Announcing the spin down of PGN (EoL June 2024)

[kyle]

Tl;dr

The launch of PGN was a feat that came together quickly, and with an incredible amount of support from the community, our partners, and from Gitcoin. I / We are immensely grateful for the time and effort everyone spent in helping us first shape our thinking, and then work to launch and sustain the network. After reviewing a number of key metrics (usage, incentives, cost, staffing, etc.) we have decided we are going to be winding down the Public Goods Network over the next 6mos (network shutdown tentatively planned for June of 2024). This decision is a hard one for us and not the outcome we anticipated, however it feels right after taking a realistic assessment of the project. We have plans we will share soon on how we plan to shut things down in an orderly manner. We also feel it is best to showcase where this experiment was successful and where there were failures. Read on for more details.

As Incepted

PGN was conceived as the network that funds the world’s public goods. By building an alliance of public goods supporters, we could move network traffic to PGN so that low cost Tx fees would offer funding for public goods projects and supporters. The unique selling proposition of PGN was based on launching Contract Secured Revenue (CSR), and the appeal of directing sequencer fees to fund public goods. We felt there would be enough interest in CSR to drive development and adoption of the network (ie, people deploying smart contracts) all while it would be steered by an alliance of public goods supporters to help us govern the surplus of funding. Through the six months of building post-launch, what we learned was that:

1. CSR was not a viable technology to integrate given the law of chains and requirements to maintain parity with Bedrock (for valid reasons)
2. Convincing people to migrate network traffic without the convenience of a scaled network was not possible
3. Low liquidity on bridges (cannot move large Tx volumes on stables or other tokens), lack of DEXs, missing core components like a Safe UI, etc. all caused large headwinds.
4. Without promise of a future airdrop (we didn’t want to do a token… and OP governs the superchain), we saw far less traffic than other emerging L2s who likely will do a token.

The network was intended to be larger than just Gitcoin. In fact, the Gitcoin Foundation / I decided to bootstrap the funding of this initiative so that the Gitcoin DAO did not need to take on any of the financial cost or work associated with launching and maintaining the network. What we learned was that:

1. Gitcoin wanted to be involved, and I should have included them in the decision making process. This decision to fund the network this way caused frustration and eroded trust within Gitcoin.
2. The cost / revenue estimates we initially made with OP have not borne out. (ie, the network is more expensive to operate than expected.)
3. The Alliance has been terrific but has not driven much Tx volume as they dont have the same dApp / Protocol usage that Gitcoin has during Grants rounds.
4. There was confusion on how the Tx volume would be filled - OP felt this would be an App chain for Gitcoin and we wanted this to be an ecosystem chain like Base.

The Silver lining

By having a network live and focused on public goods, we were able to bring many of the best public goods projects together to explore how we might expand and grow funding. For Gitcoin, having a “default chain with financial upside” gave us leverage to raise additional funds for public goods (e.g., Polygon sponsoring the Eth Infra round for us to run the round on Polygon instead of on PGN). We learned that L2s are generally interested in supporting public goods, and want to support a community of builders. Giving them incentive to fund rounds on Gitcoin is positive for both ecosystems.

We learned an immense amount about how to launch, grow and scale a L2. We had interest from those who wanted to run validators and RPC nodes, we had immense support from the community in adopting and validating PGN as a legitimate L2 option on bridges, insight dashboards, core infrastructure (like the Graph Protocol, etc.). Partnerships and support from Zora, Base, OP, jokerace, Layerswap, Hats Protocol, Guild, Goldsky, Superbridge, Hop Protocol, LayerZero, have been incredibly generous and we want to thank them for all of the time and effort they have spent with us.

We were able to meet and work with some really awesome, intelligent people. PGN brought Nicole, Sophia, Dan and others closer to our ecosystem. Finding really great individuals to partner with on an initiative as large as PGN can often be daunting. Having Nicole lead so much of PGN has been such a joy to watch and participate with.

The Gitcoin team has risen to the occasion and really supported PGN from day one. The brand work by folks on MMM, the NFT drops, the engineering team (Grants Stack and Allo!) supporting the deployment of stable coins, bridging and other core infra has been immensely valuable. PGN gave us a fun sandbox to build a new brand identity and really showcase Gitcoin’s skills in going from 0 to 1.

The Path Forward

Work has been done to map out what would need to be true for PGN to be successful, and the reality is that the list is quite large, and the capital required is also significant (and not something the Gitcoin Foundation can absorb on its own). It was through the review of these requirements, and also evaluating the current appetite Gitcoin has to lead this initiative, that we have decided to shut down the network.

If there are others that would like to financially support this initiative… perhaps take over the network, please get in contact. As currently planned, PGN will be sunset (lights out) in June of 2024. We will offer more details as we get closer to that timeline. In the meantime, we plan to disable bridging onto PGN, and would encourage folks to bridge assets off PGN as they need them. See our documentation (docs.publicgoods.network) for bridging options and reach out in our Telegram with further questions.

