First, a brief reasoning before diving into the good stuff. Why RetroPGF? The design systems around retroactive public goods funding is an excellent way to reward spontaneous, organic and creative contributions. Thanks to these funding mechanisms many web3 builders are able to pursue work that fulfills their purpose while providing value contributions to the communities where they participate. In a traditional working environment, this definitely wouldn’t happen.
These new mechanisms allow contributions and growth to happen without the funding bottle neck or a deviated for-profit direction. Better systems are possible for your community and what you’re building.
Funding tied to specific requirements or in a venture capitalist direction that doesn’t resonate with your own mind and soul will always feel disconnected. Thankfully there’s new funding and allocation mechanisms that can help us move forward in a more natural and organic way. To learn more about the ethos of RetroPGF, check out the initial Optimism blog post here.
The goal of this document is to give you a full recap of the course, hoping that you too can feel incentivized and enabled to host your own round for your community. If you feel this content can be useful for a friend, pass it on! Let’s share the gift of knowledge.
For public goods to succeed, we need thousands of RetroPGFers hosting rounds! Let’s not wait any longer and dive in right into it 👇🏻
Module 1: ‘What is RetroPGF?’ with Jonas
Retroactive Public Goods Funding (RetroPGF) is an innovative funding mechanism designed to support projects that provide public goods in the Ethereum ecosystem.
It operates on the principle that the value of public contributions is clearer in hindsight, allowing for more accurate and impactful funding decisions. By rewarding projects that have already delivered tangible benefits, RetroPGF aims to shift incentives, encouraging more individuals and teams to work on initiatives that have a positive societal impact. This approach not only fosters a culture of contribution and collaboration but also aims to build a more regenerative and equitable economic system.
The goal? We build with the belief that one day we’ll have a funding mechanism system that not only serves the current crypto or Ethereum ecosystem but is adaptable and influential enough to shape broader economic systems for a better world.
Module 2: Scoping your RetroPGF Round with LauNaMu
Before running a retroactive round, it's important to focus on clearly defining goals, values, and processes to ensure effective and fair outcomes.
The initial step in scoping is to define what is considered valuable for the organization or community. This includes outlining what type of contributions or impacts are sought and how they align with the organization's objectives. It’s key to have a North Star metric and stick to it.
Set expectations. This filter helps attract the right projects to apply. If not done properly, this can be a burden especially if self-nomination is allowed. The goal is to attract the right people, those who have effectively provided value and impact to the ecosystem.
Two interesting examples of RetroPGF rounds are the Optimism round and, as contrast, DAODrops. For the Optimism round, guidelines were provided in advance to align participants' contributions with the desired outcomes. It was clear ‘what’ would be measured, but not ‘how’. This left space for creativity but created confusion as to how to measure. Something to improve in the next iteration for sure. In contrast, other rounds like the one led by DAODrops, focused its reward system on past contributions without pre-announcement, impacting how participants engaged. This approach can be used by communities who do not count with funding upfront before starting the round. In some cases, funding can arrive much further down the road.
While goals are clearly stated in the first example, the means to achieve them can vary, allowing participants to use different methods to contribute effectively to the ecosystem or community.
Clear communication about what is valuable and how contributions will be evaluated is crucial. This ensures that participants understand whether their contributions align with the round's objectives and how they will be assessed, affecting the fairness and effectiveness of the process. Identifying and understanding the target audience, whether they are applicants or evaluators, is essential for designing an effective scoping process.
Another important aspect are operational phases and timelines. This can include the onboarding of participants as well as a training program for those who decide the distribution of funds. In general, the process of any RetroPGF round involves four main phases: announcement, project signup, voting, and results distribution. For each one, clear timelines and planning are vital.
The process involves learning from each round, using insights gained to improve future ones. This includes refining objectives, evaluation criteria, and communication strategies based on previous experiences and outcomes. It’s a joint effort. As part of the iteration process, narrow scopes are recommended. This helps focus attention and expertise where it's needed.
Module 3: Badgeholders - Understanding the Guardians with Annika
Badgeholders are pivotal in Optimism's RetroPGFmodel since they are tasked with voting on the allocation of funds to various projects. They form a distinct group within the governance structure, separate from token holders or the Foundation's governance systems, highlighting the badgeholders’ unique role in the funding process.
The selection process to define who should become a badgeholder varies across different rounds. Some are directly contacted by the Optimism Foundation while others are nominated by previous badgeholders. This brings a blend of experience, alignment, and fresh perspective.
