How Gitcoin Uses Community Voting to Give Millions in Crypto

Despite the prolonged crypto winter, Gitcoin continues to fund critical global projects for the common good. In March, according to Ukraine’s Ministry of Digital Transformation, Gitcoin Grants sent nearly $1 million in Ethereum donations to the Ukrainian government and NGOs operating in the region during the Russian invasion.

“We almost have to redesign public goods,” said Azeem Khan, Head of Gitcoin Fundraising and Partnerships. Decrypt on Messari Mainnet.

Gitcoin, Khan continued, envisions a world where Web3 allows people to own their financial transactions, search engines and social media, replacing private companies that use people as the product.

“For us to be able to do that, the infrastructure has to be built,” he said. “So instead of thinking about clean air and libraries and things like that, it’s the roads, tunnels and bridges of Web3 that will allow us to get to that place.” To do this, Gitcoin uses square funding.

Proposed in 2018 by Ethereum co-founder Vitalik Buterin and economists Zoë Hitzig and Glen Weyl, quadratic funding promotes a democratic form of matching funding for public goods, services or purposes. With square funding, all projects deemed worthwhile or valuable to a community receive funding through community voting.

“The purpose of it is kind of an anti-whaling mechanism,” Khan said. “In traditional worlds, when capital is allocated, it goes to a venture capitalist or an angel, but it’s usually a friend of a friend who ends up getting the money.”

While Gitcoin supports global events such as the case of Ukraine, its main focus is to provide funding mechanisms for Web3. In June, during its 14th grant round or GR14, Gitcoin announced the launch of the Lootverse Round, a $130k round funded by the Loot Project to support projects in the Loot ecosystem.

Gitcoin recently completed its 15th funding round, raising over $1 million from 390,000 contributors.

As Khan explains, square funding makes it possible to ensure that funds go to the projects that need them most and not just a small group of projects led by “friends” of the investors.

“As much as people want to talk about inclusion and diversity,” Khan continued, “the reality is that the majority of capital ends up going to nepotism.”

Using the “it takes a village” approach to funding, Gitcoin has prioritized underserved communities by funding grants to projects led by or supporting women, youth-focused groups, marginalized communities, and people of color. Traditionally, these groups have less access to financing from banks and venture capitalists.

Some of these projects include Dream DAO, a group that invests in web3 and social impact causes worldwide, 40Acres, a social DAO dedicated to creating self-sustaining communities of color using blockchain technology, and The Minority Programmers Association, an international network of developers that have aiming to build socially impactful software solutions and spread Web3 education to marginalized communities.

“It shows that being able to get the community out there to vote with their dollars, on the things they find important, we found that quite successful,” he said.