Bankless - Vitalik Buterin - Green Pill #1

Episode Date: February 17, 2022

Vitalik Buterin is the founder of Ethereum and a researcher at the Ethereum Foundation.  As the visionary behind the network, Vitalik's values are embodied within the ethos of Ethereum's community-centric nature. Exploring quadratic funding, pluralism, and sybil resistance, we dive into why Vitalik cares about public goods and how we can utilize novel mechanisms to fund them elegantly.  Take the Green Pill, anon.   ----- ✨ Subscribe to the Green Pill Podcast ✨ https://availableon.com/greenpill  🟢 Get the GreenPilled Book 🟢 https://greenpill.party/  Apple Show Link:  https://podcasts.apple.com/us/podcast/greenpill/id1609313639  Spotify Show Link: https://open.spotify.com/show/0l6aXWC94dd0RA3tkKfxjd?si=5fdadfbcd8d34bd4  ------ SPONSOR PILLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum  🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants  💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger  🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix  ------ Topics Covered: 0:00 Intro 3:30 Vitalik & Quadratic Funding 7:06 Evolution & Problems 12:14 Vitalik GreenPilled 15:00 Crypto’s Endgame 19:54 Pluralism 24:59 Public Goods Mechanisms 28:55 Sybil Resistance in Argentina 33:30 Community Values 38:55 Public vs Private Goods 42:10 Net Positive Impacts 44:09 Closing ------ Resources: Kevin on Twitter: https://twitter.com/owocki?s=20&t=A1yy1WYtQlNAOiSxXtGuNQ  Vitalik on Twitter: https://twitter.com/VitalikButerin?s=20&t=6oPk84CaEN12Es6e7Nze3A  Schelling Point Conference: https://schellingpoint.gitcoin.co/  ----- Music by WABI SABI - snowflake - https://thmatc.co/?l=7786B012 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Hello and welcome to the Green Pill. I'm Kevin O'Waki, and this is the podcast about public goods and regenerative crypto-economics. Today we've got Vitalik Boudarin, the founder of Ethereum and a research scientist at the Ethereum Foundation on the episode. Obviously, Vitalik's influence on the space is massive, having delivered the original white paper for Ethereum and being the visionary behind the Ethereum network. And one of the things that I wanted to do on this episode was digging on why Vitalik cares so much about public goods. I think there's like counterfactual world out there in which say Vitalik wasn't into public goods as much as he was. And I think that the Ethereum community would be missing some of its vibrancy and community-centric nature that it has these days because Vitalik's champion, because Vitalik has been championing public goods, we don't have that world. So really wanted to dig in on how he views public goods, why public goods are good,

and which experiments in the community he thinks about having the most promise for funding public goods and the just salt of all of those things together. Obviously, Vitalik, beyond just being a champion of the Ethereum ecosystem, also wrote the Quadratic Funding White Paper with Glenn Weil. As you all know, quadratic funding is a foundational part of Bitcoin. And I think that there's a lot of interesting. surface area between Gitcoin, the implementation of quadratic funding, and the research that Vitalik and Glenn have done on quadratic funding. So this was a fun episode for me. I hope that you

enjoy this episode with Vitalik Bouturin, founder of Ethereum. Enjoy. Alchemix is a Defy app that offers self-repaying loans that lets you spend money and save money at the same time. Alchemics allows you to deposit the die stable coin into its faults, which earns some of the highest yields that DeFi has to offer. You can then take a loan from Alchemy. of up to 50% of the deposited die, and that loan automatically pays itself back from the yield that is generated from your deposit. It's a savings account that the banks don't want you to know about. Alchemics also has ETH vaults available, so you can get a self-repaying loan that's denominated in ETH. Coming up in Alchimix V2 is a bunch of cool new features, such as credit delegation, multi-chain expansion, and Dow revenue sharing and vote boosting.

