Quadratic Funding and How Gitcoin Raised $60M for Public Goods - Kevin Owocki

This episode delves into the revolutionary concept of quadratic funding and its application by Gitcoin to effectively allocate over $60 million towards public goods within the Ethereum community.

1. Quadratic funding empowers broad community participation in funding decisions by magnifying the impact of numerous small contributions over fewer large ones.
2. The introduction of Gitcoin Passport aims to curb identity fraud but has increased the complexity for genuine contributors, highlighting the delicate balance needed in secure digital identities.
3. Gitcoin is evolving from a centralized platform to a decentralized autonomous organization (DAO), with governance shifting to token holders.
4. The podcast reveals plans for Gitcoin 2.0, including new funding mechanisms like retroactive public goods funding and conviction voting to cater to diverse community needs.
5. Owocki emphasizes the potential of blockchain for public goods funding, envisioning a future where even local governments could employ these advanced, decentralized funding tools.

1: Introduction to Quadratic Funding

Kevin Owocki explains Gitcoin's core product, quadratic funding, and its dual nature as both a powerful tool for community funding and a system susceptible to fraud. Kevin Owocki: "Quadratic funding is powerful because it magnifies the influence of small donors."

2: Decentralizing Gitcoin

Discussion on the progressive decentralization of Gitcoin and the transition from a traditional corporate structure to a DAO. Kevin Owocki: "We're progressively decentralizing Gitcoin and transitioning the governance to our community via the GTC token."

3: Challenges and Innovations

The episode covers the challenges faced with Gitcoin Passport and the innovative solutions being developed to reduce friction for users. Kevin Owocki: "We're constantly refining Gitcoin Passport to balance security with user accessibility."

4: Future of Public Goods Funding

Owocki shares his vision for expanding the use of quadratic and retroactive public goods funding outside the crypto space. Kevin Owocki: "In ten or 20 years, I hope to see local communities using these tools for public goods funding."

1. Explore Decentralized Funding: Individuals and organizations interested in community-based project funding should consider exploring decentralized platforms like Gitcoin.
2. Participate in DAOs: Engage in decentralized autonomous organizations to understand and influence the development of community-driven projects.
3. Stay Informed on Security Practices: With evolving platforms, keeping abreast of the latest security measures and requirements is crucial for active participants.
4. Contribute to Public Goods: Leverage platforms like Gitcoin to fund projects that benefit the broader community, enhancing the impact of your contributions.
5. Monitor the Evolution of Blockchain Applications: Observing how blockchain technology is being used in different sectors can provide insights and opportunities for innovation in your own field.

5 years, 20 Grants, 3715 projects crowd-funded and over $60M raised towards public goods funding, from 4.2M unique donations. Gitcoin’s headline numbers are indicative of the massive success their quadratic funding (QF) and public goods funding models (PGF) have seen over the years. With Gitcoin 2.0, crowd-funding is further decentralised, Allo Protocol being open-source and permissionless: any ecosystem treasury can create their own Gitcoin Grants program to help their community fund what matters to them.

People

Kevin Owocki, Friedriche Anz

Companies

Gitcoin

Content Warnings:

None

Kevin Owocki

So basically what Gitcoin is trying to do is we're trying to build the ultimate capital allocation engine for these ecosystems and allow people to deploy these tokenized treasuries to allocate them to fund what matters in their communities. We're seeing a lot of adoption by l two s and lsts and projects that want to use gitcoin grants, the power of bitcoin grants in their own communities. Gitcoins flagship product over the years has been this thing called quadratic funding, and the reason why quadratic funding is powerful is also one of its vulnerabilities. As we increase the cost of forgery for attackers, we accidentally increase the cost for real users to verify their identity with Gitcoin passport.

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Start staking today at chorus one. Welcome to Epicenter, the show, which talks about the technologies, projects and people driving decentralization and the blockchain revolution. I'm Friedriche Anz and today I'm speaking with Kevin Owaki, who is the founder of Gitcoin, a grant distribution project originally on Ethereum and now on a whole lot of other chains as well. Kevin, you've been on epicenter before. Welcome back.

Kevin Owocki

So glad to be back. Thanks for having me. Cool. It's been a while since you've been on, I think like two or three years. So give us your and gitcoins backstory.

Friedriche Anz

In a nutshell. Yeah, for sure. Well, you know, one of the cool things about having been in the space for the last seven years, and I think this is my third epicenter episode, is that I actually, the first epicenter episode I did was, uh, within a month of the launch of Gitcoin grants, which has been the platform that has helped the Ethereum community fund $60 million worth of open source software and, uh, public goods for the Ethereum community. And, um, that was, uh, that was January 2019 that we launched Gitcoin 1.0. And, uh, that was about the time that I, that appeared on Epicenter.

