🎙 Gitcoin's Kevin Owocki on Fueling Public Goods Funding for the Ethereum Nation
Kevin Owocki is the founder of Gitcoin, which helps coordinate crowdfunding for projects and software developments on the Ethereum blockchain. With 300,000 builders and over 25,000 funders, Gitcoin has become a key pillar of the Ethereum nation, making sur...
Kevin Owocki is the founder of Gitcoin, which helps coordinate crowdfunding for projects and software developments on the Ethereum blockchain. With 300,000 builders and over 25,000 funders, Gitcoin has become a key pillar of the Ethereum nation, making sure public goods can survive and thrive. We talk about how Gitcoin was born as a reaction to the ICO era, after Kevin realized many of the business models and funding mechanisms on Ethereum were broken. Open-source software is carrying a huge weight, while its builders are not being properly compensated or incentivized, and Gitcoin wants to change that.
Kevin also dives into Gitcoin’s transition into a DAO and how the GTC token now fits into the platform. We also chat about Kevin’s recently published book titled “Green Pilled: How Crypto Can Regenerate the World.” It explores the intersection of programmable money, game theory, mechanism design, and the goal of getting from Degen Finance to Regen Finance.
Podcast audio and video was edited by Daniel Flynn and Gary Leuci. Transcript was edited by Samuel Haig.
🎙Listen to the interview in this week’s podcast episode here:
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👀 Only paid subscribers have access to the full interview transcript below.
Cami Russo: Here we are with Kevin Owocki, the founder of Gitcoin, a platform that's built to fund public goods and software development on Ethereum. Kevin, it's so great to have you here on The Defiant podcast, welcome!
Kevin Owocki: Cami, thanks so much for having me, it's great to be here.
CR: Awesome. Okay, so Gitcoin has been an amazing key part of the Ethereum ecosystem. I looked on the website and saw that… it’s funded… 300,000 developers?
KO: Yep, that's right, 300,000 developers, and I think it's been like 25,000 funders have funded them. So it's been a wild journey over the last four years.
CR: That's crazy, very cool. And I saw $50M raised in this process, so really a successful project for funding public goods. I want to get into your backstory and what led you to fund Gitcoin. But if you could just give a brief overview of the project to get people up to speed, and then we'll go to your background.
KO: Sure, sounds good. Gitcoin is a place where you can get coins if you're an open-source software developer. Basically, what we want to do is we want to create crypto-economic incentives to build and maintain open-source software. And that's because open-source software is our digital infrastructure, we want to make sure that it's well-maintained.
We have two primary products that do that. The first is Gitcoin hackathons, which is if you're building a DeFi, or NFT. or web 3 ecosystem, we can send 200 to 1,000 builders to you at a time in a virtual hackathon. And then the second is called Gitcoin Grants, and that's just basically the largest crowdfunding platform in the Ethereum ecosystem. It allows you, if you're already doing great work in open-source, to raise money from the crowd, and then that's subsidized from a matching pool that we deploy.
So those are the two mechanisms that support our mission of building and funding digital public goods like open-source software. So far, we've deployed $52M worth of funding to open-source, and [at] at gitcoin.co/results… you can see the latest numbers. That page is updated every three hours.
Transitioning from running an online dating app to funding open-source development on Ethereum
CR: Very cool! So what was your pre-crypto life, and what got you into blockchain?
KO: If it was pre-crypto, was it even life?
CR: Haha, that’s a great question!
KO: I'm just kidding. I had a life before crypto. Professionally, I was an entrepreneur in the web 2.0 ecosystem. I started an online dating website when I was 22 and was the CTO of that — that's where I learned to scale web-scale marketplaces, and I went through [the entrepreneurial investment program] Techstars in 2008 with that online dating company, [and] raised a Series A the week that Lehman Brothers collapsed — [it was] funny to be fundraising when the financial system was melting down. And yeah, grew that to 3 million users, and then when that startup imploded, I was just a VP Engineering CTO in the Techstars portfolio, just [with] like my friends' companies.
CR: Wow, that's crazy!
KO: And it was through that time that I realized how broken hiring for software engineers is. Basically, I hired 45 software engineers during my time as a CTO or VP of engineering and realized that there just wasn't an efficient way of meeting engineers that didn't involve a recruiter. And I also realized how every software project that I built, was built on top of open-source software. But I didn't realize how little of a business model there was for open-source software, even though it's our digital infrastructure.
The stat that I learned was that $400B per year in economic value is created by open-source software, and you typically see open-source software developers working at like JP Morgan, or some other private company, and doing open-source nights and weekends away from their family. And I felt like that was a fundamental injustice, wanted to solve recruiting for startups, and also wanted to solve open-source sustainability — and that was kind of the genesis of Gitcoin.
CR: Awesome! Can we just briefly get into your online dating software? What was that about, and was this pre-Tinder if it was around Lehman Brothers [crashed]?
KO: Yeah, pre-Tinder. So I was working in corporate America in 2008, and I really wanted out, like any way that I could find out.
And so I was sending out resumes on Craigslist, and I met these two guys who had gotten into Techstars — which is one of the top accelerators in the world — but their CTO had dropped out. And they happened to be running an online dating website, and I just vibed with them and I liked them. And I ended up quitting my corporate job, breaking my lease, and breaking up with my girlfriend to move across the country and go through Techstars with them, and that's how I became CTO of an online dating startup. I don't have any special affinity for online dating, although it was a fun thing to do in my twenties. I like to say ‘online dating startup in my twenties, work startup in my thirties — I’ll have to do like an insurance or retirement startup in my fifties or my sixties, just to stay with my generation’. But yeah, that's where I learned to run an online marketplace.
