S.10 Ep.7 Prosperous Software: Rethinking Open Source Funding Through Licensing

Transcript

Welcome to the Greenpill.network podcast. We are exploring how technology community and new forms of coordination can build, fund, and accelerate what matters in the 21st century. This season, I'm talking with builders, thinkers, and innovators who are pushing the edges of what's possible. From onchain capital allocation to Ethereum to AI alignment to reimagining markets and governance. Together, we'll uncover how these ideas move us closer to a world that's improving every week, every month, or every quarter. what we call Protopia, a preferable realistic future that's constantly improving through small incremental changes over time. If you want to learn more about the podcast, visit our website at greenpill.network where you can download the books for free, play with some of our ecosystem projects, join the telegram, or participate in the network.

My guest today is Raymond Chang. Excited to have him back on the podcast. He is a software engineer, entrepreneur, research scientist, and open source contributor and adjunct professor who works at Open Source Observer. Basically, open source observer is an open source AI data platform for measuring ecosystem growth. Raymond and I have been a part of the open source sustainability and financing movement basically since we uh both got into web 3. And we're here to talk about the prosperous software movement which is basically a movement towards a new type of license that will build in revenue shares into open source projects. So, um how do we fund our dependencies? How do we fund open source? This has been a white whale of mine and of many others

in the space for a while and I think Vitalik on his most recent episode with us highlighted that there's a lot of opportunity space here in the licensing space. So Raymond is I think one of the credible leaders that is pushing forward revenue share licenses in the software ecosystem and I think that it's uh worth a listen for that reason. So enjoy. Hey Raymond, what's up? >> Good to see you. >> Good to see you too. Um, so last we talked on the podcast, you appeared as the co-founder of OSO, Open Source Observer, with your co-founder Carl Carl Turbone. And, uh, you guys have been

working on funding open source in Ethereum, which I think is super cool. But, uh, if you were to reintroduce yourself to the audience and maybe give an update on how your thinking has evolved, maybe that would be a good place to kick us off. Yeah, what I'm working on right now and then tell a little bit more about what we're trying to do with prosperous software movement. Um, but yeah, at at Open Source Observer, we've been open source from day one. We're building an AI data platform for measuring ecosystem growth. So, we work with all sorts of different foundations from the Ethereum Foundation to Optimism to, you know, other folks in the um crypto space to understand growth of the ecosystems.

And we were kind of born out of this public goods uh ecosystem, the same one that you know uh I share with you. And we're hitting a a difficult moment in the project life cycle. Um the same one that I think a lot of other projects are experiencing, which is what do we do with this open source software? How do we, you know, how do we fight against this feeling of, you know, are we going to get taken advantage of if we continue to open source everything that we do, including the code and the data and the AI workflows that we're working on or um do we need to relic in a way that might actually close off uh some of that potential to be taken advantage of. So that's kind of what spurred the or that was the impetus for you know how we

started thinking about the prosperous software movement and I think there is potentially a third pathway. um that I'd love to explore with you on this episode. >> Yeah, I mean it feels like zooming out that we're in this place of transition. Maybe the cycle is dead. Uh at least you know the crypto cycles for ETHUSD and BTC and all the majors, but it feels like we're still within the public goods funding space, open source funding space within web 3, transitioning to a new a new epoch, a new time that's defined by I guess like scarcity. um and the public goods funding experiments that worked in web 3 not really working out from last cycle. So we're in this liinal space where we're we're figuring out what's next and we haven't quite got there. So just to zoom all the way out that's

that's my macro frame as as we dive into PSL. Uh how do I do there? Anything to add or subtract? I completely agree with that. I mean, being in the public good space, we've been trying to, you know, for the last two years since we've been around, we've been trying to convince every foundation that they should be eating their carrots and broccoli, right? That funding open source is good for you, that it's good for security, that it's good for growing your ecosystem. And while, you know, this, let's call this the public policy approach. While the public health policy approach is an approach that we should continue, I'm not suggesting that we stop any of the efforts that we're doing there. I think it has limited efficacy, right? Especially in the world that we currently live in. it's easier to take in certain certain macro climates,

