What Is Retroactive Public Goods Funding?

Building an ambitious public goods project can be challenging, particularly when it comes to funding. Conversely, for-profit businesses offer an incentive to venture investors in the form of a potentially lucrative “exit.”

However, for public goods projects like free and open source software (FOSS), an exit is out of the question. Retroactive public goods funding (RetroPGF) proposes to reward public goods projects offering measurable impact. 

Read on to learn about how retroactive public goods funding works and the projects benefiting from this novel approach to funding. 

What Is Retroactive Public Goods Funding?

Retroactive public goods funding (RetroPGF) is a decentralized voting mechanism that delivers crypto-incentives to public goods projects based on current impact rather than anticipated future work. 

The mechanism offers a public goods version of startup “exit incentives” that non-profits with no business model can receive funding based on a series of off-ramps or already proven impacts.  

Instead, the public goods funding approach entails the retroactive allocation of rewards to proven contributions rather than speculative investments associated with venture capital. 

The principle behind this is public goods that provide impact to a general audience should be funded in an organized and sustainable manner. 

Take, for instance, an open-source, decentralized framework that enables academic data sharing to qualify for retroactive public goods funding. Existing blockchain projects and decentralized entities can funnel money to public goods funding pools like a DAO, and members vote on projects to be funded. The tokens will be sent to the project creators as a prize for delivering impact to the blockchain ecosystem.

How Does Retroactive Public Goods Funding Work?

RetroPGF funding works by a “Results Oracle” or DAO (decentralized autonomous organization). The Results Oracle rewards projects it recognizes as having an impact and providing value indiscriminately. 

The oracle will consist of select long-term contributors to the ecosystem to oversee its implementation. Rewards will be distributed to public goods projects in three main ways: 

• The reward is sent to a crypto wallet address of the individual or organization behind the public goods project. 
• The reward is sent to a smart contract representing a fixed allocation table that distributes funds between several individuals or organizations that backed the project financially or contributed time and expertise.
• The reward is shared in the form of a project token whose supply is distributed to project backers or founders. 

Why Was Retroactive Public Goods Funding Created?

Let’s imagine an open-source health management app that needs funding for core development and maintenance. 

The FOSS is considered a public good and has no for-profit business model. The founders might consider pivoting to a for-profit model, risking their mission’s integrity, as continuously contributing to free software without any personal gain can be demotivating.

Of course, they can get funding from traditional means through a centralized authority like a Ministry of Health, who have the resources and the public good in their interest. However, such funding is subject to a rigorous and competitive qualifying process, and even then, it is typically based on a small group of people giving a go-ahead for funding, which lowers the odds for a successful bid.

RetroPGF deviates from this path by decentralizing the power of voting on projects to a wider community and funding projects that have already shown impact. 

Projects Benefiting From Retroactive Public Goods Funding

The following projects benefit from public goods funding from the Optimism protocol for positively impacting the crypto economy.  

Cryptozombies

L2 Beat

Revoke.Cash

Ethereum Mexico

Conclusion

The consensus among the crypto community is that support should be extended to public goods projects that further the development and adoption of protocols. This provides an opportunity for retroactive public goods funding to ensure the people or organizations behind these projects are justly rewarded for their efforts.