CR: That's so interesting. And then you saw how hard it was to recruit software developers during your time at Techstars. You were also interested in open-source development from your experience as a developer — you were using all these open-source tools and then you saw how precarious the business model was, right?
KO: Yep, exactly. Those were the two threads that led me to Gitcoin.
CR:So where in this process was it that you decided crypto is a way to do it?
KO: In web 2.0 open-source software, there isn't really a business model for open-source software development. What you'll typically see is that companies like Google or ‘FANG’ companies like Facebook or Microsoft will want to contribute back to open-source as part of their recruitment strategy. It's kind of a virtue-signaling strategy for recruiting software developers and there's a war for talent, for software developers. It's nice that they're giving back to some of the developers that are building our digital infrastructure, but when $400B per year is created in economic value by open-source software, and we're only skimming a very little bit off of the top for corporate virtue-signaling, there's a fundamental asymmetry between value created and value captured in web 2.0 open-source.
So the big sea change with crypto is that there's now $2B worth of capital in the open-source financial system, and that may change up or down between now and when the podcast airs, but now we've got open-source money that's built on open-source. So any of the money that [previously] would go to fund some back office on Wall Street that's doing I.T., is now going to open-source software. So the idea was that we've now got trillions of dollars that are trying to build these open-source ecosystems, what if we could get more of that and fund our digital infrastructure with that — have it trickle down into the people who are building our digital infrastructure.
And that's the empirical way of solving the problem. But the more a priori theoretical way, is we've now got programmable money so we can program our values into our money. And we value open-source software, so we should be able to build monetary systems that reward open-source contributors — that's the theoretical [approach]. But the empirical [approach] is [we have] $2T, if 0.1% of it goes to open-source, then that's a good thing. So that's how crypto solves the problem, I think.
CR: Around when did this idea start taking form for you?
KO: I'm a big rapid prototyper and Gitcoin was my sixth, maybe seventh blockchain project. And I was just kind of throwing spaghetti at the wall in 2017, trying to figure out how to get into the ecosystem professionally.
If you remember in 2017, crypto was kind of seen as a hobby by a lot of people. It wasn't really an accepted idea that you could make a career out of it, so trying to start a blockchain startup was just my way of trying to figure out how to enter the ecosystem full-time.
I was doing technical analysis for a little while, I built an open-source tool called Pie Trader which was an AI-driven crypto trading app that kind of blew up on Hacker News. I built this tool called Adblock to Bitcoin, which basically would take adblocked ad space and put Bitcoin donation QR codes in it. We built this tool called You've Got ETH, which allowed you to send your ERC-20 tokens to any email address before they even had a private key, and had a brief stint with a blockchain-based hedge fund. Luckily, all those things failed because I'm really happy that I landed on Gitcoin — something that aligned with my values probably more than all of those things did.
I built the MVP prototype of Gitcoin in my basement in 2017 using some of the money I made in the ETH runup in 2017 to build a brand, and I flew out to New York and pitched Joe Lubin, the founder of ConsenSys, on Gitcoin, and luckily he agreed to fund it and to bring me into the ecosystem full-time from there. We've since spun out of ConsenSys, as of 2021, but I'm super thankful to Joe Lubin for letting me get my start in the ecosystem.
Before Joe Lubin and ConsenSys, it was just me and my friends in Colorado barely using Gitcoin, and there was like a phase change where I could be full-time in the ecosystem, and now all of a sudden MetaMask, and the Ethereum Foundation, and [the development suite] Truffle could be using Gitcoin, and it was just a real phase change that was enabled by joining ConsenSys and getting those connections and that capital. And that allowed Gitcoin to start on the journey to become what it is today.
CR: Awesome. So I remember interviewing you for The Infinite Machine and you telling me about how 2017’s ICOs influenced your thinking for Gitcoin. I thought that was truly interesting because 2017 was a time when… there was a lot of cash and money flowing around… a little bit like today with NFTs. People were raising stupid amounts of money with these projects, but then in the 2018 bear market, everything crashed and all these projects were left in a very weak situation with their crypto [projects]. I remember you telling me how that inspired you to think that there should be a better business model — can you talk a little bit about that?
KO: Yeah, for sure. I’m getting flashbacks from being interviewed for The Infinite Machine by you in that Brooklyn coffee shop in 2017-2018, and I just want to say that you're such a boss, The Infinite Machine is really an inspiration. I gave it to my father-in-law who's trying to learn about Ethereum, and I was like ‘you should read The Infinite Machine’.
CR: Yay, thank you!
Abstaining from an ICO in 2017
KO: So to actually answer your question, I chose not to do an ICO with Gitcoin in 2017. The reason that we did that was that we wanted to make sure that we were building a product-market-fit, and a community that loved what we were doing. So before we even thought about tokenizing, it just felt so backward to me that these projects were launching utility tokens before they even had the network built. For a little while, I had been involved with ETH Magicians — which is just this community of people who are solving problems in the space.
And in 2018, in Prague at Devcon, we had the web 3 business models ring, which was basically like ‘hey, we know that ICOs aren't the way, how are we going to build business models that work for all of these tools?’ And I remember it was 2018 and the market was starting to go down for these tokens, and there's like ten founders sitting in a circle in Prague and their investors standing nervously behind them [that were] like ‘hey, how are we going to build a business model for these things?’ At the time, web 2.0 was very monetized with subscriptions — you pay $9.99 a month for your Netflix subscription and you get that software as a service, and the investors and the stakeholders in Netflix get predictable incomes because they know their churn-rate, they know their lifetime value of a customer. It's just like a nice business model.