Kevin Owocki

The first time, um, I, uh. Over the last, over the last couple of years, we have been progressively decentralizing gitcoin. And I am here today to talk about the Gitcoin 2.0 white paper which outlines our vision for a decentralized git coin. So hopefully taking the power of Gitcoin grants and that $60 million worth of Ethereum public goods that have been funded on the platform and putting in the power of any community that is based on top of the EVM. So progressively decentralizing and progressively having more impact over time.

Friedriche Anz

Perfect. We'll talk about all of that in just a little bit. Gitcoin leadership has kind of changed somewhat over the years, so I know you were gone for at least a little bit. So what's your current involvement?

Kevin Owocki

So my current title is co founder and I am acting CTO of Grants Lab, which is the organization that is pushing forward the software development at the Gitcoin Dao. Gitcoin has, I said in the intro, has been progressively decentralizing over time. In 2021, when the Gitcoin Dow launched, we launched the GTC token and the GT and, and that was sort of like a transfer of power from, at the time, Gitcoin was a corporation and I was the CEO of it. So all of the decisions sort of rolled up to me and when it became a Dow, the decisions transferred over to the token holders who were ultimately responsible for the fate. And as part of the transfer of power, our legal team felt that it was necessary for me to disaffiliate from the project for at least a little while.

And, um, I think I was in total disaffiliated for 15 or 16 months. Uh, during that time I was working on a project called Supermodular, which, um, basically at the time we thought that we would kind of this setup would be, uh, similar to how the Ethereum foundation builds the Ethereum protocol and consensus. Joe Lubin startup, uh, builds things on top of it, things like meta mask or gnosis. Um, that was kind of the setup between the Gitcoin Dao and Supermodular. Supermodular was building software in the gitcoin ecosystem and gitcoin was building the core protocols, uh, which makes me, I guess like one 1000th of a Joe Lubin.

But uh, we were just building stuff in the, in the gitcoin ecosystem for a couple of years. And um, and after that time, I ended up reaffiliating with the project as of, I think it was September of 2023. And I'm glad to be back in the fold and helping push the core protocol forward. We're seeing a lot of adoption by l two s and lsts and projects that want to use Gitcoin grants, the power of getcoin grants in their own communities. So it's quite an interesting time to be helping people fund what matters in their communities, because lots of people with tokenized treasuries that are trying to build active communities around them.

Friedriche Anz

I have to admit that last time I tried participating in a funding round, and I've participated in many, many, many funding rounds. Because you've had like 20 or something, right?

I must admit I gave up. I didn't make it. I did not actually make any contribution, contributions at all. I think it was like in the late summer or fall last year, and I failed at authenticating enough ways to kind of get a Gitcoin passport or something, something that wasn't necessary to kind of contribute earlier. Tell us about the gitcoin passport and why you felt it needed to be introduced.

And I know this wasn't just me. So basically, I know lots of other people kind of seem to have the same problem on Twitter at least. Sure. Yeah. Well, certainly value your honest feedback.

Kevin Owocki

In the road to progressive decentralization has not been without setbacks, and sometimes there have been many happy to talk about any and all of them. So basically, Gitcoins flagship product over the years has been this thing called quadratic funding. And the reason why quadratic funding is powerful is also one of its vulnerabilities and quadratic funding is a mechanism invented by Glenn Weil from Microsoft, Vitalik Buterin, the founder of Ethereum, and Zoe Hitsig. And basically the way it works is that, Frederick a. If you have a grant that raises a $100 for a $100 from 100 contributors, and I have a grant that raises dollar 100 from one contributor, you, you're going to get 99% of the matching pool.

Because we're trying to fund what matters to a broad swath of the Ethereum community. So that's really powerful because it means that lots of people will come out of the woodwork to contribute to these grants. Because even giving a dollar can get matched with a tens or hundreds of dollars from the matching pool, depending on how big the matching pool is and how many other contributors there are to the grant. Okay, so that's really powerful. We're, we're, we're pushing power to the edges of the ethereum community by funding, uh, with quadratic funding.

But that power is also a drawback. Okay, so, um, the, the vulnerability in this, and uh, since your listeners are in the ethereum community, I'm assuming they're adversarial thinkers. Uh, if, if I have a $100, uh, to my grant with uh, only one contributor, and you have a, your grant with 100 contributors and you're getting 99% of the matching pool, I have a rational incentive to make up a hundred different identities in order to contribute to my grant and get more of the matching pool. So that's what's called a Sybil attack. It's a sock puppet attack.

And um, that's why we've introduced getcoin passport into the system, to allow people to verify their identity and increase the cost of forgery in so that your identity cannot be falsified. Now, the problem that we ran into, and keep in mind this is all like live beta software, where kind of trying to figure it out as we go along, is that as we increase the cost of forgery for attackers, we accidentally increase the cost for real users to verify their identity with Gitcoin passport. And not only do we have to, we have to walk this line where we make the system not civil like, we have to make the system civil resistant, but we have to make it privacy preserving and we have to lower the friction for end users. So, um, that, that's a little bit about why passport exists and the problem that we are trying to solve. And the thing I'll say is that the passport team has heard everyone's feedback loud and clear and we, they are working on a no friction way of verifying civil resistance.

