Open Source Contributors - A promising alternative to idea based funding

We’ve recently finished a proposal outlining the opportunity to experiment with an open source contributor funding process. This suggested funding process could become a highly effective and scalable approach for Web3 ecosystems to more consistently generate impact.

The opportunity to experiment with a contributor funding approach is better highlighted by understanding some of the problems that exist with idea based funding:

  • For contributors, the proposal submission process can require a large amount of effort and time upfront for contributors to participate and then also handle the ongoing burden of proposal writing and budgeting complexities to get involved in an ecosystem. The structure and incentives of this funding process result in a reduced amount of contribution flexibility and income stability that can deter contributors from participating or limit their ability to easily generate high impact.
  • For voters, it is often highly complex to compare and select ideas effectively. Many voters lack the sufficient context, skills and experience required to be well informed and effectively participate in these decisions. The selection process can be highly time consuming and complex for the voters. Voters can rarely express their exact preferences with their voting decisions and also do not have enough accountability or incentives to be expected to spend a meaningful amount of time on voting to make more optimal and well informed decisions.
  • For Web3 ecosystems, ideas are often treated as ephemeral yes or no funding decisions rather than being a collaborative process that looks to discuss and explore different solution approaches. In larger funding processes it can also become easier for innovative ideas to be ignored due to being less well understood or known. The allocation of assets can also be more inefficient in situations where the allocated funds are not actively being used to generate contribution outcomes, this can increase the percentage of deadweight assets that are not being fully utilised at a given point in time.

To understand these problems in more detail you can review our analysis on the current funding landscape - Current funding landscape | Contributors

The good news is that most of these problems can be either greatly reduced or fully resolved! An open source contributor funding process can help with resolving these problems and also could become a highly reliable and effective process for maintaining and improving Web3 ecosystems over the long term.

Our proposal outlines the suggestion of experimenting with directly funding a small number of open source developers that would help with developing any open source initiatives - this could include improving any existing pieces of software used in the ecosystem or creating entirely new tools and libraries.

The advantages and long term opportunities for adopting a contributor funding approach are numerous. We’ve covered the advantages and opportunities of this suggested funding process in more detail in our proposal - Open source contributor funding | Contributors

Experimentation in Algorand

The Algorand ecosystem has a grants process for a number of different focus areas within the ecosystem. These grants processes are great for people that already have an idea to execute but does not help with situations where developers are keen to join the ecosystem but do not have an idea to execute at that moment in time.

Experimenting with an open source contributor funding process could simply mean adding in an extra form process to enable software developers to indicate their interest in contributing to the Algorand ecosystem as a contributor. These individuals could then help with existing open source solutions being built or new ones that the Algorand Foundation suggest to them.

The immediate opportunity with experimenting with a contributor focused funding approach would be that it would make it easier for software developers to indicate their interest in working in the Algorand ecosystem. The Algorand Foundation could then identify if there are any promising candidates that could be suitable for contributing towards any relevant initiative in the ecosystem. Contributor funding proposals could end up bringing in impactful talent that otherwise might not have got involved due to the more time consuming upfront idea proposal process. The idea process can make it more difficult for these individuals to just express their interest in working in the ecosystem. A contributor focussed process could provide a more collaborative path for identifying promising talent and matching them with ongoing work that could create impact in the ecosystem.

Experiment facilitation

If any ecosystem was interested in experimenting with this suggested funding process but doesn’t want to handle the process fully themselves I am eager to collaborate with them and help wherever I can with setting up and running any of these experiments that are focussed on contributor funding.

In either event, contributor funding experiments across many ecosystems could be highly beneficial for the wider industry. The outcomes from these experiments can be analysed to better compare the strengths and weaknesses of this suggested approach against the widely adopted idea based funding approach that we see being more widely used across Web3 ecosystems today. Analysing and documenting these experiment outcomes is something that we intend to work on at the Web3 Association!

Community discussion

General thoughts & feedback
There’s likely going to be many opportunities and problems that could be better explored and addressed. If you have any immediate thoughts and feedback please share anything below in a comment!

Organising a wider discussion
If there are already weekly or monthly organised discussion events that happen internally or publicly I’d be delighted to join one to listen to peoples different perspective about this funding process suggestion to better understand any of the different viewpoints around this approach. Alternatively I could also help to facilitate a one off discussion instead. Please share below if you would be interested in having a dedicated discussion in the near future about this suggested experiment.

