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Blog Yvo Hunink
In July 2023, our theme lead for Energy & Sustainability Yvo Hunink, visited the Funding the Commons conference in Paris. This event brings together the community around funding public goods and regenerative finance. It is funded by some well-known names in the web3 space, such as Gitcoin, Protocol Labs and Brave.
In this blogpost, the highlights of the workshops and presentations that Yvo attended are given, as he understood the complex material for a non-developer. You will find the following topics:
- Revolutionary coordination systems
- Nature-positive blockchain projects
- Launch of the Ethereum climate platform
- Tokenized carbon credits and impact certificates
- Mechanisms to support indigenous communities in conservation of nature
- A public funding platform backed by a 100K ether staking rewards pool
- Open-source Impact Funding Systems
- And more….
The event began with Protocol Labs, featuring Evan Miyazono and Matthew Frehlich, who emphasized that this community aims to build revolutionary coordination systems. They highlighted the importance of understanding that lack of coordination causes more harm than intentional wrongdoing. When that becomes clear, you realize that you are not in traffic, you are traffic. No raindrop feels responsible for the flood. The role of web3 is to provide designs and tooling for programmable currencies as part of automatable and self-enforcing incentive systems. Being one of the world leading mechanism design research organizations, Protocol Labs had several lessons to share. For example, the need for decentralization and open protocols is to help in preventing monopolies in network effects, in a similar way that antitrust laws would legally try to prevent monopolies. They support the ecosystem around Funding the Commons to help design primitives that help redirect funds to the places where problems are being solved that help reduce the human and planetary suffering.
After this Xochitl Cazador from Celo took the stage. The mission of celo is mission to build regenerative economy for everyone. They do this by putting enviromment and mobile first, with a globally diverse community and a ‘nature-positive layer 1 EVM compliant’ blockchain. Their impact is measured not in term of monetary value, but in impact indicators surrounding meeting basic needs of people and planet, such as growth of individuals, supporting communities and supporting biodiversity. One of the features of the protocol, is that a portion of the fees go to an on-chain carbon fund. Use cases active in the celo ecosystem are providing liquidity to small scale farmers in the global South to invest in seeds or farming equipment. Another successful case is the enabling of forest stewardship by local communities, by making sure they can participate in data collection and environmental conservation in the Phillipines, a job formerly done by expensive consultants that fly around the world to do that.
Next, Julian Zawistowksi from Golem Foundation was up with a big announcement on the launch of their new initiative “Octant”, a platform for funding of public goods. The platform will be backed by a total of 100k ETH in its treasury, which will be staked and expect to receive significant awards. Those coins originated from the Golem network ICO, which reserved these Ether in a foundation. Instead of distributing this back to the GLM token holders, Golem Foundation has decided to finance public goods with this which conveniently also prevents the token to be classified as a security by the SEC in the US. In their starting round, called epoch 0, they are already giving away 1-million-dollar worth of ETH. Along the way, Golem Foundation wants to experiment with new ways of community governance, such as new voting and allocation mechanisms, by allowing GLM holders to have a say in how the funds are distributed. Participants of Funding the Commons were able to get a POAP at the stand of Octant in the main hall, which gives the right to join in the epoch 0 voting. For other epochs it seems you need to lock 100 GLM to join the staking rewards pool. That would even create an extra inflow of staking rewards that potentially, or maybe ‘default’, will return to funding public goods. An opt-out agreement should be possible in Octant, for small staking rewards. In return you get bigger impact with your vote, more power, because of the combination with the 100k ETH staking rewards of Octant. That means more money to where you vote. Quadratic funding mechanisms in combination with a (recurring) matching pool might even further increase that voting power on funding the commons. But the event took an even more abstracter approach.