I can get into that if, if it's interesting to your listeners. But GG 20, Gwen grants 20 is coming up in April, and I would encourage everyone who gave up during Gitcoin 19 or Getcoin 18 to give it another try, because we've been putting a lot of work into making the friction way less for people. And I'll be curious to hear if it paid off. The nice thing about bitcoin grants is that we've run 20 rounds, and it's. It's an iteration.

Every single round, we take the feedback from our, our community and the feedback from Vitalik and other game theorists and try to fold it into the next iteration of bitcoin grants. So, it's a deeply iterative evolutionary experiment, and we value your feedback because it helps helps us make it suck less. Next time, tell us, tell us what you've changed to make it less painful. Yeah, so there's two things. They're both really data science heavy.

So we've been investing in some, like, PhD level data scientists. To, number one, there's a, there's a stamp called the ETH stamp, which basically goes out and uses a lot of complicated data analysis and machine learning to look at all the on chain signals behind your address and to figure out if you're a civil attacker or not. So, like, something that that algorithm would find is that if there's a hundred accounts that are all funded by the same account, that's probably a civil attacker. That's probably someone who's just gassing up a bunch of different accounts so that they can, uh, that they can Sybil attack, get coin grant. So for the end user, that is a just one click connect and sign your message in order to get above the matching threshold on getcoin grants, to get that stamp.

And, uh, you know, before, uh, well, you tell me what your experience was in, in GG 19 or GG 20, but before, you would have to go through and click a bunch of stamps in order to get up to the threshold. And now it should just be a couple of clicks, uh, using that machine learning algorithm. And then the second thing that I just want to talk, uh, about really quickly is this new algorithm that it was invented by Joel Miller, who is a data scientist and, uh, on the getcoin team called cluster mapping. And basically what cluster mapping does is it's a way of clustering contributors who contribute to the same grants together and treating them as though they're the same identity and so basically, if someone's civil attacking a git coin grant and they make up a hundred new accounts, and they all those 100 accounts only contribute to the same bitcoin grant for the purposes of the QF algorithm. They are just one identity.

Uh, and, and basically, if, if I was a civil attacker trying to attack Gitcoin grants, then I would have to contribute to a bunch of other grants in order to make my identities unique and uncluster them from each other. And basically what this does is it takes the energy of the attackers, the, uh, funding of the attackers, and make sure that they're funding a bunch of, uh, public goods on gitcoin in order to attack the system. So it kind of takes like karate kid style, takes your opponent's momentum and uses, uses it against, uh, uses it against them in, in a way. So, um, yeah, in some cluster mapping and the ETH stamp are the two ways that we're really reducing friction. Using cutting edge data science behind the scenes in order to prevent civil and collusion attacks on QF, but also keeping the user friction low.

Friedriche Anz

I totally understand the approach. Is there a way to kind of escalate this if I feel misclassified? So say, for instance, I told my 50 friends that they should definitely give to, say, Rotke. And they do, but they only give to rotkey. So basically there's like 50 people who only give to Rotky because I told them, this is a fantastic project, please give to it.

Can I then kind of escalate the fact that kind of they were kind of, so to say, disqualified from the matching pool? Yeah. So, I mean, the first method of feedback is contacting the getcoin support. So in the bottom right of browser window, you can chat with someone on the getcoin support team and just say, hey, I don't agree with this. Or, hey, here's my feedback.

Kevin Owocki

Your ux sucks in this browser combination, web three login combination. That's the first layer. The second layer is that you can go to gov dot, getcoin dot Co, and you can escalate it to the Dow governance structures. So, you know, this is all transparent political economy happening out in the open. And if you're not happy with the way things that are working, then that's another way to escalate things.

And then, you know, the third way is just complaining on Twitter. I know that Gitcoin has had some missteps in the last year and a half, and I'm partially responsible for that as the founder, and we listen to all that feedback and Getcoin is, like I said, iterative and evolutionary, and your complaining helps makes make bitcoin grants 21 better. So please tell us through any of those channels when you, when you don't like what you're seeing perfect. So maybe let's back up a little bit. Why is capital allocation a difficult problem that kind of needs this level of infrastructure to tackle?

I think that what we're seeing in 2024 is really quite interesting. We've got thousands of daos, or tokenized communities that have tens or hundreds of millions, sometimes billions of dollars of capital in their treasury, and they all want to build ecosystems around their software stack. And so Justin Drake was just on a bankless episode in which he was talking to David about how like the l two meta, how l two s are competing with each other. And he said that l two s are going to compete for liquidity and on infrastructure and on sequencers and on tooling and on public goods. And, you know, like the one change I would say to, to what Justin said is that, is that public goods are the way that you get all of those other things in your ecosystem.

