Public Goods Funding on EOS: Fostering Decentralized Growth in Web3
Coordinating resources and distributing funding is one of the biggest hurdles limiting growth in Web3. New individuals enter the space everyday, eager to contribute their skills and there’s certainly no shortage of work that needs to be completed. However, the decentralized nature of the industry makes it difficult to efficiently mobilize funding to where it’s needed the most.
Block rewards are an effective way to fund network validation, but other work like dApp development and education often goes underfunded. For many years the EOS ecosystem was faced with this dilemma. Innovation was stagnant and ecosystem contributors worked largely on a volunteer basis, without any effective models for cooperation. That is, until the EOS Network Foundation was founded and began working on a solution to these coordination failures.
The EOS Network Foundation’s mission is to enable developers, businesses and individuals to build on EOS. Acting as a centralized entity, the ENF is able to move quickly and distribute capital to foster the growth of a decentralized ecosystem. A key part of this mission is the funding of public goods: ecosystem resources that benefit everyone but lack a sufficient business model to incentive their development.
If you’re an individual, small team or company looking for funding to contribute to the EOS ecosystem, then this is the perfect place to start.
In this article, we’ll go over what a public good is exactly and why you should care. Then we’ll talk about some of the avenues that are available to fund this type of work. If you’re short on time, jump to the bottom of this article for the TL;DR on where to go to begin your journey building for the public good on EOS.
Public Goods and Their Role in Web3
Public goods have always played an integral role in our physical environments, but they’ve only recently begun to be acknowledged in online communities. You may have heard the term “public good” thrown around but have no idea what that actually means or why they’re even needed. In this next section we’ll be covering all of that, so you can get started building public goods on EOS.
Tragedy of the Commons
There are many things that we can all agree are needed for EOS to succeed, but nevertheless they remained underfunded until last year, with little to no work being completed. This is largely due to the fact that the income generated by such solutions are very unlikely to cover the costs of creating them in the first place. Examples include improvements to UX/UI, resource management, developer tooling, marketing, and educational materials.
Even though all of these initiatives have a valuable impact on our community, many lack a value capture mechanism, meaning that users are not incentivized to maintain them. This is a common economic problem known as the Tragedy of the Commons, a dilemma that occurs when individuals have reason to consume a public resource for their own gain and at the expense of everyone else.
With no funding mechanism in place to sustain or regulate the resource, it can ultimately deplete overtime. To the average user, overcoming this hurdle may seem like a lost cause, but there are solutions presented in traditional economies that we can build upon to foster sustained growth in these areas.
Public Goods vs Private Goods
Private goods are those things that need to be purchased in order to be consumed. This limits how many people can use them and creates an inherent funding mechanism that allows the production of the good to be sustained. In the traditional economies, examples of private goods include food, clothes, cars and other consumer goods.
Due to the limiting nature and ability to generate a profit, private goods are not susceptible to the tragedy of commons described above. However, on the other side of the spectrum are public goods, which often succumb to this dilemma.
Public goods are items that are non-rivalrous and non-excludable. Non-rivalrous means that one person’s use of the good doesn’t substantially affect or diminish the supply. Non-excludable means that you can’t limit anyone from accessing the resource, it’s open to anyone to consume.
Examples of public goods in the physical world include parks, public infrastructure, clean air and other similar public resources. In Web3 economies, public goods might include open source protocols, APIs, developer tooling, educational materials and more.
The Need for Public Goods Funding Mechanisms
Now that you know what a public good is and understand the tragedy of the commons which limits growth, you can start to see the problems that arise when it comes to effectively developing our online ecosystems. When you pair this with the decentralized nature of Web3, it gets even more difficult to coordinate meaningful development of the tools that benefit all of us.
However, there is a way to overcome this hurdle by fostering protocols with a mission to fund public goods in a sustainable way. Gitcoin is an example of a powerful public goods funding mechanism in the Ethereum ecosystem. It has distributed over $71M in funding to projects building public goods for Solidity users.
For a long time, the EOS network lacked a similar funding vehicle to support ecosystem development, but that all changed in 2021 with the launch of the EOS Network Foundation and it’s initial funding pillars.
ENF’s Role in Supporting Public Goods on EOS
The EOS Network Foundation is a force for positive global change, charting a coordinated future for the EOS Network through decentralization and community. In order to fulfill this mission, the ENF is receives funding from the EOS network that can be redistributed in a calculated manner. This fosters decentralized growth and a diverse community of builders, with the efficiency offered by a centralized entity mobilizing resources.
When it comes to public goods, the ENF regularly distributes capital to platforms funding this type of work. If you’re building on the EOS Network, you may be eligible for funding from these sources, provided that your work is considered a public good. In the next section we’ll explore two of these platforms and explain how you can receive funding for your work on EOS.
Pomelo
Pomelo is an open-source platform that is becoming a self-funded, community-driven portal designed to fund EOS-based projects using a quadratic funding mechanism. Quadratic Funding is considered by many to be the mathematically optimal way to democratically fund public goods. It ties together several basic principles to achieve this outcome.
First, a matching pool is established, through initiatives such as NFT sales and matching partners like the EOS Network Foundation. Those building public goods can submit grant requests to receive funding from this pool, during quarterly funding seasons. Even with this allocation of funds, the problem persists as to how a community can decide which projects receive funding and how much. This is where the quadratic funding formula comes into play.
