Supermodular founder Kevin Owocki defines regenerative finance as implementing community-driven systems that circulate money to build resource capacity over time, thereby staying resilient to financial shocks.
Over the past few year, the crypto space has witnessed its fair share of shocks — first with the crash of Terra’s algorithmic stablecoin, UST, and most recently with the collapse of the once-leading crypto exchange, FTX.
Yet, Owocki and his communities stand by the power of blockchain technology, particularly decentralized autonomous organizations (DAOs), to build regenerative economic networks. Case in point: His open-source grant funding protocol, Gitcoin, grew into a DAO with more than 30 contributors working to develop and promote digital public goods.
In a Twitter Space, we spoke to Owocki about using crypto as a force for good — even in an imperfect world.
Edited excerpts:
I think that the promise and the peril of the Web3 space is that we can now program our values into our money. So we can now create political economies that reflect our values. This is a great promise, but it's also a great peril because if your values are building Ponzi schemes and rugging people, you can do that with Web3, as we've seen time after time with a lot of these projects that appeared in the bull market and a caused a lot of pain.
So the promise in the peril is that we can program our values into our money, and now we've got a global transparent, incorruptible and programmable substrate for building political economies. There's a huge opportunity here because the global financial system is a lever that could be used consciously to create a more regenerative global economy. But I use the word “could” here, because in the book Greenpilled I talk about how crypto could regenerate the world. I am very consciously trying to articulate a possible outcome of how this could play out. But I don't think that it's actually happening all that much right now. I really want to be able to write the book in three years how crypto is regenerating the world, but I don't think it’s there yet.
During the in between — between how crypto could regenerate the world and how crypto is regenerating the world — is taking capital and talent and routing them towards regenerative crypto economic projects. Basically that's what the Greenpilled book and the Green Pill Podcast are trying to do, is trying to create a social movement in which we realize, ‘Holy shit, we've got this power to program our values into our money. What should we do with this great power?’ I think the answer to that is to route capital and talent into projects that have the most positive impact on the world and not just the ones that have the best Ponzi-nomics.
One other thing that I'll say here is that I view the Web3 ecosystem through an evolutionary lens. We go through bull/bear cycles where we evolve different projects. During the bull cycles more capital gets allocated than should be, and during the bear bear cycles not everyone can even get capital.
It started with a moment of immaculate conception, in which [Bitcoin inventor] Satoshi Nakamoto gave us digital scarcity on Bitcoin on the blockchain. And then we've seen this cycle of boom and bust which has given us a Kraken and Coinbase and FTX and also Bitcoin forks like Litecoin and Namecoin and Primecoin. And then we have Ethereum which is programmable and faster and accoun- based. And we have the Ethereum ecosystem of L2s and all Layer 1s, and NFTs and DAOs and DeFi.
So picture an evolutionary tree. But the evolution is not natural selection in our biosphere, it's an iterative evolutionary game in which we're evolving crypto economic systems.
Gitcoin aims to be a channel for greater combinations of strength and intelligence to come together. The idea is that it's just taking the signal of what the community wants to fund with their own money and then amplifying that signal by applying matching funds to it.
Every quarter there's a matching round on Gitcoin grants and governance decides how big that's going to be and to what causes it's going to be allocated. In Round 15, governance decided that it would be $3 million total: about $1 million to Ethereum infrastructure, $1 million to diversity, equity and inclusion, and then I think there was a Ukraine round and a climate round. This is all off the top of my head. We may need to double check the numbers
There's an application period where people who are working on those causes can submit Gitcoin grant applications. They go through a fraud check process to make sure that you're not impersonating someone and that you're actually working on the cause that you submitted for the round category that you're in. And then basically there's a two week period in which crowdfund contributions from members of the community who want to fund whatever projects they want. There is a quadratic funding formula that goes through. At the end of the two weeks the the site has calculated how much money each project gets in matching governance, and then the matching funds are distributed to the projects from there.
For more insights, listen to the full conversation with Kevin here
This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.
