Note: The Optimism team has long been in search of a solution on how to sustainably fund public goods, and we now have the structure of our first experiment thanks to a brilliant design by Vitalik Buterin. This post is a collaboration with Vitalik as a guest author in section 2.
It’s insanely hard to build an ambitious project with no business model. It’s hard to get funding, to hire the best, and to persist through the hardships and obstacles of creating something great.
Startups are notoriously difficult challenges even with ample investment funding: the majority fail. But they have one important advantage - the possibility of an exit. Exits create incentives for upfront funding, hiring, motivation and alignment through equity, a share in the exit. However, for nonprofits, FOSS, and public goods projects, this “light at the end of the tunnel” does not exist.
Given this, it’s not surprising that many of the best and brightest rockstar builders, even those who genuinely want to do maximum good, end up taking a for-profit path, even if it ends up compromising on the mission. For many, it’s not simply about wealth, it’s about fairness. Why toil building free software that others make massive profits off of, without any upside yourself?