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where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum that lets you trade any token at the current market price. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Ethereum. Input the token you want to sell and receive the token you want to buy. The Uniswap Grants Program is accepting applications for grants. Do you have something of value that you think you want to contribute to the Uniswap ecosystem? No matter how big or small your idea is,

you can apply it for a unique grant at Uniswopgrant.org and help steer Uniswap in the direction that you think it should go. Thank you, Uniswap for sponsoring Bankless. All right. Welcome to the show. I am here with Vitalik Bouturin, the founder of Ethereum and research scientist at the Ethereum Foundation. Welcome, Vitalik. Thank you, Kevin. It's good to be here. Great to have you. Vitalik, your background and how you came to found Ethereum is well documented in the Infinite Machine Book and elsewhere. So in this space, I want to focus on your advocacy for public goods and your talk, things that matter outside of Defi that you gave at ECC this year. I think that the natural starting place for me and you to start talking about these themes is

quadratic funding. Gitcoin grants is built off of the research paper you did with Glenn while on quadratic funding. How did you come to conceive of quadratic funding with Glenn and how do you see it evolving in the future? I mean, I guess what Glenn originally came up with the idea for quadratic voting. And that, well, he was one of the people who came up with that idea, actually. There were, it later turned out that there were a whole bunch of historical papers that pointed to very similar ideas, which actually happens really often for the best ideas. There's one from, I think, 1980 talking about why quadratic voting is the theoretically optimal voting rule. There might be a couple of other ones about Glenn made kind of the best and most detailed exposition.

And I think it was a paper that he published sometime between five and ten years ago. And Quadratic funding was an adaptation of the ideas behind quadratic voting to the context of public goods. So I think one of the really big differences between quadratic voting and quadratic funding is that in quadratic voting, the issues that are being voted on are still fixed and you still need someone to choose what the issues are. and it turns out that there's actually a lot of power in being the issue setter, right? Just like basically, like if you are a majority that cares about something less and then some minority and you want to beat out the minority, what you can often do is you can just like raise that the same issue in the different forms a huge number of times and just like basically drain the other sides voting credits. So quadratic funding is a bit different in. that it's kind of fully

solve a complete system in that even the choice of questions is not something that needs to be kind of enshrines or like premined or whatever word you want to use for that. Right. Like anyone can create a project, anyone

can contribute to a project, and based on the quadratic funding formula and based on how many people donated and how much the projects get matched. So this idea that even like what questions people are deciding on. So in this case, like which public goods to give money to is also an emergent part of the mechanism is something that's really powerful.

So Glenn and I wrote the initial paper. I also came up with a modified version called a pairwise bounded quadratic funding, which just works a bit, is a bit more robust against collusion and against attack. is controlling a small number of accounts. And I guess quadratic voting and funding have just gone from there. Right, of course. Well, I mean, for me, having built Gitcoin with the mission of growing and sustaining open source software and having that be a primary focus for us and then launching Gitcoin grants, which used quadratic funding as the foundation, it's amazing to hear

about the history, the back history of how we got here. I'm wondering how you see quadratic funding evolving from here. Quadratic funding on Gitcoin, we're using Parwise as a way of preventing collusion on the mechanism. I know that there's other projects out there that are doing really great stuff like CLR fund that are using Macy on the mechanism. Do you envision future iteration on the mechanism or is it just kind of down to solving civil resistance or other adjacent problems with quadratic funding? I could see some of both But like what modifications there would be to the mechanism

It's like I do feel like we need to keep it open mind Like I can't think of any that we would apply right now Except maybe like tweaking the pairwise matching coefficient And one possible direction would be to Try to go further in the direction of trying to identify like which projects have support from the same group of people

and which projects have really diverse support like PIRWise Matching already does some of that but you could try to look I guess push even harder in that direction another direction is obviously to like go back to explore this question of negative

votes at some point, which is I mean, obviously super controversial but like on the other hand there are, I do think that there's a risk that there are some things that it'll just, that like there needs to be some kind of negative feedback responding to. Right. Like especially if, you know,

