Hello again! It’s been a while… but Gitcoin is still close to my heart. Over the last year I did work instantiating grants programs for Arbitrum and working with Thrive Protocol. These experiences have influenced how I think about Gitcoin’s best opportunities. I’d like to share some of these ideas here.
Allo Protocol Needs a Token
Gitcoin has always been about community - even as our mantra shifted from open source software, to public goods, to funding what matters. It rallied an open and thriving ecosystem for those brave or foolish enough to think we might be able to change the world.
At the cusp of a critical technological advancement, we have brought together libertarians and socialists in a space where innovation in how we collectively govern and allocate capital is the mission.
Allo Protocol, a tool designed to expand the possibilities of decentralized funding and community-driven innovation is our primary product. It is open-source infrastructure that could allow communities to leverage economies of scale efficiencies to fund what matters to them.
Unfortunately, visuals of a solarpunk future have not been enough to convince others to make adoption of the standard a no brainer. To succeed, Allo needs a token—a token that will align participants around a canonical open data schema, creating a unified foundation for future growth.The Allo Protocol is an opportunity to establish a common ground on which our community can build and innovate.
Most of all, announcing an ALLO token which will be programmatically awarded to those who drive GMV, will send a much needed signal to potential partner ecosystems. It is currently unclear what our north star goal is, and partners need to know this to be willing to partner deeply - with large commitments to Allo GMV.
IF our number one goal is adoption of the protocol, we need to ensure our protocol works symbiotically with partner ecosystems to help them fund what matters. This is a MUCH different partnership request than asking for 10-20% of GMV as payment for services!
Incentivizing the Adoption of the Standard
In an environment where everyone is incentivized to create their own standard for personal gain, why would anyone choose to participate in a collective effort like Allo? The answer lies in rewards. The protocol itself should reward participants for their contributions, incentivizing collaboration, and ensuring that we build a foundation that benefits the entire ecosystem, not just individual players.
For this system to function effectively, we need a legitimate unit of account that provides a foundation for legitimacy in its governance, as per Ostrom’s SES framework. This will allow us to create credible governance processes that determine when and how the protocol should evolve. We need a trustworthy foundation for decision-making to ensure every update serves the community and its shared goals.
The Allo token could fairlaunch with programmable issuance giving governance power to those who are using the protocol to fund what matters. The premine could simply give Gitcoin DAO enough governance that it would not be diluted from a controlling stake for some predetermined amount of time. Perhaps, instead of time, the issuance rate (similar to a difficulty adjustment in bitcoin) is dependent on hitting GMV goals.
The tokenomics have an opportunity to be designed with only adoption and governance of the protocol as a consideration. I hate seeing DAOs, with plenty of funding, and being one of the only entities that could fairlaunch protocols, being unable to take the next step. Current conversations around a fee switch only make sense if your north star isn’t adoption of the protocol.
ALLO doesn’t need to collect fees. Similar to bitcoin, the more users, the more valuable the protocol becomes. Bitcoin issuance dilutes current investors, like a tax, to pay for the cost of an ever more consistent monetary policy. The positive feedback loop of more people looking for consistent monetary policy drives the pie to be bigger as a whole.ALLO issuance would dilute earners slightly to ensure the existence of an end-to-end transparent and auditable way of funding what matters in your community.
Why Not GTC?
This brings us to the roles of our tokens: GTC will continue to govern the impact of network investments, while ALLO will govern Allo protocol specifications, manage network upgrades, and control the Allo treasury. Allo can initially be established with investment from Gitcoin. This will lay the groundwork for governance and resource allocation that remains true to our collective mission as each Token can only catalyze one goal.
- GTC - Store Value in a way that catalyzes value into onchain governance innovation. It’s mission is complete when the world funds everything optimally.
- ALLO - Provide legitimacy to a collective decision making process that governs the Allo protocol to ensure continued neutrality.
GTC must function as an impact network. As the Gitcoin DAO collectively funds the best opportunities to sustain the infinite game of onchain capital allocation innovation, it will need new mechanisms to enable it to “walk the walk”.
For example, Gitcoin needs the ability to spin off sub-DAO workstreams, allowing focused initiatives to thrive without being tied to the larger structure in non-symbiotic ways. We’ve seen a low rate of success thus far in attempting to spin out organizations, but this doesn’t need to continue.
Gitcoin DAO and network should “dogfood” Gitcoin software, using it to distribute its treasury. ALLO protocol can innovate on how issuance direct from a treasury can be used to fund what matters to Gitcoin, and create issuance streams that reward staked Allo protocol communities for driving Gross Marketplace Value (GMV). This structure forms a virtuous cycle of impact and innovation, where every participant benefits from the success of the whole.
Onchain Governance Innovation
Gitcoin is also setting a new standard in governance innovation, providing an infrastructure for transparent and community-driven decision-making. Our vision is to become the industry leader in allocating resources through onchain mechanisms, enabling communities to fund their shared needs without the bureaucratic inefficiencies of traditional taxation and regulation.
The beauty of onchain allocation mechanisms is their ability to bypass centralized controls, like government taxation, and allow inflation to be directed toward ecosystem public goods.
Long Term Innovation Partners
We need to partner with ecosystems that share our long-term vision to improve onchain capitol allocation. This includes building customized mechanisms, a commitment to evaluation, and improving their systems over time through iterative testing and feedback. These partners will have every reason to use and love the Allo Protocol—not just because it meets their needs, but because it rewards them for their contributions.