So we actually pioneered EIP-1337, which is a subscription standard for the Ethereum ecosystem. And we thought like ‘oh man, we could really turn the corner from ICOs and get a whole crop of ecosystem projects that are doing subscriptions’. And we launched the subscription standard and just no one cared at all about subscriptions — maybe they're too schemorphic, too old-world of a business model.
But yeah, just systematically prototyping different business models for how projects could survive in web 3, and I think that Gitcoin's business model itself is that we run virtual hackathons, and marketing departments know how to pay for virtual hackathons. So I think that it was an interesting early exploration in how to create business models for web 3 that weren't ICOs. At that time, it was a heretical thing to not do an ICO, and I'm just so glad that we didn't and that we held on, because the idea of a governance token didn't really take off until it was like 2020 — when Yearn did their governance token and their fair launch — that governance tokens took off again. So yeah, it's funny that sometimes not doing something is the best move that you can do, and not launching an ICO was one of the best things that Gitcoin did and did or didn't do in 2017 and 2018.
CR: Awesome, I'll definitely want to talk more about the Gitcoin token in a little bit. But before we do that, I'd love to get into more detail about how Gitcoin works and the overall goal. As I understand it, when it started as this kind of marketplace for developers and projects, and for developers to easily get paid in crypto, then you developed it into also having this grants aspect to it. So can you go through all those different parts of Gitcoin, and what the overall big picture is?
The power of quadratic funding
KO: Sure. The big picture, the world that we want to create, is a world in which digital public goods like open-source software are well-funded. So public good just means that it's non-excludable and non-rivalrous, which is like if I download an open-source repository, no one can stop me from pulling that down. And also my pulling it down is not rivalrous in that it doesn't stop any of your listeners from pulling it down. Non-digital, or non-excludable, non-rivalrous is a public good, and the whole paradox of public goods is that you'll always have an incentive to free-ride on them, because you're getting it for free already — so why would you bother to fund it and to give back to the maintainer? And it's our mission to build and fund digital public goods.
We believe that open-source software underpins our digital infrastructure, and Gitcoin Grants is the largest crowdfunding application in the Ethereum ecosystem because of this one weird trick — it's my clickbaity pitch for Gitcoin Grants. We're built on top of quadratic funding, which is a mechanism invented by Vitalik Buterin, Glen Weyl, and Zoë Hitzig. Basically what quadratic funding is, is every quarter we raise a matching pool, and we match contributions to your favorite projects during a two-week period every quarter. The next Gitcoin Grants round is March 9th, Gitcoin grants round 13, and during that time, we're matching contributions to open-source projects, but with one weird trick — and that's quadratic funding.
Quadratic funding is just a mathy way of saying that if two projects raise the same amount of money, but one project has way more contributors than the second project, then that project will get way more of the matching funds. We're matching based on the breadth of the contributors, not the amount funded, which is less plutocratic because you're optimizing for the preferences of the poor and the many, instead of the rich and the few. So the key thing that differentiates quadratic funding from one-to-one matching campaigns is that it's a more democratic way of funding public goods, and it also gets you over that free-rider problem. Because when I give a dollar to The Defiant, The Defiant actually gets $100 because of the subsidy from the quadratic funding matching pool. So it gets you over that free-rider problem of like ‘eh, why do I even get out my wallet, it's only a dollar?’ Well, the answer is because The Defiant, or I think in the case of The Defiant grant, y'all are giving out free subscriptions to the community when people contribute to your grant. The reason that people get over that free-rider problem is because the project actually gets $100 when you only give $1. The TLDR is to build and fund digital public goods, quadratic funding is the mechanism that powers Gitcoin Grants, and we've done $52M worth of funding for those projects because of that.
CR: Amazing. Is Gitcoin now primarily focused on grants and these grants rounds? I remember that at the beginning, a big part of it was also like the web w jobs ecosystem — is that still the case? Or do you think grants are now the main thing?
KO: Yeah, my endgame is to fund digital public goods, and I'm really super proud that we've always been focused on that mission, but that we've been fluid in how we attack that problem.
If you're someone new to the ecosystem, then participating in a Gitcoin hackathon is a great way to get paid for working on open-source. And if you're someone who's more established in the ecosystem, then Gitcoin Grants is a great way for you to get coins for that work, and I think that we'll continue to innovate on different mechanisms for people to earn in web 3, which is different from jobs. Jobs are kind of like bundling up of earning, learning, connecting, and having an impact. So I think that we'll continue to try to find ways for the developers can get coins in exchange for working on open-source, and it'll be everything from jobs, to bounties, to grants, and new mechanisms in between.
CR: Perfect. So the Gitcoin Grants round 12 just ended, how has the progression been? Has each round raised more than the last, or are you seeing some sort of plateau already?
KO: Great question. We've kind of ebbed and flowed. We've done 12 Gitcoin Grants rounds and I'm really proud.
One of Vitalik's design goals for Gitcoin Grants was that the community can expect that every quarter there will be a Gitcoin Grants round. And the idea there is that consistency allows people to augment their behavior — where they can stop working on projects that have private business models, and they can start working on public goods.
And we've mostly seen growth with the Gitcoin Grants rounds. We've had a couple down rounds, but not in the last four or five rounds — it's mostly been hyper-growth since the bull market started, and the most recent round did $6.1M worth of funding for digital public goods. So it's been about on average 25% growth round-over-round in terms of the amount of money moved.
