All you need to know about Gitcoin（GTC）

What is Gitcoin？

Gitcoin is a platform aimed at supporting open-source projects and digital communities by providing funding and tools. Since its inception in 2017, it has held a vision to “Build and Fund the Open Web Together,” supporting what’s known as public goods—non-exclusive, non-competitive entities that are open for use by all, like public libraries, parks, and open data, with a focus on open-source software.

Initially, Gitcoin offered incentives to support and fund open-source developers, evolving to establish funding pools for various projects, education, and media, advancing Web3 open-source technology. In 2018, following a paper on Quadratic Funding (or Quadratic Finance) as a solution for public goods donations by Ethereum’s founder Vatalik and others, Gitcoin implemented this technique in its grants, launching the Gitcoin Grants Program in 2019. Since then, it has conducted Gitcoin Grant Rounds every quarter, lasting 2-3 weeks, now in its 18th round (GG18).

Currently, Gitcoin has raised over 50 million US dollars for multiple projects. Transitioning from a company to a DAO, in Q4 2022, the Gitcoin community completed the upgrade to Gitcoin 2.0, open-sourcing itself into a decentralized, modular, and forkable ecosystem. Gitcoin provides the underlying substrate framework, product standards, and tools, open-sourcing them to support ecosystem partners’ integration.

What is Quadratic Funding？

The core of Gitcoin 1.0 (before the Grants 2.0 upgrade) is Quadratic Funding. This concept comes from a paper by Vitalik Buterin titled “Liberal Radicalism: A Flexible Design For Philanthropic Matching Funds.” In the paper, Quadratic Funding is a mechanism for allocating public funds that determines the allocation of project funds based on the quantity and size of individual donations. It is designed to be a democratic and efficient method of funding public goods, ensuring that funds are allocated to the most widely supported and most needed projects.

Here is a simplified example to explain the concept of Quadratic Funding:

Suppose there is a community with 3 different projects that need funding, namely Project A, Project B, and Project C. The community also has some members willing to donate to these projects. Additionally, there is an additional pool of public funds available for allocation through the Quadratic Funding mechanism.

Donations:

• Project A received donations from 10 contributors, each contributing $1, totaling $10.
• Project B received donations from 5 contributors, each contributing $1, totaling $5.
• Project C received donations from 2 contributors, each contributing $1, totaling $2.

Quadratic Funding Formula:

• Matching Funds are the amount a project receives from the public funds.
• Public Funds are the total amount of public funds available for matching.
• Total Donations are the total amount a project receives from individual donors.

Funding Allocation (calculated based on the formula):

Matching Funds for Project A = Public Funds × 21

Matching Funds for Project B = Public Funds × 16

Matching Funds for Project C = Public Funds × 7

According to the Quadratic Funding formula, we can see that Project A, having the highest number of donors, will receive the highest amount of matching funds. Next is Project B, followed by Project C.

The Quadratic Funding mechanism emphasizes the importance of the number of donors, not just the size of donations. This encourages broader community support and participation, ensuring that funds are allocated to projects with broad support and the greatest need. Gitcoin was one of the first projects to use Quadratic Funding technology to support public goods on a large scale, and other projects such as clr.fund and supermodular have also utilized this technology to achieve fairer distribution.

Who supports Gitcoin?

Behind Gitcoin’s success is the relentless effort of the team and the support of numerous communities and capital. Gitcoin’s three founders have extensive industry experience:

• Vivek Singh: Not only a co-founder of Gitcoin but also the COO of ConsenSys.
• Kevin Owocki: Apart from Gitcoin, he also founded Supermodular and has been involved in various web projects since 1999.
• Scott Moore: A member of the Ethereum ecosystem support team, previously served on the Grants Advisory Board of ConsenSys and the Ethereum Community Fund. He has also been involved in projects such as Finnovate.io and GitToken, and has advised Astronaut Capital and Picolo Research.

Due to the close relationship with the founding team, Ethereum Foundation and ConsenSys supported Gitcoin from the beginning, making it one of ConsenSys’ investment portfolios. Initially, Gitcoin focused on paying salaries to open-source software developers. With multiple upgrades, in addition to the main funding pool provided by Gitcoin itself, different grants are provided by partners in the ecosystem. For example, Mask Network, Polygon, A16z, and Coinbase all provide their ecosystem grants to support the projects they want to support.

In addition, Paradigm led a $11.3 million financing round in April 2021, with other participants including 1kx, Balaji Srinivasan, The LAO, and MetaCartel Ventures.

How Does Gitcoin Support Public Goods (Grants 2.0)?

