Impact tracking is broken. It relies on self-reported, unauditable data from centralized entities like GiveWell, creating a trust-based system that is opaque and inefficient for funders like Gitcoin.
public-goods-funding-and-quadratic-voting
Blog
The Future of Impact Tracking: On-Chain Metrics for Public Goods
Grant DAOs are flying blind. Projects like Hypercerts and DegenScore are pioneering verifiable, composable impact certificates. This is the technical blueprint for moving beyond vibes-based funding to measurable ROI.
introduction
THE ACCOUNTING PROBLEM
Introduction
Current impact tracking for public goods is a broken, off-chain accounting system that fails to provide verifiable proof of outcomes.
On-chain metrics are the solution. They provide a verifiable data layer where outcomes like carbon sequestered (via KlimaDAO) or educational credentials (via OpenCerts) are recorded as immutable, composable public state.
This creates a new asset class. Programmable impact transforms subjective social good into objective, tradable metrics, enabling automated funding mechanisms and secondary markets that protocols like Hypercerts are pioneering.
Evidence: Gitcoin Grants has distributed over $50M, but its off-chain impact reporting lacks the granular, real-time verification that on-chain attestation standards like EAS provide.
thesis-statement
THE ACCOUNTING
Thesis Statement
On-chain metrics will replace subjective narratives with objective, verifiable data for evaluating public goods funding.
Impact is a balance sheet. Current grant-making relies on qualitative reports and social proof, creating a subjective and unverifiable funding market. On-chain metrics transform impact into auditable, composable data assets.
Protocols are the new auditors. Projects like Gitcoin Allo and Hypercerts are building the infrastructure to define, issue, and track verifiable impact claims on-chain. This creates a standardized data layer for funding decisions.
Counter-intuitively, the most valuable metrics are not adoption. For core infrastructure, protocol security uptime or client diversity metrics are more critical than TVL. This shifts focus from marketing to verifiable technical utility.
Evidence: Gitcoin Grants has distributed over $50M, but its retroactive funding rounds demonstrate the demand for data-driven, post-hoc evaluation of measurable outcomes.
key-trends
ON-CHAIN METRICS FOR PUBLIC GOODS
Key Trends: The Shift to Verifiable Impact
Traditional philanthropy relies on opaque reporting. The future is transparent, data-driven impact verification on-chain.
01
The Problem: Opaque Grantmaking
Foundation grants are black boxes. Recipients file PDF reports, making impact unverifiable and outcomes impossible to compare. This leads to inefficient capital allocation and trust-based inefficiency.
- No Standardized Metrics: Each org uses different KPIs.
- High Reporting Overhead: ~30% of grant funds spent on compliance.
- Zero Composability: Impact data is siloed and unusable.
~30%
Wasted on Ops
0%
On-Chain
02
The Solution: Retroactive Public Goods Funding (RPGF)
Pioneered by Optimism's Citizens' House, RPGF flips the model: fund what already demonstrated value. Impact is measured via on-chain activity and community sentiment, creating a meritocratic flywheel.
- Verifiable Proof-of-Impact: Metrics like contract interactions, user growth, and fee savings.
- Community-Curated Registries: Projects like Gitcoin Grants and Public Nouns use quadratic funding to signal value.
- Capital Efficiency: Directs funds to proven builders, not promises.
$50M+
OP Allocated
10k+
Projects Evaluated
03
The Infrastructure: Hypercerts & Impact NFTs
Protocols like Hypercerts tokenize impact claims as non-fungible tokens. This creates a liquid market for positive externalities where impact can be funded, traded, and retired.
- Standardized Impact Units: 1 Hypercert = 1 verifiable unit of work towards a goal (e.g., 1 ton of CO2 sequestered).
- Fractional Funding & Trading: Enables secondary markets and impact derivatives.
- Immutable Audit Trail: On-chain proof of work done, funding received, and outcomes.
ERC-1155
Token Standard
100%
On-Chain Proof
04
The Metric: Total Value Locked (TVL) is Dead
TVL measures capital at risk, not value created. The new stack tracks Total Value Generated (TVG): developer activity, user savings, and public good output.
- Developer Activity: GitHub commits, contract deployments on platforms like Ethereum and Base.
- User Benefit: Gas saved by Layer 2s, fees redistributed by protocols like Uniswap and CowSwap.
- Network Effects: Cross-chain messages via LayerZero, Wormhole attestations.
TVG > TVL
New Paradigm
$1B+
Annual Fees Saved
05
The Execution: Programmable Funding via Smart Contracts
Impact funding becomes conditional and automated. Streaming grants via Sablier and Superfluid pay out based on milestone completion verified by oracles like Chainlink.
- Milestone-Based Vesting: Funds release upon on-chain proof (e.g., mainnet launch, user threshold).
- Real-Time Accountability: Donors can monitor progress dashboards and pause streams.
- Reduced Administrative Bloat: Replaces grant officers with immutable code.