bankless Dow or Gidcoin or whoever like starts really good like getting into media. Like there, you know, there is such a thing as like media that just actually reduces the quality of a public discourse. Right. So yeah, but that's like the first time it was tried in round five, you know, there is a lot of controversy for obviously. And so it's the sort of thing

that would be good to try carefully. But like that sounds like it could even be a very different mechanisms for doing positive and doing negative. It's possible that anything negative would just require much more privacy. So that's one of those areas that probably should kind of keep being experimented in slowly and carefully at some point. Aside from that, I would say, yeah, obviously simple resistance. I'm obviously privacy with Macy. Yeah, I mean, otherwise it's just a bunch of small tweaks. So, like, I actually think keeping the mechanism relatively simple and keeping the tweaks

slow is the right thing to do. Like, it just, you know, it builds more confidence that kind of sets the precedent that the mechanism is what it is. Right. Amazing. Well, it's great to hear sort of that purview from the author of the Quadratic Funding Paper. One thing I wanted to run by you is that we're actually having a little bit of a hard time scaling the pairwise mechanism at Gitcoin right now because we're doing 700,000 contributions per quarter. And with pairwise, you have to pairwise bond each contributor to each contributor. Wait, 700,000 contributions. How many contributors? I think it's on the order of like 30,000. I have to double check. But, But yeah, it did scale exponentially, I think, with the size of the contributor set. Quadratically, it should be. Yeah.

So, we're actually- 30,000 by 30,000, that's still 900 million. Like, that seems like the sort of thing that, like, maybe you'll have to write it in, like, C instead of Python. But, or, okay, I'll keep that in mind. We'll try and think if there are, like, algorithmic tweaks. Totally. Yeah, we're looking for, I think, instead of n-squared, like, log-in or linear would be great.

But yeah, C++ or maybe moving it to a GPU in memory or something like that is something that we'll be exploring an upcoming. Well, I mean, I think the other thing is that eventually, like with Macy, all of this stuff is going to have to be synarched. And so the efficiency will kind of go back down. So I do think that there is room for algorithmic tweaks of some kinds. But this is a good intellectual prompt. I will think about this more. Great. Well, I just found the exact number.

It's 27,000 contributions or contributors. in Griclin grants around 12. Amazing. Okay, so you got a lovely 27,000 by 27,000 matrix with 729 million entries, almost all of which are zeros. Yeah. Yeah, recording this for a broad audience, but to the engineers on the Gekwin team who are trying to scale that, I'm sure they'll feel seen that we talked about this

very briefly. We'd love to zoom out and go from quadratic funding, which is, I think, where you and I have the most in common, to the entire set of areas where crypto and Web3 can be used for good and for public good. So I guess I want to know since I've been following you, Vitalik, and since I've seen your talk about crypto, you've talked a lot about public goods, I think, as long as I've been reading your writing. So I want to know, how did you get green-pilled?

What got you into public goods? I think it was just looking at the crypto space long enough and seeing that there's basically these two big problems in the crypto space where one of them is that a lot of things that are public goods like really do get underfunded and you see these crazy imbalances where there's projects that are spending hundreds of millions or billions of dollars on security or equity mining or whatever. but then, like, they can't grab together, you know, a few million to pay for some researcher development. And then the other thing is that often when proper public goods don't get funded, what happens is that the market comes up with centralized substitutes. And, like, you basically create an ecosystem that, like, actually becomes much more centralized than it needs to be. Even open source software is a good example of this, right? the open source stuff is a public good.