In the previous section, we introduced how Gitcoin raises a significant amount of funding for projects through Quadratic Funding. During the fundraising process, Gitcoin is also working towards its vision.

Gitcoin envisions a world where thousands of rounds of public goods funding run at any given time, and each round is allocated in the best possible way and managed by the communities it serves. In their imagined future, DAOs and ecosystems can emulate/fork/improve the Gitcoin Grants experience, directly participating in the Gitcoin Grants ecosystem and allowing them to experiment and deploy grant experiences that suit their needs flexibly. Therefore, Gitcoin will lay the foundation for ongoing open-source tools, standards, and infrastructure development to achieve the scalable funding allocation of public goods by developing the Gitcoin Grants protocol.

The initial plan was to advance the upgrade starting from Gitcoin Grants Round 13, with the goal of completing the comprehensive transformation by the end of 2023 Q1. The cut between the ecosystem round and the theme round was completed in Gitcoin Grants Round 15. Now, Gitcoin 2.0 has completed the upgrade and is continuously being updated.

The Development of Gitcoin (Source: Gitcoin Forum)

Key Support Methods for Public Goods in Grants 2.0

Community Funding and Development

Gitcoin provides funding to open-source projects and developers through its platform, with Gitcoin Grants Program being its main initiative. Gitcoin holds funding rounds approximately every quarter, lasting for about two weeks. Through 18 funding rounds, Gitcoin has distributed over $50 million to early-stage developers, supporting projects in various domains such as decentralized finance (DeFi), climate, and open-source initiatives.

In addition to seasonal funding rounds, Gitcoin allows separate funding rounds outside of Gitcoin Grants, where project teams and venture capital can use the Gitcoin Grant Stack to initiate funding. For example, Polygon and Space ID will fund projects related to their ecosystems and technologies in October.

Digital Identity and Community Protection

Gitcoin offers “Gitcoin Passport,” which is a digital identity solution built on the Ceramic Network. It incorporates anti-Sybil attack protocols and identity/reputation aggregation dApps.

A Sybil attack involves a malicious node creating numerous fake identities in a distributed system to exploit unfair advantages. In the setting of Gitcoin, where funds are distributed using quadratic funding, Sybil attacks can lead to “cheating” projects getting more funding than those favored by the community. Gitcoin Passport is a solution to this problem.

The core mechanism involves collecting “badges” that verify your identity and online reputation in Web2 and Web3, such as Bright ID, ENS, POAP, etc. These badges grant users trust and maximize their benefits from platforms like Gitcoin Grants. The more times a user verifies their identity, the more opportunities they have to vote and participate in the network. The threshold for Gitcoin Passport scoring is 20, and any score higher than 20 is eligible for matching grant funding.

In February, Gitcoin announced the launch of the Scorer API, enabling developers to easily implement Sybil protection equivalent to Gitcoin Grants’ level with just a few lines of code. Dozens of identity providers use Passport to protect their communities.

Open-source Tools and Community Support

Allo Protocol

Allo Protocol is an open-source, decentralized, and modular digital public goods protocol introduced by Gitcoin. It aims to enable any community project to establish corresponding grant funding programs based on their specific needs, facilitating fundraising and allocation of funds. Any community can plug and play, utilizing ready-made tools provided by Allo to establish and upgrade their grant programs. It can integrate various technologies, such as the Passport protocol and anti-Sybil mechanisms, while providing user-friendly interfaces for integration with payment protocols.

The core mechanism of Allo Protocol is Rounds. Each round is a cycle that lasts several weeks or months, during which community members vote to determine which projects should receive funding support. Each round consists of four stages: application, selection, voting, and payout, all of which are timestamped to ensure timely completion of activities:

• In the application stage, project applicants can submit their projects.
• In the selection stage, community members can choose projects they want to support.
• In the voting stage, community members vote on the selected projects.
• In the payout stage, funds are allocated to projects with the highest votes.

The rounds mechanism in Allo Protocol ensures that all projects can receive funding support while avoiding misuse and waste of funds.

Grants Stack

Grant Stack is a community grant program solution built on Allo Protocol. Gitcoin Grants Stack simplifies the management process for grant projects, from setting up grant programs to managing applications and fund allocation, helping them streamline and grow their grant initiatives. It consists of three components: Builder, Explorer, and Manager.

• Builder: Enables project owners to create corresponding profiles to build reputation and management processes, directly accepting donations.
• Explorer: Encourages donors to discover and support different grant programs and projects.
• Manager: Used to deploy programs, track and manage grantee applications, and simplify approval processes.

Gitcoin Grants Stack can be seen as a self-service product suite for hosting grant projects. It allows users to run Gitcoin-style grant forms in any ecosystem.

