Type: Perspective Authors: Kevin Owocki Date: December 2025
Sources:
TLDR
- Traditional grants persist alongside innovative onchain mechanisms
- The shift is toward provable mechanisms over unprovable vibes — verifiable, dependency-driven funding
- Privacy and open source are prioritized as existential for Ethereum
- Deep funding systems route capital based on upstream impact
- Sustainable revenue flows through sequencer fees, OSS licensing, and yield-based models
- AI evaluates dependency graphs; ZK enables private, manipulation-resistant governance
- Coalition funding from L2s and app-chains creates distributed funding networks
- Multiple PGF innovators (Gitcoin, OP, Arb, CLRfund, Giveth, Drips, Octant, Nouns) provide antifragility
Where the Money Comes From Now
Traditional grants still dominate. Most funding originates from L1s and L2s — Ethereum Foundation, Stellar, Optimism, Arbitrum — via conventional grant programs.
But there is a long tail of innovation. Gitcoin and MolochDAO emerged as early exceptions in 2019–2021, channeling single-digit percentages of total public goods capital through novel mechanisms. Protocol Guild became a major force in 2022, followed by extended experimentation from Drips, Octant, Nouns, CLRfund, and others.
The funding landscape is no longer dominated by a single allocator. That's a feature.
Pluralism Is a Feature, Not a Bug
The evolution from Ethereum Foundation dominance to a pluralistic funding ecosystem follows a clear arc:
- 2017–2019: Near-total reliance on the Ethereum Foundation
- 2019–2021: Emergence of onchain alternatives (Gitcoin, MolochDAO)
- 2021+: Explosion of mechanisms across the stack
The benefits of this pluralism are substantial:
- Reduces capture risk — no single kingmaker
- Increases innovation surface area
- Creates redundancy and resilience
- Allows builders to route around broken institutions
- Aligns with Ethereum's own design philosophy of client diversity
Think of it as client diversity, but for public goods funding.
The Vibes Era Is Over
The 2021 era of public goods funding was characterized by abundant altruism assumptions, quadratic funding treated as universal good, and money flowing broadly. The implied model was: if we just fund everything, good things will happen.
Several forces drove the shift away from this model:
- Stagnating ETHUSD price
- Tightening ecosystem budgets
- Decline of vibes-based systems under adversarial pressure
- Growing demand for accountability
The reformed PGF priorities for 2026+ are fundamentally different:
- Proof of impact, not vibes — verifiable dependency graphs over narrative claims
- Tight apertures — focused funding over "fund everything"
- Adversarial resilience — mechanisms that survive manipulation
- Existential infrastructure — prioritizing what Ethereum actually depends on
- Structural revenue — sustainable flows over episodic donations
The architectural difference: 2021 assumed universal altruism. 2026 assumes messy, fragmented worlds requiring bottom-up credibility.
The key unlock is moving from "hope donors show up" to structural, sustainable flows.
Structural, Sustainable Revenue Flows
The core problem is a disconnect between revenue centers and cost centers in the Ethereum ecosystem.
Revenue centers — block rewards, sequencer fees, protocol fees — fund provable goods (blocks, transactions). These flows are structural and automatic.
Cost centers — public goods like open-source software, research, education — historically lacked provability and relied on vibes, grants, and charity.
The 2026+ solution is to make more public goods provable. Deep funding, OSS licensing, Protocol Guild, and dependency graph mapping all serve this function. When you can prove that a public good is upstream of revenue-generating infrastructure, you can connect it to sustainable funding flows.
When revenue centers see and support their dependencies, the flywheel sustains itself.
OSS Licensing as a Revenue Engine
A novel approach emerging in 2026 applies Harberger-style openness taxes to open-source licenses, requiring dependency funding or profit-sharing when projects go proprietary.
The scale potential is significant: open-source software underpins trillions of dollars in economic value. Capturing even a fraction through licensing mechanisms creates sustainable PGF revenue that doesn't depend on altruism.
Projects like the Profit Sharing License (PSL) by Raymond Cheng are early experiments in this space.
Yield-Based PGF
A key psychological insight drives yield-based public goods funding: people willingly donate yield over principal. This is huge both psychologically and structurally.
Octant has emerged as the breakout project in this segment, demonstrating that yield-powered matching can create sustainable funding without drawdown of principal. When you stake ETH and direct the yield to public goods, you get continuous funding with no capital loss.
Privacy and Open Source as Existential Priorities
Two categories deserve special attention as existential for Ethereum:
Open source: Ethereum runs on open-source software. Funding the dependency graph of open source is not just good philanthropy — it's infrastructure maintenance. This also builds bridges between crypto and the broader open-source world.
Privacy: Without privacy, PGF governance becomes a bribery market. Zero-knowledge proofs and programmable cryptography enable private, manipulation-resistant allocation systems. Privacy is not a nice-to-have — it's load-bearing infrastructure for credibly neutral funding.
Funding Your Dependencies: Deep Funding
Deep Funding is the flagship mechanism for the reformed era. Instead of funding based on narrative or vibes, it:
- Builds real dependency graphs
- Uses AI to rank millions of edges
- Employs human jurors for spot-checking
- Allocates capital based on upstream value
- Creates endogenous accountability — if usage drops, payment stops
This is the most direct path from "unprovable vibes" to "provable impact." When you can map the full dependency tree of a protocol and allocate proportionally, you've solved the attribution problem that has plagued public goods funding since the beginning.
The Polycentric Tree of L2s and Apps
Rather than a centralized funding body, the emerging model is distributed: each L2, app-chain, and protocol funds its own dependencies. Funds flow outward like mycelium.
This coalition structure means many smaller ecosystems collectively supporting the public goods they rely on. The aggregate coverage approaches the whole stack, but no single funder bears the full burden.
This replaces "general charity" with economic incentives embedded in architecture. Overlapping layers create a resilient coalition of funders rather than single points of failure.
Leveraging AI + Cryptography
Two technology enablers make reformed PGF possible at scale:
AI superpowers:
- Assists human jurors in evaluating impact
- Evaluates massive dependency trees that humans can't process
- Surfaces reasoning and evidence
- Powers continuous onchain mechanisms instead of episodic rounds
ZK and programmable cryptography superpowers:
- Enables privacy-preserving governance
- Enforces credible neutrality
- Reduces manipulation and collusion
- Makes allocation systems trustworthy
AI gives us scale. ZK gives us integrity.
Conclusion
Ethereum public goods funding is molting. The vibes era is ending, and a durable mechanistic system is emerging.
The lessons from each cycle are clear:
- 2017–2021: Discovered that PGF matters
- 2021–2024: Experimental phase — tried everything, learned what works
- 2026+: Operationalizing the learnings into structural systems
The future of PGF is characterized by:
- Continuous funding flows over one-off rounds
- OSS and privacy as existential infrastructure categories
- Dependency graphs as the core economic engine
- AI for scale and ZK for integrity
- Polycentric coalitions over centralized allocators
This is the frontier. If we get it right, we will leave behind a public goods funding system that is more credible, more antifragile, and more regenerative than anything that came before it.