-90%
Admin Cost
24/7
Verification
06
The Frontier: Impact DAOs & Regenerative Economics
DAOs like KlimaDAO and Gitcoin are building self-sustaining economies around impact. They use protocol-owned liquidity and fee switches to fund their own public goods, creating a positive feedback loop.
- Treasury Diversification: Funding comes from protocol revenue, not just donations.
- Impact Staking: Stake tokens to govern and earn from impact-generating activities.
- Sybil-Resistant Governance: Proof-of-personhood via Worldcoin or BrightID ensures fair voting.
$100M+
DAO Treasuries
Regenerative
Economic Model
ON-CHAIN METRICS FOR PUBLIC GOODS
Protocol Comparison: Impact Tracking Architectures
A comparison of architectural approaches for quantifying and verifying the impact of public goods funding, from simple attestations to autonomous on-chain verification.
| Feature / Metric | Attestation-Based (e.g., Gitcoin Grants, Optimism RPGF) | Oracle-Based (e.g., Hypercerts, Impact Markets) | Autonomous On-Chain (e.g., RetroPGF Bots, EigenLayer AVS) |
|---|---|---|---|
Primary Verification Method | Human Committees / Voters | Trusted Oracle Network | On-Chain Activity & ZK Proofs |
Time to Finality | Weeks (Batch Voting Cycles) | Minutes (Oracle Latency) | < 1 Block (Synchronous Verification) |
Cost per Attestation | $5-50 (Gas + Coordination) | $0.10-2.00 (Oracle Fee) | < $0.01 (Base Layer Gas) |
Sybil Resistance Leveraged | BrightID, Proof of Humanity, Passport | Oracle Curation & Staking Slashing | Native Staking (EigenLayer), Proof of Work |
Composability with DeFi | Low (Off-chain outcome) | Medium (Oracle Input) | High (Direct Smart Contract Trigger) |
Fraud Proof Window | None (Social Consensus Final) | 7-30 Days (Oracle Challenge Period) | Instant (Cryptographic Verification) |
Example Metric Tracked | Grant Recipient Selection | Carbon Tonne Sequestered | Active Users or TVL Generated |
deep-dive
THE DATA
Deep Dive: Composable Impact as a New Asset Class
On-chain metrics transform public goods funding from a narrative-driven charity into a data-driven, composable asset class.
Impact becomes a composable primitive when its measurement moves on-chain. Projects like Gitcoin Grants and Optimism's RetroPGF create verifiable, machine-readable attestations of outcomes. These attestations function as impact tokens, enabling secondary markets, automated funding formulas, and cross-protocol incentive alignment.
The key is standardizing measurement. Without standards like Hypercerts or Impact Certificates, impact data remains siloed and incomparable. Standardization allows impact derivatives to be built, letting protocols like Aave or Compound integrate positive externalities directly into their treasury management strategies.
Counter-intuitively, quantification precedes valuation. The market does not price impact first; it prices the verifiable data about impact. A transparent, on-chain record of carbon sequestered or code contributed establishes a floor of trust, upon which complex financial instruments are constructed.
Evidence: The third round of Optimism's RetroPGF distributed 30M OP tokens based on contributor attestations. This process created a public ledger of value creation, turning subjective contributions into a programmable dataset for future funding algorithms.
counter-argument
THE DATA
Counter-Argument: The Quantification Trap
Over-reliance on simplistic on-chain metrics creates a distorted and gameable view of public goods impact.
Quantification creates perverse incentives. Funding algorithms that reward simple metrics like transaction count or unique wallets will optimize for those signals, not genuine impact. Projects will inflate activity through sybil attacks or meaningless transactions, as seen in early airdrop farming cycles.
Impact is not a KPI. The most valuable public goods—core protocol research, developer education, security audits—produce value that is qualitative and delayed. Reducing them to a retroactive funding formula like that used by Optimism's Citizen House ignores their foundational, non-transactional nature.
The data is inherently incomplete. On-chain metrics capture only on-chain value. They miss the off-chain coordination and community building that protocols like Ethereum or Gitcoin Grants depend on. A dashboard showing zero transactions can mask a thriving research forum.
Evidence: The Gitcoin Grants program evolved from pure quadratic funding to include Gitcoin Passport for sybil resistance and manual committee review. This hybrid model acknowledges that pure algorithmic quantification fails.
risk-analysis
FAILURE MODES
Risk Analysis: What Could Go Wrong?
On-chain impact tracking introduces novel attack vectors and systemic risks that could undermine the entire public goods funding ecosystem.
01
The Sybil-Proofing Mirage
Current attestation frameworks like EAS and Gitcoin Passport rely on centralized oracles and social graphs. A determined attacker can spin up thousands of synthetic identities to game quadratic funding rounds, siphoning millions from legitimate projects.
- Vulnerability: Centralized credential issuers become single points of failure.
- Consequence: >30% of a funding round's capital can be extracted by sophisticated Sybil farms.
>30%
Capital at Risk
~$0.10
Cost per Fake ID
02
The Metric Manipulation Problem
When funding is tied to on-chain KPIs (e.g., unique users, transaction volume), projects are incentivized to optimize for the metric, not the impact. This leads to wash trading, fake engagement, and the Goodhart's Law death spiral.