Other Attempts

• Gitcoin Staked ETH Index (gtcETH) is a new ERC-20 token that provides diversified exposure to top liquidity-staked tokens, enabling users to earn staking rewards while contributing to public goods.
• Moonshotbots is a limited-edition PFP (Maximum supply 303) collection created by Kevin Owocki (co-founder of Gitcoin and CEO of Supermodular) and Austin Griffith (founder of BuidlGuidl). 100% of the proceeds will go to Gitcoin’s matching pool fund.
• Gitcoin collaborated with Metalabel to release “GITCOIN PRESENTS: The Quadratic Funding Collection’’ as a limited-edition on-chain record, commemorating the concept of Quadratic Funding introduced in the paper “Liberal Radicalism,” which proposes a fairer and more diverse way to fund public goods. The project successfully raised over $1 million as a tribute to the impact of quadratic funding.

Gitcoin’s Contribution to Web3

Gitcoin initially helped many open-source tools and projects raise funds, but it is not limited to that. Media and educational projects can also raise funds on Gitcoin, such as well-known platforms like Finematics and The Daily Gwei.

To date, Gitcoin has organized 105 rounds of quadratic funding pools, supporting 3,715 projects in total. With the involvement of 270,000 users, it has facilitated over 3.8 million donations, raising more than $50 million for various projects. Gitcoin has also employed its technology to prevent more than $3 million in potential fraud. As per Gitcoin’s impact statistics, the combined peak market value of the projects it supported has surpassed $28.2 billion.

Notable projects that benefited Gitcoin’s support include Uniswap, OPTIMISM, 1inch, Zapper, Yearn, and Mask Network. Many of these projects, upon achieving success, returned to Gitcoin to establish their own funding pools or contribute to the main pool. This enables more projects to receive funding. In Gitcoin, the more high-quality projects are funded, the greater the probability of these projects reciprocating Gitcoin’s support, thereby creating a positive feedback loop. Apart from giving back to Gitcoin, project teams reward donors in various ways. Many projects have conducted token airdrops to donors as a form of appreciation for their support. For instance, Optimism, a renowned Layer2 project, conducted an airdrop of its native token (OP) to donors who had previously contributed to the mainnet. These airdrop activities incentivize more users to participate in Gitcoin’s donation campaigns.

Gitcoin Token (GTC) and Governance

Gitcoin introduced the GTC governance token in May 2021. The total supply of GTC tokens is 100 million, distributed as follows:

• 15% airdropped to past users
• 35% allocated to existing stakeholders (i.e., the team, investors)
• 50% allocated to GitcoinDAO

The launch of GTC aims to decentralize Gitcoin gradually and drive the development of GitcoinDAO. GitcoinDAO will focus on recruiting developers and building public goods infrastructure. Currently, GTC serves two main purposes:

• GTC is responsible for managing decentralized funding, dispute resolution, and financial management within the DAO.
• GTC can be staked as an identity proof in Gitcoin Passport. Over 500K GTC has already been staked.

Within the Gitcoin Treasury, 59.81% consists of GTC, while the remaining major tokens are WETH (21.8%) and USDC (10.93%). The rest includes various currencies obtained through donations. The Treasury size is continuously shrinking due to fluctuations in token prices, particularly GTC.

Gitcoin DAO Treasury（source：DeFiLlma，2023.10.11）

According to DeepDAO, Gitcoin DAO has 13.3k governance participants and a total of 204 proposals. The community’s governance involvement is relatively high.

Public Goods Network Supported by Gitcoin

The Public Goods Network (PGN) is a network dedicated to supporting public interest projects, acting as a low-cost Ethereum Layer 2 (L2) network. PGN is built on the Bedrock version of OP Stack, in collaboration with Optimism, and supported by Conduit.

PGN’s primary goal is to provide persistent and sustainable funding for public interest projects. It collects net sequencer fees from the network, allocating the majority to public interest projects. Most of these fees directly fund public interests, offering continuous, enduring financial support for open-source applications, protocols, and projects.

Compared to other Layer 2s, Gitcoin hosts fewer ecosystem projects, with only 85 smart contracts deployed. Since its official launch in July, 14.37K accounts have been created with over 3.769 million transactions recorded.

PGNNetwork Status (Source: PGN Browser)

If you want to explore further, please click Official Documentation for detailed steps.

Impact on Gitcoin

1. The fees from PGN present a new source of funding for Gitcoin. Given the current network operations, daily fees from PGN range from 0.005ETH to 0.628ETH, with a long-term trend of under 0.1ETH as network activity has recently decreased.