By allowing partners to select from a list of proven mechanisms or customize their own, we provide flexibility and adaptability, ensuring that every community can tailor their funding mechanisms to their specific needs. And as they contribute, they will earn governance in Allo, further aligning incentives and giving them a stake in the future of our collective impact.
Optimizing for Optimal Capital Allocation
These partners could be other web 3 networks or collectives aligned by a mission such as climate or desci. Together, we can redefine how we measure success. For some partners this might mean reaching sustainability to continue making impact until an existential problem has been solved. For others, it may mean achieving their goals with maximum efficiency without compromising on political decentralization.
For the Gitcoin community itself, we must achieve sustainability as an impact network to be able to reimagine capital allocation done by real world governments. Instead of focusing solely on metrics like GDP, we want to realign focus on what truly matters—human thriving. To achieve this, we need to find and support the happiest and healthiest communities, and work with them to optimize and spread awareness for the innovative mechanisms and tools built on Allo protocol which are distributing their collaborative excess for the benefit of everyone.
Open Data Standards FTW
Innovation needs transparency, and transparency needs standards. By establishing open data standards and schemas for critical milestones of value creation, we can create a framework that empowers our community to grow together.
Communities which adopt Allo Protocol must build systems that drive attestations which increase collective knowledge growth and ensure that every community can benefit from shared insights and data. Imagine a marketplace of reviewer applications and scoring algorithms, each one contributing to the transparent and equitable allocation of resources. By creating this open system, we enable communities to develop new ways of assessing value, incentivizing participation, and driving impactful innovation.
When one community thrives, the others look to find out what tools they are using to achieve outlier results.
GTC as a Catalyst for Impact
At the heart of Gitcoin lies GTC, our native token. GTC is more than just a financial asset—it’s a catalyst for impact. Just as photosynthesis turns sunlight into energy, GTC turns incentives into real-world impact, transforming the way we solve problems and allocate resources for the common good.
GTC is a Store of Value
Holding GTC should be a testament to our collective belief that capital can be allocated in ways that truly benefit humanity. If you believe that our world’s resources could be better allocated, then holding GTC is an act of faith in a better future. (Its better than holding your value in an asset that uses its inflation to fund wars like fiat US dollars!) GTC has its mission and as long as capital allocation is not perfect, there is more work for Gitcoin to do.
Across the DAO landscape, I see the discussions of sustainability via revenue & investments vs. hypergrowth investment to achieve network effects. I never see ecosystems take sustainability via buy pressure of the asset. Across DAOs, people tend to think that this is an impossible feat - though I would argue that the only ecosystems to remain decentralized have indeed done this - Bitcoin & Ethereum.
In fact, I believe revenue is a construct that quite literally can only be optimized through a centralized entity, while asset price going up via symbiotic relationships between an ecosystem of decentralized and autonomous entities organizing productively is the only way to reach sustainability while keeping decentralization.
Finding Sustainability
Let’s assume that my comment about decentralization only being able to sustainably decentralize via token appreciation is in fact - heretical! There are still quite a few pieces of low hanging fruit we could grab if only we could truly align on a north star.
For example, if our north star is getting GMV into Allo protocol (I’m assuming I don’t need to clarify that I’m not referring to gamed metrics and wash trading), then how might we justify certain practical decisions like…
- A strategy focusing on many small clients vs a few large partnerships
- Takes more resources to sell and maintain
- $15 million GMV at $50k per client is 300 clients
- Product team builds on demand for clients instead of building solutions looking for problems
- A value capture strategy of white glove service fees
- The best way to propagate use of the protocol is no fees
- This is argued as a current strategy, to me this only makes sense if your future plan is SaaS model.
- A value capture strategy of protocol fees
- Off putting to large partnerships
- Incentivizes forks - the right to exit is good, but your governance should make it so good no one wants to leave!
Now, how can we generate more revenue for the Gitcoin ecosystem? How might we ensure Gitcoin has the resources to achieve its mission? These questions are not just for us—they’re for the entire Gitcoin community. Together, we can build solutions, push boundaries, and create an ecosystem that drives positive impact at scale.
This begins with Gitcoin being recognized as what it is - an Impact Network. It requires us being realistic about the adoption of the Allo protocol and what is needed to continue driving it forward. It requires us to invest in projects that have pathways to a revenue generating or otherwise sustainable future. It requires innovation in the onchain infrastructure which ensures Gitcoin’s investment rights while maximizing the autonomy of the project.
Reigniting the Vision
Gitcoin has always been about empowering communities to build and fund their shared needs.
As long as collective capital allocation remains unfair and biased with suboptimal outcomes, Gitcoin should be the catalyst bringing the change the world wants to see.
With the Allo Protocol and the power of GTC, we have the opportunity to take our mission to the next level—redefining governance, transforming how resources are allocated, and creating a future where human thriving is the ultimate goal.
As I learned what an ecosystem like Arbitrum needs from a partner like Gitcoin, I have compiled a mental list of things that I feel Gitcoin should be doing to attract more high value partnerships. I invite you to engage me in my vision of how we might reignite the Gitcoin vision. While this isn’t a full-time effort (those that know me well know that I tend to focus on one project at a time), I do plan to check-in and offer my honest opinions on this matter.
The future is in our hands, and the time to build is now. Let us be brave enough to execute in spectacular ways.
Disclaimer: This isn’t a proposal from me, nor do I expect any portion of a token. I’m explicitly suggesting a fair launch with proper diligence done in designing long-lasting crypto-economic security & sustainability of the system along with strategy evaluation to align messaging and intent to potential partner ecosystem.