So if you can solve the problem of capital allocation, you can invite the builders into your ecosystem to build tooling, to build infrastructure, to build liquidity. And so basically what Gitcoins trying to do is were trying to build the ultimate capital allocation engine for these ecosystems and allow people to deploy these tokenized treasuries to allocate them to fund what matters in their communities. So basically the problem of capital allocation is how do we fund what matters in these communities? How do we run quadratic funding rounds that help incentivize the outer ring of builders in your community? How do we run retroactive public goods funding rounds in order to incentivize communities in order to add value value to them.

So I think that the immediate answer in the crypto space is the most effective tactic available. Uh, if you're competing as an L two or an LST or an LRT or a DeFi project, is to build a community of, of hackers that are in the orbit of your ecosystem. And so, you know, that's the near term goal for Gitcoin grants, is to help these communities fund what matters to them in the near future. Now, I think in ten or 20 years we're going to take the, the tools that we have pioneered in the crypto space, we and others have pioneered in the crypto space. Um, and we're going to take them mainstream.

And in ten or 20 years, I would love to live in a world in which local towns, uh, and cities and states are running retroactive public goods funding rounds and quadratic funding rounds using tools that were pioneered in the crypto space. I think we can do better capital allocation using blockchains than was possible in the old world. We now can do scalable and precise capital allocation without intermediaries. We can do more democratic capital allocation than was possible before. And to me that's the true purpose of crypto, is removing intermediaries and, and help people, helping people get funding for doing good in their communities.

So yeah, near term answer, we're gonna help armed people who are building EVM based communities. But long term it's about helping the world fund its public goods and helping the world allocate capital in a democratic way. Cool. You talked about quadratic funding earlier, where kind of the impact your vote has depends on the square root of how much you're giving. You also mentioned retroactive public goods funding.

Friedriche Anz

Right? Now, can you briefly explain what that is? Yeah, sure. So, but just to zoom out a little bit, one way that we describe gitcoin 1.0 is like Gitcoin 1.0 is like a screwdriver. It only did quadratic funding.

Kevin Owocki

Gitcoin 2.0 is like a multi tool. It's going to do quadratic funding. It actually dare does quadratic funding. It does retroactive public goods funding, it does direct grants, it does all these different flavors of funding. So talk us through all of the flavors that you support now, sir.

Yeah, well you asked about retroactive public goods funding, so I'll start with that.

I've been working with the optimism community in order to build a tool called easy retro PGF XYZ, and that's basically the same voting interface that optimism uses for retroactive public goods funding in their community. Um, retroactive public goods funding, as, as your listeners may know, is based off of the idea that it's easier to fund things that have had an impact in the past than it is to speculate about which things will have impact in the future because you have all the data available about what's actually done good in these communities. So basically using retroactive public goods funding, you set up a system of badge holders who are community members, who are highly regarded in the community, have good judgment and have about three to 5 hours per quarter in order to allocate capital to what has done good in the past. And so optimism has been pioneering the retroactive public goods funding space within the Ethereum ecosystem and we've partnered with them to make their flavor of capital allocation available to any other DAO in the EVM space that wants to do retroactive public goods funding. So we've got our first pilot of easy retro PGF XYZ available coming up in the, in the next month.

That'll be in, in April. And we're working with. I think I can say this on air, but Filecoin pocket cello in order to run retro PGF rounds in their community. So yeah, just, just, I just want your listeners to like, I just want to like drill in on this point. Bitcoin 1.0 is just QF.

Bitcoin 2.0 is, is many different flavors of uh, of capital allocation. And QF and retro PGF are two, two of the ones that we're most excited about right now. Happy to go into the others or to take questions about retro PDF. Yeah, one question about retro PDF before we kind of go into the others. So you said that you have to define a set of people who are allowed to kind of make allocations or kind of vote on kind of what should receive funding.

Friedriche Anz

Why do you have to do that for PDF and not for quadratic funding? Yeah, so we're kind of like almost mixing two things. The prospect of retroactive versus prospective funding is just sort of like a spectrum of are you funding things that were only good in the past? Are you funding things that are good in the past and in the future? So that's like, that's like one spectrum and then another spectrum is the allow list, who gets to vote.

Kevin Owocki

And in quadratic funding there's this almost. It's actually pretty radical to think anyone in the community can vote with their dollars or, or their ETH that they bring. Whereas retro retroactive public goods funding is a little bit less democratic and it's a more, a little bit more technocratic. So basically you assign a badge holder, someone in your community that's well regarded and well informed, that gets to vote. And I kind of think of this as a spectrum of like on the, on the left hand side, if it's just the core team and the founders that get to decide who allocates capital, well that's completely technocratic and sort of like insular and, and no one gets to decide.