Gratitude

Thank you so much to everyone who rallied around us to make PGN what it is today. I still believe we are in a race to the bottom where sequencer fees are one of the most sustainable sources of funding for public goods. As more and more L2 ecosystem’s grants programs evolve, there may just be enough funding to sustain our innovation for a while to come.

[owocki]

Gitcoin has experiemented with many different initiatives over the years. This is something I spoke about briefly in TEMP CHECK - Rapid Prototyping @ Gitcoin 🧪 :

@owocki

History of Product Exploration at Gitcoin 2015-2023

Gitcoin has had a rich history of exploration in the web3 design space through the years. As the market cycled through bull + bear + back again several times, Gitcoin has explored the design space organically.

Here is what the history of product exploration at Gitcoin looks like in my minds eye (and in the case of 2015-2017 cycle, what led to the creation of Gitcoin):

My perspective has always been that the projects that don’t survive themselves, the learnings from them live on. Experimentation isn’t about having 100% hit rate. Its about having a 100% learning rate + compounding those learnings over time.

Kudos for taking the shot and for making the hard call in the end

@kyle

If there are others that would like to financially support this initiative… perhaps take over the network, please get in contact.

If the network is financially sustainable after the move of DA to Celestia, I think this could be interesting. i wonder what a viable path forward would be. i just worry about (1) reducing focus on my 2024 focus (gitcoin = grants, grants = growwth) (2) what this networks USP could be.

[ZER8]

This is a sad day for PG and I’m very sorry to hear that PGN is winding down, I just want to share that you’re all amazing and to thank you for the herculean efforts made here!

[annika]

Earlier this week, I heard someone ask a question regarding another project: “Is this not a worthwhile experiment?”

PGN was a worthwhile experiment.

Its learnings will live on and help the Web3 community continue to improve the Layer 2 landscape & public goods funding mechanisms at large.

I can’t say it better than @owocki did:

Kudos for taking the shot and for making the hard call in the end

[QuickMythril]

does anyone know if this will affect GG plans? unclear if there will be any more rounds using PGN or not.

[M0nkeyFl0wer]

Not planning on running more rounds on PGN. Best to bridge funds back to other L2s or mainnet.

@kyle thanks for sharing this thoughtful post and for being open to experimenting with potentially important mechanisms that benefit the community at large.

[thedevanshmehta]

After following PGN since launch, I’m glad we are doing a retrospective on this experiment for us all to learn from.

Overall, a lot of the assessment centers around PGN simply being too early for its time, with inadequate tooling and unpredictable costs making this an unsustainable venture. Specifically, a gitcoin/public goods appchain may be worth revisiting as a validium after the ecosystem solves

@kyle

Low liquidity on bridges (cannot move large Tx volumes on stables or other tokens), lack of DEXs, missing core components like a Safe UI, etc.

@owocki

If the network is financially sustainable after the move of DA to Celestia, I think this could be interesting

There were also benefits for us to have a BATNA (best alternative to a negotiated agreement) that we could use to get L2s to sponsor the matching pool in return for us hosting rounds on their chain.

@kyle

For Gitcoin, having a “default chain with financial upside” gave us leverage to raise additional funds for public goods (e.g., Polygon sponsoring the Eth Infra round for us to run the round on Polygon instead of on PGN)

I wonder what our new BATNA would be to preserve this fundraising strategy - telling Polygon that if they don’t sponsor we will host a round on Optimism (due to retropgf) might understandably not be taken too well by them.

Now, some harsh questions not for the sake of it but so we can all learn the maximum from this experiment

@kyle

CSR was not a viable technology to integrate given the law of chains and requirements to maintain parity with Bedrock

Was this assessment not possible to do before we invested in spinning up an OP stack chain?

@kyle

The Alliance has been terrific but has not driven much Tx volume as they dont have the same dApp / Protocol usage that Gitcoin has during Grants rounds.

This was something we already knew beforehand, it did not come as any surprise right? What benefit did we perceive the alliance partners as bringing to the table in the 1st place?

@kyle

The cost / revenue estimates we initially made with OP have not borne out. (ie, the network is more expensive to operate than expected.)

This is in many ways a forecasting failure - may we know who and how the cost estimates were done in how much time? It’s important to investigate the lapse on this front in committing the resources we did before proper due diligence.

@kyle

Gitcoin wanted to be involved, and I should have included them in the decision making process. This decision to fund the network this way caused frustration and eroded trust within Gitcoin.

Now for the most interesting question of all - what have we learnt from this for the right relation between Gitcoin Foundation and the DAO?

Should we stick to @owocki’s suggestion of the foundation just being a legal wrapper?

