Where Did Public Goods Go (Part 2)
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Where Did Public Goods Go (Part 2)
When we have a clearer understanding and consensus about "public goods," we will also better understand where we are headed and how to act together.
Navigating Web3 tides with focused insightsAuthor: Tiao
Editing & Layout: Soleil
Design: Daisy
This article was written by LXDAO Builder Tiao, and is the second part of a two-part series. In the Ethereum community, "Public Goods" and "Commons" are two closely related yet often confusing terms—sometimes used interchangeably, sometimes distinguished. After exploring their historical usage within Ethereum, Tiao raises questions and attempts to open a dialogue, so we may better understand where we’re headed and how we should act.
This piece originated from my participation in writing the “Web3 Public Goods Report,” incubated and completed during the first cohort of RAW School. Recently posted on the LXDAO forum, it received valuable feedback. Thank you to everyone who helped throughout this process. — Tiao
01 Why Public Goods Became Popular in Ethereum
The previous section traced how “public goods” have been defined in the Ethereum community. Now, I’d like to explore three perspectives on why this term has become so widely adopted.
Decentralization: Meta-Public Goods
The value-extraction/evil curve is a thinking tool about who we should fund (i.e., resource allocation); quadratic funding is too; retroactive public goods funding as well. What these frameworks or practices share is that they provide tools to help us determine what counts as a public good and what does not. Quadratic funding amplifies the voice of small contributors, while retroactive funding introduces clear criteria. Unlike traditional charities, where funding decisions happen behind closed doors, this entire process unfolds under public scrutiny, open for anyone to participate—and those with more money don’t get more decision-making power. Perhaps the most important thing isn't whether something *is* a public good, but *who decides*. If there’s one primary condition that defines public goods in Ethereum, it’s political/decentralized governance. Then again, perhaps the very ambiguity around the concept is a blessing. Whether something is or isn’t a public good might remain an ongoing subject of attention and debate.
But lack of absolute definition doesn’t mean anything can be a public good. Within a decentralized, open ecosystem, culture still needs to cohere—some things must be bounded, such as the concept of “public goods” itself, or “credible neutrality.” Closure creates meaning. Just as Ethereum is decentralized in politics and architecture, it remains logically centralized. Openness and closure are two sides of what we seek.
Since I believe dialogue is needed to clarify this, let me first state my own view: we rarely hear (I’ve never heard) public goods discussed alongside profit-making. Instead, we talk about the “sustainability” of public goods (which is one of LXDAO’s core visions). What do I mean by sustainability? It means public goods should be economically viable, but without being exploitative or profit-driven. Pure wealth accumulation holds no legitimacy here.
Right now, we may not know exactly what’s right—but we intuitively sense when something feels wrong, something that shouldn’t happen in the realm of “public goods,” even if it’s acceptable in “normal” markets. After all, it's precisely because “normal” market conditions lead to the “tragedy of the commons” that we discuss public goods at all.
The Incentivized Bubble of 'Public Goods'
As mentioned above, the vagueness of the concept, combined with newly created demand for public goods—mechanisms like quadratic funding and their implementation—has incentivized the community to create, or pretend to create, public goods.
Funding works well at what it does, but ironically, it may be the very mechanism of funding that undermines the existence of genuine public goods. That is, these “public goods” exist only within the assumptions of rational economic actors and institutional design—where individuals act solely out of self-interest, acting only when benefits exceed costs, leading to under-supply of public goods. Thus arises the “public goods problem,” which cannot be separated from shifts in institutions: the theory of public goods emerged alongside postwar welfare state policies, and the model of state-provided public goods began to decline from the 1970s onward [1]. Small government became orthodoxy, budgets shrank, and formerly public institutions (like universities) were increasingly privatized—this is our current reality.