And uh, badge holders are just a way for, for uh, communities to slowly dole out that responsibility to their most trusted community members. And, and what I think we're going to see with retroactive public goods funding is communities that have had direct grants programs. And maybe there's a grants administrator who's become a power broker in their community, start to be able to dole out and progressively decentralize that, that responsibility, but also that power to their community. Until you start to reach out and have what optimism has, which is hundreds of badge holders who are making decisions. And then, you know, I think the ultimate destination looks a little bit more like QF, where maybe you'll have thousands of badge holders that are making decisions about funding what matters.

It's about progressively decentralizing that power. So when we talk about the difference between QF in retro PGF, I think people get a little bit tripped up because we're actually traversing two different spectrums of the design space. The first is retroactive versus proactive, and the second is how technocratic versus democratic is the vote. And capital allocation is a design space. There's going to be many dots along this design space.

Those just happen to be two that the community is exploring right now. Yeah, super interesting. And what are the other capital allocation schemes that you have integrated into Gitcoin 2.0? So I want to be very clear about what exists right now and then what exists in the future because I think a lot of like one of the radical things we did with the Getcoin 2.0 white paper is like, we didn't write the Getcoin 2.0 white paper and then say, hey, we're going to build it over the next five years. This stuff is live already.

So we've, we've got direct grants, which is just plain simple vanilla grants. You can go out and a grant administrator can run an on chain grant program. Um, we've got quadratic funding, which is what Gitcoins historically known for. Uh, we've got retroactive public goods funding that's already live. And then we've got conviction voting pilot that we were working on with uh, one hive.

So basically conviction voting is, is, is sort of like an interesting way of doing capital allocation in which you stake governance tokens and then you can remove money from the treasury. The more governance tokens have been staked and the longer they've been staked. And then we've got a capital allocation mechanism called streaming quadratic funding, which is a, which is a partnership between Geoweb and superfluid and gitcoin in which basically instead of funding public goods quadratically for two weeks per quarter, you could have an always on stream of revenue that is being continuously allocated to different, uh, grants in your ecosystem. So those are the five that exist right now, direct grants, quadratic funding, conviction voting retro PGF and streaming QF. We've got a roadmap of around a dozen other mechanisms that we want to build into the get cooling toolbox into the future.

And um, you know, like I said, this is all in service of helping communities fund what matters. We see a future in which uh, communities are going to be funding their ecosystem in a plurality of different mechanisms, and we think these mechanisms are all complementary with each other. I, I think that the, the meta, the most effective tactic for someone launching an EVM based community in the next cycle is going to be not just having a regular grants program, but also doing QF and retro PGF and conviction voting all together. And um. And yeah, so the vision is basically to have an ecosystem of capital allocation that funds your community in complementary ways to just your existing direct grants program.

Friedriche Anz

Can you give examples of where you think each of these schemes will be particularly effective? Because if they're all about the same, you wouldn't need so many, right? Yeah, sure, I'm happy to. The word scheme makes me feel a little bit dirty because a lot of these things are deeply rooted in game theory. But, but yeah, just to answer your question, um, uh, quadratic funding is really good at democratic capital allocation and invites people in the outer edges of your community to fund what matters to them.

Kevin Owocki

Retroactive public goods funding is really good at progressively decentralizing the responsibility from a centralized grant administrator to, to a group of trusted community members, and then eventually many more of your community members to fund what matters to them. Conviction voting is really good at creating bottoms up momentum in your community to help people fund the public goods that matter to them. And you know, if, if a normal governance proposal or process takes, I don't know, hours to write the grant proposal, and then it takes all of the token holders to vote on it, and in summit spends 100 hours of, of token holder attention. Conviction building is really nice because you, you, you're not doing um, million dollar grants with, with hundreds of dollars, hundreds of hours of attention. You're doing uh, like a $500 slush fund for a party that someone in your community wants to host, and they only have to stake thousands of their, of their governance tokens in order to pull it out.

So it's like a very bottoms up way of doing capital allocation. So I think these are, all, these things are all good at. Like it's simply the analogy of, of, of a multi tool, I think really works. Like for the same reason that uh, scissors and a phillips head screwdriver and pliers solve different problems. Around the house.

Each of these capital allocation tools solve different ways of doing capital allocation in your community that are all complementary to each other. So I think of it as like a multi tool or like a toolbox of different tools that complement each other. Cool. You, you were just talking about staking the token that's relevant for that community. You guys also have your own token that you briefly alluded to earlier.

Friedriche Anz

What is that used for?

Kevin Owocki

Yup. So GTC is the, is the Gitcoin token, and GTC stands for gitcoin, or I like to say that it sell, it stands for govern the community. It's a governance token. And basically it's a fork of uni, which itself is a fork of compound, uh, using GTC, any token holders can delegate their governance power to a member of the community that's more active, uh, than them. There's, uh, the getcoin token dropped in 2021, and there was around 14,000 holders at that time who are delegating to about 100, 150 key decision makers in the community.

