Gitcoin: An Open Source revolution
Updated: Dec 16, 2021
Software makes up the entirety of our online lives. Whether you’re a casual or hardcore internet user, odds are you have some understanding of what software is. Software is simply code that instructs a computer on how to operate. Some companies have successfully based their entire business model on selling this code to consumers as software. These companies usually keep their code secret and claim it as intellectual property (IP) that can be stolen. We call this type of software closed-source or proprietary software. Software companies like Adobe keep the code behind their popular software a closely guarded secret. This is because copying and pasting a software code could give you an exact replica of the original software. Writing the initial code to build a software can be labor and capital intensive but copying and modifying that code usually becomes increasingly less difficult. If we think of code like Lego blocks and software like ‘finished’ pieces this concept becomes easier to grasp. Any finished Lego piece can always be altered by adding or subtracting pieces. This Lego-like structure of code is why open-source software is such a net-good for web development. Open-source software refers to the transparency of the code behind a software. This transparency allows developers to see exactly what is happening behind the scenes of a particular software and encourages them to reuse, modify, or scrutinize the underlying code. The manipulation and study of open source-code by developers all over the world allows open-source software to be battle tested in a way that would be very capital intensive in closed-source software. Battle testing software in this way works out bugs, ensures proper function, and confirms the code is not malware and is generally benevolent. There are already huge repositories like GitHub or Fossil that act as libraries filled with open-source code. Developers can use these open-source libraries to stand on each other's shoulders and build their desired software quickly and inexpensively. However, one of the issues with open-source software is that developers have traditionally had a difficult time monetizing their efforts. This has pushed many skilled developers into private industry where their time and talent are steered away from open-source software. In comes Gitcoin.
Gitcoin’s mission is to build and fund public goods through the deployment and refinement of open-source software. Their ethos is centered around solving the coordination dilemma that is present among software developers. Gitcoin is a website where developers can get paid in crypto currencies to develop open-source software. Gitcoin aims to recapture talent for the open-source community by providing payment for the development of useful open-source code. Developers can earn money through Gitcoin by engaging in bounties, grants, or hackathons. Gitcoin bounties are posted by individuals or projects and carry prizes in the crypto currency of the poster's choice. Developers can complete as many of these bounties as they wish and collect the subsequent crypto currency. All crypto currency transfer is governed by a smart contract which ensures both parties act in good faith. Specifically, Gitcoin uses open-source smart contracts that can be viewed here. Gitcoin also allows developers to monetize their talents through sponsored “hackathons” where developers team up to build Web 3.0 software. Finally, and perhaps the most interesting way in which Gitcoin monetizes open-source software is through Gitcoin grants. Gitcoin grants are based on quadratic funding. In theory, this method of funding ensures ideas with the greatest number of individual contributions are the best funded regardless of the monetary amount of those individual contributions. Click on this link to watch a short explanation of quadratic funding from Gitcoin directly and play around with their quadratic funding grant calculator.
Who is behind Gitcoin?
Kevin Owocki is the founder of Gitcoin and a veteran of the tech space with a resume to match. Owocki has been involved in multiple start-ups and is a co-founder of GO Facebook games and Step-Out. He also was Vice President of Engineering at Simple Energy. Owocki has a deep background in software development and has been working on blockchain technology since 2015. In 2017 Owocki decided to work full-time in the blockchain space and has hosted many blockchain meet-up events since. Gitcoin received its initial funding from the likes of Paradigm, Electric Capital, and MetaCartel Ventures. Owocki is a vocal proponent of decentralization and started Gitcoin with the expressed hopes of one day relinquishing control over to a Decentralized Autonomous Organization (DAO). There was a successful transition of operating control on 5/25/2021 and the Gitcoin DAO currently runs Gitcoin. This DAO has a governance token called $GTC that can be delegated to representatives or used for individual votes. You can check out the top representatives of the Gitcoin DAO and analyze their involvement here. This DAO is composed of active developers of open-source software and funders of that software who believe in and are looking to further Gitcoin’s vision of a self-sustaining environment for open-source software. So far, the Gitcoin DAO has been majorly successful. Gitcoin has facilitated upwards of $64,000,000 of funding for open-source software since its inception and about $20,000,000 of that funding has taken place in 2021. Gitcoin claims to have 311,668 active developers and an hourly rate distribution of $27-$123. In Q4 of 2021 Gitcoin has facilitated the transfer of around $200,000 to developers through the tipping function alone. As wages for traditional jobs stagnate, more individuals have been steered towards gig-work. Gitcoin goes above and beyond in offering a livable wage through gig-work. The development of Web 3.0 will be open-source and because of that it will be exponentially fast. Gitcoin is perfectly positioned to be at the center of Web 3.0 development.
Why did we invest?
Gitcoin’s mission aligns with how we would like to see Web 3.0 play out. We believe that a future of open-source technology governed by the masses is exactly what society needs. We believe what Gitcoin is offering is a net-good for society and that as a whole this world suffers from a coordination failure that Gitcoin is geared to address. The $GTC token is the governance token for the Gitcoin DAO which were both launched simultaneously on 5/25/2021. $GTC is a fork of $COMP which is the governance token for the Compound DAO. $COMP is currently worth around $325 a coin at a $2 billion market cap. $GTC is currently worth around $10 with a market cap of $142 million. The potential growth for $GTC is in direct relation to the growth of open-source software which has been growing exponentially. The purchase of Gitcoin’s governance token is an act of support for the digital revolution of Web 3.0.
Written by David Coryat, Crypto native and analyst at Istari Capital LP.
This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article or in projects related to this article.