This article will try to examine the present state of the public goods funding ecosystem in Solana, drawing comparisons with the well-established ecosystem in Ethereum. With this comparison, I intend to examine the Solana Foundation's and Ethereum Foundation's previous strategies and provide an answer to the question, Do Solana public goods funding ecosystems require improvement? In addition, we will look at how Solana communities can learn from Ethereum communities' prior practices.
Before we begin, I'd like to clarify what public goods and the funding ecosystem mean in this piece.
Public Goods** - I Would like to draw from the Ethereum Foundation's definition of public goods from a blockchain development standpoint, which I can define as free and open projects that enable other projects to build and reach customers "better, faster, and easier". Examples include infrastructural initiatives, research, educational resources and communities, developer tools, and so forth.*
Funding Ecosystem -* In this piece, I define funding public goods as funding that does not seek a return. So VC, seed funds, convertible grants, and the like would not be included, but they might be mentioned. And the ecosystem part refers to the activities surrounding it, such as community building.*
Now let’s start
Public goods can be critical to any blockchain ecosystem's long-term growth. Each blockchain has its own foundation that funds the development of core protocols as well as initiatives that can serve as building blocks for other projects. Even though all blockchains appreciate the importance of funding public goods, their methodologies differ. This could be due to the culture and vision of each blockchain's founders.
Public goods can be critical to any blockchain ecosystem's long-term growth. Each blockchain has its own foundation that funds the development of core protocols as well as initiatives that can serve as building blocks for other projects. Even though all blockchains appreciate the importance of funding public goods, their methodologies differ. This could be due to the culture and vision of each blockchain's founders.
Brief Overview of the Ethereum Funding Ecosystem
Currently, Ethereum has quite a robust and mature Funding ecosystem through Ethereum Foundation(EF) itself and through other decentralised platforms. EF appears to focus on promoting public goods that benefit the whole Ethereum ecosystem. They have a main channel, called Ecosystem Support Program(ESP), which solely supports free, open-source, and non-commercial projects (as of February 2024, they are now accepting Academic grants and ZK grants). Through this mechanism, EF granted more than $45 million in public goods between 2019 and 2021. Their approach, however, still functions as a traditional grant with closed review.
Gitcoin is a key component in the Ethereum ecosystem's decentralised and open funding initiatives. With over $56 million in grants already allocated to open-source software, Gitcoin has shifted its direction, focusing on grants as its primary method for supporting public goods. Their ultimate goal is to disperse $1 billion through their protocol and tools. To do this, Gitcoin has a three-pronged strategy in place.
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Gitcoin owned grants with quadratic funding which they started since the beginning of Gitcoin. (For a comprehensive deep-dive on what Gitcoin did and what is Quadratic funding please read this excellent piece by Yash Agarwald)
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Grants Stacks tool - an all-in-one tool for projects to manage their own grant programs.
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Allo Protocol - an open-source protocol enabling anyone to effectively manage community pooled capital. Grants Stacks were also developed based on the Allo protocol. Allo protocol opens up new ways for communities to allocate their pooled funding for, not just through granting.
Gitcoin has become a platform for public goods funding; it has developed powerful tools accessible to anyone interested in funding public goods. They also have a decent monitoring system, (and a help from the community) to track the impact of their grantees. This feedback loop informs the protocol for improvements in efficiency and impact through their grant programs. Gitcoin's scope extends beyond digital public goods; they have also engaged in fundraising efforts for causes such as supporting Ukraine during times of war.
Observing both the EF and Gitcoin's commitment to public goods funding, it's evident that Ethereum embraces an open culture and provides robust support for open software development.
Solana Funding Ecosystem
On Solana, the Solana Foundation (SF) uses a variety of funding mechanisms to fund public goods.
Granting
SF also runs grant programs to support open-source projects, following a model similar to the Ethereum Foundation (EF). They also collaborate with communities like Superteam who assist them in managing these grant programs. SF has also expanded its granting methods to include convertible grants and investments, aiming to enhance fund sustainability. However, this shift raises concerns about the potential dilution of funding away from open-source public goods.
Hackathon
SF developed hackathon communities that are well-known for being active and rapidly growing. Even though a hackathon is not a direct funding scheme, it allows builders to collaborate and produce solutions to specific concerns, such as building open infrastructure or public goods for the Solana ecosystem. There was also a specific track for public goods solutions. However, the Solana hackathon frequently leads to VC funding. Approximately 80% of VC-backed firms in the Solana ecosystem began with hackathons. This trend indicates a focus on VC funding rather than public goods funding.