It was in this context that research on the Commons arose. In her review of Commons scholarship, Locher situates Elinor Ostrom’s work within broader studies of postwar development in the Global South, where both the state (welfare regimes) and the market (the tragedy of the commons) dominated discourse. In the 1970s, development anthropology began emphasizing local communities’ effectiveness in managing resources, challenging both mainstream narratives. In the 1980s, Western societies shifted toward neoliberal economic policies and ideologies (understood simply here as reduced government spending, privatization of public institutions like universities and hospitals, and emphasis on individual responsibility, etc.—as Margaret Thatcher famously said: “There is no such thing as society. There are individual men and women and families” [2]). As state provision of public goods diminished, the public goods problem remained unresolved. It was in this environment that Ostrom’s Commons research gained prominence. And it was then that the burden of solving public goods problems became society-wide.
The blockchain solution to public goods funding is to create a market for them—a dedicated pool of funds to incentivize production. Naturally, rational economic actors will respond to incentives and flood the space with “public goods.” We fall back into the dream of the economic man—those who produce socially recognized public goods receive financial rewards (in its most radical form, donors with more money don’t gain greater influence), making public goods profitable. Supply increases, and suddenly every project claims to be a public good—yet many feel uneasy aligning with them, suspecting scams or elegant branding used merely for status. Then we face various forms of gaming behavior, such as Sybil attacks (creating fake accounts to vote), perfectly rational within economic logic.
Where there is demand, supply follows—alongside countless profit-seeking behaviors. This is frustrating—the meaning of “public goods” rapidly corrupts as incentives grow. Can changing terminology prevent this? I agree with Scott Moore:
Unfortunately, whenever any term becomes widely used, it tends to dissolve into semantic overload; I don’t know if anyone has found a way to prevent this [3].
Still, the “public goods” bubble keeps growing, attracting ever more attention.
Ethereum Spirit: Building Public Infrastructure
Ethereum has no owner. It requires funding to sustain and evolve. This is the practical reason figures like Vitalik have long advocated for public goods funding: to finance maintenance and development of Ethereum’s foundational protocols as public infrastructure.
Since Ethereum’s inception, this anxiety and urgency have accompanied it. In Laura Shin’s Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, I learned that in Ethereum’s early days, Vitalik and others decided to treat Ethereum as a nonprofit, making great efforts to resist capitalization attempts. But perhaps for this reason, early development faced severe funding shortages—even the Ethereum Foundation nearly shut down due to lack of funds [4].
One partial motivation behind The DAO in 2016 was to crowdsource funding for whatever the community wanted to support, avoiding capital-dominated decision-making. Reflecting on The DAO hack in 2019, Christoph Jentzsch expressed:
Jentzsch believed one of the worst outcomes of The DAO hack was shifting crypto fundraising from collective organizations to direct ICO sales targeting investors. He said: “The DAO proved you could raise funds on-chain, but then it collapsed, leaving projects seeking funding empty-handed.” More broadly, Jentzsch lamented the fading of the broader spirit that gave rise to The DAO. “Back then, the Ethereum spirit, our visionary worldview—it was very similar to early Bitcoin players,” he said. “We still have some of that, but we’ve also lost some. We haven’t yet realized the vision of building truly decentralized applications. Today, we’re much better at secure smart contracts. We shouldn’t be afraid to try big things again” [5].
The DAO resembled a precursor to today’s public goods funding protocols—its attempt ended dramatically. During the 2019 bear market, MolochDAO emerged, carrying forward The DAO’s mission but prioritizing security, minimizing code, and building a “minimal viable” DAO. In its whitepaper, MolochDAO aimed to fund Ethereum public infrastructure, particularly Eth 2.0 development. Then, in the subsequent bull market fueled by DeFi, DAOs became a dominant narrative, and their numbers exploded. It’s reasonable to believe the early DAOs’ ideas and practices continue to influence the general operation models and tendencies of later DAOs:
1. Many DAOs directly use the Moloch protocol (smart contract) [6], such as the recently evolved Protocol Guild, which uses Moloch V3 for on-chain governance [7].
