Problem Statement: Ethereum lacks enough proven, sustainable model for mid-stage projects and communities working on OSS & public goods.

The Ethereum ecosystem is flooded with builders that have reached some level of success with a niche of users, but are unable to get the funding needed to attempt to take their project to the next step. Funding solutions for them are often erroneously considered to be funding mechanism problems - and solutions are built based on “measuring impact” or intelligently allocating funds to the right people.

They completely ignore the real problem, which is capital formation.

The solution for sustainable public goods funding is to enable healthy capital formation processes so that the project’s community, partners, ecosystems, and end users can invest in its success, taking on financial risk for the chance of upside if the project succeeds.

Proven routes for early stage projects:

• Quadratic Funding / Incentivized Donation events - Gitcoin GG1-GG23, Giveth
• Hackathons - like on Buidlbox and Devpost
• Fellowship Programs - Protocol Labs Research, Ethereum Foundation fellowships can sustain founders with direct funding while they build.
• Ecosystem/Protocol Grants Programs - Ethereum Foundation, Protocol Guild, network ecosystem grants
• Community Sponsorship - contribution from a community whale (i.e donation from Vitalik)

Proven routes for late stage projects:

• Tokenization - projects with a large, passionate userbase can raise money by distributing community ownership through governance tokens. These projects can often convert this into a treasury that sustainably funds the project through yield and healthy treasury management.
• Fees - projects with huge TVL, volume, and/or userbase can sustain themselves on fees, i.e. a freemium model, or fees small enough to be negligible for users.

Proven route at all stages of growth:

• Privatizing - projects that restrict access to their product to high-paying users (and upside to select investors) can join accelerator programs, get traditional Angel / VC funding, and continue raising private capital until they either fail or reach late stage growth.

  Drawbacks:

  • For many goods and services, the so-called “public goods,” this significantly decreases the total value it can create. For Ethereum OSS, usually it means that financial interests control the direction of the good / service, and the interests of its community of users are de-prioritized except for those with the most profitable use cases.
  • For some public goods, this route isn’t an option. Take public transportation in a city: for a private org to build a train system (buy the land, build the infrastructure, operate & maintain) they’d need to charge customers way more than anyone would ever be willing to pay.