Funding Taxonomy
Below is an attempt to create a taxonomy of types of funding and support required. This is the same whether it is at the ecosystem level – that is, how might the Ethereum community as a whole tackle these items – or at the level of a single entity such as the Ethereum Community Fund, or a project or private company that may want to support funding.
Not covered is venture capital (VC) / private business investment. From my POV, getting small teams to sustainability is more interesting than generating venture returns. VCs will do their diligence and follow their own theses to decide what will make them a return.
A good question for each of the items below is, “How do you measure success?”.
1 - Grants to get things started
This is mainly where the community has been to date. One time grants or bounties that build a new project or a new feature. Short time horizon, and generally “smaller” projects.
Bigger grants have been handed out as well, but mainly to companies that are already up and running. And, a $500K grant is really only a year of runway for a team of 5. You can argue that in different ways to stretch it out, but if we’re talking mainly engineering talent being paid close to market rates, that’s the number. And, if it’s to a brand new team forming, setup costs must be considered.
- What is the purpose of grants?
2 - Long term funding for research & maintenance
Once something has been created, it needs to be maintained with feature requests, bug fixes, and regular open source community management over time.
Research in many cases also needs to be matched with long term funding – 6 months, a year, 2 years.
This category includes “core” infrastructure funding.
- Which clients, research, testing, or other infrastructure should have long term funding in the ecosystem?
3 - Sustainability for individuals and small teams
Which is kind of (2) but is basically different revenue streams other than constant grants. What is the business model? Is this a project that should look to sell support, services, custom work for business needs, etc.? Is there a sponsorship or patronage model that results in more sustained funding over time?
- As part of grant funding, how to support projects in finding sustainability?
4 - Operational & financial support
Some of the areas would be where projects hit the real world e.g. budgets & cash flow, treasury management contracts, entities in different countries, back office, operations – I talked about some of these items along with posting my template spreadsheets.
The obverse of real world financials – help with decentralized aspects like best practices and tools for crypto management, different DAO setups for different projects – would also be super useful to gather together.
Common Applications for Funding Considered Harmful
I have seen suggestions that there is “waste” in having multiple funding bodies, and that moving towards a single application is something that should be worked on.
Since there is no one entity in charge of Ethereum, I think this is harmful.
It only encourages further insider discussions and group think, rather than a diversity of approaches, which should lead to a diversity of outcomes.
If groups DO move towards a common application – then you don’t need the overhead of people employed by these different groups to manage the process.
As mentioned with VCs at the beginning, I think different funding bodies should have different hypotheses. This might be providing different kinds of funding (#2 one off grants vs #3 long term) or focus on different aspects of the ecosystem. This might be different layers of the stack, could focus on research over implementation, could be on code outputs vs community or design & UX research.
I do think that a highly transparent, anyone can submit, DAO-like system would be super interesting.
At the end of the day, it’s really up to the entities providing the funding how they want to run this.
Ecosystem Funding
One of the meta questions really is:
- How should the Ethereum ecosystem work together to fund ecosystem level initiatives?
If there are people that truly want to work together on this – we can!
The dynamic of large funded companies, private companies, and foundations – all working on infrastructure together – is very interesting.
Part of this dynamic is that foundation supported projects have limited exposure to market pressures. But it’s up to each foundation to decide which projects to keep funding. The “community” might sway them in some way (stop funding project X!) but that really seems extreme.
Rather, lobby different entities to fund your favourite project Y.
Fundamentally, everyone working in the Ethereum ecosystem is working with a shared resource – a single global chain. Standards and specifications are the base of this, then layering on testing, client implementations, interoperability, and so on.
How much of this should be shared? How do you prevent tragedy of the commons? How do different companies make a business case for contributing or not contributing to shared resources? What is the business model of certain entities building infrastructure that is a common good?
I have also been doing research into broader open source sustainability and licenses. For instance, this maintenance focused Fair Share Clause – companies using open source giving a portion of their revenue to projects they rely on.
I have no “next steps” other than I’m trying to figure out how to fund / get to sustainability for the work I want to do, and how to collaborate with others who want to support core infrastructure. And maybe waste less for any grant systems that are put together.
Happy to continue the discussion with any people or groups that find it useful 
Thank you to @Cygnusfear @pet3rpan @GriffGreen for early feedback on the draft.