- Example: A project buys its own token to inflate TVL.
- Result: $1M+ in funding directed to economically hollow, manipulative projects.
$1M+
Misallocated Funds
0
Real Impact
03
Oracle Centralization & Censorship
Impact data from the real world (e.g., carbon credits, educational outcomes) must be bridged on-chain via oracles like Chainlink. This recreates the web2 trust model, where a handful of node operators can censor or falsify impact claims for entire sectors.
- Risk: A 51% attack on the oracle network invalidates all downstream impact certificates.
- Dependency: 100% of off-chain impact data is vulnerable to this vector.
51%
Attack Threshold
100%
Off-Chain Data
04
The Liquidity Fragmentation Trap
Impact tokens (e.g., KlimaDAO's carbon offsets) require deep liquidity to be credible stores of value. Without it, they become illiquid governance tokens, prone to >90% volatility, destroying their utility as a funding mechanism.
- Failure Mode: Thin order books on Uniswap pools allow whales to manipulate token price.
- Impact: Projects cannot reliably cash out their impact for sustainable operations.
>90%
Price Volatility
<$100k
Typical Liquidity
05
Regulatory Arbitrage Backfire
Treating impact outcomes as financial instruments may trigger securities regulations (Howey Test). A single enforcement action against a major protocol like Toucan Protocol could freeze billions in carbon credits, creating systemic contagion.
- Trigger: The SEC classifies an impact token as a security.
- Contagion Risk: $1B+ of "green" DeFi TVL becomes non-compliant overnight.
$1B+
TVL at Risk
1
SEC Ruling
06
The Long-Term Verifiability Cliff
On-chain metrics capture a snapshot, but real-world impact (e.g., reforestation, scholarship success) unfolds over decades. Smart contracts cannot natively enforce 20-year commitments, leading to impact reversal where funded projects fail after the funding cycle ends.
- Data Gap: Zero on-chain proof of sustained impact after year 1.
- Result: Capital is wasted on projects with no lasting effect, eroding donor trust.
Year 1
Verification Window
0%
Long-Term Proof
future-outlook
THE DATA
Future Outlook: The 24-Month Roadmap
Impact tracking will shift from narrative-driven grants to verifiable, on-chain metrics that programmatically unlock capital.
Impact will become a financial primitive. The next 24 months will see the emergence of standardized on-chain metrics for public goods, moving beyond subjective grant committees. Projects like Gitcoin Allo and Hypercerts are building the infrastructure to quantify contributions, enabling retroactive funding models like Optimism's RPGF to scale.
The key is composable attestations. Protocols will compete to be the source of truth for verifiable impact data. This creates a zero-sum game for attestation standards, where winners like EAS (Ethereum Attestation Service) or Verax will become critical middleware, similar to how The Graph indexes blockchain data.
Evidence: Optimism's RPGF Round 3 distributed 30M OP tokens based on community-voted impact metrics, a primitive but functional model. The next iteration will automate this voting using on-chain activity proofs from protocols like Covalent or Goldsky.
takeaways
THE NEW ACCOUNTING
Takeaways
Public goods funding is moving from subjective narratives to objective, on-chain metrics. Here's how to measure what matters.
01
The Problem: Subjective Impact is Unfundable
Grant committees and retroactive funding (like Optimism's RPGF) rely on qualitative storytelling, not proof of impact. This creates high overhead, political capture, and misaligned incentives.
- Key Benefit 1: Shifts funding from 'who you know' to provable on-chain utility.
- Key Benefit 2: Enables automated, algorithmic grant distribution based on usage metrics.
~$100M+
In Subjective Grants
>80%
Manual Overhead
02
The Solution: Protocol-Specific Utility Metrics
Impact is not one-size-fits-all. Measure what directly reflects a project's contribution to the ecosystem it serves.
- Key Benefit 1: For an L2 bridge, track total value secured and unique addresses.
- Key Benefit 2: For a developer tool, track contract deployments and dependent protocols.
- Key Benefit 3: For a governance tool, track proposal participation and delegate adoption.
10x
Better Signal
Custom
Per-Protocol
03
The Mechanism: On-Chain Attestation Frameworks
Tools like Ethereum Attestation Service (EAS) and Hypercerts allow for the creation of portable, verifiable claims about a project's work and impact.
- Key Benefit 1: Creates a standardized, composable data layer for impact.
- Key Benefit 2: Enables sybil-resistant reputation systems for builders and funders.
2M+
EAS Attestations
Immutable
Proof of Work
04
The Future: Autonomous Funding Pools
Combine on-chain metrics with smart contracts to create self-executing funding mechanisms, moving beyond DAO votes.
- Key Benefit 1: Streaming finance platforms like Superfluid can disburse funds based on real-time metric milestones.
- Key Benefit 2: Creates a positive feedback loop: better metrics attract more capital, funding more impactful work.
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Funding
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