harder to take in other macroclimates. And so I think part of the impetus for this movement is okay, while we continue to do that work, um what is what are the levers that us as software developers have? And one of the realizations that we had was in reality the biggest choice that a software developer makes that is the center of power for how they release control or how they release power to you know the markets or they preserve power as like some form of bargaining power that's in their licensing choice. And so that's kind of that's the thread that we started pulling to figure out if there's some other pathway here um that can preserve the things that we love about open source. Uh but you know gives um

more more oomph behind the public goods funding um movement to to convince more of the corporate entities the commercial entities to be funding their public goods. >> I feel like you're giving me my question here. Is there another path? What is it? [laughter] Well, I think, you know, I think this is actually if we get this right, this can be significantly bigger than, you know, just in the crypto space or, you know, just in the public goods space as we as we define it here. Um, if I could take a quick zooming out, um, and take a look at like the history of software licenses, I would say the where we are today is kind of the market movement of, you know, things that happened decades before us. So you know the first one was

in the 1980s there was a free software movement that led to the birth of things like Linux new all sorts of foundational technologies that we use today things that we almost take for granted now and then the later open source movement um if people don't know that that only started in the '90s [clears throat] and that led to a huge explosion of open source software in every single industry not just crypto but also you know not just the tech industry as well but basically every you know almost everything in the economy uses something that is open source today. I think the recent study showed that about 99% of companies use free and open source software somewhere in their stack. 70% lines of code shipped to production comes from open source libraries. It is not hard to say that [clears throat] this giant 113 trillion GDP economy that

we have today. Free and open source software is the bedrock of that economy and it's been growing exponentially with technology ever since. And the fundamental problem here is that the licenses of today do not reflect any of the financial realities of this modern economy. Not only do free and software developer free and open source developers rarely benefit from this prosperity and growth, they struggle to find support for the project. And you hear this over and over again. We heard it in the heartbleleed incident with OpenSSL. But that is one of a huge, you know, list that you could probably go Google and find of critical infrastructure that's not being funded.

And I think part of the problem here is that these licenses were rooted in a particular focus, right? In the, you know, free software world, it was just focused on freedom. GPL, AGPL, the freedom to use, view, study, modify, and redistribute your software. And in the world of this open source movement, it was really about open collaboration. In particular, how it was going to interface with commercial entities. None of these licenses of the past had really addressed anything that had to do with financial realities of how much does it cost to write software um and who was going to be maintaining these things once once it was shipped into production. And so I'm suggesting that we need a new phase of software. Um we're tenatively calling this a prosperous software movement, but the

fundamental ethos is that all of the value creators in this economy should be financially benefiting from the prosperity that they helped to create. And to meet this challenge, I think there needs to be a new class of software licenses that addresses that financial reality that rewards open source developers while holding true to the principles that make this community great. And so one of the things that we are starting to work on, um I know we recently called it PSL. We're kind of shifting the names a little bit. Um the current tenative name is the public prosperity license, PPL version one. And uh the fundamental premise is quite simple which is if you're you know over a certain amount of annual revenue you must dedicate some wide percentage share of your revenue back to funding your dependencies. Very simple premise um but

there's a long road of how do how do we make this actually enforceable and how do we address adoption when there are you know such a large corpus of uh open source software that that exists today. So, it feels like you're rooted in the legacy of the free software and open- source movement from the 20th century, but now that we're in the 21st century and increasingly digital world that depends on open source, the licensing regimes have not caught up. And so you envision a branch of software licenses that will be under PSL that will accommodate this new economy in some way and also sidestep the need to go pitch people and get them to voluntarily fund

their dependencies but maybe create some sort of legally binding method in the license where they fund their dependencies and maybe a cryptoeconomic system for actually doing that. Am I tracking? Is that a good summary of of what we've learned so far? >> Yeah. Yeah. I think that is the fundamental premise. I think there are a couple areas where we want to distinguish ourselves from um other work that's currently in the space. So I would say you know if I had to paint a reductive large picture of where you know in our in our research we've looked at other licenses and how they kind of bucket there's open source licenses which for the most part uh don't really discuss anything related to money whatsoever and then there are commercial licenses that kind of do right. Um, and

