Crowdfunding Forks

Proposing a New Type of Crowdfunding

The Background Story

Over the past year, Christopher Heymann and I have been discussing how to spread the economic benefits of the new internet to sub-Saharan Africa. Blockchain as an industry first grew precisely where venture capital networks were weak. Add to that the inherently decentralized nature of our work, and the power of our industry’s economic geography starts to feel like a sleeping giant.

Whether that matters or not will be determined by what early movers in the industry actually do, not what they hope will happen.

Christopher emphasized that a blockchain school located in sub-Saharan Africa was vital. Developer talent is a great source of scarcity in blockchain right now, with the going rate for a Solidity developer in the Valley being $200/hr.

The first step for getting a great school off the ground would be finding excellent local partners. Adebayo Dawodu, Fabian Volgesteller, and I were having a casual dinner a few months ago. Adebayo has run a dev studio in Lagos, Nigeria for some time. Fabian is the creator of the ERC-20 standard.

Midway through the dinner, the conversation turned to early 90s coding nostalgia. Now, I have written more than my fair share of code. But I didn’t start as a child, and nothing like Fabian and Adebayo. As they went down that rabbit hole, it occurred to me that Adebayo would be the perfect partner for the blockchain school.

Adebayo was excited about building a blockchain school alongside his existing dev studio. With the perfect partner in place, creating the course material and designing the crowdfunding campaign were the next steps. And that leads us to where we are now.

The Problem

We are well-positioned for two powerful reasons: Demand for blockchain developers is at an all-time high; and many of the best developers in the community are exceptionally generous with their time and talents. So, the question becomes: How do we channel these two ingredients into a crowdfunding campaign that creates not a tiny, feel-good program, but an institution that makes an impact on Nigeria’s economic geography?

RootProject’s slogan is “Political Economy Applied to the Blockchain.” One focus of political economy is the construction of incentive structures that channel people’s material self-interest into socially beneficial outcomes. Hope and goodwill are not our main building blocks — new, sustainable economic systems are.

The most important source of scarcity for many blockchains — and projects building on those blockchains — is not one of funding, but of developer talent focused on their ecosystem. So, it seems likely we could convince one of these blockchains to back our new dev school by offering to tailor the course material to their language or ecosystem.

Ideally, however, developers would have choices in courses dictated by the intellectual substance of blockchain as a topic, not by funding constraints. If EOS worked best for what interested one student, she should be able to follow that course. If Ethereum worked best for another, then the student should dive deeper into Solidity instead of studying secondary blockchains.

So, how do we design a crowdfunding campaign that is powered in part by the material interests of powerful blockchain firms, but that does not distort course material? We’re calling the answer crowdfunding forks, and it is a key part of a more decentralized, more crypto-powered version of the traditional crowdfunding model that RootProject has promised to put forth.

Crowdfunding Forks

If a group is interested in some particular part of a program, there likely is some donation threshold at which it would make sense that for the central project implementors to tailor program implementation to fit donor concern. Looking at the economics of Adebayo’s studio, for instance, if a blockchain firm donated roughly $25,000, we would be willing to reserve a certain number of slots in the blockchain school for students that elect to take a course on that blockchain.

In essence, we are forking the variable part of program implementation; in our example, course curricula. That fork requires agreement between the central project implementors and the donors that would like to see a new node — though one could imagine a more decentralized alternative where certain implementation alternatives are structured and automated.

That fork could continue down to a new child node. For instance, if Consensys met the minimal donation threshold for a more advanced smart contract development course based in Solidity, and then Gnosis wanted modules pertaining to its platform, it could meet a similar or different donation threshold.

Taken by themselves, crowdfunding forks could be caricatured as a more complex version of rewards-based crowdfunding. That is not necessarily a bad thing, as rewards-based crowdfunding has proven to be a powerful fundraising innovation.

Crowdfunding forks are just one part of a larger vision — one that decentralizes not just funding — like crowdfunding already has — but program implementation.

Token Curated Registries and Program Implementation

Another innovation involves not fundraising, but program implementation. For example, donors can be given a small amount of ROOTS tokens proportional to the amount they donate to a campaign, deposited in a special wallet. In the example of the blockchain dev school, if someone donated one percent of a campaign’s budget, their tokens would give them one percent of the voting rights that can govern the program in the real world. For instance, vetting grant applications among developers for the dev school.

Tokens with voting rights could be mixed with past students or program administrators over the years, to increase the knowledge base of those voting.

Summing Up

Taken together, these innovations and applications of preexisting crypto design add up to a recipe for decentralizing crowdfunding and program governance. In the real world, the design of these systems will be difficult. We will have to be careful, experimenting, iterating and testing new program governance mechanisms along the way.

The result of successfully learning, however, is a recipe for a new form of decentralized real-world governance, through the whole life cycle of an organized project, from project inception, to funding — which is where crowdfunding currently stops — all the way through to program implementation. By decentralizing the latter, the material interests of funders can be more closely aligned, creating more powerful fundraising for causes that otherwise would receive only small donations.

The end goal is robustly funded real-world programs that are radically decentralized and designed in a way that replicates the efficiency of heirarchical organizations (corporations) without the heirarchy.