And, um, yeah, GTC is, is basically a governance token that allows you to govern the Gitcoin smart contracts on chain. And the Gitcoin smart contracts are basically the treasury. And then there's also allo protocol, which is our capital allocation protocol, that there's a fee switch within the protocol that is governed by the GTC holders, and then there's the treasuries that are governed by the GTC holders, and there's active discussions on Gov dot Getcoin co about how to evolve this into the future. But yeah, the short answer to your question is just governing both allo protocol and the treasury. Okay, then let's maybe dive into allo protocol, because the Gitcoin 2.0 vision is a three tiered stack with the allo protocol at the bottom or top, however way you look at it.

Friedriche Anz

So talk us through that. Where I'll start is that we built Kitcoin 1.0 totally wrong, and I just want to raise my hand in front of your audience and say I built it centralized and monolithic, and I have seen the light and modular and decentralized is the way to go. Gitcoin 1.0 was a centralized monolith. It was hosted on a AWS server in Oregon that I set up. And gitcoin 2.0 is hosted on Ethereum and on ipfs.

Kevin Owocki

Hooray. Our public goods funding mechanisms are decentralized. Now we're eating our decentralized vegetables. So, um, basically, uh, this is a allo protocol is a modular suite of smart contracts that allows people to basically, it's easily forkable. So anyone can fork gitcoin grants and build their own capital allocation mechanism into it.

But if you don't care about coding, uh, you can just basically use this tool called Gitcoin grants stack, which is the web application that allows anyone to run a Gitcoin grants in their community. So basically what we're allowing everyone to do is run a QF round permissionlessly without any help from us. So Getcoin 1.0 was all about fishing for you. Getcoin 2.0 is teaching you to fish. We've now got a community of 50 to 100 round operators that are trained to run Gitcoin grants rounds in your community.

And that's what we call the program layer, it's the social layer. People who run, understand how to run QF rounds in, in various EVM based communities and they are building, they are building these programs on top of Gitcoin grant stack, which is the application that anyone can use to run a QF round and a retro PGF round. And then that's all built on allo protocol, which is, which is sort of the, the development layer under, underneath of it. So, um, yeah, I think this architecture is quite elegant because it allows us to go deeper on each of the capital allocation tools and build the best tool for that design space. But it allows us to go broad and build many different types of capital allocation tools into the community.

So that's a little bit about the architecture of Gitcoin 2.0. Can I add modules to that? So basically, if I feel like a particular distribution mechanism is definitely missing, can I build that and have it integrated into that stack? Yep. So if you don't have coding skills, you can go to Gitcoin Co, Grantstack, click on the GitHub, open up a new issue and make a suggestion for a capital allocation strategy.

If you are a software developer, what you can do is you can fork allo in Grantstack and you can augment the capital allocation strategies and then pr it back into Grantstack. So what I think is really one of the most powerful things about open source is the ability to accept contributions from all over the place. And my goal for Gitcoin 2.0 is I want to do for capital allocation what open Zeppelin has done for ERC 20 tokens. And what I mean by that is this. When I was a software developer who was just entering the space and wanted to mess around with something at a hackathon for a weekend, I would just pull ERC 20 solidity contracts out of open zeppelins repository and I knew they were well documented and they were audited.

And I could just take that money Lego ERC 20 token and pull it into my app. And that way I could build what my app actually needed to do instead of reinventing the wheel of ERC 20 for every app that I'm, that I'm building. We want to do that for capital allocation. I imagine a future in which anyone in a hackathon at an ETH global hackathon in the future can pull the power of bitcoin grants into their out, into their application for that weekend. And they can instantly have a quadratic funding strategy or retroactive public goods funding strategy that they know is documented and audited.

And I think that what this is, we want to build the money legos for capital allocation on the EVM based stack. And what thats going to do is propel the community forward in distributing the capital that exists in all of these different tokenized treasuries across the space. And so yeah, setting the shelling point for capital allocation contracts and making those, those contracts available to any hacker in the space who wants to build QF or retro PGF or conviction voting or whatever it is, into their application in the future. So that's the final North Star. Uh, we're not quite there yet.

Still working on making the docs good, still making the contracts really understandable. But uh. But yeah, we believe in a future in which anyone can take the power of bitcoin grants and put it into their application. And that's enabled by this new modular architecture, uh, that we presented in gitcoin 2.0. You said that the fee switch for the allo protocol is triggered by the gitcoin token.

Friedriche Anz

Tell us about the fees that you may introduce. Yeah, I'd say that right now we're really just focused on providing as much value as possible. Allo protocol is being used in dozens of places right now. We think that there could be hundreds, thousands of daos that are using allo protocol and could benefit from these capital allocation tools right now. And uh, right now we are accepting payment and feedback, uh, because we just want to make sure that these tools are adopted and helping as many people as possible.

