This foundational article introduces Retroactive Public Goods Funding (RetroQF), a mechanism designed to solve the fundamental problem of funding public goods and open source projects. Written collaboratively by Optimism and Vitalik Buterin, the piece addresses why talented builders often abandon public good projects for profit-driven ventures despite genuine desire to maximize social benefit. By creating “exits” for public goods projects based on demonstrated impact rather than business models, RetroQF aims to attract more resources and talent to projects that serve community benefit over individual wealth accumulation.
Key Highlights
- Core Innovation - Results Oracle: The mechanism introduces a “Results Oracle” DAO that funds projects retroactively, rewarding those recognized as having already provided value. This approach leverages the principle that “it’s easier to agree on what was useful than what will be useful,” making impact assessment more objective and achievable than predictive funding.
- Creating Market Incentives for Public Goods: By providing exits for public good projects, RetroQF creates backwards incentives that enable startup-style funding cycles. This allows public goods projects to attract upfront investment and competitive talent by offering potential returns based on demonstrated social impact rather than extractive business models.
- Project Token Innovation: The framework includes the radical concept of “project tokens” that create prediction markets for Results Oracle funding. These tokens establish price floors based on oracle rewards, allowing projects to receive multiple funding rounds and enabling broader community participation in project success.
- Addressing the Nonprofit Funding Gap: Unlike traditional grants or donations which provide insufficient runway for competitive salaries and team building, RetroQF offers a sustainable model where successful public goods projects can achieve meaningful financial exits, making them viable career paths for top talent.
- Implementation Commitment: Optimism committed to directing all profits from sequencing operations (prior to decentralization) to public goods funding experiments, demonstrating practical implementation rather than theoretical discussion.
- Multi-layered Ecosystem Design: The framework acknowledges the need for supporting infrastructure including grants programs, token sales on exchanges, and quadratic funding to help bootstrap the ecosystem before RetroQF becomes self-sustaining.
Practical Applications
RetroQF can be implemented across various contexts and scales:
- Layer 2 protocols and blockchain projects can redirect sequencer fees or protocol revenue toward retroactive funding of infrastructure that benefits their ecosystems, creating sustainable funding for developer tools, documentation, and security audits
- Open source foundations can adopt RetroQF mechanisms to reward maintainers and contributors based on measured usage and impact rather than hours worked or proposal promises, creating better incentive alignment
- Municipal governments and civic organizations can implement retroactive funding for community projects, urban improvements, or social services where outcomes can be measured after implementation
- Philanthropic organizations can shift from traditional grant-making to retroactive funding models that reward demonstrated social impact, reducing the overhead of proposal evaluation and increasing resources directed to actual results
- Academic institutions can apply RetroQF principles to research funding, supporting scholars whose work demonstrates real-world application and societal benefit after publication and validation
The model provides a replicable framework for any organization seeking to align funding with demonstrated value creation rather than projected outcomes.
Connection With SuperBenefit
- Directly demonstrates an alternative economic model that rewards community benefit over individual profit extraction, aligning with SuperBenefit’s regenerative economics approach by creating sustainable funding for projects that serve collective rather than private interests.
- Provides a practical implementation of impact-based resource allocation that SuperBenefit can reference for funding its own regenerative initiatives and community projects.
- The Results Oracle concept resonates with SuperBenefit’s emphasis on community stewardship and democratic decision-making about resource allocation, offering a technical framework for implementing collective governance over funding decisions.
- Addresses the challenge of sustaining regenerative projects by creating economic incentives that don’t rely on extractive business models, supporting SuperBenefit’s vision of viable alternatives to traditional capitalist structures.