And so it's more difficult to come up with the incentives to contribute to it. But then often what happens is that someone just creates a software package that works halfway, but it's because it's close source. And so it has a business model to actually keep paying developers. And trying to come up with a better solution to those problems was definitely something that I have been always, at least for a long time, fairly passionate about. Another way to look at this is that I've been really interested in this concept of DAOs and I guess DAC, well, they were called DACs before I called the DAOs to be more general, decentralized

autonomous corporations or organizations, and figuring out how to actually do decentralized governance, like what same decentralized governance mechanisms will look like. And it just so happens that funding public goods is like one of the most important governance problems, or at least one of the most important things that any sane governance mechanism would inevitably end up doing. And so to some extent, they just end up being the same problem. So, I mean, it's amazing to hear from you the example of open source software, because that's why I founded GICCoin was to grow and sustain open source software. And I think that the underfunding of our digital infrastructure leads to these systemic imbalances between people who can create value and those who can capture value. So I guess I'm wondering, you know, what do you think the endgame is for crypto and public goods? Like, do you think it's possible that we'll do a better job of funding the underfunded public goods in the Ethereum ecosystem?

And what would have to be true to expand that out to all digital public goods or maybe all public goods in the world using mechanisms that have been innovated in crypto? Yeah, it's a good question. I do think that going out further into more and more digital public goods is important. I guess the two main challenges that you're going to have. One of them is like scalability. I mean, actually, I forget, it's like the new, like the D-Grants was it on Polygon right now? Yeah, it can deploy to any EVM-compatible network, but it's on. Right, deploy to any EVM-compatible, right?

But, like, basically, I think even the layer two is due needs to keep getting. cheaper and keep getting more scalable before because like the crypto space I think is made up of fairly wealthy people who are fairly comfortable paying a transaction fees that are quite high by most normal people standards by people outside the ecosystem or not and like I personally do actually believe that like doing the Macy thing and actually sticking kind of the encrypted record of the votes on chain is something that's really really. valuable. It really improves the security properties

of the whole system. But it needs to actually be made technically sustainable. Right. And then the other issue would probably be

let's see. Well, one is just that people outside the theory of ecosystem are less familiar with quadratic funding. And the other big one is that blockchains have like very, these very big pools of money that are almost like seeking for a credibly neutral way to deploy them. Right.

Right. Like it's like for a big project, it's easy to come up with a half a billion dollars. It's harder to come up with a mechanism for figuring out how to spend it that the community would actually accept. And that's not a problem that, that's not the problem that most people have, right? Like, most people don't even have the way of getting half a billion dollars.

Like, I guess governments, like, have local taxation and all of the, and all of those things. Though even there, like, you'll have to get pretty far before people are going to be willing to experience. on the same scale as I think even the Ethereum ecosystem itself is willing to experiment. But maybe it can happen. I mean, if it does happen, then great. And then ecosystems that, like, don't have either a cryptocurrency or a government behind them, like some, like a non-cryptocurrency open-source software package.

Like, there's this question of, you know, where does the funding coming from? And realistically, you'll, like, if that's the big person, problem, then the way you'll have to end up cooperizing is by finding a funders who, or the most eager funders you'll find are funders that have strong opinions about what should be funded. And so the quadratic kind of everyone contributes the deciding thing that would not get a chance to shine as much. So those would be the worries that I predict. But at the same time, I do think that there is a lot of promise. and so, you know, and strongly, yeah, support any efforts to keep expanding.

And ultimately, like, the only thing, the only way this thing ever succeeds is by just, like, basically powering through the issues. And, like, some of it might take one or two, one or two more years of working on the technology or working on the means, but, like, that's fine. You know, like, the U.S. is in a 225-year-old constitutional framework. So sometimes these kinds of things take time. Right. They'll say a 225 year old, I'm a mid-245-year-old. Yeah.

Yeah, a lot of experimentation and iteration and evolution over that time frame over the years. And that actually is like a good segue into my next question, which is, you know, how do you see in the Ethereum ecosystem, we talk a lot about client diversity, which is making sure that the base layer clients that are going to power the network once we move to proof of stake. are diverse in implementation, which prevents any sort of fault in the network if one of the clients has a bug in it or a security hole. And I'm wondering how you think about pluralism of mechanism and of implementation when it comes to the public goods stack. Over the last year, you've been talking to the optimism team about retroactive public goods funding, which I think is an amazingly complementary mechanism to what Gitcoin grants is doing. And within the quadratic funding ecosystem. There's obviously Gitcoin, there's CLR fund, and you get an amount of diversity

