FROM CONCEPT TO REALITY : EXPLORING PUBLIC GOODS FUNDING ON NEAR
The NEAR Protocol ecosystem is one that values public goods funding, which not only includes digital infrastructure but also the social layer. However, compared to other ecosystems, public goods funding is not yet widely discussed on NEAR. In this blog post, we explore what public goods funding is, why it is important, and how NEAR can benefit from it
What are Public Goods in Web3?
Blockchains themselves are classed as public goods, since anyone can create a Web3 wallet and start accessing a network. The client software used to connect and interact with blockchains, as well as the dApps built on top of them, can also be considered public goods that serve the community with accessible services (with some nuance).
Illia Polosukhin, for example, highlights Uniswap as a public good on Ethereum that serves the community with an accessible swapping avenue.
But public goods are not just digital infrastructure, in the world of Web3 they also include: the social layer, documentation, education, protocol research, and community building.
Public Goods on NEAR
Developing and maintaining public goods is critical for an ecosystem’s growth and longevity. For a long time, the NEAR Foundation has been the main source of support for developers who maintain NEAR Protocol, create clients, or write documentation.
The recent launch of the NEAR Digital Collective has seen the creation of a new transparent framework to decentralise funding throughout the NEAR ecosystem. For example, builders in the NEAR ecosystem can now directly request funding from NEAR Developer Governance (NDG), among additional entities, if their project meets the right criteria.
Note: NEAR protocol has a neat feature for developers writing smart contracts where 30% of the gas accrues to the contract, and the rest is burned. That means if you create a very popular smart contract, you’ll earn from it for life.
Without this sort of support, it would be challenging to maintain infrastructure and grow the NEAR ecosystem in a sustained manner.
Looking at the Bigger Picture
Real-life public goods are mostly funded through taxes imposed by the government, and in some cases, aren’t funded at all when looking at open-source code.
Public goods don’t have an obvious exit or business model. That makes them unattractive to profit-oriented investors.
The good news here is that Web3 ecosystems have been experimenting with this for a while. Let’s have a look at a few interesting approaches:
I — Moloch Framework
One framework that has been repeatedly used by investment DAOs is the Moloch framework. Moloch is a set of smart contracts that facilitate human coordination. The first one to use the framework was Moloch DAO which is focused on funding public goods in the Ethereum ecosystem. Everyone votes on what projects to invest in. And if a vote doesn’t go to your liking, you can always ragequit (like the Panda below) and withdraw your funds.
While these frameworks are a great step, they’re still vulnerable to allocating more power to those with deep pockets.
II — Quadratic funding
Quadratic funding is quickly explained; it uses an algorithm to optimise funding amounts going to public goods in a way where it is of more importance how many people contribute than the amount they donate.
Gitcoin, a platform paying to maintain open-source projects, has been pushing this approach as the “mathematically optimal way to fund public goods in democratic communities” as it pushes power to the edges. On Gitcoin, when you apply for a grant, it’s better to have 100 people pledge just $1 each than having 1 person allocate $100 straight. Depending on the number of backers, funds are then matched through sponsors.
Meanwhile on NEAR, the EVM layer Aurora has been a generous sponsor to Gitcoin’s 15th grants round, matching participants’ funds with $100,000 to foster projects building public goods. Funded projects included Crypto Do App, a multichain no-code builder, Incrypted, a channel focused on providing web3 education, among others.
III — Retroactive public goods funding
Overall, it’s easier to evaluate the contribution of something after it has been built. That’s what RPGF is all about. It’s a way to create an exit for public goods and eventually make them as profitable to build as VC-backed ventures.
The Ethereum Layer-2 Optimism has heavily leaned into retroactive public goods funding, distributing millions of its native tokens to teams and individuals contributing to its ecosystem. It sounds pretty easy, in theory, to pay for the value created, but the reality is that we’re still in the experimental phase.
…And Into the NEAR Future
With the formation of various funding bodies within the NEAR ecosystem, it’s important to remember that the funding of public goods is essential to maintaining infrastructure and sustaining the growth of the network. As an ecosystem, we should collectively explore the potential benefits and drawbacks of some these different funding models, and consider further integrating them to support public goods.
If all clients were to suddenly started charging people for usage, it would undermine the purpose of the network. For instance, MyNEARWallet is currently in the process of being handed over to the community (update: Meteor Wallet has been announced as its official maintainer), but the question to address is: how will the maintainers be rewarded once the foundation is fully dissolved?
It’s not just about ensuring the infrastructure on NEAR remains secure and openly accessible to all. Public goods drive demand for block space and increase protocol revenue, which drives value to stakeholders and creates a thriving ecosystem—a net positive for any blockchain.
Written by @NEAR_intern
Edited by @achildhoodhero
About NEAR Protocol
NEAR is on a mission to onboard a billion users to the infinite possibilities of Web3 with the Blockchain Operating System (BOS). Leveraging its high-performance, carbon-neutral protocol, which is fast, secure, and scalable, BOS provides a common layer for browsing and discovering the Open Web.
NEAR Protocol | NEAR Discovery
About NEARWEEK
NEARWEEK is one of the first decentralised news sources within the NEAR ecosystem. Via the production of high-quality content, news, and promotional support, NEARWEEK unleashes the full potential of its media outlets to act as the social epicentre of the NEAR ecosystem.
Website | Twitter | Newsletter
