What is Gitcoin and how does it use Quadratic Funding? - Crypto in Plain English - Episode 289 - by cryptohunt.it

What is Gitcoin and how does it use Quadratic Funding?

Welcome to the Cryptohunt Jam, where we spend one minute a day to explain crypto. In plain English.

Today, we take a short look at Gitcoin, which aims to solve the problem of funding opensource projects.

If you are not familiar with opensource: It is when developers write computer programs and make their code available for anyone else to use for free. This is so common, in fact, that every device you use and every single website you browse would not work without code that was opensourced.

There is just one problem: Those developers don’t make any money. That’s where Gitcoin comes in. It creates a marketplace, where donors can reach developers and pay them for contributions to opensource. The idea is to create more common goods, meaning things that help a large number of people. By its very definition, opensource does just that because anyone can reuse it for free.

But it goes even further: Gitcoin also has a grants program handing money to those opensource projects that the community feels are worth funding.

But who decides what is getting a grant, and how much? In true Web3 fashion, this is done by a vote of the community. But there is an interesting, important twist: The votes are counted differently, in a process called “Quadratic Funding”.

Votes on Gitcoin are cast in the form of individual donations to a project. The grant matches those donations, meaning that for every dollar donated, the grant puts something on top. The trick is that the formula favors individual donations. So a project that got $100 from one donor will get less grant money than a project that got $1 each from 100 individual donors.

So - why make it more complicated in the first place? Well, think about it this way: Gitcoins goal is to create moore public goods. By making sure that the projects with the most contributing people, and not with the richest donors get more funding, it strikes that balance.

We like the idea. Hope you got inspired as well – this is one of those examples where blockchains have a real-world impact by programming the flow of money.

This podcast is produced by Cryptohunt.it the easiest place to learn crypto. Copywriting is done by Arndt Voges, Social Media is done by Brett Holleman, Design is done by Carmen Rincon and my name is Christian Byza, Co-Founder of Cryptohunt and I am your host of this daily show.

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.