The talk that followed was given by Kevin Owocki, one of the founders of Gitcoin and taking the new initiative with the new Green Pill Network. His talk focused on the concept of attractors as a way of thinking to get more activity in public funding. For example, quadratic funding has opened up a new way to allocate funding in a more participatory way, but a problem is that the matching pool always needs to be topped up. Public Good Network is a new tool that can be used for scalability in transactions on blockchain (Layer 2), from which the fees are relocated to the funding of public goods, who are collaborating with Octant as well. This acts as an attractor for public good funding, to fuel that matching pool. Gitcoin’s latest work on Allo protocol (a set of allocation and distribution mechanisms for custom use) and the Grants stack (a grant program builder), and Gitcoin Passport (protecting against Sybil attacks through a form of digital identity, based on verifiable credentials and decentralized identifiers) also have these attractor characteristics. You can see all of these elements as ReGen legos, that fit together to build a whole mechanism. Green Pill is possibly another attractor, or more likely a strange attractor, most likely one that can act as a community that interacts with the people that are not web3, but who still are public good ‘maxis’. Kevin didn’t talk much about Green Pill, because on Monday (the day of writing) the green pill event in Paris would still take place. Yvo, for and on behalf of the DBC, opened an NL channel in de Green Pill Discord. Join us through this link, and let us know which public good you want funding for.
Next up, Protocol Labs again, this time with Juan Benet, starting with a more philosophical approach to web3 and later the state and the future of the Funding the Commons ecosystem. His view is that our macro systems are inadequate to solve our global issues, basically using 1700s technology. It is dangerous to update these systems, but we need systemic updates to make it through the century. Blockchains are tools for planetary coordination. Bitcoin showed that blockchains can scale to the size of nation states, when the energy use increased to the size of a small country. That means that right now it is a good moment to add primitives, such as those that Kevin mentioned in previous talk, for public good funding into the stack of web3, so that it becomes not just a corner of web3, but an integral part of the whole ecosystem. This way crypto funding could, for example, support scientific funding at large scales, which is the gole of the DeSci community, decentralized science, who had a parallel event going on.
Too make the bond with DeSci, the podium was for Primavera de Filippe, internationally known for her work on the intersection of law and blockchain. She is now focusing on using that law to help science get funded. With DEa they are building a defensive patent pool, mixed with a copyleft clause, in order to foster an ecosystem of open and decentralised science, while maintaining economic incentives for innovators and contributors. Essentially, a way promote innovation through collaboration, instead of competition. The series of images she presented showed a complex mechanism that has many feedback loops, but really guides you as a community through the patenting process. Due to a good question from the audience it also became clear that the technical configuration was not completely finished yet (Token-bonding curves). Anyway, for users of the platform, the non-commercial use of patents will be free, but commercial users will have to pay with tokens for using IP. A DAO governs a treasury, capturing some of the money flows, which will be re-invested in the ecosystem. The most interesting market is the AI market, due to its low degree of patented infrastructure, because AI companies prefer the secrecy as opposed to protection at this point.
After it was time for Omoju Miller, the Founder of Fimio, who also spent almost 5 years at Github. She has gone into the question of is are really responsible for maintaining the most important open source libraries used in AI. Shockingly little, apparently, it is only a handful of people per library. Another insight is that 90% of the enterprise software is based on these libraries. So, all our AI software maintenance is in the powerful hands of a few, with very little redundancy as a consequence, which can be explained as a coordination problem. Web3 can and should deliver the tools to solve this problem, and this was Omoju’s request to the crowd: Build this with my support! Her first suggestion is to start enforcing signed commits, to have a tracking system of where financial rewards on contributions should flow.
When PIA Mancini, CEO of Open Collective, came on stage her passion for community building was instantly observable. But she also recognized it is hard. She does believe that DAOs are a solution for governing communities in a better way, but also sees a lot of problems. Mainly balancing coordination versus decentralization and taking into account we are dealing with humans that need to interact with the institutional environment to make a living. However, we need to include especially the people who we claim we are designing for. Open Collective is built to bridge that gap, for example by connecting DAO communities to hosting organizations that can deal with things such as pay slips, proof of income and taxes. This way, already 15.000 communities have been funded 105 million dollars. Now they are transforming their platform to be community owned as well, and co-design and co-host the platform’s infrastructure open source.
