TLDR
With GG24 just around the corner, we want to assess the community’s interest in supporting research (initially) entitled, “From Mechanism to Outcome: Towards a Taxonomy of Impact for Web3 Capital Allocation Governance.”
This research will analyze the performance of the capital allocation governance mechanisms deployed during GG24, mapping each mechanism from desired outcomes to actual results. The data will be collected through a combination of documentation reviews, interviews with domain leads, and a retrospective analysis.
We strongly believe such research is crucial as Gitcoin looks to pioneer a multi-mechanism world. It is our hope that the findings will help to better fit future domain-specific rounds with the capital allocation mechanisms that will achieve stated objectives and generally facilitate more effective mechanism experimentation.
Overview
In many ways, web3 has become the preeminent environment for experimentation in novel capital allocation governance mechanisms. Currently, the space is rapidly moving out from under the dominance of plutocratic, simple token voting systems, to a plurality of more sophisticated mechanisms. As a paradigmatic example of this shift, Gitcoin is “expanding the aperture” from allocating funding strictly via QF rounds, to fully embracing a multi-mechanism future, funding dedicated domain areas with tailored mechanisms. In addition to QF and dedicated domain allocation, the upcoming GG24 round will feature deep funding, retro funding, hypercerts, conviction voting, InfoFi / conditional funding markets, as well as hybrid approaches featuring some combination of these mechanisms.
The emergent multiplicity of mechanisms presents a need (and an opportunity!) to evaluate their performance and impact.
While the Mechanism Institute has done a good job aggregating various characteristics and design considerations regarding a large number of mechanisms, and the capital allocation handbook explores real-world implementations, there is a lack of transparent, evidence-based evaluation criteria by which to communicate and analyze mechanism impact within and across ecosystems. But before we can do that, we need to take a step back to answer the following question: how do we make mechanisms—their components and outcomes—more comparable? Comparability will help drive the cross-mechanism analyses, evaluation frameworks, and performance benchmarks that make effective impact measurement possible.
The Global Impact Investing Network (GIIN) has developed a thematic taxonomy for the purpose of “providing a shared language for describing, assessing, communicating, and ultimately comparing impact performance.” Similarly, we propose that creating a taxonomy of impact for capital allocation governance mechanisms in web3 will enable the creation of a flexible framework to map mechanism components to outcomes. This taxonomy will provide practitioners with a common logic that guides mechanism selection, execution, evaluation, and iteration, ultimately ensuring that novel mechanisms are deployed towards initiatives with the strongest alignment to ecosystem objectives and the greatest potential for impact.
Objectives
This research aims to produce an initial taxonomy of impact for capital allocation governance mechanisms in web3. Modelling off of GIIN, this taxonomy will be constructed of hierarchical classifications proceeding from broad-to-narrow (i.e. from high-level objective categories to individual outcomes). To understand a mechanism’s full effects on GG24 results, outcomes will reflect both funding distribution data and funder behavior data.
Building such an evidence-based taxonomy will:
- Map objectives to actual results
- Uncover thematic connections within the layers between objective categories and outcomes
- Enable mechanism comparisons that provide greater transparency and credibility for round operators and funders
- Reveal behaviors of various actors in the system to better predict future outcomes
As a final deliverable, a paper will be published that allows the community to visualize and assess the performance of the mechanisms deployed in GG24 and enables better decision making regarding mechanism selection for future rounds.
But this is just the beginning! Using the “v1” taxonomy created in collaboration with Gitcoin, we hope to continue the research by extending the analysis to other ecosystems. This "roadshow,” which we plan to start at Devconnect, would aim to convene more stakeholders and inform the development of the taxonomy through more comprehensive data sets.
We also see this research as a way to better engage with social organizations, NGOs, and potential large funders outside of web3, with whom we have yet to find a common language to effectively communicate and compare impact performance.
The long-term vision is to create a living public resource that allows all participants to better understand the distinct outcomes driven by each mechanism and better match objectives with the mechanisms that help achieve them. This will hopefully result in better decisions when setting up or evaluating future funding rounds and position these mechanism experiments towards success.
Methodology
Taxonomy development will be conducted via the qualitative research method known as the grounded method, whereby the taxonomy is constructed by looking at the evidence that exists and building from what is there (i.e. from the ground up).
The research will cover all mechanisms used to allocate funds during the round and will consist of 3 stages:
Stage 0: Aggregating, reviewing, and analyzing existing documentation (primarily the Gitcoin forum posts submitted during Sensemaking Szn) relating to what mechanisms were chosen for GG24 and why they were chosen.
- Analysis will involve coding of the documents in order to capture text regarding specific mechanism objectives, components, and outcomes. The codes will then be clustered based on conceptual similarities in order to generate hierarchical frameworks and initial drafts of taxonomies.
Stage 1: Connecting with domain leads for structured interviews about their mechanism selection process and desired funding outcomes for their GG24 domain.
- The interviews will help refine the taxonomies, or uncover new ones. Sharing initial taxonomies with the interviewees beforehand will allow researchers to further support or expand findings.
Stage 2: Collecting and analyzing funding data from across all GG24 domains
- The final stage will surface both funding and behavioral data, the combination of which will provide full context for understanding GG24 outcomes. Researchers will then map each mechanism from objectives to outcomes.
Rough Timeline
- Sept 29 - Oct 3: Collect feedback from Gitcoin community
- Oct 6: Stage 0 (documentation review) & Stage 1 (interviews) begin
- Oct 24: GG24 ends & Stage 2 begins (funding data analysis)
- November: present initial findings and vision for taxonomy at Devconnect
- December: publish final research findings along GG24 Retrospective
Team
Sam McCarthy, Ecosystem Lead @ DAOstar (@samccarthy27)
Josh Dávila, The Blockchain Socialist (@TBSocialist)
Mike Cooper, Research @ Metagov / Grant Innovation Lab
Next Steps
This post is a temp check to gauge the community’s interest in supporting this research through collaboration and/or funding. In particular:
- Are there similar efforts already taking place that we should look to for areas of overlap and places to collaborate?
- Are domain leads willing to participate in the interviews?
- Is this research something that Gitcoin would be interested in funding directly?
Feedback on this post will help shape a formal proposal, including specific funding requests.