Introduction:
Vitalik Buterin and Karl Flores discuss retroactive public goods funding, a compelling idea for funding projects after they have accomplished specific outcomes.

Retroactive Public Goods Funding:
Unlike traditional public goods funding, which allocates funding based on predictions, retroactive funding provides grants to projects that have already achieved their goals. This approach incentivizes investment in projects with high chances of success, aligning incentives and rewards similar to startup VC ecosystems. It addresses the challenge of evaluating future possibilities and provides a pathway for projects to succeed even if they lack initial support.

Personal Experiences:
Karl Flores shares his experience with Plasma Group, a nonprofit focused on scaling Ethereum through Layer 2 solutions. Despite the importance of their mission, Plasma Group faced difficulties in securing grants due to the nonprofit structure and lack of upside for investors. This led them to explore for-profit entities, but they recognized the limitations of this approach for long-term sustainability.

Sustainability and Business Models:
The question of sustainability arises when considering the long-term viability of projects funded through retroactive grants. While some projects may have internal business models to capture value, others may struggle to become self-sustaining. The challenge lies in finding a balance between funding projects that provide public goods and ensuring their long-term sustainability.

Conclusion:
Retroactive public goods funding offers a compelling alternative to traditional funding mechanisms, aligning incentives and providing a pathway for projects to succeed based on their accomplishments. However, the question of sustainability remains a key challenge, requiring careful consideration of business models and long-term viability.

Public Goods Funding:
Mechanisms for extracting protocol value and repurposing it towards public goods funding are needed. MEV (miner extractable value) should be minimized, but transaction fees, especially priority transaction fees, should go to the community, not the highest bidder.

Decoupling Value Creation from Value Extraction:
Public good value should be decoupled from the ability to get a business model. Projects with high value extraction opportunities should fund the rest of the ecosystem that cannot do it on its own.

Macro Perspective and Matchmaking:
Groups should take a macro perspective and matchmake between value-extracting projects and public goods projects. Teams making sacrifices to benefit the wider ecosystem can tap into “warm, fluffy, social dark matter” support. Enlightened self-interest can lead to supporting public goods for long-term profitability.

Choosing Projects that Promote Collective Interest:
Blockchain users and builders should choose projects that support public goods over purely self-interested private goods. This is a moment where humans still have bargaining rights and can shape the future of blockchain systems.

Ether’s Phoenix and Roko’s Basilisk:
Roko’s Basilisk is a thought experiment where an evil superintelligent AI punishes those who didn’t help it come into existence. This can be seen as a parallel to the tragedy of the commons, where individual defection leads to the creation of a controlling system.

Nash Equilibrium in Iterative Games:
In iterative games like public goods funding, cooperation is the Nash equilibrium. Aether’s Phoenix concept provides a salvation story for retroactive public goods funding. Early collaboration and building for the public good should be rewarded more.

Retroactive Public Goods Funding:
Rewarding early contributors to public goods creates a positive feedback loop. It encourages collaboration and discourages defection. Contributors are rewarded for helping to create a cooperative future.

Intrinsic Motivation vs. Profit Motive:
Some individuals are drawn to public good work without profit expectations. Cultural norms and vibes can promote giving back without profit motives. However, relying solely on intrinsic motivation is not sustainable.

Injecting Market-Based Dynamics:
Combining public goods with market-based dynamics can help scale up contributions. Investors who fund early-stage projects provide a valuable service. The challenge is to inject market dynamics while preserving the genuine spirit of public good work.

Motivation for Public Funding:
Vitalik Buterin and Sina Habibi discuss the need for public funding to support public goods in the Web3 ecosystem. They emphasize the importance of coordination and a clear funding mechanism to ensure the sustainability of these initiatives.

Establishing a Funding Mechanism:
Buterin suggests starting with a simple governance mechanism and connecting a funding stream to the project. He proposes issuing retroactive grants to demonstrate the functionality and effectiveness of the governance process. Buterin highlights the potential for diverse funding sources, including transaction fees, new coin issuance, and NFT sales.

Retroactive Public Goods Funding:
Karl Floersch from Optimism explains their plans to allocate all profits from their sequencer to retroactive public goods funding. Floersch believes that rollups should contribute to public goods funding and that building good rollups with low switching costs will maximize this funding.