in the public goods funding stack from that. And there's also other intersubjective consensus tools that are starting to be built in DAOs like Kordape that are meant to help build mechanisms for how you fund your contributors to a DAO. I'm wondering how you think about pluralism of mechanism and of implementation in the public goods funding stack for the Ethereum ecosystem. And how does that relate to the client diversity and the pluralism of eith clients that we want to have in post-Eath two? So how do you think about pluralism generally and in those two subject matters? Actually, like, there's two different types of contexts where pluralism is important, right? Like, one of those contexts is where something that's too powerful going wrong can cause a lot of

problems. And so the thing, like, the thing that you're risking from not having pluralism, like basically just is like this kind of, this, this downside risk from one thing being too powerful. And then the other situation is where your risk is missing out on an opportunity to do something right. And I think a lot of public goods funding, especially in the software space, are a lot of the second, right? Like, it's often much less bad to waste, $10 million on funding the wrong thing, then it is to miss out on spending $10 million on something that turns out to be quite important. And so,

like, that is a really big argument for pluralism as well, right? So I guess in the second, which is exactly why, like I support there being many different kinds of mechanisms, right? Like, you know,

you have Bitcoin grants with its quadratic funding. You'll have optimism, retrofunding. You know, we can have uniswaped out and some various, other DAOs, a couple of centralized organizations that are led by, you know, hopefully high-quality leaders that are trying to execute on their own coherent visions. And really, we as an ecosystem only need, like, one of them to kind of be right in order

to get the important stuff covered. So that's one way or one of the kind of reasons why. think it's important. And then the other reason why it's important, this is about kind of creating more diversity in order to prevent like this risk of what happens if, you know, one client gets too powerful. And that's obviously in the case of ETH, of ETH2 clients, that's a really big deal or I guess, sorry, their consensus lawyer clients and executional your clients. Right. It's a big deal because, you know, if you have Prism that has more than and two-thirds.

And if Prism is wrong, they could just immediately finalize a block that's wrong. And that's going to be really hard for the ecosystem to get away from. And then another example of this might also be, like, political balance of power, right? Because, like, if there is one very concentrated political elite that has a lot of power and, like, figuring out how a protocol moves forward or even has, like, a lot of veto power, then then that ends up kind of really constraining things and constraining the protocol's ability to evolve in a different vision or recover from the possibility

that that group of people is wrong. So, yeah, so both of those are just, like, really important to keep in mind and really important to foster. So, you know, I'm happy that we have all of these two clients and there's just big movements to try to get people and not just people, also applications, like things like DapNode, that a lot of secrets rely on it, too, I support all of them. Right.

And then, obviously, the more distributed public goods funding efforts, I feel like they have improved things in the Ethereum space quite a bit already, right? Like even, you know, bankless was a major early recipient of Gekoin grants funding. Yeah, so, you know, we need both. We need a lot of this and public pluralism. Right. Amazing. Yeah, I'm wondering other than the mechanisms that I mentioned, which just to refresh the

audience's memory, where retroactive public goods funding, coordinate CLR fund, GICT-CLABs, Quadratic Funding, what other mechanisms are you excited about and do you think are under-explored for funding public goods, if any? One of the ideas for public goods funding that does not depend on AES central funds allocations, allocator that I've tried to push on a couple of occasions is like actually doing a better job of having like using NFTs to fund public goods. Yeah, like we like so far it feels like, you know, we have these really expensive NFTs that often support things that like are often actually interesting and fun.

But it would be cool if we have the GnifTs that support things that are interesting and fun, but also meaningful. There is a I think there The model that I had supported Back when I wrote that post on legitimacy a while back right Was this idea that you could have NFTs that were kind of An artist partnering with a charity where the artist kind of provides the art to the charity

And provides some legitimacy and the revenues end up end up being split between the two And And, you know, the NFT becomes kind of both art and a way to, like, show that you care about a particular charity. I know that opti punks, right? It's like a spinoff of crypto punks for optimism. I saw that they were putting some of the revenues from selling the punks into the retro funding pool or something like that. Yep, that's right. They did fund around and we're very thankful for that.

