Gitcoin (GTC): A Marketplace for Open-Source Development

What Is Gitcoin?

From an ideological standpoint, Gitcoin believes that open-source software is an integral cornerstone of software development and modern computing at large. Launched in November 2017, the Gitcoin crypto platform seeks to foster collaboration on open-source software projects. It achieves this by incentivizing developers to take on development projects with reward payments and grants. Many developers who contribute to open-source projects do so with little to no direct compensation because the software is by nature free and open — but Gitcoin was created to help compensate developers who want to contribute to meaningful open-source software applications.

The Gitcoin platform focuses on funding “public goods” projects, which are typically “non-rivalrous” and “non-excludable” — in other words, they are designed to benefit everybody without necessarily competing with one another. Examples of public goods projects include those related to clean air, infrastructure, and privacy. However, most of the public goods projects funded by Gitcoin include projects that address blockchain within the Ethereum ecosystem. For example, there are ongoing projects to translate Ethereum’s source material into different languages, to accelerate Gitcoin’s transition to full decentralization, and to support educational content creators.

Gitcoin seeks to encourage talented developers to join the platform by offering a financial incentive to participate in hackathons, bounties, and funded community grants. Developers who have a project they wish to work on can submit it on the Gitcoin platform and crowdsource funding directly from other contributors, as well as participate in quarterly opportunities to earn extra funding through the platform’s innovative quadratic funding mechanism.

Quadratic Funding and Gitcoin Crypto Grants

Gitcoin crypto funding is directed to public goods projects through a proprietary, democratic system known as quadratic funding. Quadratic funding is a structure for crowdfunding campaigns where donations from individuals are matched with corresponding amounts of funding from larger pools of funds supplied by bigger donors. Funds are not “matched” according to a 1:1 ratio, but rather according to a proprietary formula. The formula is optimized to reward projects with more community support. So, for example, if a grant receives 100 individual donations of $1 USD, it would receive more in matched funds than a grant that received one donation of $100.

Quadratic funding is intended to align the needs and incentives of donors, those seeking funding to carry out public goods projects, and developers. Through quadratic funding, small donors are able to support what they deem to be the best public goods projects, and by doing so drive up matched funding. Similarly, developers with an objective they want to work on may leverage quadratic funding on the Gitcoin platform to finance their own projects. Users who submit their own grants must draft a clear project title and description, and specify if they’d like contributors to donate funds in a particular ERC-20 token (Gitcoin supports all ERC-20 tokens).

Currently, the quadratic funding matching pools are funded primarily by user donations to the Gitcoin Grants official matching pool fund, although other matching pools exist and more will likely continue to be created. Users can contribute funds to matching pools, which are then proportionately doled out to popular projects according to the quadratic funding formula with matching rounds occurring quarterly. As of October 2021, Gitcoin Grants have funneled approximately $35 million towards open-source public goods projects, including about $5 million in specialized “bounty” projects — another way for developers to earn on Gitcoin.

Gitcoin Bounties

Gitcoin enables users to fund certain technological development issues and crowdsource support from available developers on the Gitcoin platform. As the funder of a bounty, a user must create an issue on GitHub, fund the issue on Gitcoin (specifying project details, a timeline for completion, and any other expectations or relevant information), and then contributors may submit a short form to express their interest in completing the issue. Gitcoin bounties can be permissioned, requiring funder approval to begin work, or permissionless, allowing anyone to complete the bounty at any time. Through Gitcoin bounties, funders can choose workers at their own discretion, set timelines, and cancel at any time.

On the other side of this deal, participating developers can choose to contribute to any publicly listed project with a “bounty” — which represents the total amount of project funding available to be earned by developers. The larger a bounty is, the higher the hourly rates may be. For example, a project with a bounty between $1.5k to $5k might correlate to an hourly rate of $50 to $195 per hour. For projects with a bounty between $5k and $50k, the hourly rate could jump up to the $125 to $520 per hour range. Hourly rates also vary by skill and the particular programming language required. For example, projects requiring basic computer programming skills like CSS and HTML have lower starting rates than more advanced languages like JavaScript and Solidity, which offer higher ranges of pay for developers.

Community Governance via Gitcoin Token (GTC)

Gitcoin’s native governance token, GTC, is an ERC-20 token intended for community platform governance. There is a total token supply of 100 million GTC tokens, which are allocated as follows.

• 15% distributed in a retroactive airdrop to platform users

• 35% distributed to existing stakeholders

• 50% to be distributed by the Gitcoin decentralized autonomous organization (DAO)

The intent of the GTC token distribution is to reward both the early users of the Gitcoin platform, as well as future contributors. The retroactive airdrops were sent to early platform users who participated with actions such as opening a bounty, submitting work to a bounty, opening a grant, or contributing to a grant, among other activities. The GTC distributed to stakeholders was allocated to the founding team, investors, employees, and strategic partners. The GTC tokens reserved for the Gitcoin DAO are governed by a community-led treasury, and become available in equal monthly installments until approximately May 2023 when all 50 million of these GTC tokens are unlocked.

Gitcoin is governed by a DAO wherein users can participate in platform governance by leveraging their gitcoin tokens to propose and vote on various proposals. The platform is undergoing a gradual transition to complete decentralization, where eventually all of the platform governance will be turned over to the community. As of October 2021, this transition is being spearheaded by community “stewards” who have been selected for their demonstrated alignment with Gitcoin’s mission and values, as well as an ongoing willingness to contribute to the Gitcoin crypto ecosystem on a weekly and even daily basis. Gitcoin stewards have initially been tasked with setting policies around Gitcoin Grants.

The main initiatives of the Gitcoin governance process revolve around several predetermined “workstreams” — which are essentially broad categories that define topics about which community members can submit proposals. Currently, the main workstreams entail:

• Public goods funding: rallying the community to fund public goods, and setting criteria for various funding rounds

• Public goods prototyping: creating ways to use Gitcoin’s unique architecture in building solutions for public goods problems

• Sybil defenders: crafting solutions to prevent Gitcoin from becoming susceptible to Sybil attacks

• Progressive decentralization: making Gitcoin’s architecture more modular and simplified to better facilitate ongoing community governance

Future of the Gitcoin Crypto Ecosystem

Gitcoin has proven effective at accelerating open-source software development in blockchain by providing a platform for a community of donors and developers interested in creating a more open internet to build together. With a platform designed to direct funding to meaningful open source projects via a system of open governance, Gitcoin continues to foster the development of Web 3.0 — the decentralized web.