2. At the 2023 Pragma conference in Lisbon, DAOs were no longer novel. Simona Pop, deeply involved in Gitcoin DAO, having experienced passion and burnout before ultimately leaving, reflected on her journey [8]. She reminded us: in DAOs, we work *with* others, not *for* others—and the original vision of DAOs was diverse values.
3. In an ongoing study (“Constitutions of Web3”) [9], Metagov researchers analyzed 19 DAO whitepapers and found that DAOs “frequently describe the intended beneficiaries of project activities as all of humanity,” though certain groups may be excluded in practice.
Has LXDAO inherited part of this broader DAO vision, or created a variant of it? In a way, LXDAO is a fractal of Ethereum’s “infinite garden”—it doesn’t aim to be an end product, but rather a habitat for builder collectives, where ideas recognizing the intricate connections between individuals, others, and the material environment can bloom.
This aspect of Ethereum has been analyzed by many authors, who see its funding, provision, and maintenance of infrastructure as central to its vision. Of course, Ethereum has no pre-drawn map, but I would say “providing public goods” is part of its cultural imagination. Thus, providing infrastructure for diverse public goods to flourish may be the most important kind of public good—and this, in my view, is the spirit of Ethereum.
The infinite garden is a powerful metaphor—Ethereum itself is already a garden, yet it allows other gardens or flowers to “parasitize” upon it, taking while also giving, entirely contrary to economics’ logic of scarcity. Hence, I believe this explains from another angle (beyond economic incentives) why “public goods” have become such a popular meme in Ethereum. Humans are moral animals—flying high with “XX punk” labels carries not just posture, but expectation. Ethereum’s expectation is to become public infrastructure.
02 Public Goods and Commons Are Not the Same
In the Web3 space, the two thinkers most associated with Commons are likely Elinor Ostrom and Michel Bauwens. The former’s work is widely celebrated by champions of “public goods” (from Moloch DAO’s whitepaper to Commons Stack, influenced by her); the latter is a leading advocate and thinker behind “Commons-Based Peer Production (CBPP),” collaborating directly with local governments and policymakers on urban reform, working with scholars to develop peer production theory, and actively advancing CBPP within the crypto space.
Commons and CBPP
I’d first like to clarify the relationship between Commons and CBPP theory.
I see CBPP as a subset of Commons theory. Yochai Benkler first introduced CBPP in his 2002 article “Coase’s Penguin, or, Linux and the Nature of the Firm” [10][11]. As the title suggests, unlike the broad intellectual scope of Commons (including Ostrom’s focus on resource-based commons, or radical interpretations of “The Common” as resistance to capitalism, such as Hardt and Negri’s), CBPP initially focused specifically on production models in free and open-source software.
Chapter 7 of the Handbook of Peer Production identifies Yochai Benkler and Michel Bauwens as the two “prophets and advocates” of CBPP, outlining its theoretical evolution [12]:
The 1990s rise of Linux in the open-source movement and Eric Raymond’s influential essay “The Cathedral and the Bazaar” laid the groundwork for CBPP theory. The open-source world’s distinct governance models, property rights, and collaboration dynamics—along with creativity and productivity surpassing traditional “cathedral builders”—led sharp scholars and activists to see possibilities beyond and alternative to capitalism. In the 2000s, the spark from open-source communities ignited academic and social institutions, expanding the movement beyond software into exploration of CBPP as a new mode of production.
Certainly, whether CBPP can overturn existing extractive institutions remains to be seen. But representative cases—such as Michel Bauwens’ collaboration with local governments in Ecuador and Belgium on “Commons Transition Plans”—have proven CBPP can influence real policy.
Back to Commons. Understanding of Commons has been summarized through four lenses: resources, property rights, institutions/relations, and processes/practices. I’ve also seen Commons framed as a mode of production (peer production). Sometimes, Commons refers to rivalrous yet non-excludable resources and their collective management systems (epitomized by Elinor Ostrom); at other times, Commons is viewed as a verb—“commoning”—always fluid, continuously produced and reproduced through practice. In other words, without participation in shared management and stewardship, there is no tangible Commons.