Kevin Owocki

There are no active plans to turn on the fee switch. I think, uh, it's really up to governance whether that's going to happen or not. And I think keep an eye on gov dot get coin dot Co. But uh, you know, my constraints for actually activating the fee switch would be that it has to be done in a way that is positive some with the communities that it serves. And I think that we're still exactly figuring out the path to financial sustainability for Gitcoin and how to balance the trade offs with what that would mean for turning that on.

So I guess that's a long way of saying it's up to governance. I don't know. Keep an eye on Gov dot Gitcoin. Dot Co. What's the sentiment about Gitcoin token holders?

Friedriche Anz

Because, I mean, in principle, if you look at the market cap, it's kind of like probably on the order of 100 million or something. So to kind of have that kind of float, people probably believe that it'll be able to capture some of the value that it provides to other communities. Right. I mean, I think that the sentiment that I see expressed on Gov Dot Getcoin Co. Which is where, at least in theory, people are supposed to be expressing their sentiment about gitcoin, is you guys need to get product adoption.

Kevin Owocki

So, so basically, Gitcoin Dao launched in 2021 and we're now in 2024. It took two years to rewrite the centralized monolithic stack to be decentralized and modular. And I, and I think that, you know, in a space where attention is fickle and we're going to chase meme coins on the order of hours, not days, I think a lot of people have forgotten about Gitcoin and that's fine. We didn't execute and there was a pretty hard reset between 1.0 and 2.0. So I think the focus right now is on building tools that are actually useful to people and getting those adoption.

And I think being a leader again in capital allocation, I think in a lot of ways Getcoin 1.0 pioneered quadratic funding with the help of. Obviously we didn't write the paper, Glenn Vitalik and Zoe wrote the paper, but we're pioneering the actual practice of using it. And the game has changed. It's not just quadratic funding anymore, it's retroactive public goods funding. There's a bunch of different capital allocation tools, and the reset, from centralized and monolithic to decentralized and modular, has necessitated a different approach in a new era of leadership.

So I think the honest answer to your question is that Kikuyu needs to lead again and it needs to pioneer the space during a new era in which the game has changed. And the sentiment that I hear that I really want to respond to is making Gitcoin a market leader again. And that's what you'll see me pushing for at Gov Dot. Gitcoin dot Co. That's absolutely fair.

Friedriche Anz

So you recently deployed to a whole bunch of chains. How did you determine where to deploy to? I mean obviously it's clear that Ethereum mainnet was not the place to fee anymore in light of the fees. But yeah. How did you decide where to place your bets?

Kevin Owocki

Yeah, well anyone can take allo protocol and deploy it wherever they want. So that's the nice thing about being forkable and permissionless, that you don't have to rely on Kevin Owake anymore. Gitcoins going to deploy to any l two that's legitimate and wants to fund what matters to its community. So right now we're seeing the most traction on optimism. And arbitrum allo has also deployed to Celo, into Zksync, into base and wherever the communities that, wherever there's money that is going to be funding public goods and funding what matters to these communities, I think that, well make sure that there is an allo deployment to those chains.

So I think we're all waiting to see where l two s are going to shake out. But it's pretty cheap to deploy the allo contracts to a new chain in terms of time and gas costs. So we're going to go to as many l two s as there are communities that have treasuries that want to deploy them. Yeah, makes total sense. You heavily rely on kind of like the future being dao heavy for gitcoin.

Friedriche Anz

Right. Because allocating treasuries kind of like in a decentralized manner. This is very much a dao mandate. How do you see the recent evolution of daos? Are you happy with where we are right now with daos or do you think we need to push for getting to another place?

Kevin Owocki

I think daos are a fascinating design space. I think daos are basically crypto and multiplayer mode. What do we do when communities have to govern something together, have to push forward a movement together? And I always like Win said the word organization in decentralized, autonomous organization. I think these are networks in a way, and that's just a totally different way of thinking and it's going to take time for them to evolve.

The corporate forum evolved for 300, 400 years, something like that from the East India Corporation to what we now know is the Delaware C Corp or, you know, I'm not sure what the equivalent is in Europe, but uh, I think it's going to take, it's going to take decades of evolution for us to figure out the final form of Dallas and I think that we can't rush it. Um, I really like, I really like Mullock Dows. I really like compound daos. I think that there's all the gnosis. Safe is just an incredibly simple but powerful tool for helping communities work together.

I'm excited about new primitives like hats protocol, and I think we can't force the evolution. I think we have to go through the painful parts, but also the beautiful parts of daos happening. And what gitcoins trying to solve is a very small portion of the Dao stack, which is capital allocation. And you're right, it does sort of depend on people having tokens that they want to deploy to, from their tokenized treasuries to the outer orbits of their communities. But gitcoins kind of a bet on the EVM eating the world and tokenization eating the world.