The last attended session of day 1 was Christopher Szymczak from Unicef, on funding the Youth. He sees our youth as a commons in need of funding and has been building a lot of web3 tools, such a crypto donation system. However, the most recent work is working on Digital Public Goods, which are open software, data, algorithms standards and content, all bundled in an alliance. Unicef is actively stimulating the building of capacities of young people in understanding and using the open resources. Now they also have been stimulating people in their programs to help maintain and update the knowledge base. As he says: Funding the Youth = Funding the Commons.
The day started with a workshop by Angelo Kalaw of Celo and Njambi Ngoroje of Grassroots economics. Here the use case was shown on smart contract voucher systems in Kenya. Those vouchers are used to stimulate local trade and exchange of services as a sort of community backed currency. In the workshop we went through some of the exercises that they do with the local communities, such as a physical visualization of interconnections, for system awareness. Eventually, when communities start using these mechanisms, which they are actively, tracking the of the exchanges on the Celo network becomes possible. This allows for a network graph of economic and social activity in the community that can be used for impact monitoring and reporting.
The second workshop, titled ‘Random thoughts at the Edge of Cynicism on the Use of Cryptoeconomic Arguments for Common Good, by Anish Mohammed, was exactly what the title says. As a long active member of the community, Anish has seen and experimented a lot throughout the web3 stack. His main point of the talk, but certainly not the only one, seemed that price discovery and arbitrage are the most important elements for mechanism designers to focus on. If you don’t understand your incentives on that level, maybe you should not make a mechanism design, is the message. His talk is also the first one where privacy was mentioned in more terms than just a functionality of some platform, with some thoughts on the ‘cost of privacy’ in marketing services.
Back to a presentation in the auditorium. This time Ori Applebaum from NEAR Blockchain Operating System, on What Money Can't Buy: The Limits of Ecosystem Funding. Having worked with a large open-source developer community, they have a lot of lessons on how to make them thrive. They have categorized developers, given personas to them such as opportunity seeker, mercenary and those of open principles. Through ‘models’ of leadership, they have been able to support a decentralized community to create the right mix of developers and approach reward throughout that community through incentive structures that fit these personas. Funding the open-source ecosystem is a public good in the creation of tooling for other public goods, and therefore a force to design for.
Up next, Megan Lister, Product lead at Gitcoin Grants Stack. Somehow, she managed to instill a feeling of positivity in a message that basically reads: There is a lot not figured out, grantee experience is poor, there is a lack of clear processes and best practices in allocation models. In the Grant Stack, all these things should be tackled, and some standardization is happening already. Much of the talk Megan spend on explain different allocation mechanisms, with of course quadratic funding, but also direct grants, retroactive funding and more. From their perspective, depending on the maturity of your grants ecosystem, you should apply a different mix of funding mechanisms. This could help you engage the ecosystem of donors and grantees in the optimal way.
Now it was time for Matt Stephenson, Head of Cryptoeconomics at Pantera, the first US institutional asset manager focused only on blockchain technology with 3,5 billion under its wings, and which launched the first cryptocurrency fund in the US. He gave a deep dive into behavioral game theory as a web 3 treasure map, where equilibrium can be a sticky thing. Which equilibrium to prefer is a social and ethical discussion on top of your mechanism designs. New fundamental mechanisms are being explored to nudge complex systems, such as Subgame Credible Altruisms (SCAMs), which entails the ability to penalize someone who is freeriding the system, preventing the degradation of optimal equilibriums, chosen by us. An application can be in quadratic funding where you want to prevent the matching pool to be sybil attacked, taking away the stake of a malicious participant. Such a slashing mechanism with built in robustness against hostile takeover, could move the public goods game into a coordination game.
