This document is version 0.1.0 + should be considered a "rough draft". The version numbers will increment to v0.2., v0.3., and so on... until an endgame plan is accepted by DAO governance (version 1.0).

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Warning: This resource describes planned functionality and processes that has not been implemented and is not part of any official roadmap. Be aware that parts may be inaccurate or out of date. This document should not be relied on for financial, tax, business, or any other type of advice. This document is not legal advice, please consult your own lawyer .

Financial sustainability.

The next several years will see investments in experiments that will bring revenue + treasury appreciation to Gitcoin to offset the treasury outflows.

These will be accomplished with a combination of revenue inflows + managing the spend of the outflows.

Timeline

Next 6 months: staking + revenue experiments.
18 months: deep utility, programatic slashing, conviction curation.

Gitcoin Tokeneconomics

Incentive Engineering (ty to Electric Capital) The art and science of designing economic mechanisms and governance systems that form the basis for a healthy and defensible network, ecosystem and community

Why GTC? GTC offers a way to create and govern internet scale protocols and programs that evolve in the service of all community participants. Practically this means:

Govern Gitcoin’s Grants program
Reward contribution and align incentives between community members and the network they are building
Act as a community script for participation in products (ie, identity staking)
Decentralize decision making on core protocol & product areas

Why do people own GTC today? The goal is to push every strategic decision to the community (through token voting) with the DAO being a major voice, but not the deciders.

Speculation
Decision making on DAO operations and workstreams
Control over grants rounds decisions (ie, how large are rounds, who is eligible, how are funds allocated, etc.)
Future fee share split from the protocols
Future curation of grants in the grants rounds (ie, featured grants or changes to sort order, etc.)
Formalizing partnerships between aligned communities to govern and participate accordingly

How do we think about incentivizing actions in the Gitcoin Ecosystem?

Reward positive sum contributions (ie, Gitcoin’s initial airdrop to those funding and building public goods)
Reward participation where users are incurring risk (staking on their identity and being a good actor)
Amplify matching pool rewards based on positiver sum actions of community members (curation and staking on projects).

Breakout by Initiative

We have done analysis to review and experiment with a number of mechanisms to determine which approach would bring about the best outcomes for our community, users and token holders. By parntering with folks at Mechanism Institute we have developed Impact Measmument (opens in a new tab) tooling, and deeper financial modeling to better predict outcomes based on mechanism deployment timelines.

Gitcoin Passport

Passport is a leading identity and reputaitona aggregator focused on empowering communities with the ability to protect what matters from sybil attacks, bots and bad actors. Passport aggregates web3 and web2 identity information to create a "unique humanity" score. Amongst those primitives is the ability to stake GTC and attest to ones unique humanity. That staked GTC can then be slashed if a user is found to be a bad actor. Early slashing mechanism design (opens in a new tab) is informing future approaches to how we will revamp the staking experience. The goal is to ensure users who are unable to verify themselves as unique using the existing tools have an alternative that ensure some risk is paired with the reward (ie, slashing staked GTC for bad actors while offering good actors a relatively low barrier to entry)

You can track Passport's tokeneconomics trajectory in the [Dune Dashboard here].(https://dune.com/ivanmolto/gitcoin-identity-staking (opens in a new tab))

Gitcoin Allo

Gitcoin Allo is the allocation protocol that enables communities to permissionlessly fund that matters to them. This protocol is particularly important for those who want to integrate Quadratic Fudning (or direct grants funding, milestone based payemnts, the core project regsitry, etc) into their dApps. In this case Allo is comprised of three core primitives:

Project Registry
Funding mechanisms
Payout strategies It is in these three areas that value is delivered for consumers of Allo. It is also in these areas that the Allo team is exploring where an appropriate value caputre mecahnism may reside. To date, the most straight forward answer is in collecitng a % of the funding flowing through the protocol. Obsentisbly a "fee switch" for the Allocation protocol.

Gitcoin Grants Stack

Grants Stack is a dApp built to utilize aspect of Allo, and Passport with the goal of enabling communities to fund their shared needs. This is done through multiple funding mechanisms (ie, quadratic funding, direct grants funding, etc) but leverages parts of the Allocation protocol and Passport that help ensure conssitent and reliable results.

Grants Stack is evaluating revenue models and GTC staking models that would enable grants program managers to use the technology to allocate capital using the developed core primitives (registry, funding mechanisms, payout strategies). Grants stack seeks to lock up sufficient GTC or charge a sufficient percentage of the funds flowing through the programs that they can be cashflow neutral by the mid/end of 2024.

Public Goods Network

PGN is not directly tied to Gitcoin's tokeneconmics beyond continuing to make funding for public goods available. Said differently, it is with proceeds from PGN that Gitcoin may continue its mission of enabling communities to fund what matter to them.

Barbell Strategy

We are not sure whether (1) taking in proceeds from revenue or (2) GTC Staking is the best model for Gitcoin -- It is likley some combination of both.

One thing we've discussed is having a barbell strategy. You can either pay $$$ to use the products (left side of the barbell) or you can stake GTC (right side of the barbell) + become a stakeholder in the ecosystem. This offers multiple options to showcase a community is values aligned. Either by directing paying for teh services received, or making a commitment to the Gitcoin Ecosystem (through staking).

Pay with        GTC 
$$$$            Staking

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Example: Once a fee switch has been turned on, a customer of Grants Stack, Allo, could decide between staking y*stake_ratio GTC in order to run a round worth $y... Or they could pay z*fee_ratio DAI in order to run a round worth $z...

Reference documents

Gitcoin's Governance Overview