I would bucket things in there such as like uh source available licenses like BSL or you know fair use licenses or things like that. Um, effectively this entire class of commercial licenses are predicated on some kind of restriction, right? Whether or not it's to restrict your ability to run the software in a commercial setting, uh to restrict the ability to use this software for per certain types of competitive uses or to you know or require some kind of bilateral negotiation to get uh funding for, you know, some kind of licensing or royalty fee for using the software in particular. I think that's why I categorize it as like commercial licenses. I kind of want to chart a third a third path and maybe I'm threading a needle here where I want to

preserve the things that make free and open source software great. So that you know the four fundamental freedoms that are typically talked about are the freedom to view the software, study the software, the freedom to use it in any way that you want, the freedom to modify and the freedom to redistribute it. Um and so I think that is what makes software amazing. That is why I love the community. I want to preserve that. It's just it's more like uh it's more akin to something like copy left where you know there's just additional things that you have to do. Um in the case of copy left you know you have to um you know open source your software if you use it. Um in the case of this we need to come up with a better term for this. Um, I've been describing it as like profit left,

but the idea is that if you use this software, there's just some additional requirements that you have to make, which is in this case donating to your your free and open source um dependencies, >> right? This may be a a nuance, but I I want to get into it. Um, there's open source, which I think is governed by um there's a foundation that governs what's open source and what's not, and then there's source available, which I've heard used as a pjorative in developer circles here and there. Um, do you think that uh what's what's the difference between those two and does that matter for for where PSL is going?

>> Yeah, I think um it's a good question. I think it is very complicated is one of the things that I feel like I've learned in the last month. Um so there's the free software foundation um you know the Richard Stallman world um which has their own set of approved licenses that they approve to that fall under the free software definition. Um there's also the OSI which has their own approval process and their own open source definition um and their approval process. We have not gone through any of these approval processes yet. So I don't know where we fit in this. Um at the end of the day uh you know that's just that's a process that we'll probably have to go through and figure it out. I think if I had to give a layman's explanation of why this

is different than um let's say source available licenses you know in the world of free and open source software like I said there's usually these four four fundamental freedoms and uh you know if you start removing those freedoms if you start um saying well okay you can't use this software uh you can look at the software on GitHub but you can't even run this software without permission from a commercial entity That's usually the world of like you know commercial um source available licenses. So something like BSL it's kind of threading somewhere in the middle where it's basically a commercial license for say 2 to four years and then it automatically converts into an open source license later. I think to me I

mean I understand why companies end up choosing something like that but effectively what you end up doing in that period of time is that in the in that two to four years you're basically creating those restrictions right three of those um freedoms are no longer there you can look at the software but you can't run it or modify it or redistribute it or sell it um without permission from the license owner and to me I feel like that starts to chip away at what makes open source software great and one of the reasons why we end up loving it and So I again I understand why people end up going the source available way. Source available basically means the only freedom that you want to preserve is the ability to look at it on GitHub. You know one of the one of the best ways that I've heard

it explained to me was the the collaboration monster effectively. You know open source is one of the best collaboration monsters that exists. There is nothing that restricts anybody on the internet anywhere in the world to pick up a piece of software uh to modify it to fork it to make it better to redistribute it to even to sell it. Um it is one of the reasons why I have a strong belief um that opensource or open economies and open technologies almost always out innovate the proprietary closed source uh counterparts. And I think that part of what I would love to do is to try to maintain as many of those four freedoms as possible.