And we've also been experimenting with this project called MoonshotBots. I get coin Dow, which is an NFT where all of the sales of the primary sale went to public goods, and then worked with Nouns Dow on releasing an NFT that was for public goods. So actually, Gitcoins have been kind of experimenting with fundraising in this category a little bit. So it's interesting to hear you say that, especially with the explosive growth of NFTs in 2021. Well, it makes me really happy to hear. Great. Well, yeah, we're always, you know, I say that quadratic funding is just this really amazing, elegant mechanism.

but the two kind of catches that come along with it are solving the civil inclusion problem, which is somewhat complex. And then also the continual need to fund a matching pool are just like the two kind of like adjacent things that you need to do in order to keep that steam engine of quadratic funding rolling. And you've traditionally been sort of an advocate for let's not spend too much money in each round. And let's make sure that the community knows that there's that continuous. quadratic funding that's going to happen over time so that they can start to expect it and adjust their behavior to work more on public goods from there.

So I'm wondering if you think I got those two mechanisms, those two sort of like catches right with quadratic funding. It's the ability to innovate on how you fund the matching pool and the ability to innovate on fraud detection. Is there anything else that you would include in that category of like quadratic funding adjacent implementation problems? Hydratics Let's see

Those are probably the big ones Right Yeah like there's The kind of making sure What category one is making sure The mechanism is sounds Which would include collusion resistants Civil resistance

Like the Cryptography all of that stuff And then The other one is Finding funding sources I do want to Whether or not If you don't have anything to add there, I was going to sort of pull on the threat of civil resistance.

And I know that you recently spent some time in Argentina with Santi. We talked about that in his episode a little bit. Proof of humanity, I think, is an amazing protocol for creating civil resistance on the Ethereum ecosystem. And I'm wondering what you think the ecosystem, what kind of new mechanisms the ecosystem could invent once civil resistance has proliferated across the ecosystem. So basically moving from one token, one vote, DOWs, which I know. you've said one-to-one coin voting can be plutocratic to more one-human one-boat-type systems. How excited are you for civil resistance to be widely available and what kind of new mechanisms do you think that will enable in the ecosystem?

Lots of things in governance, definitely. In other, aside, the main non-governance use case that I think is important for crypto has to do with coin distribution. I think that there is right now, you know, obviously there are air drops. But also, there's a bit of a backlash against airdroops for a couple of reasons. So, like, one is that they don't discriminate between people who actually care a lot about a project and people who, like, barely care at all. And, like, that's not going to be like that won't be solved with, like, personhood. That might require some other solutions.

Like, I'm increasingly a fan of the learn-to-earn-to-earn-stuff as a substitute for just, like, unconditionally giving people coins. the other one is but then the other problem is that they just get farmed to death by VC funds and like whatever air drop mechanism someone comes up with it can basically only safely be used once and like that's a problem right

so I think like having air drops that are gated by proof of personhood is something that could really help and improve things and like it could even be a hybrid right it could even be like the number of coins you get is the square root of how many dollars of liquidity you contributed. So, yeah, more things like that, I think could help projects a lot because I do think that

there is a very genuine desire to have a very wide distribution, but at the same time, a very genuine desire to have a meaningfully allocated distribution where you're not just throwing coins away. And there's like increasingly effective tools for people to click one button and dump all of them. So, yeah, I think proof personhood can do a lot there. Right.

