Web3 is about to disrupt scientific funding

Science. For some, it catalyzes memories of middle school science fairs and for others, it’s their day-to-day career. In the Web3 community, scientists and non-scientists alike are forming a movement called DeSci (decentralized science), which is a global effort aimed at transforming how we fund, conduct, and publish scientific research.

Scientific funding — a process that few people are currently concerned with as a regular matter — is poised for disruption as Web3 technologies enable dynamic, community-driven actions, democratize access to funding, and support shared ownership of tokenized assets.

The problem with scientific funding today 🧐

As it stands, a vast majority of scientific funding comes from two sources: government grants and corporate R&D budgets. There are some major challenges associated with these two sources.

Government Grants: Grants are in high demand and dwindling year over year. In FY2020, extramural research projects (not run by federal scientists) saw a 20.6% success rate receiving funding from the National Institutes of Health. While overall available funding is increasing, the market for procuring it is increasingly competitive as more scientific ventures crowd the market.

This phenomenon can have deleterious effects on scientific innovation when research campaigns with potential cannot secure funds to proceed. Citizen scientists, for example, may become isolated under the centralized funding process, which can hinder scientific development. This centralization of influence marginalizes underrepresented groups as individual voices go unheard.

The divide between tax-paying citizens and scientific innovation is not new: while tax money funds a tremendous amount of research, citizens have little to no say over how the funds are earmarked. Moreover, the current system locks published research behind paywalls, further distancing scientific results from the public eye. A more transparent system is needed to ensure that the scientific process is serving the will of the community.

Corporate R&D Budgets: In 2019, the US commercial sector accounted for about $500B in R&D expenditures (74.9% of total US R&D spending). Footing the bill for research while balancing shareholder interests requires a high likelihood of return on investment (ROI).

An emphasis on ROI is a timeless strategy; however, under this model, science is stifled. Scientific ventures that may have promise — for example, to cure a rare disease — may not be greenlit as the market size is too small to be profitable. In other words, corporate purses for scientific funding are limited to a select group of scientists with distinct agendas that may not be aligned with societal ambitions. Thus, like governmental sources of funding, the commercial sector can stifle scientific innovation due to a centralized group of actors deciding on how funds will be allocated.

How Web3 will fix this problem 🛠️

The underlying technology of Web3 and its inherent social elements of user-owned data and transparency will upend how we think about funding scientific research. Here are three ways that Web3 could transform how we fund (and invest in) scientific research:

1) Science, Powered by the Community
With community-built tools and open access to platforms, scientists and non-scientists can unify in the spirit of collaboratively advancing their fields of interest. Investors, empowered by broad access to wallets and tokens, can pool together funds to support scientific research of their choice. Smart contracts will enable self-executing protocols to automate how we make decisions as a community. Well-designed tokenomics will incentivize stakeholders to behave in certain ways that benefit the community. For example, a scientist may only regain access to their staked tokens if they proceed with their research in accordance with the process voted on or co-designed by the community. Web3 creates an opportunity to redesign the process from the ground up into a more sustainable and incentive-aligned model for all constituents.

2) The (Continued) Rise of the Citizen Scientist
As community efforts expand, so does the opportunity for the Citizen Scientist to access the ever-growing Web3 community for support. Citizen science is a trend in which grassroots efforts to conduct scientific discovery are driven by everyday people. With Web3 tools, citizen scientists can engage with vibrant communities of fellow scientists and non-scientists who have unique desires or goals, and with appropriate governance, these parties can collaborate to generate shared value. Novel ways of voting, like quadratic voting, will spur new ways of garnering community support for a more diverse set of mandates related to a broad spectrum of science.

3) Shared Commercialization Models
The advent of NFTs (non-fungible tokens) and NTTs (non-transferable tokens) has paved the way for shared ownership of intellectual property and other scientific research assets, such as datasets, algorithms, or published papers. While multiple outlets for crowdsourcing science exist today, they lack the benefits of Web3 that allow users to enter the ecosystem with a pseudo-anonymous identity and programmable wallet with free rein to fund science, vote on which projects get greenlit, and receive royalty rewards as intellectual property from those projects are published and sold on open data marketplaces.

DeSci Researcher, meet DeSci Investor 🤝

This is where we come in at Impact Finance. Our mission is to strengthen the role that communities and individuals play in the development of new technologies.

DeSci Investors
At Impact Finance, we believe in a world where you no longer need to invest in proxies to support the advancement of scientific innovation. Today, if you desire to enhance car batteries, you would invest in $TSLA or $LCID, but your money is not invested with efficiency: a disproportionate percentage of your funds go toward overhead. With funding, we envision a future where the average investor can commit their funds to support groundbreaking research, with the opportunity to share in the rewards of the outcomes of that research (e.g., developed technology, valuable datasets, IP royalties).

DeSci Researchers
For too long have researchers been beholden to limited sources of funding and the era of community-driven funding is emerging. We imagine a world where passionate researchers committed to their domain meet with communities of users who share those passions to support new scientific ventures. With shared goals, scientists and investors can work together to achieve their objectives: with scientists needing funding and investors needing progress. This harmonious model brings together these constituencies so that we as a society generate increased scientific innovation.

Building toward this future, together 🚧

Impact Finance is working toward building a gateway to science so that DeSci Investors and Researchers can come together to generate scientific innovation. We understand that open collaboration with our fellow DeSci and Web3 projects is paramount toward building it. We welcome any feedback or thoughts as we collaborate in this space together. For more information, feel free to check out our website and litepaper.

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