>> Got it. Yeah. I think that there's there there's sort of like a lot of nuance there that maybe only matters if you're the kind of person who's deciding to accept these licenses. And um you know, I'll be curious to see once you submit PSL to those approval bodies, what ends up happening there. But um yeah, let's let's let's uh go back on the main the main course of our uh of our Vancor here and and talk about PSL. So like in a nutshell, what what is it like? What's the TLDDR of of of PSL or are you still sort of exploring what's within this design space?

>> Yeah. Um well, I think there's a few principles that kind of we want to stick to and then, you know, we can talk a little bit about in practice what it's going to look like. Um you know, at the end of the day, there's like in terms of the goals that we're trying to meet. One is we want to maintain that collaboration monster. So we want to maintain the ability to you know run study modify redistribute the software. Um there will be this additional provision where things inside this set um trigger some ability um to enforce to anyone using the software to have to revenue share back to this cohort. I think one of the fundamental principles here is that there is effectively a collective bargaining

power. um our individual you know say OSO our individual ability to negotiate with any particular you know commercial entity is very limited but I think there is a very positive sum that we can collectively bargain together and so um if more projects start to join this cohort then we kind of increase both the negotiating power of the cohort of PS uh you know prosperous software as well as the surface area of the commercial entities that we end up touching and so um that collective bargaining I think is going to a a core key component of this.

So we want to preserve that in any of the licenses that we end up writing. One of the ones pieces of you know one of the goals that we want to preserve that I think are going is going to be one of the hardest things to solve for is no self-deing. So we want to make sure that this revenue sharing component actually benefits the individuals and organizations outside of the donor's control. if a corporate entity like, you know, Google can just end up just self-funding its own uh things that it ends up funding anyway, um it kind of runs counter to the intent of this revenue sharing with other public goods. So, in your most recent episode with Vitalic, you know, I think we can draw some inspiration in legal language around selfdeing, but I think we'll have to figure out both the legal and

technical mechanisms to to avoid that. Um, we want to provide some kind of scalable judgment. So I don't think we want to be prescriptive that this has to be um retrofunding or deep funding or or something like that but we want to de devise like boundaries of what good dependency funding mechanisms look like and how do we make sure that we preserve you know these types of principles like no self-deing within them um and I want to make it as compatible with as many software licenses and business modables as as possible. So I think those were kind of like the design considerations and then you know okay then how do we create a license that is actually enforceable and how will it actually work. Um so to break it down at like a very basic level I think you know

imagine you know I'm a developer I want to license some piece of software um as public prosperity license or whatever we end up calling it. >> [clears throat] >> So uh ppl will contain this profit left clause which generates a revenue sharing obligation for anybody that uses the software. We choose some revenue sharing percentage. So let's say it's ppl 1%. So um if somebody ends up using this piece of software, they're going to have to reissue revenue share 1% of their revenue. Um an engineer at another company at a startup ends up using this library that I built to build a commercial service. And so, you know, while it's young and profitable or if it's a nonprofit or if it's a, you know, educational use case, etc., there's no obligations. But once you reach some kind of revenue threshold, then the the

revenue sharing uh clause kicks in, you have about a year to donate to an approved dependency funding mechanism. Um, and then if anybody forks my library, then they have to inherit this profit left clause. Um, with with the fork, I think it's still an open question what happens if, you know, some commercial user ends up using two pieces of PPL license software. um whether we use whether we combine them using sum or min or max or average or median. Um you know I think the current suggestion is to leave it at something like max. So if I have something that's ppl 5% something that's ppl 1% um then that would yield you know effectively 5% revenue sharing to all the dependencies that um that piece of software ends up using. So that's that's how it works at a at a

high level. If I were to reduce it down to just a very small phrase, it feels like we're talking about a revenue share license here. Do you have an objection to that reductionist summary? >> Not at all. I mean, I think the one thing I would say is that uh I think we are trying to design it in a way such that not every individual software author has to negotiate with every single user of the piece of software. And so if we can do this in a permissionless way where anybody can still pick up the software, it's just clear what the obligations are um and it ends up funding this cohort in a way that that seems fair. Um I think that would that would satisfy. So I think that is the one thing that is a little bit different than let's say traditional