Conformism in Decision-Making:
Habibi brings up the concept of conformism in decision-making, particularly in the context of DAOs and public forums. Buterin acknowledges that conformism can be a challenge, making it difficult to make controversial decisions with multiple decision-makers involved.

Incentivizing Long-Term Value Creation:
Difficulty in creating governance systems that strike a balance between conformism and exclusion. Decentralized systems tend to favor decisions appealing to the entire group, limiting opportunities for non-conformist ideas to succeed.

Markets and Retroactive Public Goods Funding:
Markets excel at allowing anyone to start a company and succeed based on future recognition of value, fostering incentive to create lasting value rather than target immediate conformity. Retroactive public goods funding offers an improvement over the status quo by capturing successful ideas that might have faced obstacles in conventional systems.

Short-Term vs. Long-Term Incentives in Social Media:
Current social media platforms lack incentives for content that remains valuable over time, leading to a focus on immediate engagement and popularity. The COVID-19 pandemic has highlighted the consequences of short-term thinking, with predictions quickly proven wrong.

Cultural War and Market Design:
Karl Floersch suggests a cultural war and market design are necessary to address the misalignment between actions perceived as impactful and those that are profitable. The use of markets to fight the cultural war is a promising approach.

Promoting Open Source Software:
Karl Floersch emphasizes the importance of promoting open source software as a way to combat the cultural war and align incentives.

Long-Term Social Media Posting Incentives:
Vitalik Buterin proposes the concept of retroactive social media incentives, similar to retroactive public goods funding. Possible mechanisms include showing users posts from two years ago and allowing them to upvote or downvote, influencing the poster’s future reputation.

Reputation System Based on Long-Term Engagement:
Sina Habibi suggests a reputation system where a user’s prominence and recommendations are influenced by likes and retweets received over time, giving more weight to older interactions.

Person Tokens:
Vitalik Buterin acknowledges the growing interest in person tokens as a means of rewarding rising stars in various fields. He expresses a mix of excitement and apprehension, recognizing the potential for abuse in such systems.

Moral Responsibility and Fan Expectations:
Vitalik Buterin expresses concern that social media users may not fully comprehend the moral responsibility they acquire when launching a profile and opening a personal token for public purchase. These users might create a crowd of fans financially invested in their future, leading to expectations of continuous content creation and improvement on the platform. Disappointment and backlash may arise if these users lose interest or decide to pursue other endeavors.

Experimentation and the Need for Time:
Buterin advocates for experimentation with different token models but emphasizes the importance of allowing a full cycle of excitement and disappointment to occur before drawing conclusions. This would provide insights into the social dynamics and consequences of such models in both good and bad times.

Comparison to Traditional Influencers:
Buterin highlights the distinction between traditional influencers with individual fans and the concept of tradable personal tokens. With tradable tokens, large numbers of people can buy into an individual’s success or failure, creating a different dynamic of expectations and potential backlash.

Impact of Tradability and Political Opinions:
Buterin raises the concern that the tradability of personal tokens 24/7 could lead to real-time fluctuations in value based on the individual’s political opinions or actions. This could potentially influence the individual’s political stance to maximize token value rather than expressing genuine beliefs.

Uncertain Consequences and the Need for Time:
Buterin acknowledges the need for time to fully understand the consequences and implications of tradable personal tokens and their impact on individuals and society.

Pseudonymity and Multiple Identities:
The concept of identity is becoming less tied to an individual person, and more associated with a brand or online persona. This is evident in the rise of influencers and avatars, which allow individuals to create and portray different identities in different contexts.

Zero-Knowledge Proofs and Reputation:
Zero-knowledge proofs have the potential to revolutionize reputation systems by allowing reputation to be portable without revealing the source of the reputation. This could lead to a more nuanced and accurate assessment of an individual’s reputation, taking into account both positive and negative aspects.

Shape-Shifting and Non-Conformity:
The ability to create and switch between multiple identities could also be used to resist conformist pressures and express unpopular opinions without fear of reprisal. This is already happening on social media platforms, where anonymous users often feel more comfortable expressing their true thoughts and opinions.

Inverse Bra:
The inverse bra is a phenomenon where anonymous users take the opposite position of well-known individuals or groups, often as a form of protest or to challenge established norms.