An Open-Source Marketplace: The What, How, and Why
The marketplace is one of the oldest forms of exchanging value, evolving from simple village interactions to sophisticated web platforms. These marketplaces are like the heartbeat of a thriving economy, essential for its growth. Imagine a village without one – a struggle to exchange goods and services. On a larger scale, no stock exchange means the absence of a global economy.
Nowadays, marketplaces cover practically everything – from simple tasks like pet sitting to the intricate world of stock options.
But here's the intriguing part: why isn't there a dedicated marketplace for open-source projects? These projects and their stakeholders are sitting on a goldmine of value (see our blog about the untapped value of open source here). Yet without an efficient exchange system, we see inefficiencies in the open-source community – lack of funding, contributor burnout, overlooked bugs, and more. Ultimately, this puts open-source at a disadvantage compared to its closed-source counterparts.
In this article, we will explore how we can build a marketplace for the open-source community, the potential benefits of creating one, and how it could revolutionize the way open-source projects are developed, maintained, and utilized.
Crafting an effective marketplace requires a thoughtful approach to identifying the stakeholders, understanding their needs, and determining the most suitable governance structure.
To help guide us in this adventure we'll draw parallels with a familiar setting – the traditional village marketplace, where people come together to buy and sell food.
The Stakeholders
Village Marketplace
In a typical village marketplace, there are two primary groups of stakeholders: those who wish to buy food and those who seek to sell it. This is a straightforward setup.
Open Source Economy Marketplace
When we transition to the realm of open-source projects, the landscape becomes significantly more complex.
Each of these groups plays a distinct role in the open-source ecosystem:
Maintainers: the project "gatekeepers", responsible for overseeing and guiding development, making key decisions, and ensuring project quality.
Contributors: submitting contributions for review by maintainers
Users: individuals or entities that utilize an open-source project without necessarily contributing
Financial backers (donors or investors): Individuals or organizations that provide financial or other resources to meaningful projects.
Stakeholders' Needs
Village Marketplace - needs
In a village marketplace, the needs of sellers and buyers are relatively straightforward.
Sellers aim to sell their goods before they spoil, secure the highest possible prices, and minimize the effort required to find customers. Buyers, on the other hand, seek affordable options, variety, and a streamlined shopping experience.
Open Source Economy Marketplace - needs
In the realm of open source, each stakeholder group has a unique set of needs and interests, and fulfilling these needs is not always straightforward.
In this article, we will concentrate on the most pressing ones:
Developers need to stay to their vision and principles while maintaining a sustainable income.
Users need to have a good product.
Financial backers need to support meaningful initiatives and derive value from their investments.
If you are curious about other needs of the stakeholder community and want to know how we address them with our marketplace, keep reading this article!
Marketplace’s Governance
When we talk about "Governance," we're essentially delving into the nuts and bolts of how the marketplace operates: who sets the rules, who gets a seat at the table, and so forth.
Village marketplace - governance
In a village, one approach might be to allow anyone to set up shop and sell goods at any price, with no regulations in place. While this promotes freedom, it also poses risks. For instance, a vendor could undercut others by selling at a loss to eliminate competitors, leading to a monopoly situation.
To address these issues, the mayor of the village might establish some rules. However, this introduces a different set of challenges, such as the potential for corruption or external influences affecting the marketplace.
Open Source Economy - governance
In the realm of open source, governance presents a unique challenge compared to a traditional village marketplace. Unlike a close-knit village where residents know each other, the open-source community spans the globe, comprising individuals who are strangers to one another. Achieving consensus in such a diverse and dispersed environment presents a unique challenge.
Establishing a marketplace for open source is a clear objective: it must be a collective asset, constructed by and for the open-source community, and under the control of that very community.
Now, how do we achieve community unison and alignment?
Decentralization
Let's begin by examining past endeavors, and learning from mistakes. Notable attempts dedicated to open source include platforms like bountysource.com and polar.sh, as well as more broadly focused platforms like Patreon. In almost every case, current platforms are centralized, injecting a middleman into every transaction within the marketplace. This centralization strips users of their decision-making power regarding how the platform operates.
