The Future of Public Infrastructure Funding is a DAO

Traditional grant programs like Gitcoin Grants are slow, political, and create a beggar-builder dynamic. Funding is decoupled from actual usage and value creation, leading to misaligned incentives and wasted capital.

• High Overhead: Months-long review cycles for proposals.
• Value Misalignment: Builders optimize for grant committees, not end-users.
• Unsustainable: Projects face a 'valley of death' after initial funding runs out.

Pioneered by Optimism's Collective, RPGF flips the model: fund what has already proven valuable. Capital flows to projects based on measurable on-chain impact, creating a direct link between utility and reward.

• Impact-Driven: Rewards are allocated post-hoc via voting power or algorithmic distribution.
• Builder Alignment: Incentivizes shipping real products users want.
• Flywheel Catalyst: Successful projects reinvest funds, attracting more talent.

EigenLayer transforms the cryptoeconomic security of Ethereum into a reusable resource for new protocols (AVSs). This creates a native revenue stream—restaking yields—that can be programmatically directed to fund public goods infrastructure.

• Capital Efficiency: Unlocks $10B+ in staked ETH for productive use.
• Sustainable Treasury: AVS fees generate continuous revenue for ecosystem DAOs.
• Protocol-Controlled Value: Aligns the security and success of the public good with its funders.

Mature protocols like Uniswap and Aave can activate fee switches, creating protocol-owned revenue. This capital, managed by a DAO, becomes a perpetual funding engine for complementary public goods (e.g., oracles, data indexers, wallets).

• Direct Monetization: Turns usage into a sustainable treasury.
• Strategic Investment: DAOs fund infrastructure that drives more volume to their core product.
• Reduced Speculation: Revenue is based on utility, not tokenomics hype.

High-throughput L2s like Arbitrum, Base, and zkSync generate significant profit from sequencer fees. By committing a portion of these profits to ecosystem grants via DAO vote, they create a virtuous cycle: better infrastructure → more users → higher fees → more funding.

• Recursive Funding: Profits are reinvested into the ecosystem that generated them.
• Real-Time Alignment: Funding pace matches network growth.
• Competitive MoAT: A well-funded ecosystem attracts the best developers.

The convergence of RPGF, protocol revenue, and restaking economics births self-sustaining ecosystem DAOs. These entities own productive assets, automate funding via algorithms like Hats Protocol, and continuously upgrade their public goods stack without human grant committees.

• Automated Governance: Funding rules are codified and executed on-chain.
• Asset-Backed: Treasuries contain revenue-generating staked assets.
• Perpetual Motion: The flywheel becomes the primary economic engine of the chain.

Traditional grant programs suffer from high administrative overhead and low accountability, leading to capital misallocation. On-chain treasuries like Optimism's Citizens' House and Arbitrum's DAO automate distribution with verifiable milestones.

• Key Benefit: Retroactive funding models (like those pioneered by Optimism) pay for proven outcomes, not promises.
• Key Benefit: On-chain attestations from Karma, SourceCred, or GovScore create objective reputation graphs for grantee selection.

The Moloch v2 framework provides the atomic unit for collective resource allocation: a multi-sig with ragequit. This enables small, focused pods (like Metropolis or Raid Guild) to form, fund, and execute public goods projects without monolithic DAO overhead.

• Key Benefit: Ragequit mechanics allow dissenting members to exit with their capital, enforcing continuous consensus.
• Key Benefit: Guild-kicking and shaman contracts enable modular permissioning for specialized workstreams.

Funding public goods requires measuring impact. Hypercerts (by Protocol Labs) are NFTs that represent a claim over the impact of a piece of work, creating a primitive for impact markets and retroactive funding.

• Key Benefit: Enables tradable impact futures, allowing funders to bet on and support high-potential projects early.
• Key Benefit: Creates a verifiable ledger of public good contributions that can be integrated by any protocol for rewards or reputation.

DAO lobbying firms like Tally and Govrn are emerging to represent protocol interests in traditional politics. Their key innovation is on-chain activity tracking, turning political influence into a measurable, accountable service.

• Key Benefit: Transparent spend tracking ensures lobbying budgets are used for specified outcomes, not pocketed.
• Key Benefit: Success fee models tied to verifiable legislative milestones (e.g., bill introduction, committee vote) align incentives.

Platforms like Syndicate for legal wrappers, Sablier for streaming payments, and Safe{Wallet} for treasury management are the rails. Their composability turns civic funding into a lego-like system.

• Key Benefit: Gasless voting via Snapshot and Tally reduces participation friction to near-zero.
• Key Benefit: Programmable vesting via Sablier or Superfluid ensures sustained funding aligns with long-term project milestones.

Projects like CityDAO and Praxis are experimenting with on-chain land ownership and governance, treating physical jurisdiction as a protocol. The goal is sovereign-grade infrastructure funded and governed by its citizens.

• Key Benefit: Property rights encoded on-chain reduce title disputes and enable novel financing models.
• Key Benefit: Resident-owned utilities (internet, energy) funded via tokenized municipal bonds create aligned economic flywheels.

Centralized grant committees are slow, politically charged, and often misaligned with actual developer needs. This leads to underfunded critical infrastructure and slow innovation cycles.

• Decision Lag: Months-long review processes for critical security patches.
• Misaligned Incentives: Grants often go to marketing, not protocol R&D.
• Opaque Process: Lack of clear metrics for success or failure.

Pioneered by Optimism's RetroPGF, this model funds work that has already proven its value. It aligns incentives with outcomes, not proposals.

• Pay for Value, Not Promises: Teams build first, get rewarded based on measurable impact.
• Community-Led Curation: ~100+ badgeholders assess contributions, scaling decision-making.
• Sustainable Flywheel: Successful projects reinvest funds, creating a virtuous cycle of development.

DAOs like Developer DAO and Bankless DAO issue verifiable, on-chain credentials for contributions. This creates a portable reputation graph for builders.

• Proof-of-Work Ledger: Contributions to Gitcoin Grants, protocol governance, or documentation are immutably recorded.
• Sybil-Resistant Identity: Leverages Gitcoin Passport and ENS to filter noise.
• Automated Eligibility: Smart contracts can auto-qualify contributors for future funding rounds.

Protocol Guild is a canonical model: a $50M+ vesting contract that directly funds core Ethereum client developers. It's a DAO-managed, exit-to-community mechanism.

• Direct-to-Dev Funding: Removes intermediaries; 100% of funds go to designated contributors.
• Long-Term Alignment: Vesting schedules ensure commitment beyond a single grant cycle.
• Blueprint for L2s: Optimism, Arbitrum, Polygon are replicating this model for their own stacks.

VCs should fund the DAO treasury and its governance infrastructure, not individual grant recipients. The return is a healthier, more valuable ecosystem.

• Leveraged Impact: Capital funds a self-perpetuating grant machine with community oversight.
• Ecosystem Equity: A robust L1/L2 core is a primary value driver for all applications atop it.
• Data Advantage: Investment DAOs gain a real-time pulse on developer trends and talent.

DAOs are not a panacea. Vote-buying and metric optimization (e.g., inflating GitHub commits) are existential threats that must be engineered against.

• Mitigation via Design: Conviction voting, peer prediction markets (like UMA's oSnap), and fraud proofs.
• Continuous Iteration: Funding mechanisms must evolve faster than attack vectors.
• The Bar is High: Failed public goods funding destroys more value than slow grants.