@owocki

Afaik the Foundation is chartered to be the legal/administrative wrapper for the DAO. Whereas Labs would be chartered more for rapid experimentation.

(Keep me honest Foundation team members, but it seems like PGN was a one-off strategic project, but lmk if wrong. FWIW some of the folks that built parts of PGN, like @carlb, will be contributing to Labs

Or can we actually retain the amazing team that PGN has brought together and carve out a larger role for the Foundation to play of being like Gitcoin Labs, creating a culture of rapid 0-1 iterations while DAO workstreams retain the ethos of 1-10?

Arbitrum has some interesting learnings in this regard. Initially, they too focused on being the legal wrapper. Over time, the division has evolved to where the DAO supports teams in the ecosystem while the foundation poaches teams from outside. It is not a bad thing for these relationships to evolve over time.

[sophia]

There are no plans to have future rounds on PGN

[sophia]

@thedevanshmehta

Or can we actually retain the amazing team that PGN has brought together and carve out a larger role for the Foundation to play of being like Gitcoin Labs, creating a culture of rapid 0-1 iterations while DAO workstreams retain the ethos of 1-10?

I love this idea. When it became clear that we needed more tx volume on PGN, we started to focus builder calls on creating public good dApps to boost network activity. In theory, the idea is simple: build useful products.

One key blocker for PGN’s success was the lack of high tx volume non-defi dApps. I’m a strong believer that PGF infra will revolutionize how we coordinate, collaborate, and fund solutions to the world’s most pressing problems. But growing PGF dApp adoption requires real-world testing and refinement.

The products that launched through Gitcoin (grant stack, passport, and allo) are an excellent start. There are a lot of very talented teams across the PGF ecosystem. If we can work together and leverage each team’s strengths, we can begin to build products with strong market fit that scale into the real world.

I think the best way to do that is to support more people to rapidly iterate on human-centered products that connect the different PGF lego blocks together. Imo, a lot of the web3 landscape often gets caught in a loop of developers building for developers, resulting in products that fail to gain traction beyond their insular circles. I think we can disrupt this pattern by centering our efforts on the end-users.

I personally don’t know what’s next for me after PGN, but I want to do all I can to scale adoption of PGF tools. PGN was full of so many learnings and a really powerful, passionate, determined community. It would be a shame to see the momentum that was created from this schelling point go to waste.

[sophia]

It’s been an honor to work on PGN.

PGN was an excellent experiment for how we can leverage the economically exothermic nature of blockchain to create sustainable, durable, and recurring funding for public goods. I still believe in its mission and hope that as the L2 ecosystem evolves, its goals will be realized.

@kyle

We learned that L2s are generally interested in supporting public goods, and want to support a community of builders.

Yes! This was exciting to witness. L2 ecosystems are realizing that there’s a competitive advantage to fund public goods. While this made it a bit harder to sell our narrative as a unique selling point, the more L2s funding public goods the better. Symbiotic relationships are the backbone of web3.

@kyle

Work has been done to map out what would need to be true for PGN to be successful, and the reality is that the list is quite large, and the capital required is also significant

And the L2 landscape is rapidly evolving. It’s like that saying about startups… building a plane while flying. But in our case, the plane pieces are changing, many people with significantly more resources are also creating planes, and there’s just not enough passengers who even want to ride a plane…

As the ecosystem matures, we will move towards a direction where L2s will be easier and cheaper to maintain. But we just aren’t there yet. And it’s unclear what that exact timeline will be.

@kyle

We are immensely grateful for the time and effort everyone spent in helping us first shape our thinking, and then work to launch and sustain the network.

Couldn’t have said it better. The schelling point that PGN created amongst the partners, alliance members, the supercahin, and the PGF ecosystem at large was truly special. Lots of amazing things came from this experiment and grateful I had the opportunity to give it my all!

[0x666]

@kyle

ie, the network is more expensive to operate than expected

testinpod team is going to push delta upgrade to OP Mainnet
this upgrade will brings Span Batch, which can reduce 50%-90% of costs(it says performance in the backtest article,but i personally think it is costs) while in GG round,and reduce 97% costs if theres no GG round.

The PGN case represents that people can now use OP Chain for periodic use cases.

you can check the article here

[KarlaGod]

Oh wow, I guess it’s all for the best, I had put a team of B<>rder/ess students and a team of builders in PGN network to build PGN’s first dex, PIGEON.

We had created a TG group with me and a team to build PIGEON
https://t.me/+0aJ-RxBlL7w1N2Nk

Built a UI

Figma

And @bertux was working on the Contracts.

It’s all good, I guess we’d just close it off and count our losses, the good thing is PGN allowed me to meet amazing developers like @bertux and it allowed me to have great Jamboree sessions with other PGN builders and the person of @sophia.

If this is the best decision, then it’s all good, I’d still find more ways to contribute to the Public Goods ecosystem.