From the activities in the Solana ecosystem, it appears that SF prioritizes funding hackathons and jump-starting startups to attract VC investment (SF also has its own VC arm). Public goods funding doesn't seem to receive as much emphasis as seen in the activities of the Ethereum Foundation.
A notable development in Solana's funding landscape is the Retrospective Public Goods Funding (RPGF) Program. This initiative focuses on projects with proven past contributions to the Solana ecosystem's public good. The first round has concluded, distributing $250k in funding as of 2024.
While these initiatives are mostly centralised within the Solana Foundation, external protocols and communities are attempting to support public goods as well. Superteam, though not directly financing public goods, is developing communities and co-managing a grant with SF. Projects like Cubik and Stockpile try to provide platforms for public goods, similar to Gitcoin's function in Ethereum, although their success has been limited thus far. The upcoming Solana hackathon is being run by Colosseum, a hackathon platform that bundles pre-seed financing and accelerator services but does not target public good funding.
Differences in culture
Taking an outsider's perspective, I will try to see this issue based on what the founders and foundations have conveyed. (I haven't participated in the Solana hackathon or received a grant from the Ethereum Foundation). It seems to me that the strategies of the Ethereum Foundation lean towards research, exploration, and openness, with a focus on grant programs, including dedicated academic rounds. The foundation appears to prioritize allocating funds for public goods, and its communities follow a similar attitude.
In contrast, the Solana Foundation appears to be more oriented towards jump-starting many startups to foster subsequent rounds of funding. This focus is evident in their emphasis on hackathons, convertible grants, and the Solana Venture initiative. The approach seems to revolve around a competitive race to the market, encouraging the rapid development and growth of startups within the Solana ecosystem.
These differing strategies highlight distinct philosophies in how Ethereum and Solana Foundations approach public goods funding. Ethereum seems to prioritize the gradual exploration and support of projects, fostering a collaborative and research-driven community, while Solana is more geared towards a dynamic and competitive ecosystem, driving startups to swiftly secure market presence.
This difference in approach might originate from the distinct cultures embedded within each community. Solana exhibits a “chewing glass” mindset, an extreme "all-in" mentality typical of startup culture, fostering a relentless drive among its builders. This mindset aligns well with the competitive nature of the primary activity in the Solana ecosystem – hackathons. Furthermore, a number of developers in the Solana community transitioned from web2, where open-source practices were not the norm. Solana's laser focus on performance and optimization reflects its pragmatic pursuit of solving current issues and achieving "fair access to finance, freedom, and security."
In contrast, the Ethereum Foundation leans towards the philosophical side, evident in the inclusion of a dedicated “philosophy” section on their website. They adhere to three guiding principles in their decision-making: Long-Term Thinking (projecting centuries ahead), Subtraction (no competition and removing themselves from the equation), and Stewardship of Values (prioritizing decentralization and open access). Clearly, Ethereum operates with a distinct thought process, emphasizing a more philosophical and forward-looking approach compared to the pragmatic orientation of Solana.
During my research for this article, I came across opinions that similar to what I expressed earlier. From Yash Agarwald’s article on Gitcoin, he wrote “A critical narrative has been that Solana is trying to speedrun growth via focusing on VC funding vs. Foundation style public goods funding like Ethereum”. Another tweet from Irffan from Cubik also criticised the Solana public goods funding system. And a Solana dev start to voice on currently closed-source practices. Whether this is true or not, communities are trying to gather information to answer this.
Is Solana in need of more public goods and new ways to fund them?
As of 2024, it's undeniable that Solana has achieved success across various fronts in recent months. Isn't this proof that the Solana Foundation strategy has previously been effective? Does Solana necessarily require the very open culture of Ethereum to continue thriving? This might come down to an endless debate over open vs. closed software development. Each has its own set of advantages and disadvantages. I believe that each blockchain should chart its unique course, and Solana must strike a balance in this realm to reach its goals. Should there be a need for improvement, we can learn from Ethereum's experience that supporting the foundation of a public goods funding platform like Gitcoin can go a long way.
This article is by no means an exhaustive exploration of these topics, and some of the ideas presented in this piece might be considered speculative. I plan to expand on this foundation, providing a more comprehensive perspective on these subjects and conducting further analysis to verify certain ideas more thoroughly. I welcome and value any feedback, along with suggestions for additional resources that can contribute to a deeper understanding of these topics.
Thanks for reading!
nor