Leading Projects and Startups

Overview of public goods in web3?

As climate investors and founders in web3, we’ve seen a lot of recent buzz around web3’s ability to create new ways of creating, funding, and managing, public goods.

• What are public goods?
• They can go by a variety of names (public goods, universal goods, or common goods)
• Why do people in Ethereum care about public goods?
• Web3 applications brought public goods back into public discourse because:
• Examples of projects building public goods for the climate
• Up to now, public goods have been produced and maintained by the State. (Insights from Climate Crypto Commons)

Insights and notes for climate investors

• I plan to build this out with more notes over time as AeraForce.xyz assesses and invests in related companies

• Rewards for public goods currently will only come from benevolence, rather than being a sustainable business model.

  • H/T to input Crypto Commons Association: “there is an open question regarding, can crypto tokeneconomics design systems which assign value to natural capital assets?”

  • However, as Gitcoin is showing, this benevolence could come from entire communities... web3 might make this altruism a lasting source of public goods innovation.

    

• What does this mean for climate investors?

  • New funding methods (albeit largely reliant on grants, benevolence) mean that it’s suddenly ‘profitable’ or attractive for entrepreneurs to create public goods or ways to manage public goods (they receive rewards for the initial creation, even the public captures all the future value/’revenue).
  • Supporting exceptional founders at early stages could both create profitable investment opportunities, and facilitate the creation of massive public goods. These may involve companies in areas like:
    • Open source climate data
    • New networks that improve climate coordination
    • Or ways of managing resources like fisheries or nature reserves.

Further reading & sources

Blurb for this week’s the Web3 for Climate Newsletter:

**Why are public goods often discussed in web3? by Alex Filotimo (8-minute read)**

• As investors and founders in web3 for climate, there’s been a lot of recent hype around web3’s ability to create, fund, and manage, public goods more effectively.
• We all learn in high school that street lamps and clean air are public goods but, specifically, public/universal/common goods “non-rivalrous” and “non-excludable” goods. In many ways, fully decentralized currencies or Ethereum networks (which cannot be “shut down”) are now public goods.
• Why do people in Ethereum care about public goods? In general, public goods — ranging from local playgrounds to certain areas of science — are underfunded because everyone benefits without needing to pay for its creation. Ethereum’s distributed ownership options and crowd coordination allow for new ways to fund and manage them.
• What does this mean for climate investors?
  • New funding methods mean that it’s suddenly ‘profitable’ or attractive for entrepreneurs to create public goods (they receive rewards for the initial creation, even if the public captures any future value/’revenue’).
  • Supporting exceptional founders at early stages could offer profitable investment opportunities and facilitate the creation of giant, impactful public goods. These may involve companies in areas like:
    • Open source global climate data
    • New networks that improve climate coordination
    • Or ways of managing resources like fisheries or nature reserves.
  • At least, it is a fascinating field to follow on Twitter. Gitcoin DAO’s community has funded dozens of new public goods using web3-enabled quadratic funding (what is quadratic funding? [video]).

Contributors:

• Alex Filotimo: climate impact researcher @AeraForce.xyz