Fun(d) Public Goods - Without Donations or Sacrifices

Transcript

Just waiting for a quue. Okay, we are good to go. Good morning everyone. My name is Lauren Harkness and I am here to talk about how to fund public goods without donations or sacrifices. And for those of you who know me, I love having fun. I love onchain games and I also love funding public goods. And it was my desire to come up here on stage today and to shill some of my favorite crypto projects which fund public goods.

But then as I was writing my presentation, there was so much drama on Twitter. Man, people were having these spicy conversations about public goods and I thought I got to rug everyone. I'm throwing out my presentation and I'm just going to get up on stage and I'm gonna ramble about uh philosophical thoughts related to public goods for 12 minutes. So, hold on to your hats. Here we go. And it started to uh dawn on me that when we talk about funding public goods without donations or sacrifices, there's an implicit question in there begging to be

asked. How should we fund public goods? But before we get to that question, there are some other questions which we need to ask and answer. Starting off with what the are public goods? Well, public goods are goods which are non-rivalous and non-excludable. And my favorite example here are lighouses. Everyone loves lighouses. How scenic, how picturesque. But lighouses actually have a significant purpose. helping ships at sea avoid craggy shores. They're non-rivalous because one ship captain using the lighthouse does not detract

value from other ship captains doing the same. And they're non-excludable because no one can prevent any ship captain from utilizing the lighthouse. But this is kind of a silly example because it's antiquated. We now have better technology and we don't use lighouses for navigation. But it's actually not a silly example because one of my favorite public goods projects in crypto is DeFi scan which tells you how much D is in your FI and it can help you avoid centralized projects just like a lighthouse can help you avoid a craggy shore.

And the next question is why don't Oh, by the way, first spicy point. Um, some people think that public goods are charity, but public goods are actually the exact opposite of charity. When you are making a charitable donation, you're donating to something and you're not getting anything in return. But with public goods, you're actually getting something upfront. And the only question is are you going to pay for it?

So then the question is why don't we fund public goods? Why don't we pay for them? And the classic answer is the free rider problem. Because uh public goods are non-excludable by definition. We can't prevent anyone from using them, which means that we can't force people to pay for them or threaten to cut them off. And yes, we can do things like payw walls and turn them into private goods or club goods. We can also do things like putting ads on websites which make the experience super shitty. And yes, there are more evil ways and less evil ways to fund public goods. So, let's

think about some of the actually good ways to fund public goods. But how much money do we need to fully fund public goods on Ethereum? And we're not even talking about public goods at large here. We're not talking about mitig mitigating global climate change or saving the whales or alleviating poverty. All things which we definitely should fund and do. But let's just think about Ethereum for a second. I have recently outsourced all of my thinking to chat GPT. And so I outsourced this question as well. And chat GPT says that at an absolute minimum,

Ethereum public goods need $150 million. And that's just basic things uh like clients and wallets and research for the future. But if we really want to fund all public goods on Ethereum, we need 500 million every year and not 500 million Zimbabwe dollars. So then the next question is how much of that 500 million is actually funded and how much of that is yet to be funded?

Well, again I asked chat GPT. I was using 03 so these are pretty good answers I have to tell you. Um and it basically told me that uh we are funding about $150 million worth of public goods annually uh in Ethereum. And as a result, we kind of have our minimum basic public goods covered, but we still have a shortfall of about $350 million if we per year if we want to fully fund public goods on Ethereum.

That's a lot of money. So, we need to mind the gap. Um, so which public goods should we fund? Uh should we fund all public goods including those which are fully funded or should we only fund the public goods which are underfunded? Or some people think that we should only fund public goods which bring us value or public goods which bring us value and we can actually extract that value and create positive feedback loops from.

My answer here is somewhere in the middle. My answer is that maybe even a better way of explaining public goods is to think about underfunded dependencies. Um so we should only fund things which actually need funding and we should only fund things which we actually depend on. And of course what I depend on may be different from what you depend on. And there will be some overlap and that's wonderful. Um, but each of us should fund our own dependencies uh partly out of pragmatism but partly out of self-interest.

But there's this really interesting question here. What is uh what do we depend on? What do we actually benefit from? Um and there are things which I directly benefit from in the short term which create more value for me which I can extract value from. And a really classic example of this is like a government investing in public transportation infrastructure. And as a result of that public transportation, land prices increase. And as a result of that, the government has an increased tax base. They're collecting more taxes, which means that for every dollar

they're investing into public goods, they're actually getting more than $1 back in taxes. And that's a positive cycle. But there's a difference between the government in this example and many crypto projects which is the government is really good at extracting value. They have the authority and they have the means to do so. But many crypto projects are horrible about extracting value. And so we might be in this position where it's dependencies, underfunded dependencies all the way down.

So how do we fund public goods? Traditionally, there have been three ways of funding public goods. The first, the biggest, baddest, meanest way, and also the most successful way, you guessed it, taxes. Let's hear it for taxes. No. Oh man. Uh thank you. Thank you all who clapped. Um traditionally people don't like taxes because they feel coercive, right? And we don't know how the money is being spent and sometimes it's spent in ways which don't actually benefit us.

It's not spent on our dependencies. Um, the second way is donations, right? For a dollar a day, you can save the life of a child, right? Donations. I think most of us actually like have a lovehate relationship with donations. Um, we enjoy donating because we're doing something good and it makes us feel good, makes us feel connected to other people. But at the same time, donations are often accompanied by a massive guilt trip.

The third one is VC funding or token funding. And this is relatively new. But what we risk here is that we have a community built around a public good which is uh fragmented uh where the different subsections of that community are misaligned and the VCs or the token holders may actually be seeking profit and seek to capture the project. So what are some new ways to fund public goods? And here I'm getting into my favorite projects territory.

There are two uh projects which I absolutely love, Glow Dollar and Octant. And what they have in common is they both take underlying assets. Um they invest them and then they take the yield and they distribute it to public goods based on a community voting system. And they both have this wonderful mechanism in place which creates positive flywheels where you can actually grow and fund your community based on yield.

In the case of Glow Dollar, it's a regulated USD stable coin uh which is backed by cash and treasury bills and the yield on those T bills does not go into the pockets of some corporation. Uh it goes into public goods. Octant is east staking where the staking yield goes to public goods. I'm super short on time so let me just say there are also some old ways to fund public goods. Uh many people know that the Great Wall of China in part was funded by lotteryies and lotteryies are actually a really fun and successful way of funding public goods. And the reason is unlike donations people play out of

self-interest. They want to have fun. They want to make money. And so with different projects like Lotto PGF, you can buy a lottery ticket. Part of the money goes to public goods. Part of the money goes to a lottery jackpot which is given away in a lucky draw. Same thing with pool together except for it's a no loss savings lottery. And then just as honorable mentions, Paddle Battle, an auction platform where anyone can auction off cool as long as they contribute the proceeds to public goods.

And last but not least, launching just two days ago, the Ethereum time capsule celebrates Ethereum's 10-year anniversary, and anyone can create a time capsule entry. However, each entry costs 0.001 0001 ETH $2.50 and it goes to Protocol Guild. So Salana and Cardano Bros can create as many shill entries as they like, but they're funding Ethereum core developers along the way. Thank you very much. Um, how should we fund public goods? In the most fun way as possible.

Thank you. [Music]