Back to the workshop space for a discussion on ethics of Public Goods Funding in the web3 space. It was clear the community is still battling with this topic, whereas the big question remaining is: who determines what is ethical? A discussion erupted on the role of Venture Capitalists preventing web3 companies in their portfolio from delivering services to people in countries like Iran. Some projects in the room had experienced this pressure and felt that legal compliance was necessary to keep on delivering more impact. Others, such as Manu Alzuru viewed this as a direct contradiction of the web3 proposal. What is good is not always legal and what is legal is not always good. However, the main question that the web3 community around public goods should get an answer to ‘what is good?’. Someone from the audience argued that this might never be settled, because of conflicting value systems. However, it might be easier to settle on ‘what is bad?’.
Time for a talk from Mallika Robinson from Guardians of the Earth looking to unleash community power for conservation of biodiversity. Her observation is that society is less and less engaged with nature, so how can we solve that? Could gaming be a pathway for that? They are building an ecosystem of tooling that can support communities to gamify the detection of species in an area by the community, handing out biotokens to incentivize people to get out in nature and helping to provide a data foundation around biodiversity conservation. They have connected to the citizen science databases such as Ebird, so that they can make use of existing communities adding data to the space, getting 200.000 participants doing almost 7 million observations already. They can calculate added health benefits by the fact that people are moving in a natural environment, adding to the impact of the initiative.
Next up was a big announcement by Steven Haft from Consensys on the launch of the Ethereum Climate platform. Recognizing that in the past 7 years, the proof-of-work protocol has created a significant climate debt, some main contributors in the community have announced to start the efforts in removing the carbon debt of the Ethereum ecosystem. The calculations are still ongoing, but the expectation is that at least 200 million metric tons of carbon dioxide need to be removed from the atmosphere to pay back that debt. Alongside Steven, Raphaël Haupt of Toucan joined the stage to show its support to this mission.
Quickly back to the workshop area, where Raphaël Haupt, CEO of Toucan joined Phil Fogel from Flow Carbon, both leading companies in the tokenization of carbon credits, on how blockchain is opening the market for new participants. Their vision was clear, let Regenerative Finance be a feature of the entire web3 ecosystem, not just a corner on its own. They see carbon credits as the primary use case for web3, since it is still a young market that can adopt web3 native infrastructure. Even further, they argue that without a functioning carbon market we might not make it as a species. Scam projects, however, are getting the most attention and give a bad reputation, as well as quality issues with methodologies. The toolbox they have is full of solutions to these problems, such as carbon bridges between registries, automated issuance of credits to pre-determined owners upon showing results, centrifuge pools for combining funding sources and more. Also, the role of standardization organizations was discussed, where both Raphaël and Phil stated that the Gold Standard was the most progressive in adopting tokenization. We surely can expect tokenized carbon credits to adopt a bigger role in the market in the future and possibly be solution to its main problems.
Now back to the auditorium for a talk from David Dao from Gainforest. They are active in the monitoring of biodiversity through community led initiatives. They have web3 infrastructure for donation impact, made an NFTree and are building much more. Recently they have been selected for the Xprize competition for the rainforest, where they using drone based environmental DNA sampling as a basis to determine biodiversity levels of areas. They also apply a decentralized social labeling protocol for indigenous communities to earn an income by assisting conservation efforts by using their local knowledge on species, with all communication running through discord, therefore reducing the barrier for participation in web3 immensely.
The final talk that was attended was by Holke Brammer from Hypercerts. This concept is taking impact certificates to the next level. As a spin-off from Protocol Labs they are looking to create open source Impact Funding Systems, a general approach to fund public goods. This standard (on top of ERC1155) could be used to help in three of Elinor Ostrom’s puzzles for the commons, namely credible commitment, mutual monitoring and supply of new institutions. They do this by unlocking things like retroactive funding, where you reward impact after it has been done, rather than up front as the more traditional direct grants normally do. Also, open evaluation of impact allows for preventing double counting in attribution from funders.
With that, Funding the Commons and Paris came to an end for Yvo. The week continued, with more events from the community, such as Celo, Green Pill and the Ethereum global community event. However, this first toe by the Dutch Blockchain Coalition in the web3 bathwater of public goods funding and regenerative finance was enough to spark a wealth of new ideas and inspiration.