Badgeholders commit to the RetroPGF mission diverse periods of time, with one individual reporting around 10 to 12 hours spent fulfilling their responsibilities while some more, and some less. Since there is no one way to do it, this is a fully personal choice.
Discussions have taken place about potentially grouping badgeholders based on their domain expertise to improve efficiency and effectiveness in evaluating projects. This approach could help tackle challenges related to the volume of applications and the associated workload, ensuring that badgeholders can contribute effectively within their own scope and fields.
After each funding round, badgeholders participate in post-mortem discussions, offering feedback on the process and suggesting improvements for future ones.
For a deeper dive on Badgeholders, check out the Badgeholer Hub documentation on Optimism.
Module 4: Application Process and Impact Evaluation Strategies with LauNaMu
The application process is constantly changing and reflects learnings and adaptations from the previous funding round. Optimism took strict measures to ensure the integrity of the application process, highlighting the importance of safeguarding against malicious attempts to game the system. A significant effort was made to filter out spam and fraudulent applications through a rigorous civil analysis, ensuring that only legitimate applications were considered by badgeholders.
In the last Optimism round, a new requirement was set for a project to receive funding. Each one had to receive votes from at least 17 badge holders to reach quorum. This threshold aimed to ensure that projects are evaluated from multiple perspectives, contributing to a more democratic and balanced allocation process. For your own round, you can decide to have or eliminate this requirement, totally up to you. This was more of a test but it was felt as a need to achieve double quorum.
Learning how to measure impact is currently a work-in-progress that we can all contribute to. When defining your own RetroPGF round, make sure to emphasize this aspect of the process. Doing so aims to facilitate evaluation for badgeholders and to set expectations for applicants.
Check out Launamu’s Impact Evaluation Framework to learn more about how to measure effective and impactful contributions in your ecosystem.
Module 5: Project Nominations and Voting Process with Magenta
As a project manager and developer with a background in UI/UX, Magenta Ceiba shared a ton of experience in multi-stakeholder decision-making and financial governance. Thanks to her involvement in Gitcoin rounds and DAOdrops, she provided a practical perspective on managing community-funded projects during this specific session.
One of the key learnings I had was the fact of using the community's objectives to shape the nomination process. Different strategies are considered for nominations, including self-nominations and badge holder nominations. Self-nominations allow a broader discovery of projects, while badgeholder project nominations can introduce a layer of vetting and community endorsement.
The nomination form that one should create for running any RetroPGF round is a crucial tool that guides applicants on how to present their projects, and it should ensure that the information collected is structured and relevant. Make sure to ask for impact metrics that are relevant to the success of your community! If they align with your North Star, even better.
Module 6: Operations, Communication Strategy + KYC and Payouts with Magenta
Having a streamlined and efficient operational process in managing a RetroPGF round is key to the success of the initiative. To optimize your RetroPGF round's operations, it's recommended to document and review each step post-round, allowing continuous improvement.
Effective communication is also a key aspect that must not be left behind. A proper strategy should include regular updates, accessible channels on your communication platforms for inquiries, and a feedback loop with participants.
KYC processes are crucial for maintaining compliance and security in the funding round. To navigate KYC effectively, it's recommended to clearly communicate requirements to participants and consider the global nature of your audience, ensuring the process is inclusive and respects privacy concerns. If you’re able to implement a robust KYC process, remember to communicate its requirements clearly and early on to your participants, to ensure it's designed to accommodate the diverse and global nature of your community.
Transparency and efficiency in payouts is also very important. To make the most out of this process, it's advisable to establish clear timelines, communicate them effectively to recipients, and have contingency plans for any issues that may arise.
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In general the cohort provided key learnings from the Optimism RetroPGF experiment. All participants in the cohort are now invited to create their own RetroPGF rounds in their own communities. If you’re interested in learning more about the process, the cohort team has uploaded a series of mini-videos extracted from the cohort that you can access here.
As for next steps, I’ll be experimenting with the RetroPGF tool built by the Gitcoin team. As this process is work-in-progress, I’ll be sharing more updates on X and Warpcast. Feel free to shoot me a message there if you’d like to sync on the topic.
Before wrapping up, I’d like to give a huge shoutout to Sejal, Lana, to all guest speakers and most importantly to all the web3 community BUIDLers that participated in the cohort.
Learning together is the most valuable part of this journey.
Let’s continue 🌎 🌿 💜