Vitalik Buterin the Ethereum founder has co-authored a white paper that he believes will offer a solution to the crypto funding problem. The paper is titled Liberal Radicalism: Formal Rules for a Society Neutral among Communities.
The paper was co-authored with Zoe Hitzig, a Ph.D. of economics at Harvard and Glen Weyl a Microsoft researcher. It points out at a problem that exists on funding crypto projects due to the existence of free riders.
Free riders are described as businesses or people that profit from the under-provision of public goods. The problem comes when more of these free riders benefit from the public goods and this leads to scarcity for the projects that really need them.
It’s a problem that also plagues projects outside the crypto industry and the three authors are well aware of how ideas can create harmful motivations when it comes to funding blockchain projects.
Currently, crypto development teams mostly depend on donations and with the current setting many good ideas get underfunded.
The white paper proposes a new financing method that supports a “self-organizing ecosystem of public goods.” It seeks to allow different groups to allocate funds for the maintenance of public goods and services at the same time steering away from the free rider problem.
This mechanism is similar to the Quadratic voting system in that it allows participants to vote using crypto tokens based on how much they care about a project. This will change how communities contribute to public goods especially software development, journalism, and cryptocurrencies.
So, this will see individuals make public goods contributions based on how much they value the projects. This, in turn, will increase the amount of funding worthy projects receive.
Speaking to CoinDesk, Hitzig says:
“Once we circulate the paper we expect that experimentation will begin in earnest shortly thereafter.”
What do you think of this white paper that seeks to address the crypto funding problem? Share your thoughts in the comment section below.