The primary issue arises with the substantial fees associated with these platforms. Take polar.sh, for example, an open-source bounty platform, which imposes a hefty 10% commission. On top of this problem is the tendency for fees to escalate further when the marketplace gains a monopoly. This familiar pattern typically starts by offering low fees to secure market share, only to increase them later when user dependency is solidified. A case in point is Patreon, which raised creator fees from 5% to 8% (coupled with additional charges for payment processing, currency conversion, and payout fees) – all beyond the user's control, leaving them at the platform's mercy.
That's why, if we aim to construct a marketplace tailored for the open-source community, it must unequivocally embrace decentralization – essentially, a peer-to-peer system without the interference of a middleman. This way, if a major change to the product/project model were to occur, the decision would be made publicly and democratically by the core community, and not by a few executives hidden behind closed doors.
Meritocracy
Decentralization is not enough. Indeed, even if we remove the middleman, a decentralized platform can still charge fees - (set in its protocol).
While it's reasonable for a platform to charge fees for its upkeep, server costs, and more, the problem arises when users lack control over fee ratios and their allocation. Platforms that are not community-led prioritize maximizing profits for investors rather than the well-being of the community. While taking fees is acceptable, the open-source community must determine these fees and their purpose.
That's why a meritocratic governance system is crucial. What does this mean exactly? It means your voting power is tied to your active involvement in the platform's development, be it through financial contributions or human resources, and your utilization of the platform.
Now, the real puzzle is how to establish a genuine meritocracy—one that doesn't unintentionally transform into a plutocracy. Untangling the complexities of achieving a true meritocracy without sliding into plutocratic pitfalls is a detailed and expansive topic, and we'll be delving into it extensively in our mission.
Permissionless
In addition to possessing a decentralized, meritocratic governance structure, we must ensure it’s open to everyone. Our open-source marketplace must unequivocally be a common good, where no one requires permission to join. Of course, you can be kicked out if you do not respect the rules decided by the community, but that only happens in very rare circumstances, when and if decided by the community.
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The Marketplace Economy
With a clear understanding of stakeholders and governance, we can now turn our attention to the marketplace economy.
To kickstart our economic setup, it's crucial to recognize that every project is like its own little world. Each operates differently, with its way of interacting and unique culture.
To embrace this diversity, we propose a micro-economy – one designed for each project's specific needs. This setup allows for personalized economic interactions. Think of it like our village markets; the basic idea is the same – people selling stuff, and others wanting to buy. But just like each village has its own rules to match its culture, each project can have its economic setup.
To make this happen and stay in sync with our discussed governance structure, we're turning to blockchain and cryptocurrency. Essentially, each project gets its token, to trade value within its community. For example, the Linux community might have a Linux token for exchanging value within its unique ecosystem.
Leveraging users’ needs
On a project level, when we examine the needs of our stakeholders, it's akin to the sellers and buyers in a village market. On one side, we have developers—both maintainers and contributors—armed with the skills to create fantastic products but often lacking financial support. On the other side, we have users who may not have the know-how or time to develop these cool products but are eager to pay others to bring their ideas to life. Users can have various needs (bug fixes, new features, support, etc..)
The logical next step is to establish an exchange protocol in our marketplace that facilitates transactions between these two parties.Doesn’t this system already exist? The answer is yes, and it's called a bounty system. However, there's a catch. The existing bounty platforms are centralized, and we've already delved into the problems that centralized systems pose.
These bounty systems, while addressing the funding needs of contributors, often create a slew of issues that counteract other important needs. These issues are significant enough that many builders opt to steer clear of bounty systems altogether. Another glaring issue is that bounties can corrupt individuals and influence a project in the wrong direction. Additionally, tasks or projects that aren't deemed "cool" or "sexy" may struggle to attract support.
These problems warrant a thorough discussion to figure out solutions, and we've dedicated an entire article to it. In essence, since we're utilizing cryptocurrency, we can sidestep corruption by penalizing individuals attempting to influence a project improperly. We can also address the issue of attracting support by redistributing part of the bounty a project receives to the open-source dependencies it uses.
Leveraging financial backer’s needs
Bounties alone might not offer contributors a stable income. And for that, we need to attract financial backers.
Here’s the vision: the more successful the project becomes → increase in bounties → rise in donations → higher interest for people to financially back projects by buying its tokens → funnels more funding into the project. We are doing this by developing a tokenomics that ties a project's success to the token price. All that of course, at the service of the project and its community.
Come Join Us!
We are called Open Source Economy, and we are an open-source community that builds a marketplace for open-source communities. If you want to have a say in this project, that is very simple: just come join us!