It seems like reading between the lines from your answer, Vitalik, that mechanisms that can figure out who is creating value for a protocol are going to be really important in a learn-to-earn type sense where you can have a continuous token distribution to the people who are

adding value to an ecosystem. So basically anything that for a Dow or a Learn-to-Earn ecosystem can add value to that ecosystem, could then be plugged into a public goods funding mechanism for that ecosystem. Is that accurate? Exactly. I think so. Cool. So maybe there's a whole category of tools that we'll see that are designed to help figure out

who's adding value and measure that in different ways. And I could see a whole bunch of innovation coming out of that. I really hope so. Living a bankless life requires taking control of your own private keys, not your keys, not your crypto. That's why so many in the bankless nation already have their ledger hardware wallet. But the ledger ecosystem is much more than just a secure hardware wallet. Ledger is the combination of the Ledger hardware wallet, the Leisure Live app, and soon the CL CryptoLife card powered by Ledger. The CL card powered by Ledger is a crypto debit card with powerful features, like an instant exchange to Fiat, where crypto assets are only sold at the moment that you swipe

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Fast, cheap, and friction-free. All right. Well, I think that we're coming up on the half hour here, so I'm going to get into my closing questions. I would love to know if there's anything that I didn't ask you that you want to say about public goods or regenerative crypto economics or that part of the Ethereum ecosystem. See, we talked about NFTs. So we talked about humanity gating. And, um, um, Oh, one other direction that I think quadratic funding might need to evolve eventually is that right now, the mechanism doesn't really discriminate much between, like, people who are part of a community and people who are not part of a community. And like, if you make a Gitcoin round for, like, say, optimism, there's nothing. distinguishing, like there's nothing giving in an actual member of the optimism community a greater ability to have an impact on where the matching pool goes than the someone from

the arbitralum community. And one way to look at this is, like, well, the point is that the mechanism is flat because it's by being willing to don't kind of throw money into the system as a contributor that you are demonstrating that you care about optimism. The other way of looking at this, though, is that, like, in practice and, you know, especially with some of these per person limits, it is, like, it might be, it is possible that some of these projects end up being vulnerable to a brigating. And it's, like, and this is a problem, especially in.

if you have funders that actually actually care, right? Because like quadratic funding, the mechanism was originally designed as this kind of very unusual mechanism that just says funds all, funds me all the public goods. And so from that light, like it makes sense why you, you know, you wants to try to be completely unusual between everything. But when you have like sources of funding that wants to be more specific, then does it make sense to find a way to try to make the mechanism be more specific? Like, what would that actually take?

Like, what would happen if, you know, an optimism person tries to like sign, make a, or let's say any world where Gipcoin grants is fully automated? And then someone, an optimism person, submits a project applying for funding from the arbitral pool. where that project actually just sends the money to do some optimism stuff. And this is transparent that everyone knows about it. And then they just invite a whole bunch of optimism people to throw a dollar in and get some of the arbitrage matching funds. How would you actually prevent that?

Would it actually, would it be some kind of like gated participation thing where if you're not like one of the community members, then either you have a smaller matching allocation or you just don't get matched. Would it be something else? Would the matching pool be able to specify some group for dispens that have free credits? I don't know. But that's just like one of the things that would be interesting to look at eventually, right? Like this I think gets into the broader question of like we talk, how we talk about there is this binary of private and public. goods, but the reality is that nothing is fully private or fully public.

Like, there's medium-scale public goods that benefit some people but don't benefit other people. And then there's people in their end sources of funding that care about some ecosystems and not other ecosystems and how to actually create mechanisms that care about all of those things. It's going to be an interesting challenge. But I think it's also a really important one. Right.

Well, yeah, I think that's a really important one. As Gitcoin grants has, we've been scaling vertically, which means bigger matching pools, but now we're starting to scale what I call horizontally, which is out into these other ecosystems like Uniswap and then Polygon, and then we've also been doing cause rounds for climate change and longevity and journalism. And I do think that you know, being able to figure out whose voice matters within the public goods of each of those ecosystems now that we're not just having general public goods is the problem I heard back from you, and that's an interesting problem to solve.

But I want to tug on the... Oh, sorry, go ahead. No, no, you go ahead. What are we talking on? Yeah, I just wanted to tug on the sort of like binary between public and private goods. And one of the things that I've been struggling with from a governance perspective is that a lot of these projects that are on Gitcoin are public goods in some way or private goods in another way.