I treat the first three as noun-like, static “Commons,” and the fourth as verb-like, dynamic “Commons.” These should be seen as different facets of the same concept, not mutually exclusive.
When trying to understand “Commons” in the blockchain context, I want to focus on two elements widely present across definitions, setting aside nuances to distinguish Commons from Public Goods. As noted, Commons is both noun and verb (a process of co-management and co-production), encompassing shared resources and their governance.
1. From the “noun” perspective, Commons are shared resources (like pastures or grazing cattle)—not final consumer goods, more like infrastructure. They are both productive and consumptive. The value of Commons extends beyond price (exchange value) to include labor invested throughout the process of producing and reproducing Commons resources and communities—value beyond exchange, not just the final “product.”
2. From the “verb” perspective, Commons is a collective process—a bottom-up, dynamic process of co-production and co-management. Not a magical “public good” delivered by government.
Thus, Commons primarily emphasizes value beyond exchange value. It prioritizes the process of production over the final output. In other words, the social relations within production matter more than what is produced. When we speak of “public goods,” we usually refer to collective consumer goods—already finished “objects”—consumed by self-interested economic agents, whose consumption yields societal satisfaction greater than (often far exceeding) the sum of individual costs.
Building vs. Modeling
These two aspects—value beyond exchange, and the social processes and relationships involved in producing and maintaining goods—are overlooked in public goods discourse.
In the 2018 paper introducing quadratic funding, the conclusion presents five use cases for funding public goods—none address how to *produce* them. For example, how would a news organization produce journalism (if funded through such mechanisms)? Of course, that wasn’t the paper’s goal—but such formal, quantifiable content continues to dominate “public goods” discussions. Even today, we mostly debate funding mechanisms and obsess over optimizing them. This is limiting, especially given widespread anxiety about how blockchain can positively impact the off-chain world. Contrary to “putting everything on-chain,” it’s time to go “off-chain”—Web3 is no longer novel [13].
We neglect production relations and processes, overly eager for results; our understanding and recognition of value—whether forced or voluntary—remains tied to price. I’m not saying we need virtue instead of money. But we need a more accurate, nuanced understanding of human behavior: motivations vary widely, rational calculation being just one. Often, altruism isn’t virtue—it’s part of our inherent human potential.
The consequence: we don’t know how to *create* “public goods.” When Rune Christensen [14] and Simona Pop each express concerns about DAO governance (from arguably two of the most successful DAOs: MakerDAO and GitcoinDAO), they worry that vibrant, dialogic, deliberative democratic processes may turn into rigid, formalized, bureaucratic performances.
Even Commons Stack, named after Commons and deeply influenced by Ostrom, faces its own challenges [15]—for instance, online communities may have hundreds, but only about two dozen participate in meetings and agenda-setting; adopting polycentric models to enable large-scale democracy while ignoring power imbalances among centers; pre-designed mechanisms and assumptions repeatedly shattered by practice (decontextualized math and economics scale well, but real operations are deeply contextual; universalist economic assumptions crash against the localized, plural nature of human conditions). This reminds me of Vitalik’s reflection in “The End of My Childhood” [16]:
One change I’ve written about in my thinking is that I now engage with economics less than I did ten years ago. The main reason is that during the first five years of my crypto career, I spent much time trying to invent mathematically provable optimal governance mechanisms, only to discover fundamental impossibility results that made clear:
(i) What I was seeking is impossible;
(ii) The key variables determining whether flawed systems succeed or fail in practice—often the degree of coordination among participant subgroups, but also other factors we often simplify as “culture”—were variables I hadn’t even modeled.
On one hand, we need better theories to understand people (perhaps starting by moving beyond mainstream economics); on the other, we must better balance design complexity with usability. The process of Building is always hard to Model, but reality won’t apologize for that—theory can.
Distinguishing the Two
With the above in mind, I now offer a simple distinction between how these concepts function in the Ethereum community:
“Commons” is process-oriented, focusing on the process of producing and consuming goods; “public goods” is outcome-oriented, focusing on the consumed object itself.