CR: Is the idea that projects that want to work on 100% open-source ideas can do that by expecting consistent funding from Gitcoin Grants? Is the idea to provide a consistent funding system for projects to just rely on Gitcoin Grants on its own? Is that feasible?
KO: Yeah, the end goal is something that Vitalik calls quadratic freelancers, which is just someone who works for the open internet and is funded by quadratic subsidies. So the whole idea is that if that exists, then you can just work on open-source and expect that the community will support you every quarter on Gitcoin Grants.
We define [quadratic freelancers as people who are receiving roughly] $5,000 or $10,000 per quarter — enough to live on, or at least augment your income in a serious way. There's on the order of a couple of hundred people that have passed that threshold with their projects. I think that the goal here is for as many people as possible to be able to just work on their products and work on their open-source infrastructure for as long as possible without having to worry about a business model. But there are definitely people who just augment their income with quadratic funding, and that's fine too. But one of the things that kind of tickles me in a good way is when I go to [The Ethereum Community Conference] or LisCon or whatever, and I meet someone who's like ‘hey, I survived the bear market because of Gitcoin Grants’, or like ‘I found my next career opportunity via Gitcoin hackathons.
We've [also] got this incubator accelerator thing called KERNEL, and a lot of the alumni will come up to that to tell me that they met their next co-founder in KERNEL. So ‘how many lives can we affect for the positive’ is the [key performance indicator] we're shooting for.
CR: Awesome. And on the funder's side, and not just like individual contributors, but those bigger contributors who are donating for the matching, what's in it for them? Why do you think they are participating?
KO: I think that the reason is that they want to build an ecosystem. So Gitcoin Grants rounds one through seven were funded by the Ethereum Foundation… Well first off, Vitalik was looking for someone to test out his crazy quadratic funding idea, and I think we were his guinea pig.
The Ethereum Foundation Grants Team does an amazing job, and I have so much respect for the hard workers on the EF Grants Team. But they can only process so many grants per quarter, and they're also very centralized. So by pushing the power out to the edges and allowing the community to fund the ecosystem grants, not only do you achieve more scalable grants funding, but you also achieve a change in the selection mechanism — which is not ‘did I go through the grants process that’s administered by the central team’, it's do your peers respect your project? Quadratic funding optimizes for the preferences of the poor and the many, so if you can convince one thousand of your closest friends to fund your grant on Gitcoin, then that's going to allow you to prove your project to the EF Grants Team, or Uniswap Grants, or Aave Grants, or projects of that nature. So it augments ecosystem funding.
And one of the coolest things that we've seen is projects like Yearn and Uniswap that are Gitcoin Grants alumni start to give back to the matching pool…. So Gitcoin Grants rounds one through seven were funded by the EF, rounds eight through 10 were funded by DeFi projects like Chainlink, BadgerDAO, Aave, Uniswap. And recently, Austin Griffith and I have been experimenting with selling NFTs to fund the matching pool, and that's been a really great way to fund the matching pool as well. So, in sum, I think that people are trying to build ecosystems and fund public goods when they fund the matching pool.
CR: Awesome. I just recorded a podcast with Griff Green who is also working on public goods, and a big part of what he's trying to do is just to further incentivize contributors with some expectation of like a reward or profit.
KO: ‘Give-backs’, I think they're called.
CR: I don't think they've started that process yet, but the plan is to have DAOs where contributors become investors in these non-profits and get tokens in return. And like if the community does well, the tokens do well, and there's this idea that contributors become investors and can kind of get some sort of reward. Is that something that you consider? What are your thoughts on that model?
Driving donations without leveraging economic incentives
KO: Griff is a friend. I think that he and Giveth are an inspiration. I'm a fan of many other people who are building regenerative crypto-economic projects. Griffin and Giveth, retroactive public goods funding and Optimism, CLR Fund, and Coordinape are all doing public good. So I'm supportive of a pluralism of mechanisms in the ecosystem that will build a web skill infrastructure for funding public goods.
In the Eth2 client layer, we talk about client diversity, which is how do we keep the client network healthy by having a pluralism of clients that are securing the network. And I think that for funding public goods you also want to have a pluralistic way of funding public goods, in which if one mechanism gets attacked, then you still have the others that can pick up for it. So I'm supportive of this pluralism of public goods funding mechanisms.
For Gitcoin, to answer your question directly, we do not give kickbacks to any contributors. In fact, it's explicitly against the rules to give kickbacks to your contributors in Gitcoin Grants. The reason for that is that we want projects that will never have a business model, that are just pure public goods, to be on the same footing as a project that is going to be the next Uniswap. I think that it's super important that you don't have that sort of mechanism, that sort of psychological expectation that you're going to get a kickback for contributing to a public good because it would augment which public goods you fund.
So yeah, to answer your question directly, we do not have that mechanism at Gitcoin Grants, and, in fact, it's explicitly forbidden. But mad respect to Griff and the rest of the people who are working on a pluralistic public goods funding infrastructure for the world. I respect that there's a diversity of mechanisms. We've just chosen to do it a different way than Griff.
CR: So how does the Gitcoin token play a part in all this?
Striving to improve community governance
KO: As we know, I've been around the block once or twice having run that online dating website and been in the web 2.0 startup ecosystem. And one of the things that I really wanted to do after that experience was to have the community govern the platform that it used. Basically, I've been in this situation in the past where you raise a seed round, and after six months, the VCs are like ‘alright, Kevin, time to turn on the business model and start extracting from your users’. And I really just didn't like that because as a manager of a startup, I have my users on one side, and I have my investors on the other side, and I have a fiduciary obligation to my investors, and then and I didn't get in the business of wanting to extract revenue from those users.