And I look at these things as maybe a double-sided or triple-sided marketplace in which one side of the marketplace is a public good and the other side of the marketplace is a private good something that you have to pay for. And, you know, like the example that I would that I would sort of use is, you know, I think like ENS, the ability to find anyone out there and like figure out what their ETH address is based off of a name that you can remember like I'mawaki.eath and being able to find me, that is a public good. But the ability to write to the EMS system costs ETH. And So on that side of the market, it's, it's like gated by some amount of money. It is excludable and it is rivalrous.

And so I'm wondering, you know, how do you think about that spectrum of pure public goods and private goods? And is there capacity for nuance in how we fund these public goods? And, you know, how do you think about that? Is it a binary or is it a spectrum to you? It's definitely a spectrum to me. Okay. Yeah. Big good.

I think it's uh again it's definitely a spectrum um i think it's not showing itself as a spectrum yet um and the reason why it's not showing itself as a spectrum yet is because uh like the amount of funding to that's uh there for public goods it's still like nowhere near as high as it should be and so when the funding is scarce like it just gets distributed to the things that really really need it the most which are these uh very pure and very uh underfunded uh public goods that just have no chance of having a business model otherwise. But as the funding increases and as the ecosystem saturates a little more, like I think it fully makes sense for public goods funding mechanisms to also like intervene

in places where there are kind of mixed public and private concerns. Right. Like eventually if, you know, if like an entire government of like starts running on a quadratic funding, then, you know, maybe like, yes, it should. just like give subsidies to businesses who take more effort than others to make sure that their products are environmentally friendly or you know to like health insurance companies that like do more to ensure to ensure that their offerings like are fully universal and open to everyone um like that's you know like there again the real world there are a lot of like mixed private and public

goods um like that and i think uh you know that's you know definitely part of the complexity of the here of the world that we're trying to build for, which is totally fine. So what I heard there is maybe a crypto economic incentive for things that you, businesses may have externalized things like environmental impact or access to health care to people who are not profitable, adding a crypto economic incentive to not externalize those things and to bear those costs and using quadratic funding mechanism as a way of creating that incentive. Did I hear that correctly?

Exactly. Okay. Yeah, one of the things that we've been talking about in the regenerative cryptoeconomic space is sort of defining an impact Dow as anything that has a net positive impact on the world, whether that's a financial, social, or other type of impact on the world. And I'm wondering what you think of that definition of like building. What I'm searching for is an atomic building block of regenerative crypto economics. And the best I've come up on is one that has a net,

positive impact and externalize is good for the world. What do you think about that definition? And can we build a composable building block for more regenerative systems? And how would you define it, if not? Can we build a building block for more regenerative systems? I feel like there's lots of building blocks for more regenerative systems. Like this is a sort of thing that's like difficult to reduce the one component, right? Because there's public goods funding and there's different.

kinds of public goods funding and even different dependencies to public goods funding. Like we talked about like identity, some of the cryptographic aspects. There is like decentralized governance. There's like some kind of arbitration. And all of these systems are kind of depend on each other in complicated ways. Yeah. So yeah, I think there's probably like at least half a dozen building blocks if not more that like if we were to try to draw out a diagram of all of this, like we would see them.

Right. Yeah, I was kind of looking for the lowest common denominator. Like, for example, with ERC20, you can have a token that's a governance token, that's a utility token, that's a security. And ERC20 is the lowest common denominator. And my attempt at a lowest common denominator for this stuff is an impactile is something that has a positive externality. And that could be implemented in multiple ways. Yeah, I think that's probably the closest you can get.

It's a good place to be. Right. Yeah, I support impactals. Cool. Well, Vitalik, thank you so much for coming on the Regenerative Crypto Economics show and looking forward to seeing you at Heath Denver and through 2022. Thanks so much, Vitalik. Thank you too.