revenue sharing commercial agreements. But yeah, I think that's that's effectively the the the premise. >> Does crypto have anything to add here? I mean, I I can imagine in a world where there's 300 nations across the world all over with their own their own jurisdictions and we've got a digital economy where you might download a software from one jurisdiction in another one. The enforcability is real hard, especially if you're going to have to fly across the world and and sue someone. And one of the things I love about crypto is that it's global and self- enforcing smart contracts. And you know, I I I think that the the best case scenario for builders out there is that they don't have to worry about enforcability. They just say, "Hey, install this package and then it'll auto

route the revenue to my smart contracts and then you fulfill your obligations without even having to think about it." And maybe I'm answering my own question here, but like, you know, does crypto have anything to add here? >> Yes, 100%. Um, I think, you know, the the problem that we're trying to solve is pretty ambitious. And so, I think we're going to have to leverage all forms of power that we can that we can muster together. So, you know, when it comes to the license, we're mostly talking about legal power, but I think there are other two forms of power that we shouldn't underestimate. There's technical power and social power. Um, so for technical power, you know, I I would look at something like in climate change when you take a look at, you know, the ability to just go to checkout and click the ability to, you know, buy some

carbon credits with this purchase or, you know, strike climate green makes that tribul to, you know, revenue share, basically 1% back to climate change. Those types of technical mechanisms are incredibly powerful because people don't want to sit there and reason about you know how do I how do I make best use of that 1% to make sure it is effectively you know changing climate change in the right way and so technical mechanisms end up being incredibly powerful. I think those mechanisms will look different depending on which industry sector that you're in. And so if we're able to hook into the payment rails, um, you know, the more that we have these types of revs sharing agreements in smart contracts, you know, when it comes to stable coin transactions that are

happening on chain, that would be incredible. Um, the more that we can build into, you know, emissions or yield or transaction fees, um, the ability to do this revenue sharing, that would be incredible. And I think we should also have web 2 compliant mechanisms as well that make it trivially easy for people to just opt in. um the more that we can reduce the friction for people to not have to reason about what good looks like when I am funding um and not having to take too many steps to actually do the funding but actually hook into the payment rail so it's trivally easy to just click that checkbox um I think that would be incredibly powerful and you know I think one of the things that I'm bullish on is it's not crazy to me that in the next 5 to 10 years an enormous

amount of international commerce is actually going to move on chain and so if we can get these rails in now um I think it's going to have outsiz impact when the economy looks significantly different in 5 to 10 years. >> So if I'm someone who's interested in using PSL or interested in getting involved, what do I do? Is it available now? Are you are you looking for initial alpha users? What's sort of the call to action? >> Yeah. So um we have not drafted the license yet. Um this is a very early episode and uh I appreciate you Kevin working uh being willing to even record this to you know be in this brainstorming phase. We're effectively looking for our initial founding cohort, right? And I think it, you know, we're looking for top tier projects um in this

space that are willing to explore relicensing. Um ideally, you know, you're you're a project that has some surface area, has some negotiating power. Um that you're struggling with, you know, recurring revenue um and you have some desire to support, you know, dependency funding and public goods. Uh to begin with, one of the you know best pieces of feedback that I got in the last month was from one of the founders of of NL2. Um and he was basically like said look if you can find 30 top tier projects that are you know in the in the uh highly reputable you know crypto space then if you can get people to pre-commit if 30 other projects also join then you know he's down to relicens. So we're looking for that inio

cohort to help us figure out what this governance looks like. Help us figure out what are the you know fundamental principles and what are the the boundaries of this license that work for your particular use case. And we want to make sure it's like a healthy mix of everything from you know L1 clients, L2 stacks and um libraries and developer tooling. How do we make sure that we are addressing all the potential business and financial considerations for you? um and then put you uh you know launch this together um sometime in the new year. So um our goal here is to find these these you know these projects. There is a form that you can fill out. It's it's at uh it'll be linked as part of this episode, but uh it's at the short link