So one of the things that we wanted to do was put the community of Gitcoin in charge of governing the platform that they use, which creates this closed loop. And actually, in political theory, the consent of the governed is the only legitimate basis of government, and I think that's opposed to ‘the divine right of kings,’ which is how people used to have legitimacy for their government in the past. And when I think about like the Facebooks, and the Googles, and all these web 2.0 giants of the world that are not accountable to their users in any way — maybe in the purely symbolic act of clicking a terms of service box on the website is like how they're accountable — I think web 2.0 platforms are like the divine right of kings. And I wanted Gitcoin. In its most purest sense, to be governed by the community that it served.
So GTC is the governance token, it stands for ‘Grow The Community’, or ‘Gitcoin’, and basically… we just dropped it to everyone who'd used the platform to fund public goods between 2017 and 2021. So if you had contributed to public goods, then you could then govern Gitcoin, and we announced at that point that we were going to be decentralizing Gitcoin into a DAO. Vitalik Buterin has called Gitcoin a significant pillar of the Ethereum ecosystem, in that some or many of the projects in the Ethereum ecosystem are relying on Gitcoin for support, and you can't have a centralized pillar of a decentralized ecosystem — it just doesn't make sense. So the idea is to decentralize our governance, and then the development, and computation of the network from there, and GTC is just giving governance rights to the community, and we're in the middle of actually rewriting the entire platform to be a protocol instead of a web 2.0-style platform. The whole idea is that, right now, there's kind of like a social consensus that GTC is what governs the Gitcoin rounds, and Gitcoin Holdings — the company that I'm the CEO of — has agreed to allow the Gitcoin DAO and GTC to govern the grants rounds that we run. But the plan is that by the end of 2022, knock on wood, I’d have to check with the engineers to see if we're on track, … that we've got a trust minimized, credibly neutral protocol that most of the funding is happening on.
So we're trying to turn a company into a DAO right now, and we believe that that's the ultimate vessel for Gitcoin Grants and the public goods and charitable mission on Gitcoin. So that was the idea behind the GTC drop.
And we're just standing on the shoulders of giants in so many different ways in this ecosystem — GTC is a fork of UNI, which is a fork of COMP, which is an ERC-20 built off of I think it Open Zeppelin library, and each of these projects added their own little bit to advancing the space forward. Open Zeppelin built the ERC-20 token, Compound introduced delegated governance — so basically I don't have to vote if I'm a token holder, I can delegate my votes to you, Cami — and then Uniswap advanced us with the retroactive airdrop…
And what Gitcoin did is we just combined all of those ideas, and then what we did was when you got the GTC drop, we would not give you the tokens until you delegated. And why does that matter? That matters [because] it set the starting conditions of Gitcoin DAO around that consent of the governed and the hundred percent delegation.
The dirty secret of governance tokens is that everyone wants to have governance tokens but no one wants to spend the mental capacity to vote on proposals. So by allowing all 18,000 GTC holders to delegate to people that they trusted, that were actually going to be involved in governance, we allowed Gitcoin DAO to have much more legitimacy because we have higher voter turnout than most other DAOs. A typical vote on Gitcoin DAO will have between 60% and 80% voter turnout because the consent of the governed is just aggregated in Austin Griffith, Linda Xie, Simona Pop, and Griff Green — the people that the community has delegated their vote to. Whereas a lot of other DeFi projects, they'll have a voter turnout of like 3% to 10% on their governance tokens. So I think that our core innovation was just the UX paradigm of having people delegate when they received their tokens, and I feel validated that [Ethereum Name Service] copied that when they launched their governance token.
So the TLDR is we're all standing on the shoulders of giants, and we innovated in only one very small and seemingly obvious way in hindsight with the delegation on airdrop. And yeah, I think that we're all kind of in this Cambrian explosion of exploring what governance looks like in the 21st century, and I and I hope Gitcoin remains a part of that into the future.
CR:Awesome, I love that overview. By the way, I thought the Gitcoin GTC drop was amazing — it just was so flawless, and the UX was so nice. And I think you also incorporated a quiz in the middle of it — I thought that was really cool too because it's like you're making sure that tokenholders actually know what they're voting [on] and what they're getting themselves into. I thought that was a really good touch as well.
KO: Yeah, we called it Proof of Knowledge and we made you watch a one-minute video which was about ‘The Quadratic Lands’, a world where Gitcoin is maximally successful and we've rewritten the laws of economic gravity to support public goods. And then you had to take a quiz about what you saw in the video afterwards, and to be honest, anyone with a pulse could have clicked through the quiz and figured out how to answer it. But it was about creating that social consensus that this is a governance token with no economic value, and getting people to agree to that before they got their airdrop — we’ve only got the captive audience of people trying to get their airdrop once, we might as well maximize it. That was a fun experience and I'm glad to see other people doing airdrops that have clearly been inspired by Gitcoin's airdrop experience.
CR: Yeah, it was really good. So how many delegates are controlling Gitcoin right now?
KO: So I’m very proud that the delegates that were chosen by the community on May 25, 2021, when the token launched, are still intact today. We do have investors who have tokens, but they have chosen to back who the community backed at the start, which I think is a huge sign of legitimacy for the project in general.
But yeah, basically the top 20 ‘stewards’ are the ones who have aggregated the most of the governance power. So those are Austin Griffith, Linda Xie, Simona Pop…, Trent from the Ethereum Foundation — so top-tier community members in the Ethereum space are the ones who are aggregating most of the voting power at Gitcoin.