And on top of that, I know that people are going to want to fund what matters in their communities and we just want to build the best stack for doing that. But maybe I could tease a little, actually, a little bit. I'm actually writing a book right now called how to Dao, which will be published with Penguin Random House as a publisher in September, October of this year. So really excited to explain the design space of Dallas to hopefully a more mainstream audience coming in the fall. And I think it's a really fascinating and exciting design space.

Friedriche Anz

I had no idea about the book, but I'm going to push on this now. So what do you think is the single thing that should be changed for Dao that would have the most impact right now? It's. It's a hard question to answer because asking about Dallas is, is like asking about. It's an extremely wide aperture.

Kevin Owocki

Asking about Dallas is like asking about organizations. Are we talking about a family? Are we talking about a nonprofit? Are we talking about a for profit corporation? Are you talking about an ngo?

Like, it's just like too wide of an aperture to even give a useful answer. So I'm sorry, not to answer your question, but I think there's a whole bunch of little things that need to be made better. Yeah, okay. I'd specify. So in my view, the one thing that would do a lot if it were to be solved is kind of like the attention bandwidth problem, right?

Friedriche Anz

Kind of. Right now, when you actually look at the snapshots of daos, often it is votes on things that shouldn't be voted on. There's like basically quorums are not met left and right. Because people kind of disengage. Do you have an idea how to deal with the bandwidth problem for different decisions kind of on different scales for daos?

Kevin Owocki

Yeah. I mean, my response to that would be, hey, what if there was a capital allocation tool that respected the voters attention instead of assuming that theyre spending tens of hours every day on the governance forums? So I think that quadratic funding, in a way sort of is that with quadratic funding youre taking a look at all of the grants in a community that are doing stuff within that community and loading up your cart. Once per quarter, it takes ten or 15 minutes. It feels more like an e commerce experience.

You check out and then youre done once a quarter. And so there's not a bunch of like governance proposals to really spend a lot of time debating back and forth on. And, um, anyway, by the way, I'm sorry there was so much friction in your GG 19 experience. I hope that GG 20 is, is more, uh, is better for you. But, you know, my response to that is we need a capital allocation swiss army knife and we need to have more tools that respect the, the user's attention, the voters attention when, when they're allocating capital in these daos.

Friedriche Anz

Yeah. And Kevin, I want to make clear that I've given through gitcoin through most of the rounds. I'm a huge fan. I think it's super. I just wanted kind of, I was frustrated because I think it's a really important tool and I want to see it just work.

Kevin Owocki

Yeah, well, I am back at gitcoin. I was disaffiliated for about a year and a half and I think that gitcoin was in the messy middle between 1.0 and 2.0. Um, but if you have complaints about GG 20, please tweet at me. I'm at a walkie on Twitter and I read all the feedback and we take it seriously, uh, sometimes even if you don't see it and, um, and know that we're working hard to make the user experience better. Um, we have made missteps.

It is a hard design space, but gee, each getcoin is deeply protopian with. And by that I mean it gets better every quarter. Um, sometimes it's two steps forward and one step or one step, two steps back and one step forward. Uh, you know, especially between gitcoin 1.0 and 2.0. But, uh, we are still here, we are still grinding and we're going to make each get going grants round better than the last one.

Friedriche Anz

Fantastic. So, um, tell our audience how to get involved with Gitcoin governance if they want to do so, how to contribute, um, how to. I know there's an approval process for projects to kind of be whitelisted and so on. You rely heavily on volunteers for that. So if people kind of, if this resonates with people, where do they head?

Kevin Owocki

Yep. So you can go to Getcoin co. Which is where you can find all the other good stuff. If you check out impact dot getcoin dot co. That is the ticker for the amount of impact that get coin has had from the beginning of of gitcoins entrance in the space.

I've always been very focused on. Let's actually show the numbers, the tangible impact that bitcoin is ha is having. And I wanted to stand out from all the projects that were promising the world but not actually delivering much. And impact dot get coin dot Co is where you can go to see our latest impact numbers. As of, as of 2024, March 2024, we've done $60 million worth of funding to public goods in the ethereum ecosystem.

You can go to get coin dot co slash discord. If you want to join our discord and get involved gov dot Getcoin dot Co is the governance forum for, for gitcoin. And um, you can also find us on twitter@twitter.com getcoin yeah, those are the links that I would, that I would expect that people could go and check out. And April 2024 is when gitcoin grants 20 is happening. So set a reminder.

Remember to check out in your getcoin cart and uh, send me a tweet after you do it and let me know. If it sucks, then tell me it sucked. If you thought it was great, then tell me it was great. I'm twitter.com awakey. Frederick ye, thank you so much for having me on the epicenter podcast.

I really enjoyed the conversation. Thank you for coming on. Kevin. I'm looking forward to round 20. Thank you for joining us on this week's episode.

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Kevin Owocki

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It helps people find the show and. We'Re always happy to read them. So thanks so much and we look. Forward to being back next week.

Kevin Owocki

Forward to being back next week.

Forward to being back next week.

Kevin Owocki

Forward to being back next week.