Gitcoin has emerged as a popular platform that “enables communities to build, fund and protect what matters to them” and has driven $70M in funding for social impact projects,3,800,000 unique contributions, and a 105 quadratic funding pool.
The platform is a marketplace for early-stage builders to showcase their projects across DeFI, climate, open source and beyond to connect with funders. The platform uses a unique funding model called quadratic funding that has been hailed as a game-changer for the open source community. Let’s take a closer look at Gitcoin and explore how nonprofits can learn from their funding model.
Who founded Gitcoin?
Gitcoin is a platform that creates a sustainable funding mechanism for open source projects. The platform was launched in 2017 by computer scientist and early Ethereum community member Kevin Owocki and has since become a popular destination for people who are looking for funding for early-stage ideas.
How does Gitcoin's funding model work?
Gitcoin's funding model is based on a system of quadratic funding. This means that the more people contribute to a project, for even as little as $1, the more funding that project will receive from the matching pool. This is designed to encourage a more democratic approach to funding, where small contributions from a large number of people can have a significant impact.
For example, let's say that a project has received contributions from five people, each contributing $10. The total amount raised for the project is $50. If the matching fund has a multiplier of two, then the project will receive an additional $100 from the matching fund. This means that the total funding for the project will be $150. If another five people contribute $10 each, then the project will receive an additional $200 from the matching fund. This means that the total funding for the project will be $400, or 40x the original contribution.
The quadratic funding model is designed to increase the number of people making decisions on which projects should be supported to compensate for large dollar donors, who may have a disproportionate impact on funding decisions.
The quadratic funding model explained in 60 seconds
What can nonprofits learn from Gitcoin's funding model?
One of the key lessons nonprofits can learn from Gitcoin is the importance of transparency, accountability, and large-scale participation. Gitcoin is built on top of the Ethereum blockchain, which provides a transparent and immutable record of all transactions. This means that funders can see exactly where their money is going and how it is being used. This level of transparency helps to build trust between funders and recipients and can help to ensure that funds are being used effectively.
Another lesson that nonprofits can learn from Gitcoin is the importance of community engagement. Gitcoin has built a vibrant community of over 3M donors, developers, funders, and supporters who are all passionate about open source software. This community provides a valuable source of feedback and support for projects on the platform. Nonprofits can also benefit from building strong communities around their causes, as this can help to raise awareness, build support, and encourage more people to get involved.
Finally, nonprofits can learn from Gitcoin's funding model by embracing new technologies and innovation. TheEthereum blockchain, the foundation of Gitcoin, provides a secure and decentralized platform for funding open source projects. By embracing new technologies and innovation, nonprofits can find new and innovative ways to raise funds, engage supporters, and achieve their mission.
Gitcoin is a platform that is revolutionizing the way public goods are funded. Its unique funding model based on quadratic funding incentivizes contributions from a large number of people and helps to reduce the influence of large donors. We hope this kicks off your journey on Gitcoin. Our friends at Blue3DAO will walk you through getting started.
Projects Givepact is supporting on Gitcoin:
- Crypto Altriusm — A media company documenting all the projects in Web 3 that are positively impacting people and environment.
- Web3ForGood — A aggregator of the social good news and projects in Web 3.
- Blu3DAO — Undefeated hackers bringing Web3 education to women globally.
- Impact DAO Media — The first book dedicated to documenting social impact DAOs.
Donate to your first project, it only takes $1!