Direct communication
If anyone would prefer to chat about this funding process suggestion with me directly then please feel free to reach out to me on Discord - lovegrovegeorge or Telegram - georgelovegrove. Otherwise just throw any questions in the comments below!

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How does this actually work? This is very light on details of what you are actually proposing.

Each ecosystem is different in what tools it has available and processes it has already set up. The point of this proposal is not to tell ecosystems HOW they should implement this suggested funding process but instead WHY it is a highly promising long term solution to experiment with. Contributor funding has the long term potential of handling the majority of funding that gets disbursed from an ecosystems treasury and could even replace idea funding processes entirely. If anyone disagrees with the analysis or potential of this suggestion then that’s where we can go through this suggestion and any rationale to improve the analysis and see what might be missing.

In terms of actually executing this suggested experiment though, the key thing that is suggested in the proposal is to just start with a few developers, 1 to 3 is perfectly fine. As starting small will help to make it easier to ensure that top performing talent can be selected. Algorand could handle the process in anyway that makes sense in the short term as the process itself doesn’t need to be well refined in the beginning stages. Start small and learn over time.

One area of focus in the experimentation stage that would be highly valuable is to focus on how contribution logs are recorded and structured. I have a separate piece of analysis on the importance of contribution measurability - Contribution measurability - Disbursement. Getting this right is what helps to enable better contributor performance and impact measurement. These logs can then become increasingly useful for voters to make contributor selection decisions. This is an area I would like to work on with any ecosystems that decide to start experimenting with this process.

Hi, its great to have you onboard in Algo ecosystem. Looks like you are good analysts or product owner.

I do not understand how this is different to the current xgov grants program. Right now anybody can propose idea, make it open source and get it funded.

I do a lot of open source software … the wallet, gold tokenization, dex, clamm, bridge, nfts, onchain voting apps, … Check if you want to see the frontends.

In my opinion what would be much better is to create crowdfunding platform where people may put their ideas and what is good will get funded. Main catch is that this platform to be used must have some VCs willing to invest to projects there. Also main thing is to protect the investors as in past crowdfunding platforms peple just got money and run away.

Btw I also see a issue with VCs main goal to make money and open source thing. Example from the algo ecosystem… If folks finance would be open source it is more likely they could not charge current fees as competition would have easier job to make them competition.

Also if you think that crowd of the community will pay willingly to develop something you would need much bigger community than algorand currently is. And question is how you even motivate someone from the community to pay for something… If developer has good idea it is not enough. There must be need from the community first to willingly pay for something. Or someone who has funds to be willing distribute them for good cause, which is btw AF doing with the xgov platform.

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Thanks for the response :dancer: So this suggestion is different due to attaching the incentives to contributors instead of ideas. So in your situation you would submit your professional information and contribution history to a contributor process and the voters would decide if you are going to become a paid contributor for a period of time. If you get selected you’d be able to work on any of the open source initiatives you mentioned that you have been already. Your task as a contributor is to make as much impact as possible. Those that are most performant and effective at doing that will likely be funded in future contributor selection rounds.

This is much easier for voters to handle as top performers don’t change that often so voters can keep selecting them as it’s obvious they are consistently executing to a high standard. For yourself and other contributors it means you can get stable income and can move between ideas much more fluidly based on the needs of the ecosystem.

If you look at all the founding entities across crypto, you’ll be hard pressed to find any of them working internally using an idea funding model where all of there ideas must be selected for each individual to receive any compensation. This would add in massive complexity and remove any stability in working as a cohesive team. No large company operates in this way either - if it was more effective to attach the incentives to ideas then you’d see other examples of this already.

I have some more content around treasury income to release sometime soon but generally speaking I think ecosystems should be able to look after themselves and not be dependent on good will gestures to be maintained and developed in the long term. The most logical way to achieve this means a percentage of transaction fees should be allocated to a treasury that helps with funding the maintenance and improvement of the network. This is what would make an ecosystem self sustainable over the long term. There’s also lots of software built on the network like frameworks, utility libraries etc that don’t need a token, these initiatives are another good candidate to be supported by ecosystem treasury funding.

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Nice reply. I think this is really good thinking because it creates a mechanism for sustainability.

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