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Recap of 2023: Fracton Ventures Research

Fracton Ventures Research

In 2023, there were various events in the crypto space as usual. In Ethereum, notable developments included the implementation of Account Abstraction (AA) using ERC-4844 and the Shapella upgrade in April. Under the concept of modular blockchains, the development of zkEVM continued in the execution layer, with ideas emerging to integrate zkEVM as a native feature of Ethereum. In the Data Availability (DA) layer, projects like Celestia stood out, highlighting the expansion of the Ethereum ecosystem. In the area of public goods funding, which we mainly focus on, Optimism began its full-scale RetroPGF, and Gitcoin adopted clustering matching quadratic funding. Notably, Optimism released OP Stack, allowing the creation of systems similar to their Optimistic Rollup, aiming for a Positive Sum state. Gitcoin, which is involved in developing the Public Goods Network (PGN), also utilized OP Stack, with plans to use sequencer fees earned through PGN for public goods funding. Arbitrum, another Optimistic Rollup project, launched its grants program, and experimented with various funding distributions. This year, the public goods funding enthusiasts have actively debated impact evaluation. While impact evaluation is often discussed outside of crypto, the emergence of Hypercerts sparked this debate in crypto. Hypercerts, a product that functions as a certificate of impact, has recently attracted attention for methods of measuring impact, particularly in evaluating Open Source Software (OSS). Next year is expected to see more development in this area. Also, in Japan, where we are based, events like ETHGlobal Tokyo and DAO TOKYO (hosted by Fracton Ventures) were held, contributing to the expansion and excitement of the local crypto ecosystem, and connecting global crypto ecosystem and Japanese crypto ecosystem.0 - 35lmPfii6Va1my

In this eventful year of 2023, we launched in October with the goal of conducting researching and developing coordination designs. This recap also serves to share our reflections for this year and aspirations for the coming year.

Sep: Ethcon Korea 2023

Our first public announcement regarding the full-scale commencement of our R&D was at Ethcon Korea 2023. Ethcon Korea which began in 2019, hosts hackathons and conferences to support the open-source movement. They promote decentralized protocols, tools, and culture within the Ethereum ecosystem.

In our speech, we presented on the theme "Protocol Design for Positive Sum." We proposed the design philosophy required for building protocols that not only mitigate the negative aspects that arise with increased user numbers but also continually produce positive externalities, regardless of scale, to achieve an overall positive state. Essentially, in online services, network externalities generate more positive effects as user numbers increase. However, as services scale up, negative aspects become apparent, such as privacy problems in Web 2.0 services and the under-provision of Open Source Software (OSS) because of the free-rider problem. Therefore, we argued for the need to aim for designs that continue to generate positive externalities as the service scales.


Sep: Funding the Commons Berlin

Funding the Commons is individuals and organizations building new models of sustainable public goods funding and value alignment in open source networks. They aim to bridge the public goods community across Web2, Web3, research, philanthropy and industry. And, they have a vision of a world where the incentives that govern human coordination at scale push our species to develop an economy that prioritizes public goods above all else.

At Funding the Commons Berlin, presentations primarily featured teams based in Germany, with topics focusing on impact evaluation and regenerative economics. We participated in a panel on Mechanism Design, where we discussed challenges in public goods funding and the necessary structures for its success. One current challenge we identified is finding sustainable funding sources. While research and development have advanced in funding distribution mechanisms like quadratic funding, and there is growing interest in developing metrics for impact evaluation in fund allocation, the sustainability of funding sources remains a critical issue. The potential use of sequencer fees from Rollups is a promising avenue, with experiments in projects like Optimism and Public Goods Networks using OP Stack. However, it's still unclear how effectively these mechanisms function. We highlighted and discussed this aspect, which we believe is currently under-addressed, to bring more attention to the need for sustainable funding models in the public goods space. image2

Oct: Fracton Ventures Research was published

We have launched the portal site for Fracton Ventures Research, an R&D institution dedicated to creating a positive sum world through exploring inclusive coordination design. Our primary aim is to address coordination problems and public goods issues, such as the free-rider problem and the tragedy of the commons, by creating positive externalities through coordination mechanisms based on blockchain technology.

At Fracton Ventures Research, we operate under the philosophy that "Coordination is a game, but not one that is played to win. Coordination is more like tending a garden, where one works only that the garden may continue to thrive." This ethos underscores our focus on the nature of human coordination. Specifically, we concentrate on public goods funding and cross-sectionally study Grants DAOs operated within various protocols.

Nov: Code for Japan Summit

We had the opportunity to speak at the "Code for Japan Summit," organized by Code for Japan, a Civictech organization based in Japan that aims to solve local challenges using IT technology. Civictech refers to citizens utilizing technology to address local issues and everyday problems. We are actively involved in projects within local communities in Japan and have participated in events focused on diversity and individuality, such as Plurality Tokyo held in April and Plurality Taipei in August.

Additionally, we contribute to Dig DAO, a study group community that spun out from the Japanese Digital Agency. We take pride in playing a role that bridges the crypto space with contributors from traditional industries and government through collaborations in the Civictech sector. Our involvement in these initiatives reflects our commitment to leveraging technology for community empowerment and fostering meaningful connections across various sectors. image1

Dec: Funding the Commons Taipei

Since our launch in October, as part of our research on public goods funding, we have initiated a study on Grants DAOs. This study involves a cross-sectional investigation into the projects funded by various Grants DAOs, the funding amount they provide, and the differences among them. Our goal is to visually capture more effective funding distributions and identify differences. While individual Grants DAOs have been scrutinized and evaluated, there is a lack of comprehensive, cross-DAO research. Our findings will be published after receiving reviews from representatives of each Grants DAO.

At Funding the Commons Taipei, we shared our interim research results and hosted a workshop to discuss what is crucial for better Grants programs and more effective public goods funding. We believe that this research and discussion will provide valuable feedback to projects implementing grant programs, contributing significantly to the enhancement of public goods funding mechanisms. image4

Conclusion: Aspirations for Next Year

Next year, we plan to intensify our research and development efforts in coordination design, focusing on public goods funding, impact evaluation, and decision-making mechanisms. Additionally, we aim to actively collaborate with external entities such as Civictech organizations, local communities, and government officials, sharing our insights to contribute to further development in these areas.

Furthermore, next year will see major events like EDCON and Funding the Commons being held in Tokyo. We will continue our efforts from Tokyo, addressing the challenges of coordination failures and contributing towards a Positive Sum world. Our commitment is to continually create value and contribute positively to the broader community, leveraging our research and collaborations.