S.10 Ep.6 Public Goods Funding in 2026 & What Builders Should Do Next with Vitalik ButerinVitalik Buterin on Public Goods Funding in 2026 : Mechanisms, Money & What Builders Should Do Next

The gist

The crypto space has shifted from frothy, vibes-based public goods funding (quadratic funding in 2021) to a scarcity mindset requiring "provable" funding mechanisms tied to measurable value. Vitalik argues that the next wave of public goods funding should move beyond crypto's block rewards, embed dependency-funding into software licenses, and build mechanisms (like deep funding) that reward projects based on actual usage rather than political campaigns. This requires new technologies (programmable cryptography, AI) and a pivot toward funding open-source software, privacy, and Ethereum's core dependencies.

Key takeaways

• Shift from QF to deep funding: Quadratic funding assumes a "world government" allocating capital generically, while deep funding lets funders specify what they care about and money flows to dependencies—more robust to chaos and more likely to attract sustained funding from projects with skin in the game.

• Harberger tax in software licenses: Vitalik proposed embedding dynamic licensing (between GPL and MIT) that charges a "tax" proportional to how proprietary a product is, creating efficiency-increasing incentives for openness while funding dependencies. This could scale beyond crypto into the broader open-source ecosystem.

• Block rewards + new revenue sources: Historical funding came from chain block rewards (Filecoin, Zcash), but the space should explore non-crypto sources: software licenses, yield-bearing treasuries (Octant model), and structured dependency funding that plugs into existing value flows.

• Accountability via continuous mechanisms: Round-based funding (Optimism's 6-month cycles) fails because it doesn't create long-term flywheel effects. On-chain, monthly-or-weekly mechanisms with AI-assisted evaluation and human spot-checking, plus follow-up feedback to builders, solve the motivation problem better than punitive sticks.

• Cozy up to new projects, not old ones: Reforming existing DAOs is politically hard; new projects (Aztec vs. five-year-old L2s) are hungry to differentiate and adopt novel mechanisms. Focus 2026 energy on greenfield applications.

• Privacy + AI as foundational technologies: Programmable cryptography (ZK, FHE) solves bribery in voting mechanisms; AI rank-orders millions of dependencies programmatically (voter assist, not replacement). These are prerequisites for scaled funding mechanisms.

• Pluralism of funders = good: Multiple funding sources (Gitcoin, Optimism, Arbitrum, Protocol Guild, Octant, etc.) reduce single-point-of-failure risk and allow ideological diversity. Risk is only splitting funders so much they collectively weaken counterbalance to commercial actors.

• Realistic 2026 success: Deep funding running live month-to-month distributing steady capital; median DeFi builders experimenting with or full-time on PGF; horizontal scaling (ENS, Lido, etc. running own deep funding instances) and vertical scaling (graph extends across more of the Internet).

Notable quotes

• "Now is really the best opportunity to reform the public goods funding space... it's a really high leverage opportunity because it's in a lull and previous paradigms have hit their walls."

• "Public goods funding is actually quite error tolerant. If you give the right person $10M and simultaneously give SBF $10M, that's still likely a net good, because the difference between a 1x and 10x is nine times more important than 1x vs. 0x."

• "I would love to see at least one of these things actually running live, distributing money month by month to projects... I want to see that kind of success in 2026."

Worth a full listen?

Yes—especially for builders, DAO operators, and anyone working on public goods funding mechanisms in crypto or open source; Vitalik's reasoning on why dependency-based funding beats broad QF, how to embed it in licenses, and what new projects should prioritize in 2026 is concrete and novel.