Why Modular Design Is the Only Ethical Choice for Public Goods Funding

On a single chain like Ethereum, every public good—from Gitcoin Grants to protocol treasuries—fights for the same blockspace and fee revenue. This creates a tragedy of the commons, where high gas fees cannibalize funding and limit scale.\n- Zero-Sum Competition: More grants = higher L1 fees for everyone.\n- Inefficient Allocation: Block builders, not communities, ultimately decide fee distribution via MEV.

Modular stacks like Celestia, EigenDA, and Avail decouple execution from consensus and data availability. This allows public goods funding to run on a dedicated, low-cost rollup while inheriting the security of a robust base layer.\n- Sovereign Economics: The rollup captures 100% of its fee revenue and MEV for its treasury.\n- Predictable Cost Basis: Data posting costs are stable and separate from volatile L1 execution fees.

Projects like Optimism's RetroPGF and Arbitrum's DAO Treasury are early examples. A dedicated Public Goods Rollup can implement custom logic for grant distribution, quadratic funding, and automatic yield generation from its treasury.\n- Tailored Logic: Native support for complex distribution mechanisms (e.g., clr.fund style).\n- Yield-Accruing Treasury: Protocol-owned liquidity and staking yield directly fund grants without dilution.

Users shouldn't need to bridge assets manually to fund a cause. Intent-based architectures (like UniswapX and Across) and universal layers (LayerZero, Axelar) abstract away complexity. A donor signs a message; the network routes assets optimally from any chain.\n- Frictionless Donations: Donate USDC on Arbitrum to a grant on a Celestia rollup in one click.\n- Aggregated Liquidity: Taps into the deepest pools across Ethereum, Solana, and Cosmos.

In a modular ecosystem, sequencers and validators of a public goods rollup can be directly incentivized by its mission. A portion of fees can fund a verifier rewards pool, creating a sustainable flywheel where network security and grant funding are co-dependent.\n- Staked Ethics: Validators bond value to the rollup's success and its funded projects.\n- Proposer-Builder-Separation (PBS): Ensures fair block building and MEV redistribution to the treasury.

A modular public goods stack is a hyperstructure—unstoppable, permissionless, and positive-sum. It generates fees that are entirely recaptured to fund its own ecosystem, creating a perpetual motion machine for good. This is the antithesis of the extractive, monolithic model.\n- Perpetual Funding: Protocol revenue → Treasury → Grants → Ecosystem Growth → More Revenue.\n- Credible Neutrality: No single entity controls the spigot; code is law.

Monolithic L1s like Ethereum capture ~$100B+ in MEV and fees annually, but public goods funding is a rounding error. This creates a structural misalignment where the network's success doesn't proportionally fund its essential infrastructure.

• Value Leakage: Fees fund speculators, not core devs.
• Governance Capture: Funding decisions are political, not meritocratic.
• Inelastic Supply: No mechanism to dynamically fund emergent needs.

Decouple funding mechanisms from the base layer. Treat public goods as a modular service layer with specialized components for discovery, evaluation, and distribution, inspired by Celestia's data availability model.

• Specialization: Optimize each layer (e.g., Gitcoin Grants for discovery, RetroPGF for evaluation).
• Composability: Allow protocols to plug into the best-in-class funding module.
• Exit to Community: Teams can fork and recombine modules without permission.

Move beyond one-off grants to algorithmic, on-chain treasuries that autonomously fund verifiable outcomes. This mirrors the shift from manual bridging to intent-based systems like UniswapX and Across.

• Automated Disbursement: Funds release upon proof of milestone (e.g., Optimism's AttestationStation).
• Sybil-Resistant: Leverage BrightID, Gitcoin Passport for identity.
• Transparent Accountability: All flows and decisions are on-chain and auditable.

Gitcoin Grants and Optimism's RetroPGF are live experiments proving modular funding works. They are application-specific funding layers built atop general-purpose blockchains.

• Scalable Impact: $50M+ distributed via RetroPGF rounds.
• Efficient Allocation: Quadratic funding optimizes for democratic preference.
• Data-Rich: Generates on-chain reputation graphs for future rounds.

A modular funding layer turns public goods into composable financial primitives. This creates a competitive market for funding mechanisms, driving innovation and efficiency, similar to the rollup-centric roadmap.

• Positive-Sum Games: Protocols can co-fund shared infrastructure (e.g., The Graph).
• Talent Magnet: Predictable funding attracts top-tier, long-term builders.
• Protocol Resilience: Reduces single-point-of-failure risk in governance.

The ethical imperative is clear. Architects must either build exit ramps from monolithic capture or design protocols with native, modular funding from day one. The model is Celestia, not a corporate treasury.

• Design Principle: Funding is a first-class module in your stack.
• User Alignment: Value flows to users and builders, not just token holders.
• Legacy Defense: Prevents the ossification that plagues Ethereum's core development funding.