CR: And what sorts of things do they vote on?
KO: So there's a treasury management question about what is the size of the quarterly Gitcoin Grants rounds, and what are the rules for them? An example of a rule-setting operation is ‘should we allow projects that have raised VC money to be on Gitcoin Grants? Are those really pure public goods if they've raised Vc money?
One of the rules for Gitcoin Grants is based on quadratic funding, which is dependent on this problem called ‘Sybil Resistance’. Sybil Resistance is basically if I can make up a bunch of fake accounts, and make my project appear more widely popular than it is, then that's called a Sybil attack. so setting the rules for what constitutes a unique identity is an example of a governance question that Gitcoin,
It's funny because in April 2021, I had governance problems coming out of my ears, and now that we've launched the DAO, I can just say ‘okay, well it's up to the DAO to decide those governance problems, instead of people tagging me on Twitter and saying ‘is this a public good?’ The whole magic of Gitcoin is that it doesn't matter what Kevin Owacki thinks, we're just building a channel where greater combinations of strength and intelligence can come together to express their preferences. We're an aggregator of the Ethereum community's preferences for what is a public good, and I think that that's the crystal clear vision for a credibly neutral public goods funding mechanism.
But anyway, you asked me what GTC does. So the answer is setting the rules for the matching pool, managing the treasury, and then also voting on proposals to fund different workstreams in the DAO. So basically, in the company, you've got a CEO who does budgets and decides who to hire and fire. In the DAO, you've basically got a proposal process through which people can request money out of the treasury, and then can fund workstreams that are in charge of things like building the software product, or preventing fraud, or evangelizing public goods via marketing — stuff like that. So GTC can be used basically for anything that's governance-related in the Gitcoin DAO.
CR:And do all of Gitcoin’s funds go to the DAO? Or are there separate accounts?
KO: Gitcoin Dao is in charge of governing everything related to Gitcoin Grants, and there are basically two pools of funds. There are funds that can be spent on Gitcoin DAO, and Gitcoin DAO-related operations. And then there's a second address that is in charge of just holding the matching pool funds. So we're not commingling funds that are used for administrative things like funding our software development with the funds that are actually deployed in the matching pool on the platform. So those are the things that the governance has control of.
Balancing centralization and decentralization
CR: Okay. I'm wondering about the delegation process. I agree, it's a big problem when DAOs become plutocracies. There are many thousands of GTC token holders, but in the end, only a handful end up controlling governance. So having this kind of representation and system where you delegate your tokens to trusted members of the community — that is better — but it still feels like the difference is that now 20 known members of the community that token holders have trusted their voting power in are making these decisions. But in the end, it's still a small number of people governing Gitcoin. So I don't know, it's still kind of better, but I don't know if it's optimal it — still kind of feels centralized. What do you think?
KO: I mean, hands in the air, I [plead] guilty, we have centralized elements at Gitcoin. I'm kicking 2017 Kevin for building it centralized. I wish I had thought that we were going to become a DAO from the start — I would have done things differently.
I think that your criticisms are valid. The one thing that I'll point out here is that our mission is to build and fund public goods, and we don't want to build and fund the public goods that Kevin Owocki likes, or that any other stakeholder in Gitcoin likes — we want to build the optimal channel for the community to express its preferences.
If you look at the architecture of the system, GTC is basically a policy setting token for allocating the matching pools. But think about how the matching pools are governed when you contribute on Gitcoin Grants to The Defiant, or to WalletConnect, or to Prismatic Labs, you are actually governing the matching pool. So basically, there are 700,000 contributions every quarter that actually decides where the funding goes, and then you've got the delegated GTC people, who are just setting the parameters for… what's out of bounds, what's a Sybil attack, how big are the matching pools.
So you're right, like the criticisms of the delegated governance model are fair and valid. But I would say don't discount the quarterly public goods funding matching campaign that we run every quarter because that looks like a crowdfunding campaign on its surface. But if you turn it on its side, it's actually a giant experiment in decentralized governance — it just doesn't feel like you're governing something because you're going to the site to contribute to your favorite projects, not vote on something. So I would posit that 80% of how funds are moved on Gitcoin is actually decided by the individual participants in the quadratic funding rounds, and the GTC holders are really just kind of setting up and trying to design that channel for how that happens.
So your criticisms are valid, but I'm just saying don't throw out the quadratic funding model because that's where a lot of the more decentralized portions of the governance happen. And maybe this is kind of like The House of Representatives versus The Senate, where you've got one body that's like a smaller group of people, and one that's a more inclusive group of people. That might be an analogy I come to regret, but that's the one that came to my mind right now as you asked that.
CR: I think that's totally fair. And then a little bit more on the token itself. With a lot of governance tokens, at the moment of launch, the founders, or the team, or whatever say ‘okay, this is a no value token, it's only meant for governance’. But, in the long term, tokenholders expect to have access to some sort of portion of the treasury, or… some way to actually have ownership of the funds generated by the protocol. In the case of Gitcoin, is that the case? Will there ever be some sort of revenue-generating fee, or some other kind of value that accrues to the token?
KO: That's a fair question, I think our intent with Gitcoin was to make it a valueless governance token that has no economic value and no economic rights imbued into it. The purest thing that we wanted to do was put the community in charge of governing Gitcoin Grants. So I think that's the intent, and we're actually in the process of totally decentralizing the DAO and disconnecting it from the company that launched the DAO.
