Creating a Sustainable Blockchain Ecosystem with Public Good Staking

After our previous conversation with DoraHacks partner Steve Ngok, CoinDesk had the opportunity to speak with Eric Zhang, the founder of DoraHacks and architect of Dora Factory. Dora Factory has recently launched innovative solutions for funding public goods in blockchain ecosystems through public good staking, as well as unique ways to create governance structures among a global decentralized network of BUIDLers.

In our conversation with Eric, we learn more about the challenges of creating a sustainable open source community and how Dora Factory is uniquely positioned to support decentralized technology.

In our early interview with Steve, we got to talk a bit about the foundations of DoraHacks and how it has evolved since your time at Oxford and CERN. We didn’t, however, get to talk about Dora Factory. I'd love to hear the origin story of Dora Factory.

As we discussed earlier, DoraHacks is a platform that is essentially a market of ideas where hackers and open-source developers can collaborate, build together and participate in hackathons and other kinds of activities in the hacker communities.

Dora Factory is an infrastructure project born out of DoraHacks in 2020, officially launched in 2021.

Dora Factory’s goal is to build the necessary infrastructure to solve two problems we felt were urgent to be addressed for the long-term growth of open-source communities and the hacker movement.

The first problem is the need for sustainable funding to support the global hacker movement. The second problem is the need for new governance technology within these communities. Governance is a particularly difficult challenge because the hacker communities often consist of global networks of teams turning ideas into reality. They are not like corporations; they are not managed in hierarchies. So decision making and funding distribution and resource allocation are very different.

The reality is that the big differences between governance in traditional corporations and hacker communities require a different kind of infrastructure than the existing platforms we have today. We’ve been building Dora Factory to solve these two problems.

Let’s start with the first problem: funding. What is the infrastructure Dora Factory is building to solve this?

We solve this problem via Public Good Staking.

Back to 2010, there were already a lot of hackathons in the world, particularly at universities. There were excellent hackathon organizers coming out of the University of Michigan, MIT, the University of California and so on.

These university hackathon organizers were great – I knew many of them personally and saw them as early pioneers of the movement – but their funding and sponsorship came almost entirely from large companies looking to hire developers. That kind of hackathon model wasn’t very sustainable in terms of supporting original ideas from the hacker community. It’s difficult to keep building something after the hackathons, and there is no followup mechanism after each hackathon. Most of the time, hackers will just go back home and return to their daily job, even if many hackathon projects could be developed much further.

Then hackathons became an even more important component within the blockchain communities. The great thing about blockchain and Web3 is that almost every project is open-source, so you can practically work on any project you want and build out your ideas based on open-source tech stack. But the path to getting funding and working as a hacker was less clear.

Of course, as their ideas mature, they can look for venture capital (VC) funding. But VCs alone cannot support all ideas from the global hacker community. In the end, they are not hackers. We have to develop something more organic, more native for blockchain ecosystem funding.

The original idea was to move towards block incentive-driven ecosystem funding, because there’s something special about blockchains. The value created by blockchains is generated by transactions, which means that if a blockchain ecosystem has applications that create value and generate transactions over time, you'll have a non-stopping stream of income for the ecosystem.

Traditionally, this income has been distributed to those who secure the network. However, as the blockchain community as a whole moves towards proof-of-stake, there are new opportunities to redirect part of the income stream from native incentives to support the hacker communities.

However, it is often difficult to directly make changes on the blockchain consensus level. So we were thinking about what’s a practical way to achieve the same goal without modifying every blockchain’s consensus layer. In early 2022, we proposed a practical way to achieve this – we call it “public good staking.”

How does public good staking work?

Dora Factory maintains a public good validator for each of the major blockchain ecosystems, as well as necessary infrastructures to support the validators. As a result, we are able to capture a portion of the network's revenue and redirect it to fund open-source developers through hackathons, grants, bounties and other means.

Public good staking is a very realistic and practical way to achieve the goal of block-native ecosystem funding. We direct native funding to communities and projects building in that ecosystem, and we can do that through distributing the ongoing network incentives.

In practice, there are different approaches to distribute funding from public good staking, depending on the size and development stage of different blockchain ecosystems. There are more mature ecosystems that are more influential, and smaller ecosystems that are looking to build early communities to adopt their technologies or APIs. We use public good staking funding differently in order to provide the most effective support based on their needs.

In more mature ecosystems, we’ve made some remarkable progress in experimenting with grant DAOs that can run continuous funding rounds. We have been continuously improving decentralized funding mechanisms for the purpose. For example, every two months, the Aptos Grant DAO funds a batch of active developer projects building on Aptos, and all funding results are public and all funds come from the Dora Factory public good validators.

With a single validator, we are able to distribute 6,000 to 8,000 Aptos tokens every two months, which could be a significant amount of funding to support early-stage hacker teams building on Aptos as the ecosystem continues to mature.

Developers can apply for grants from the grant DAO and then the community can vote on those projects through quadratic voting. Ultimately, the projects are funded by the collective decision of the community.

While this works for Aptos and other larger ecosystems, it’s not a one-size-fits-all approach. There are other ecosystems that are smaller and have a token that may not be as valuable, but they still need to facilitate the development of public goods. We can still facilitate funding opportunities through public good staking, but our approach could be a bit different.

For example, developers could participate in bounties that solve specific problems for applications, build new APIs, or use existing APIs to build something interesting, or get on board something new with a developer course and so on. It’s open-ended and public good staking offers resources to sponsor these activities. Of course, these activities can happen on DoraHacks.io, or they can happen anywhere else.

You mentioned that you’re working with different sized ecosystems, but how many blockchains are you supporting with public good staking?

Our Public Good validator supports over 30 blockchain ecosystems with over $150 million in assets secured and staked with us to support our vision of funding public goods, developers and hacker communities.

