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Why Crypto’s Most Altruistic Project Is Going (Kinda) Corporate

Why Crypto’s Most Altruistic Project Is Going (Kinda) Corporate

Why Crypto’s Most Altruistic Project Is Going (Kinda) Corporate

Gitcoin, which rewards developers for working on open-source projects, is embracing money-making initiatives to increase its capacity for good.

Gitcoin, which rewards developers for working on open-source projects, is embracing money-making initiatives to increase its capacity for good.

Gitcoin, which rewards developers for working on open-source projects, is embracing money-making initiatives to increase its capacity for good.

AccessTimeIconFeb 5, 2024, 9:37 PM
Updated Mar 8, 2024, 9:03 PM

Gitcoin founder Kevin Owocki has been a long-time advocate for public goods funding in crypto.

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Public goods funding and profitability are not necessarily in conflict. This was the lesson that Gitcoin, the decentralized, Ethereum-based crowdfunding project, is putting into practice as the organization overhauls its operating structure and announces a significant change in focus. The community-led project has opted to sunset its layer 2, the Public Goods Network, and is shifting its attention to helping support technology development through grants.

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“The narrative around Gitcoin has largely been around supporting public goods and funding projects with high impact,” Kyle Weiss, executive director of Gitcoin, told CoinDesk in an interview. “Our mission to fund public goods still feels like the soul of the DAO,” he said, but the method and strategy it will take is being substantially reworked. In a word, Gitcoin is becoming more capitalistic.

In addition to merging a few teams under a new business unit and granting more decision-making power to Meg Lister, who was promoted to lead the reformed Grants Labs, the project is no longer shying away from money-making opportunities, including by investing in for-profit projects and allocating its own capital into various DeFi yield strategies. “You need capital to be able to fund public goods,” Weiss said.

“I do think that building-in profitability is important if only for sustainability,” Azeem Khan, the former head of impact at Gitcoin, said in a direct message. “That was one of the things I really pushed on and used to joke that I was the most capitalist person at Gitcoin. Finding ways for creating sustainability so that good things can continue to be done is something I think is extremely important.”

Partially motivating the revamp in operations was learning that a fully-remote and geographically-split workforce had become unwieldy to manage. But Gitcoin itself was also becoming unfocused, dipping its toes into a number of areas that, in hindsight, did not add to its core mission. Either they were ancillary or because they never achieved “product market fit,” like its L2, which was designed to allocate a portion of its transaction fees to funding initiatives but never achieved the level of adoption needed to justify the expense.

Likewise, the DAO decision-making process and work streams were unproductive, Weiss said. (Khan, for one, described Gitcoin very much as a startup.) To balance that, somewhat contrary to ideals of community-led decision-making, Lister is being granted a degree of autonomy to make decisions. “The vast majority of our decisions still go through token holders,” he added, but there is a new emphasis being placed on efficiency and consistency.

“We want to enable the technology team to just continue to deliver value and execute,” Weiss said. “Developing software requires high context teams — you need an organization to rally around.”

As manager, Lister said she plans to focus more directly with Web3 grant programs, the big ecosystem funds founded by token projects that distribute funding to startups willing to build on upstart chains like Optimism, Polygon and Base. “These grant programs have grown enormously over the last few years and play a key role in the development of the Ethereum ecosystem … [but] they’re still in early stages of figuring out best practices and calculating impact,” Lister said via email.

In other words, Gitcoin is looking to use its expertise in grant-giving to help other funds better distribute capital. “Running grants programs can be really tough for teams — there’s a pretty steep learning curve,” Weiss said. But Gitcoin is still aiming to remain “credible neutrality,” he added, not favoring any particular chain over another. “They're evolving away from being the place where you get grants and instead are the underlying infrastructure for all the grants being distributed in this ecosystem,” Khan said.

Ultimately, the “big, hairy, audacious goal” Gitcoin is setting for itself is to distribute over $1 billion in funding. Weiss said there isn’t a solid timeline for this in play, and that the team is still “figuring out what’s possible.” To date, Gitcoin Grants has donated a little over $56 million. The goal isn’t just to spend money to spend money, and that Gitcoin is still laser focused on directing funds towards projects that meaningfully move the needle in crypto.

But measuring product-market fit in crypto is a difficult thing to do. To some extent, ironically, Gitcoin is one of the few projects that could be said to have a clear purpose and brand-recognition. Not only was it the first initiative to build out a quadratic funding mechanism, based around a novel economic concept put forward by Vitalik Buterin and two Harvard professors, but it was also the first project to take crypto donations mainstream, forming relationships with everyone from the American Cancer Society to Shell (for better or worse).

All of this makes news of Gitcoin’s revamp all the more interesting. Paul Dylan-Ennis, a professor at Dublin College School of Business, welcomed these attempts at “corporatizing” Gitcoin, “tightening the ship [and] placing experienced folk in the important positions.”

“DAO life is messy, it's a thing that we're all still figuring out,” Weiss said. “I feel very fortunate that Gitcoin has been doing this for longer than most, but it doesn't mean that we've got it figured out or that we're doing it right either. We hope that this next and current incarnation will solve some of the challenges we were facing – it certainly feels like progress,” Weiss said.

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Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.