I think that our profitable business lines, like hackathons, will probably go in a different direction than the non-profit and charitable assets associated with Gitcoin Grants, and we have no plans to build economic value into the token. But once we've disconnected those things, I don't have the ability to stop the DAO from doing that. So we'll have to see what they do, and I'll be following along, just like you will be…
Gitcoin as a brand is so powerful and it's because of software developers. So software developers are our friends and community members first and foremost, but they're actually one of the most scarce resources in the ecosystem — that's why Electric Capital puts out the dev report every single quarter. So I think the question is what kind of business model long-term could an entity with Gitcoin’s branding generate? Given the affinity that it has with developers, I don't know what kind of innovations there will be there, but we are definitely not focused on economic value at this time.
And it's just about governance. The audience doesn't know this, but before you and I were talking, my daughter was coming in and bugging us in the middle of an interview. And the analogy I want to make right here is to parenting — the DAO is kind of going to leave the nest and go where it wants to go, just like my kid will grow up and grow out in the world, and I will have no control over it, I'm just really hoping to see it blossom into all that it can be. The direct answer to your question is that at this time, there's no plan to add economic value to the token.
CR: Awesome. So if we see Ethereum as a nation and Gitcoin as the organization or entity organizing funding for public goods for that nation, would taxes ever make sense? Like if a percentage of Ethereum transaction fees or something went to Gitcoin, or to whatever entity is public funding public goods? What do you think of that in theory?
KO: Can I propose an augmentation to your question? Gitcoin is not the entity in the Ethereum ecosystem funding public goods, Gitcoin is an entity in the ecosystem of a pluralism of mechanisms for funding public goods.
CR: Yes, let's rephrase that to that.
KO: Okay, cool. And the answer to your question is an emphatic no. I have a history in that I was a co-author of EIP-1890, which was discussing what it would look like to fund public goods in the Ethereum ecosystem with block rewards. That proposal has since been withdrawn, and the reason for that is that the Layer 1 of the Ethereum ecosystem should not be politically capturable, even with the most elegant mechanism for governance. If fees were going to a place that was funding public goods, then you'd always have to worry about a place where that could be captured. and I don't think that block rewards [are] a great way to fund public goods.
I think that we can hustle to fund public goods with Layer 2 sequencer fees with MEV, with NFTs, with social consensus. Gitcoin [is] funded for six rounds out at this point without block rewards funding, and I don't believe that it's a good idea for any credibly neutral blockchain to implement block rewards funding or EIP-1559-style funding for public goods I think that it would compromise the credible neutrality of the Ethereum ecosystem, and there are alternatives for it.
CR:Yeah, absolutely I agree. I'd love to talk about your book, ‘Green Pill’ book. Can you tell me about where the idea came from?
CR: I know that it was executed in this special way…, and what is the vision going forward?
Kevin Owacki’s end goal for the Ethereum ecosystem
KO: Yeah, totally. So basically what I believe is that Ethereum is this amazing opportunity to create more coordination in the world. We've now got a substrate for transparent, immutable, global, and programmable money. And the huge opportunity there is to use that for regenerative means. We had DeFi summer, and a big meme that came out of DeFi summer was ‘degens’, [for example] ‘I'm going to degen into this yield farming pool’, and ‘I'm going to ape into this’.
I’ve been a degen, I understand the value of money for creating a good life for your family and for those around you. But I think that what we're really after, and the legacy of the Ethereum ecosystem, is to create ‘re-gen’ finance as opposed to degen finance.
What I see is an opportunity for crypto to be regenerative, which I just define as projects that have a positive externality for the world. We could build this whole infrastructure for the world that's more regenerative, is more credibly neutral, and is more transparent than the current system that exists for funding public goods. And I think that's the beautiful vision that many of us have, like the Griff Greens, and the Karl Floersch [of Optimism], and the Manu [Alzuru] from DoinGud, and all of these projects that are trying to create social impact in human thriving with the Ethereum ecosystem.
So Green Pill is just a project that basically talks about our moment of opportunity. We've got $2T in this financial system, how can we create positive externalities for the world? And then it talks about the game theory and the mechanisms that you can build into the programmable money in order to do it. And then, in the end, it's kind of a challenge to actually build this infrastructure.
We've got this substrate for human coordination that's better than anything that's ever been available before, but we have to choose to coordinate to use it to create more coordination. All coordination is a choice, and we can either choose to coordinate, or we can choose to just build bigger decentralized casinos and profit generation mechanisms, and I hope that we choose to solve coordination failures and to fund public goods. This is my vision, and an educational opportunity to have that mission and that idea propagate outwards.
So basically that's the book. You can get the book at greenpill.party. I'm giving away the digital version for free, and then the physical version will cost $50. The idea is to first off spread the narrative to web 3 founders and let them know that they can do good for the world while they build a profitable system. And the second theory is that I think crypto has gotten a bad rap in the mainstream press as people have complained — the complaints about the Ethereum energy usage are completely valid, and I think that once Ethereum moves to Proof of Stake and uses 99.5% less energy, there's a real chance that we can build an economic system, a financial system, that has positive externalities for the world by first doing no harm on the electrical usage question, then building coordination games on top. So that's the vision. Get the book at greenpill.party, and learn about how we can solve coordination failures with Ethereum, and the coordination systems that we can build on top of it.
CR: Awesome. Can you show it because this will also go on our Youtube, so maybe people can take a look at the book as well?