“Commons” acknowledges that different “places” may fundamentally differ—how people see the world, what they value, etc. It demands first recognizing and respecting differences across plural worlds, and striving to build communication channels to foster mutual understanding, enabling bottom-up production, management, and distribution of shared resources. “Public goods,” by contrast, starts from mainstream economic assumptions, using mathematical language to design “optimal” mechanisms and tools for top-down optimal allocation, preference revelation, and supply of public goods. Processes are often “black-boxed,” and highly formalized language often excludes broad participation—yet this very formality grants scalability and universality to public goods mechanisms.
Similarities
Conceptual distinctions may be clear, but ultimately users of these concepts are part of a shared, larger process. Like how something once thought incomprehensible eventually becomes understood; or how close allies may later drift apart. When we use concepts, our usage may reinforce them—or diverge. While summarizing uses of “Commons” and “public goods,” I see both differences in application and shared intentions among users. Below are these similarities.
Hand in Hand: Socio-Technology and High-Tech
Vitalik Buterin and Glen Weyl both adeptly use mainstream economic language in Ethereum discourse, rarely invoking “Commons” (Vitalik uses it mainly in the context of “tragedy of the commons”; Glen Weyl argues the openness praised by Yochai Benkler leaves vast spaces open to colonization rather than freedom), and are key thinkers promoting “public goods” in the Ethereum community [17].
Besides citing Vitalik’s recent blog post, he has long emphasized the importance of decentralization (power decentralization), flaws of token voting in DAO governance, mechanisms to fund public goods valued by the masses, and the need for social coordination—not just incentives—to ensure blockchain stability, sustainability, and broader societal benefit.
Glen Weyl has said socio-technical systems and technology must match—if existing institutions can’t keep pace with rapid technological advancement, perhaps we should revisit Einstein’s words [18]:
The inventions humanity has bestowed upon us in the past hundred years could make life无忧 and happy—if only our organizational capabilities could keep up with technological progress. Yet in our hands, these hard-won achievements of the machine age are as dangerous as a razor in the hands of a three-year-old.
Public goods funding mechanisms are one of his envisioned “social technologies” to foster democratic communities. But mechanism design must gain legitimacy through broad public discussion. This—rather than technically optimal solutions—is primary. Thus, he is not a technocrat. Though he sees communities managing shared resources (like those studied by Ostrom) as local, informal, exclusive, and too small for global coordination, this doesn’t mean he dismisses their traits. For instance, he endorses Hannah Arendt’s view on social change from On Revolution [19]:
My view on social change is that what we actually need is to build society. We must establish legitimacy—perhaps one day recognized or replacing the state—rather than imposing such things top-down.
Starting from Plurality, Defense First
Interestingly, in recent years, both Vitalik and Glen have gradually moved toward the opposite end of the spectrum (if I roughly place “public goods” and “Commons” at two ends, with a continuum between). We increasingly see their reflections on formal languages (economics and mathematics) and mechanisms—driven partly by Web3 and AI’s techno-utopian fervor (acceleration!) and the dangers of power centralization in both fields (especially the latter).
In late 2023, responding to debates on “techno-optimism,” Vitalik introduced d/acc:
Overall, I see too many world-saving plans that grant extreme, opaque power to a small group, hoping they’ll wield it wisely. So now I’m drawn to a different philosophy—one with detailed ideas on risk mitigation, but aiming to build and maintain a more democratic world, avoiding concentration of power as the default solution. This philosophy extends beyond AI—I believe it applies even in worlds where AI risks are largely unfounded. I call this d/acc. The “d” stands for many things—especially defense, decentralization, democracy, and differential [20].
Here, defense is foundational—just like economic and mathematical models, meant to prevent worst-case scenarios.