1. In previous funding rounds, high mainnet gas fees hindered public voting for supported projects, especially small donations. Utilizing other Layer 2s often involves interest conflicts. Launching its own Layer 2 solves cost and interest selection issues associated with quarterly donations.
2. Facilitates the launch of more public goods projects. While PGN’s fees and speed meet most Layer 2 project needs, Gitcoin offers more infrastructure for public goods creation, like Grants Stack and Gitcoin Passport, making projects on PGN more likely to attract valuable users due to Gitcoin’s influence in the public goods domain.

How to Participate in Gitcoin?

Applying for a Grant

1. create an account and project profile:
   1. First, create an account on Gitcoin.
   2. After creating an account, you can create your project profile, including the project name, description, objectives, links, and other relevant information.
2. Prepare your proposal:
   1. Prepare the proposal you wish to submit, including your project’s objectives, timeline, budget, and other relevant details.
   2. Ensure your proposal is clear, complete, and engaging to attract potential funders.
3. Submit your proposal:
   1. Submit your proposal in the “Grants” section of Gitcoin.
   2. You may need to select a category suitable for your project, such as infrastructure, community, content, or others.
4. Promote your project:
   1. Once your project is listed on Gitcoin Grants, actively promote it to attract more funders.
   2. Share your project on social media, community forums, and other platforms, interacting with potential funders as much as possible.

Aside from using the Grant Stack to generate relevant documents, one can also follow their latest updates for application and review related information.

Becoming a Funder

1. Log into the Gitcoin website, register for Gitcoin Passport.
2. Visit Gitcoin Explorer to view project information, narrowing down search with categories, keywords, or other filters.
3. Evaluate and select projects.
4. On the project page, find and click the “Fund this Grant” button.
5. Enter the donation amount, choose your payment method (e.g., using Ethereum), and follow the instructions on the page to complete the donation.
6. Follow-up and Interaction: After making a donation, you may receive updates and newsletters from the project. You can also choose to join the project community, participate in discussions, and stay active in the project’s progress.

Becoming a Funding Pool Manager

If interested in setting up a funding pool, contact Gitcoin directly and use Grant Stack to establish your own funding pool.

Prospects and Challenges

Initially, Gitcoin was a social entity (2018-2021), transitioning into a modular social entity (2021-2022), and is expected to evolve into a structure with a trust-centered core and social periphery (2023+), akin to the Hyperstructure depicted by Zora’s founder. With the growth of the flywheel effect, Gitcoin will become a free and permanently existing ecosystem. The big transition to Grants 2.0 signifies the leap from the second to the third phase. With the launch of products and protocols like the Allo protocol and Gitcoin Passport, Gitcoin’s core products will be adopted by more projects, creating stronger network effects. The continuous increase in successful projects and the revenue from Gitcoin’s funding, gtcETH, and PGN will provide ample financial support for Gitcoin to advance public goods development.

Gitcoin Roadmap (Source: Gitcoin Forum)

However, Gitcoin also has certain limitations and issues awaiting resolution:

Scalability and Efficiency

As the number of projects and users increases, Gitcoin may face challenges with scalability and handling a large volume of requests, especially during funding rounds where processing numerous proposals and transactions can be difficult.

User Interface and Experience

Gitcoin’s user interface is not very intuitive or easy to use. Despite continuous improvements by the Gitcoin team, new users might still encounter some barriers.

Project Quality and Evaluation

The quality of funded projects can vary significantly, and it might be challenging to assess which projects are worthy of funding. Although Gitcoin employs quadratic funding to help identify worthy projects, challenges remain.

Inability to Support Multi-chain Ecosystems

Despite the emergence of more and more Layer1 and Layer2, Gitcoin can only support projects from some of the ecosystems, mostly projects and communities on Ethereum and Layer2.

Significant DAO Treasury Fluctuations

With nearly 90% of the current treasury in non-stablecoins, the DAO relies heavily on the treasury for daily operations. The low value during adverse market conditions can hinder the DAO’s continuous operation to some extent.

Conclusion

As a leading supporter in the public goods sector, Gitcoin’s growth also showcases the development journey of Web3 open-source endeavors. From introducing quadratic funding technology to developing its underlying protocols and public chains, the infrastructure in the public goods sector is continually improving. More projects are seeking early support through funding, positively impacting the entire Web3 ecosystem in the long run.

Despite the limited use of GFC and the challenges that Gitcoin faces, its significant developmental potential cannot be overlooked. This is particularly true for the positive cycle of funding projects, receiving feedback from top projects, increasing funds, and subsequently supporting more projects.