Moving on to the second problem Dora Factory is solving, let's talk about governance. How is Dora Factory fixing governance in the decentralized hacker community?

Governance is about making decisions. In our case, the decisions are about how to distribute funding within a decentralized community. How can you have an unbiased protocol that helps distribute funding in a way that reflects the community’s opinion while still being effective?

This is a very important problem to solve. Because with the same amount of funding, how effectively you can distribute the funds will eventually determine how much value you create.

In parallel to our work on public good staking, we are working on building out new systems and infrastructure for voting and decentralized community governance. We have done very extensive research on decentralized community governance and voting, and have continuously improved governance mechanisms such as quadratic voting, quadratic funding and zero-knowledge proof-based voting systems.

What are some examples of how you are improving the governance and voting experience?

One example that comes to mind is our efforts to build MACI-based voting systems, a framework to reduce collusion and vote bribery in governance. We’ve seen increased adoption of collusion-resistant voting among hackathon organizers and are looking to iterate on these concepts.

Specifically, how it works is that, for example, people can vote for their favorite projects without knowing what other people voted for. Everyone’s votes are encrypted, and we can publish final results without revealing each individual’s votes. In the end, we provide zero-knowledge proofs to validate the results.

Another example is fair distribution within quadratic funding systems. Quadratic funding rounds usually end up with big “wealth gaps” among projects. We designed a dynamic funding pool adjusting algorithm and now quadratic funding is working well to fund developer projects in many blockchain ecosystems.

There are many other interesting problems to work on to improve governance efficiency and fairness in decentralized communities. We are happy to continue working on developing new gov tech.

Dora Vota is going to be released soon. As we have more pieces of research coming together, Dora Vota is a special-purpose infrastructure for voting and decentralized governance and it will allow us to continuously improve the technology.

Do you see these governance tools, alongside public good staking, as a way to decentralize multi-chain and PoS blockchains?

Absolutely. It’s essential that the blockchain ecosystems are decentralized because, after all, that was the original vision of blockchains.

I also think it's very important to have a thriving multi-chain ecosystem in the long-term because multi-chain applications offer more choices for users. Pretty much every blockchain since Bitcoin has been built for some purpose, it’s good to have different blockchains in the world each pursuing a different goal.

Beyond the different goals, it's also important to recognize that each blockchain represents a community. Ecosystems unite a group of people who have a particular mission or who have a certain set of values, and there certainly won't be any one blockchain that can represent everyone in the world. Assuming the technology and crypto will be adopted by more and more people, bringing their own values from more communities in different parts of the world, a thriving multi-chain ecosystem is essential for the industry to continue to exist and evolve.

In terms of decentralizing proof-of-stake, I think the public staking infrastructure together with proper decentralized governance technology is effectively decentralizing these ecosystems because we are helping to incentivize more developers to use these technologies and build new applications on top of them, and therefore potentially more people adopting them.

Will Dora Factory’s infrastructure and funding mechanism work beyond Web3?

Yes, that's actually something we have been thinking about and experimenting with for a while.

I believe that the hacker movement and the open-source community is definitely going beyond Web3 and blockchain. Although blockchain is a very good starting point because it offers the opportunity for us to develop on these exciting infrastructures that can continuously provide open systems and funding. We see talented teams coming out of the Web3 community and the ecosystems. And these are super energetic communities with great teams and some incredible talent capable of building these ecosystems.

But we recognize that the hacker movement is going to be important for the entire human society and it will be there for a very long time. We should think about how we can apply the same model or how we can further develop our platforms to fund open-source developers and the hacker movement beyond Web3 and crypto.

I think it would make sense because in many frontier technologies, at least many new exciting developments can get more involvement from grassroots communities.

One example is quantum computing. We are supporters of several quantum computing developer communities that are currently engaged in developing tools, organizing hackathons and improving quantum computers and algorithms. You know, for quantum computers, we’re still at a fairly primitive stage where we have just a few hundred qubits at our disposal, but it's very promising in this early stage. With our involvement, we hope to bring new opportunities from the quantum industry to encourage more hackathon hackers to build products on quantum machines, and of course keep it open-source.

The same is true for many other emerging technologies, such as space technology, including Lunar tech, space resource utilization, orbital technology and many other interdisciplinary fields. The spirit of the hacker movement and the way early-stage teams work together in environments like hackathons, will equally help these fields as it has helped the blockchain community grow.

I think we will be able to support more communities beyond Web3 and more hacker projects that are building very exciting products in frontier technologies that could be useful to our society.

To wrap things up, we had talked about Eric Raymond's analogy of Cathedrals and Bazaars in our last interview and I wanted to circle back to it. Would you say that DoraHacks is building a bazaar for hackers?

I think the bazaar metaphor is a great metaphor to describe what DoraHacks is building. I believe it's important to build an open market for grassroots developers and innovators so that anyone can come up with ideas, build on something they feel is important without the absolute necessity of working with a big company.

The global hacker movement can help achieve this goal. By building this bazaar, DoraHacks is creating the foundation that connects hackers and their ideas around the world.

The two aspects we're working on at Dora Factory, public good staking and improvements on decentralized governance, we believe are unique to crypto and important for its continued growth. These opportunities certainly weren’t possible without blockchains. As we continue to build out new tools at Dora Factory, we hope to inspire the development of bazaars that can eventually stand as tall as cathedrals.

Addressing the challenges of sustainable funding for global developer communities, Dora Factory's ambition – to revolutionize the crypto staking landscape and their commitment to the open-source movement – sets the project apart. As the demand for decentralized solutions and transparent governance continues to grow, Dora Factory is uniquely positioned to empower the global hacker movement and shape the future of crypto staking.