent, and tamper-proof way of distributing funding into areas that need it most. She went on to stress the experimental nature of this mechanism,
this was a crazy-successful experiment. Each round was run like a scientific experiment, with hypotheses and control variables, so that they get better and better at accurately assessing and rewarding impact every time.
In addition to being a social good initiative, Dew said public goods funding mechanisms can be a competitive advantage for blockchain ecosystems to scale and capture market share.
Dew pointed out that, unlike how past funding mechanisms were designed top-down, blockchain enables bottoms-up global networks to design systems that align with their values:
Onchain ecosystems are made up of thousands of people from all around the world who are designing novel forms of economic and governance structures around their shared goals.
Dew argues blockchain has the potential to completely revolutionize how capital flows through society and how power and money is concentrated. The combination of global permissionless networks, and smart contract based governance systems, enables new ways to democratise and allocate funding for shared public goods within the Web3 ecosystem and beyond.
Written by J Huang and S Pettigrove
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