Make Open-Source Work Better
An economy tailored for open-source
Passionate about open-source’s massive potential?
Irritated by its constant challenges?
Want to make it better?
If you said “Yes” to all of that, you’re in the right place.
Open-source faces a bunch of problems.
Let’s face some of them:
Lack of funding
Contributors’ financial uncertainty
Under-prioritized bugs
Dropped pull requests
Powerlessness
Lack of democracy
Misaligned incentives
But the good news is: we’re here to change that!
Our mission is simple but powerful:
Elevate open-source to the level of its closed-source counterparts, making it a viable option for thriving businesses. All that sticking with the open-source values, in a truly decentralized and democratic way.
We want to build a new “Open-Source Economy”.
As you might guess, the solution isn’t exactly simple. So, in this article, we will outline the general workings of our solution. If want to know more, you can visit our website.
What? Is it a Crypto Solution?
So, let’s first cut to the chase: For our solution, we’re using cryptocurrencies.
And I know that for some of you, it might raise some concern. Yes, crypto has its dark side — scams, Ponzi schemes, etc. But we’re not here for that. Crypto is a tool, and we will use it to decentralize power and payment. So that the control of the “Open-Source Economy” that we are creating together is in the hands of the community.
A Tailored Token per Project
So, let’s kick things off with the basics of our system:
Every open-source project will have its very own unique token. This allows us to build a micro-economy around each project that is both decentralized and permissionless. These tokens are tailor-made, and each project has to decide what setup they want.
So, let’s focus on one project in particular and its own token.
A Bounty System
The first thing I want to dive into in the “Open-Source Economy” is the bounty system.
Picture this: you’re a user who wants a particular issue resolved or a pull request reviewed. You can then put a bounty on that issue or on this PR to effectively incentivize contributors and reviewers to tackle it.
What Problems Does a Bounty System Solve?
First, it helps financially support contributors and reviewers.
Second, if there’s a bug that’s causing you headaches, you can put a hefty bounty on it to make sure it gets immediate attention from developers.
Third, if you believe that your Pull Request should be reviewed, you can offer a bounty.
Lastly, it empowers users and contributors who may not have merging rights to influence the project.
Bounty System Brings Trouble
A bounty system can solve a lot of problems, and that is very cool.
But — because there is always a “but” — a bounty system brings its own set of challenges, such as:
Tasks or projects that aren’t deemed “cool” or “sexy” may struggle.
The system could steer the project in the wrong direction.
Bounties alone might not provide a stable income for contributors.
So, how do we fix these challenges?
Not Sexy to Get Bounties
In “Open-Source Economy,” bounties are paid using the project’s token. Every time bounties are paid out, or there is a token transfer, a small portion is taxed. I know, nobody likes the word “tax,” but hear me out.
This tax serves two main purposes:
Project Funding. This means that part of the tax is going to the project itself. That helps to cover essential costs like server space or paying key people who might otherwise not get a bounty, such as managers, designers, and developers who do important but “invisible” work.
Asset Redistribution. Many open-source projects depend on other projects that are not visible but are still crucial. The folks working on these behind-the-scenes projects deserve to get paid too, but they often miss out on financial incentives because they’re not in the spotlight. That is why part of the tax is used to pay them.
By doing this, we address the first issue with a bounty system and ensure that all types of tasks or projects get the attention and funding they deserve.
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Avoid Corruption
Now, let’s address the second issue with bounties: the risk of steering the project off course.
What do I mean by that?
Imagine a user who wants a feature that doesn’t fit with the project’s overall vision. And then there’s a developer who, let’s face it, has bills to pay. The temptation for that developer to chase the money and build that feature can be pretty high, especially if they’re already dealing with financial uncertainty.
So, how do we fix this?
The key is to minimize that financial temptation. Here’s the idea: users can still offer bounties for features that might not align with the project’s goals. The project community, has the authority to assess the situation in the following ways:
If the proposed feature aligns with the project’s vision, the community can proceed to implement the requested functionality as desired by the user.
If the proposed feature doesn’t perfectly align with the project’s goals, the community can still create a customized implementation for the user, which won’t be maintained by the project’s contributors. For instance, this could involve creating a dedicated plugin.