pgf.ing/join if you want to sign up and hear more and and join this working group. >> Cool. Well um you know in 10 years if you're maximally successful what does the world look like? Yeah, I think I mean it is incredible how far we've come with no financial rails whatsoever, right? You you you know you can think about open source software as the digital public infrastructure of the world. Um and as I mentioned you know the vast majority of the economy is already built on top of it. It's incredible how much innovation that has led to. Think about, you know, what you can build with AI and VI coding, what you can build in a weekend hackathon project today versus what was possible

back in the '90s. We, you know, open source software has enabled an incredible amount of innovation and economic growth. And I think our goal here is to just turbocharge that. If we can provide the mechanisms to be sustainably funding that core infrastructure that everybody ends up using, we should be getting more of it. And if we get more of it, I think that has an accelerationist effect on the economy. So I think it's I think this is a prosperous argument for everybody instead of focusing on, you know, just the just the security reasons why you should fund open source, which of course you should, or just focusing on um the moral reasons why, you know, from an altruistic perspective it's a good idea.

I think the economic argument is the strongest which is that I think in a world with more digital infrastructure um especially ones that people end up using um I think we end up growing the entire pie growing the entire economy for everybody both proprietary and you know open source and and public goods. So yeah that's what we're shooting for. >> So number go up [laughter] uh prosperity go up. >> Okay I like that. That that'll make it into short short form clip I'm sure. Is there anything I didn't ask that you want to say before we wrap?

>> Yeah, I think the one thing I might add, um, I mentioned earlier that there is legal power, there's technical power, but there's also social power. I don't want to underestimate the importance of the social coalition movement and the coalition building here. And so, it's one of the reasons why I'm grateful that, you know, um, you're willing to chat with me at such an early stage and and think about this more thoughtfully. Um, when it comes to adoption, I think the hardest part is the 0ero to one, you know, like going from 0 to 1% revenue sharing or even going from zero to one BIP, like 0.01% revenue sharing. That's honestly the hardest part because people are just not used to paying for any amount for open

source software today. I, you know, this might be naive. I believe this to be true. True. I think if we get the technical rails right and you start really really small. Um so for example if we start at you know ppl 1%. Where you know one bit basically means if you're at a series a million dollars annual revenue that's about $100 a year. You know if you have a billion dollars in annual revenue you know it's hundreds of thousands of dollars a year. um that's you know hopefully small enough that you know it's not worth the switching costs and we can start to build that social practice of giving back and funding public goods and funding you know dependencies. If we can

get that right where there's this general social expectation that this is something that we end up doing that's something that we build build into our you know expense forecasting etc and something that can just be tied along with all of the other service based you know software expenses expenditure that I already spend um I think that will be one of the most important pieces because once you get there you know you can scale up um and you can grow the movement from there but just getting an initial the right cohort of initial members right to start that social practice I think is going to be really important.

>> Yeah. Well, um you know, I hope this podcast episode helps you get zero to one at least a little bit. And the call to action I'll leave the audience with is that if you're a member of a project that's interested in being a part of the trial cohort, reach out to Raymond. You can find him on X. There's a link in the show note where you can get involved. So, I hope to see pro PSL be really successful. It's one of the things that I'm going to watch in 2026, especially since Vitalik highlighted in his episode, this is a category of things that he's interested in. So, um, best of luck to you and looking forward to seeing this go from 0ero to one.

>> Thanks. Thanks for having me on. It's good chatting with you. >> All righty. We just heard from Raymond Chang from OSO. Really excited about OSO as a project and then also PSL, the prosperous software licensing movement. I think will be really cool. If you enjoyed this episode, we'd love for you to check out the links in the show notes to learn more. And I hope you've enjoyed listening to the Green Pill podcast. Uh if you're if you're still here at the end, please remember to like and subscribe. Share this episode with your friends, especially if they're building in the PGF space. And we'll see you in 2026. Thank you.