In this previous post I gave some details about the Optimism RPGF grant Peter Ferguson and I received. We are incredibly grateful for the grant and to the wider Optimism community for the votes! This piece takes a look at some of the criticism the program received related to some larger, VC backed applicants.
Criticism
A lot of negative feedback has been thrown towards well funded companies applying for the RPGF grants (sorry Alchemy, you’re the scapegoat here). It stems from the belief that a $500 million funded company should not be taking resources from smaller teams — the push back being that, to quote the motto of the Optimism RPGF itself, ‘impact = profit’ and since the companies provide impact, it is fair that they get a share of profits.
Why Contribute
I don’t know what it is like to run a company with $500 million in funding, but I imagine the decision to start a project is probably similar to what we, as 2 people with no funding, thought:
Is this thing worth building
Do we have capacity to build it
What do we get in return
Our answers were
Yes
Yes, if we drop everything else we’re working on
A brand new tool which is a huge unlock for users. And by open sourcing, social capital for our small team, earned by contributing something brand new to the community (We genuinely hadn’t even considered the grant, and it just kinda landed in our inbox from Binji months after)
The answers for a $500 million funded company are probably
Yes
Yes,
And the third is where the criticism stems…
Like us, larger companies also get a product for their users. If they decide to gate access or charge for it, then it is not a public good, if they provide it free or open source, and it benefits the ecosystem then by definition it is, so what is the fuss about?
Potential for Conflict
I believe it comes from some contradictions between the public good itself, and the opportunity cost of other smaller projects losing out. A look at the docs from Optimism’s RPGF page makes a few statements.
‘…provided positive impact to the Optimism Collective…’
Did these companies provide positive impact? Of course.
Is giving them an inconsequential amount of money relative to their funding the best way to create more positively impact the collective? Probably not.
Small unfunded teams could receive the same amount and go full time with a year of runway, overall creating a much more significant, and decentralised, impact in the long run. We had to drop all our engineering work to build the work we were awarded for. Supporting more teams to make those leaps can create new companies rather than profit existing ones.
‘… create strong incentive for people to build…’
It is unlikely that Alchemy or other well funded companies considered the one off return of ~$300k as a dealbreaker in terms of wether the feature was built. So on this point they are not the target profile for these grants and should probably not apply.
While great PR from contributing to the open source ecosystem is an incentive, it certainly does not require collecting a payout
‘RetroPGF also provides possible exit liquidity for public goods projects’
This is probably the most out of touch with the larger companies.
When a company like Alchemy open sources some work, they can provide incredible tooling for devs to work with, that can contribute to standardisation around their stack, mutually benefiting the company and community. Since they get good PR (similar to our incentive for early social capital) and since it is perfectly within the rules that VC backed companies can apply, it is understandable why they do so.
But there could be some changes made to make sure future rounds do not have such controversy about the grants that end up getting awarded.
Improvements
Unsurprisingly, some of the most involved members of the community have already given this thought and are actively working on improvements.
By creating more focused rounds, Optimism could set conditions for projects that have not taken VC funding, or have revenues below a certain amount. Setting specific themes like ‘educational content’ can also ensure allocations are going to make it to valuable projects which may not have received enough votes when up against too many other categories.
Thought is also being given to allowing VC backed companies in, but weighting their potential reward based on how much funding they have taken.
We look forward to seeing how the grants progress, and again are grateful to the community for the award this year! In 2024 we will continue to develop our app, attempt to positively impact the wider Optimism ecosystem, and hopefully build something worth applying with again, however the rules look then!