KO: For sure. So the book is called Green Pill, the subtitle is ‘How Crypto Can Regenerate the World’. I'm so lucky to have forewords by Vitalik Buterin, Glen Weyl, Danny Ryan, and Balaji Srinivasan. I think that there are a lot of people who are thinking about how to build civilizational-scale institutions and infrastructure that are both good for the world and they're non-coercive.
So that's the huge opportunity that I see, and I'd just be so happy to come back on The Defiant podcast in, I don't know, let's call it 2024, and talk about how crypto regenerated the world from there. So we’ll put that on the books now, and we'll see if it actually happens.
CR: Amazing, I'd love that. I remember you mentioning that there was some collaborative aspect to it as well?
KO: Yeah, well you can't write a book about coordination without proposing more coordination. So this is called the “0th edition,” which is kind of just a nerdy joke in computer programming — ‘let's start with the zero-index instead of the first item’. So this is the 0eth edition of the book and it's targeted only at web 3 builders. If it was a university course, it'd be like a 500-level course — you'd have to understand consensus mechanisms, solidity, [etc].
So the 0th edition is focused just on web 3 builders. But what I would really like to do is once The Merge happens and Ethereum is energy neutral or close to it, I'd love to create a first edition that is going to be targeted at the mainstream, and will speak on behalf of the crypto ecosystem about how crypto is actually regenerative to the world.
So the 0th edition was just ‘YOLOd’ out by me. I wrote it over the last two months and it's only 130 pages, and there's a lot of pictures in it — it's not that dense. But the idea was that I could use the 0th edition as a shelling point to gather a bunch of people in a Telegram channel and have them collectively publish a first edition.
So basically, if you buy the book, then you can join a Telegram channel, and you can help co-create the next edition that will be focused on a more mainstream audience. And I think that if we're going to create a channel that purports to represent crypto and to talk about how it's regenerative for the world, it's not my place to do that — remember I'm trying to build a channel for greater combinations of strength and intelligence to come together, and the first edition will be authored by a distributed consensus of members of the community, and therefore will have the legitimacy of speaking on behalf of the crypto ecosystem. Or at least… that's the idea, we'll see if anyone shows up and actually wants to write a book with me. But yeah, it's kind of fun because the book is about coordination, and then there's a coordination game on top of it, which is how we publish a second edition of the book.
CR: That's really cool, I really like that idea! And then finally, to wrap up, I want to touch on something you mentioned, which is the mainstream media and the criticism of web 3. Part of it is definitely the environmental impact, but another part of it is how crypto is… financializing the web, and I've seen people take a lot of issues with that. The web is like this free space where people send information globally and freely, and now these crypto dudes want to add money to it, and like to speculate on art, and it just seems very backward. I'm sure you have a unique perspective on this, I’d love to hear your thoughts on that criticism of our space.
KO: Yeah, I think it's a valid criticism. For me, what crypto enables is digital scarcity. The whole idea that if I'm a creator, that I'm going to upload my code to GitHub, or my photos to Instagram or Facebook or to Google, and they're going to own the rights to it — that feels to me that we're all serfs on Zuckerberg's land, and I feel that we don't want to have these systems which intermediate.
The world is increasingly intermediated by the digital, and there are people who live their lives on the internet, or I’ll begrudgingly say ‘the metaverse’. I think the metaverse is just what we call humanity's experience when it's increasingly intermediated by the digital, whether it's a computer, or VR, or whatever. And I just believe that we should have digital property rights and we shouldn't just be serfs on the tech giants’ lands.
Now, there are a lot of problems with web 2 — not only with not having ownership of your content. but also being tracked everywhere we go. I think that if we're going to enable innovation in the web ecosystem, then there's got to be a way that you can pay your mortgage by working on innovation, and I think that digital property rights are a new way to monetize that don't involve advertising and spying on people. and surveillance capitalism.
Is that the right model for everything on the web? I think the answer is probably no. But I think that we can all agree that Mark Zuckerberg shouldn't own our digital experience. That seems dystopic to me, to think that we will always be tracked by the FANG companies and that they're going to be extracting from us — especially since we've already established that the legitimacy of Google and Facebook is not legitimacy by consent of the governed, it's legitimacy by the divine right of kings, and I don't think that it's legitimate to think that's the only model that should be out there.
So those are some of my thoughts, and I think those criticisms are valid — there are certain things that probably shouldn't be hyper-financialized… Technology can be used for good or for evil, but it's what you choose to do with it that informs the impact that it has on the world. And I really think that we have programmable money that's transparent, immutable, and global, and we can program our values into our money. So my challenge back to those criticisms is if we're programming our values into our money, and we're seeing bad things manifest, maybe we just have bad values. So maybe we should try to program our good values into our money, maybe we should build a regenerative crypto-economic ecosystem that supports people, supports the commons, and supports communities.
My challenge back to those critics is ‘don't throw the baby out with the bathwater’. Let's build a better world that's free and owned by the communities that it serves, and I think that's my vision for regenerative crypto-economics. And I hope that you'll join me in building it. Get the book… and join the movement.
CR: Awesome. I love that! Totally on board with this regenerative crypto movement, 100% agree. Degening is fun, but regening is meaningful and hopefully long-lasting, and why we’re here.
KO: Yeah, and in the long term, regen is more profitable than degen, that's the ultimate idea.
CR: Nice. Everyone, go get the Green Pill book, it looks awesome. Kevin, thank you so much for joining me, this was super fun.
KO: For sure. Cami, you're an inspiration, and I think that The Infinite Machine was a huge inspiration for me working in this space, and I hope that people have their Green Pill book right next to The Infinite Machine on their bookshelves. Thanks so much for having me.
CR: Thank you!