If the suggested feature is deemed detrimental to the overall project vision, the bounty issuer will face the cancellation of their bounty and the forfeiture of part of their bounty collateral.
This way, contributors are not tempted to add a feature that will hurt the project, and users who propose off-strategy bounties risk losing some tokens, but nothing too drastic.
But wait, who gets to decide what aligns with the project and what doesn’t?
This is where our project’s tokens come into play, acting as a governance tool. Token holders can vote to decide whether a bounty should be accepted or rejected. And don’t worry; this system is designed to be democratic and not easily abused.
I know what you’re thinking about: “What’s to stop contributors from gaming the system?” or “Are we going to vote on every little thing?” These are valid questions, and honestly, governance is complex. And remember, this article is just an intro, and I won’t dive into every detail right now.
For those of you eager to know more, make sure to visit our website.
Get Enough Income
Okay, let’s dive into the third challenge that we could have with a bounty system: not making enough money to sustain a living just through bounties. That’s a real concern, even if the project is thriving. This brings us to another key role the project token plays.
Here’s the vision: We want a scenario where the more successful the project becomes — getting more bounties, more donations — the more people want to financially back it by buying the project tokens, which in turn funnels more funding into the project.
How do we make this happen?
Token Burn
First, whenever that “tax” on bounties or on token transfers is applied, a portion of it is used to “burn” by sending them to the “zero” address. That means that tokens are removed from circulation each time a tax is applied. Fewer tokens mean increased scarcity, which usually drives up the value, making the tokens more appealing. The more people buy the token, the more funding the project receives.
But that is not enough!
ABCurve — Better Than a Fixed Supply
We’ve moved beyond the simple concept of token burn combined with a fixed supply. The fixed token supply model, while theoretically attractive for increasing token value, has several drawbacks, such as hoarding, value dilution, and susceptibility to market manipulation.
Instead, we’ve implemented something known as an “Augmented Bonding Curve (ABC).” This graph sets the buying and selling prices for the token based on its circulating supply. All the parameters need to be defined by the project.
For instance, let’s say a project sets its curve as follows
This means that when someone wants to buy the first token, raising the total supply to 1, the price will be $1.
Now, if at a point when the total supply is 4, someone decides to sell a token, the selling price will be $3, and the total supply will reduce back to 3.
There’s nothing stopping someone from selling their token on a secondary market. It’s important to note that we’re talking about the “Augmented Bonding Curve” as a primary market.
This system offers two key benefits
1 — Additional Project Funding
The price gap between buying and selling directly funds the project.
For example:
The total supply to 4 tokens by buying one for $4, and then another person sells a token, reducing the total supply back to 3, for $3 — the $1 difference, known as the “Exit Tribute,” goes to the project.
It’s worth noting that the project doesn’t have to wait for a sale to realize this $1 gain. As soon as someone buys the fourth token for $4, the project knows that it can later be sold for $3, allowing them to allocate the extra $1 however they wish.
2 — Token Floor Price
The second advantage of the ‘Augmented Bonding Curve’ comes into play when it is combined with a token burn mechanism. This combination establishes a ‘floor price’ for the token, below which the price can never fall.
For example:
Let’s say we have a total token supply of 8, and 3 tokens have been burned (i.e., sent to the “zero” address, effectively removing them from circulation).
That leaves 5 tokens in active circulation. If all 5 are sold back to the ABC, the lowest price any seller will get is $3 per token. Specifically, the first seller will get $4, the second $3.75, the third $3.50, the fourth $3.25, and the final seller will receive $3.
This ‘floor price’ encourages people to buy more tokens because it limits their potential loss. Additionally, the more successful the project becomes, the more taxes are collected, more tokens are burned, and thus, the higher the floor price rises, reducing financial risks for token holders over time.
Token Yield
Another incentive for buying tokens, and therefore financing the open-source project, could be the yield that the project might offer. This yield could come from the collected tax or from the “Exit Tribute” (the difference in price between buying and selling tokens through the Augmented Bonding Curve).
What is the best option between the two?
That’s it for now!
I hope this gives you a solid basic understanding of our “Open-Source Economy.”
Let’s Decentralize and Open-Source Everything!
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