The ecosystem is evolving!
Crypto moves fast. This means there are both opportunities/threats for Gitcoin…
This post is from Owocki/@Sov , and covers different trends that we see in the market, and how they may affect 2025 strategy.
1. Ecosystem-Specific Venture Funding
Convertible grants are a hybrid mechanism bridging the gap between traditional ecosystem grants and VC investments. The most well-known early examples of these come from Solana as non-dilutive grants that can convert to equity investments upon reaching specific milestones, such as raising a priced round or hitting growth targets. Another example is Giveth’s q/acc program with Polygon.
This model allows grantors to support various projects, including closed-source and potentially commercial initiatives that still deliver ecosystem value. It offers projects the flexibility to build viable businesses without typical grant restrictions while giving foundations a stake in successful ventures.
We know that many of the longest-running and well-funded grants programs in the Ethereum ecosystem are thinking about this. Optimism, Arbitrum, Aave, Maker, and the Uniswap Foundation have all either announced ecosystem-specific VC programs or stated that they are looking into them. Venture programs are typically well-funded which means that there may be high potential GMV. Since these programs are also typically run off-chain, even in Web3, we would need to come up with a compelling case for running them on-chain.
2. Rising demand for verifiable impact
Grants are not dying, but they are entering their Reputation era. This means it’s time to reinvent, to be outspoken and advocate for change where it’s needed!
There is a new category of ecosystem incentives programs that only spend on verifiable impact (eg some action is taken onchain.) This category represents both an evolution of historically hard-to-verify grants programs, as well as a push back against grant farming and even the idea of grants themselves. Some mechanisms in this category may fit more in the “ecosystem growth” bucket than “grants.” The largest and savviest programs are already moving in this direction and we expect that the rest of the market will follow them.
This category includes things like
- Direct to Contract Incentives from Boost.xyz
- Incentivized Action Market (IAM) from Royco
- Retro Funding (esp Round 4 style Impact Metrics Funding) from Optimism (we built R4 app!)
- The Sunny Awards (funded by Optimism, built by Gitcoin)
- Primitives for proving out impact like Karma/Hypercerts
- Verified Impact using Thrive Protocol
The rise of verifiable impact is a threat to Gitcoin Grants if other players are able to segment the market into verified impact/unverified impact, and our solutions are cast as unverified impact.
The opportunity to evolve Gitcoin Grants into including verifiable impact is a great way to counter that threat, and even turn it into a strength.
Should Gitcoin make a play in verified impact? And if so, what primitive do we bet on? Where do we think we can provide value/win?
3. Futarchy
2024 was undeniably the year of the prediction markets, with platforms like Polymarket gaining unprecedented attention and usage. Prediction markets, where users bet on future events and outcomes, surged in popularity as tools for both governance and decision-making. Polymarket, one of the leading platforms in this space, became a central hub for predictions on everything from elections to cryptocurrency trends.
Futarchy is a governance model proposed by economist Robin Hanson, where decisions are made based on prediction markets. In a futarchy, elected officials (or protocol governors) define national welfare metrics, such as GDP or well-being, while policy choices are determined by markets that predict which policies will most likely improve those metrics. The idea is that by relying on market-driven predictions, it could lead to better decisions than traditional voting, leveraging collective intelligence to forecast outcomes more accurately.
Endorsed by Ethereum co-founder Vitalik Buterin, Polymarket gained credibility and momentum, symbolizing the growing interest in decentralized forecasting. With its rapid expansion, 2024 marked the mainstream emergence of prediction markets as a powerful tool for collective intelligence and economic insights.
In the past, following Vitalik’s research/thinking has yielded great results (AMMs=> Uniswap, QF => Gitcoin Grants, RetroPGF on Optimism). It might be a good bet for Gitcoin to get ahead of this one and build futarchy into the allo ecosystem.
4. More ppl building on Allo
2024 was the year of Gitcoin going multi-mechanism.
Grants Lab has built
- QF
- MACI QF
- RetroPGF
- Direct Grants
Citizens have built the following on Allo now
- Conviction voting (by 1hive)
- Grant Ships (by dao masons)
- Arbitrium LTIP (by raid guild)
- Endaoment QF
- Streaming QF (by Geoweb/superfluid)
This trend will likely continue with tailwinds from the release of Owocki’s new book, and Allo 2.1 having a great development experience.
How might we extend/embrace the network of builders on top of allo? Are there any cases in which we want to build these tools into GG? Do a token swap with these teams/develop a rev share? Are there any of these teams we want to acquire? Let’s explore DAO to DAO partnerships!
5. Onchain Social
The meta has been around for a while now, but given the large investments by VC in the space, what can we do to make Gitcoin a more social experience? A key principle of onchain social is that Ethereum is a social network. How might we showcase the best of what is being built in the Ethereum ecosystem, by who, and who has supported them? This could be woven throughout the product experience as a light touch, providing users with insights into the network and impact driven by the projects they support. By doing so, we aim to inspire trust, transparency, and a deeper connection between users and the broader ecosystem.
ASK: Get involved
This is a live conversation. Here’s how you can contribute.
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This post was authord by Sov/Owocki. But others probably have good market insights too! We’d love to get your input. If you are reviewing this doc, feel free to add your trends below.
Possible Trends:
- How are projects like Gitcoin doing financial sustainability or value capture?
- Are there any threats we can turn into opportunities?
- Differing crypto UX depending on audience
- AI Development Tools - How can we embrace them to Allo builders?
- native/exclusive projects/tokens
- Web2 companies converting to web3 (kickstarter, web2 music co)
- Ethereum Localism / Bioregionalism
- More responses here
- Grant-Hopping from ecosystem to ecosystem. Projects maintaining grants on many L2s/ecosystems, getting funding-ask-attention-overload.
- QF IRL - Ethereum Localism
2025 Planning is in October
Looking fwd to discussing in more depth how we’ll adapt to these trends starting then.