Ecosystem-wide collaboration on public goods value capture

Ideas & Open Discussion
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Hi everyone,

We’re starting an ecosystem-wide initiative to realize value capture for public goods.

Why value capture?

Public goods funding without value capture is like funding car production with cookie sales; if you want more cars produced you need to sell more cookies — this doesn’t scale.

PGF with value capture however is like funding car production with car sales; the more cars you sell the more you can produce — it scales!

Yet today every public goods funding platform in web3 relies on external sources of funding (“cookie sales”) and doesn’t capture the value of public goods. Meanwhile, little research is done to advance value capture.

Because scaling PGF is so important for the entire ecosystem (and beyond), we need an ecosystem-wide collaboration to realize value capture — and that’s what we’re now initiating.

We’d like to bring together project leaders, mechanism designers and builders from across the web3 ecosystem to develop a value capture mechanism for public goods.

We’re also looking for a liaison from each project/community to keep the community in the loop on what we’re doing.

We will be onboarding contributors and liaisons from across the ecosystem over the next few weeks, then start the effort of ideating and designing the mechanism, and later prototyping and iterating on the system (more on that here)

Much progress has already been made toward a functional value capture mechanism with work around Value Consensus, so that can be our starting point in exploring the solution space. The endpoint though should be a system that every public goods project in the ecosystem can benefit from, and that needs to happen through a ecosystem-wide collaborative effort

So if you’re passionate about mechanism design, governance, or otherwise believe you can contribute to this effort, please let me know so I can add you to the initiative.

Thank you!

(cross-posting this in the ecosystem)

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This does sound interesting to me. I’d like to build tools that let people identify commons and let more people govern them. I think public goods should ultimately be funded by the wealth that’s generated by commons. Let’s build tools to help us decide how much goes to what, and what rules we want for the use of commons.

I’m working on Updraft and Aura right now.

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checkout my latest research on this - fair fees - Fair fees: A dynamic formula for balancing dapp value creation/capture - Ethereum Research

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Thank you @owocki, shared with the Value Capture group.

I’m curious if you considered ways to extend Fair Fees to other public goods that don’t necessarily directly involve routing transactions onchain (eg. OSS, research, etc. or even other onchain infra)?

Also wondering how closely is this approach likely to align with what the community values - it’s possible that certain onchain components are absolutely critical for a protocol to function well - and may be really difficult to build at the same time - but are not often used (something analogous to an emergency brake, for example), vs other parts that may get lots of traction but aren’t as valuable.

In other words, can the Fair Fee approach mitigate creating perverse incentives where builders focus on txs maximization over value creation for a community?

Another question is whether user fees in this case are preferable to some model where the builder reward comes from a community treasury. For instance, pay builders $30K reward if $100K in txs are used, $50K for 500K, etc. - you can even match the bonding curve per transaction value and stream the reward.

The reasoning here is that, since it’s easy to fork onchain code, a community needs to agree to the proposed fee structure (rather than forking the code and eliminating it). It would therefore be more beneficial for the community to spread the fee burden more equitably instead of having early users pay larger fees.

The user fee approach here may disincentivize use of the dapp or create misalignment between users and the community; in a Gitcoin QF round, for example, early donors would be paying a greater fee though the benefit of donating is accrued to grantees and the ecosystem as a whole.

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