After the matching pool has been established, a crowdfunding round is opened up, allowing community members to donate some of their own funds to their favorite grants. This helps influence how the matching pool is divided, without a centralized entity deciding on the distribution.
What’s unique about quadratic funding is that it measures how many individual donors contributed to a grant and weighs that higher than the total amount of money a grant raises. As an example, a grant that receives $1000 from ten different donors would receive a much larger portion of the matching pool than one which receives $2000 from a single donor.
This is important because it incentivizes community members to support important projects, regardless of how much they can donate. It also mitigates dynamics where those with the largest amount of capital have the most control over how resources are utilized.
With the magic of quadratic funding, project supporters can have a meaningful impact even with donations as small as $1. Better yet, they can watch as their donations are magnified to be worth much more once the matching pool is distributed. If you’re still confused, head over to WTFisQF.com, a site dedicated to explaining this concept with tools that demonstrate the process in action.
Pomelo has played an integral role in encouraging decentralized development of the EOS ecosystem. The platform has distributed over $2M in the first 3 Seasons alone. Funding seasons are run every quarter, so if you’ve got a project that you’re building and you think it would qualify for funding be sure to check them out and get involved in the next season!
Pomelo Season 4
Pomelo Season 4 is in full swing with grant applications open since November 14th and contributions to approved grants can be made until December 7th! If you’d like to get involved, check out this recent article from the Pomelo team to learn how to craft your grant application. Then head over to the Pomelo website and get started!
ENF Grant Framework
The ENF’s Grant Framework offers a more traditional direct approach to grant funding with clear guidelines, an application process, a multi-stage approval process, and a milestone based pay-out system. The purpose of the grants is to enable developers, businesses and individuals to build on EOS.
Grants are available to both “for profit” and “public good” entities, with the goal that all grants will benefit the EOS ecosystem. However, preference will be given to those with strong technical aspects that clearly add to the public good.
Through the ENF grant framework, individuals, small teams, and companies are all able to receive funding for their work in the ecosystem. Grant categories include but are not limited to Core Antelope Chain / Sub-modules, Development Tools, UI Development, Backend Development, and Cryptography.
Small grants of up to $10,000 have minimal prerequisites, but the requirements become more involved with larger amounts. Most notably, for any amount over $10,000, it’s necessary to have participated in a prior season of Pomelo. Even with smaller requests, participating in Pomelo and having prior work to show can greatly increase your chances of receiving funding. So, if you’re new to the ecosystem, it’s recommended to begin funding your work through Pomelo, then approach the ENF Grant Framework for further funding.
Public Goods on EOS
Both of these funding mechanisms have played an important role in fostering the development of impactful public goods on EOS. If you’re thinking of getting started building public goods on EOS, you may find yourself looking for clarity on what qualifies as a public good in the Web3 realm.
As previously noted, the clearest example of a public good, would be work where the deliverables are made available for users to access and other projects to modify. This includes open source code and media that’s licensed in the creative commons. With that said, there are other ways to find the public good in your project even if it doesn’t fall under these guidelines.
Here are some tips to keep in mind, a valid public good…
- Is values-based: it supports values your community cares about.
- Has longevity: it’s achievable and maintainable.
- Creates positive externalities: it benefits a public beyond an immediate set of users.
Find more tips on how to build for the public good in this guide from the Pomelo team. The ecosystem has already seen a slew of innovative projects contributing in this manner.
Conclusion: Fund & Build Public Goods on EOS
The EOS Network Foundation recently turned one year old and, not surprisingly, there is a stark difference in where the EOS ecosystem is currently and where it was a year ago.
This is partially due to the ENF’s role as a vehicle for distributing resources to public goods initiatives like Pomelo and the ENF’s Grant Framework. However, even more credit goes to our dedicated community of builders and innovators, actively contributing to the growth of the network and building for the future of Web3.
The excitement surrounding this exponential growth is palpable and it all started with users and enthusiasts like you. With all that’s been achieved in one year alone, one can only imagine where our network will be in another year, as the positive externalities of open and transparent innovation compound.
With Pomelo Season 4 ramping up, there’s no better time to be a contributor to the EOS ecosystem. Platforms like Pomelo and the EOS Grant Framework offer accessible funding to those building for the public good. The industry is still so young and there’s lots to be done.
What will you BUIDL?
EOS Network
The EOS Network is a 3rd generation blockchain platform powered by the EOS VM, a low-latency, highly performant, and extensible WebAssembly engine for deterministic execution of near feeless transactions; purpose-built for enabling optimal Web3 user and developer experiences. EOS is the flagship blockchain and financial center of the Antelope framework, serving as the driving force behind multi-chain collaboration and public goods funding for tools and infrastructure through the EOS Network Foundation.
EOS Network Foundation
The EOS Network Foundation (ENF) was forged through a vision for a prosperous and decentralized future. Through our key stakeholder engagement, community programs, ecosystem funding, and support of an open technology ecosystem, the ENF is transforming Web3. Founded in 2021, the ENF is the hub for EOS Network, a leading open source platform with a suite of stable frameworks, tools, and libraries for blockchain deployments. Together, we are bringing innovations that our community builds and are committed to a stronger future for all.