Glen Weyl’s shift came earlier—he’s expressed it multiple times on social media and in articles. He opposes technocratic or rationalist communities’ pursuit of formal knowledge, sharing insights gained from building communities (like RadicalxChange)—no less valuable than academic learning. A key moment was his 2020 essay “Why I Am Not a Market Radical” [21], where he reflects on core assumptions in Radical Markets: twins derived from what he ironically calls ALONE (Atomistic Liberalism and Objectivist Naïve Epistemology)—atomized individualism and technocratic views of social change, seemingly opposite extremes.
Under ALONE, intermediate social structures are secondary—either abstracted, mechanized, or oversimplified. In this worldview, the main question is how to structure the state so individuals pursuing self-interest maximize aggregate welfare. From this binary, extreme individualism and authoritarian technocracy emerge in economic thought. ALONE essentially assumes the absence of intermediate social structures, making the state the sole natural site for social intervention.
This echoes Vitalik’s self-reflection in “The End of My Childhood.”
From Radical Markets and RadicalxChange to Plurality, Glen Weyl has begun actively exploring plural technologies and plural institutions. In his initial article describing this, pluralism is split into institutional and epistemological pluralism. Aware of the concept’s breadth and vagueness, he stresses pushing forward from existing “plural” institutions across domains, embracing complexity rather than retreating to single models (as right-wing politicians do).
Toward chaos, viewing human society ecologically; rather than forcing consensus, cherish and nurture existing differences, focusing effort on building trust and dialogue across fundamentally different people.
Defense first, society first—that’s what I see in their turns. Compared to suboptimal outcomes from dialogue and “irrationality,” entrusting power to genius engineers is far riskier. Technology should strive for credible neutrality, while first acknowledging that complete “neutrality” is a myth (Is economics neutral? Is blockchain?). Technological ethics must be debated—where are we going? Only then should we accelerate. Here, technology must first protect and coordinate plurality, or democracy—defense, difference.
Global Coordination
These ideas weren’t part of public goods theory, but belong within the Commons domain. Meanwhile, Commons is also evolving, drawing closer to “public goods.”
In recent writings, Michel Bauwens envisions a “cosmo-local” Commons system: light things (knowledge, information) should be globally shared to enable global coordination; heavy things (natural resources, factories, production relations) should be managed by local Commons communities. But this doesn’t replace state and market directly. Rather, acknowledging material scarcity, it proposes a superstructure where Commons, market, and “partner state” coexist (see his newer thoughts here and here).
Vangelis Papadimitropoulos observes that blockchain alone struggles to scale Commons; real change requires clearer positions and alliances with all anti-capitalist efforts into an equivalent chain, forming a collective resisting capitalist hegemony. Such collectives prioritize intellectual and practical openness, avoiding hierarchies among claims. These collectives don’t build monuments—they coexist across plural worlds.
Thus, both public goods and Commons theories in Ethereum aim to solve problems existing institutions cannot (or have caused). Both seek alternatives beyond state and market, emphasizing rich social experiments and alternative practices, uniting or modeling theories while preserving difference. From this view, Commons and public goods are part of a larger process. Thinkers seem to treat economics (and Commons) as one of humanity’s many infinite languages—a powerful tool, but not the end in itself.
03 Beyond Public Goods and Commons
Finally, the conclusion. I realize my conclusion is simple: public goods and Commons theories are complementary, such as these pairs:
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Top-down ↔ Bottom-up
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Structure ↔ Process
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Elite ↔ Democratic
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Universal ↔ Plural
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Formal ↔ Informal
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Global ↔ Local
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Design ↔ Prefiguration
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……
In the Ethereum community, “public goods” dominate—but they sit too close to one end of the spectrum. We need to advocate attention to lively, messy community processes, to breathe life into existing mechanisms and tools.
Perhaps start by reimagining public goods—efforts in public goods financing have achieved much, creating a democratic, effective market for them. This formal language may help tackle broader coordination challenges. But if we believe blockchain can do more, if Ethereum can do more, we must step beyond economics, begin reimagining humans, and how we—distinct yet together—co-create realities we wish to inhabit.
We need cultural and social experimentation, not just repeating the same mental models (ALONE, that’s you). We always begin from familiar ground, but that doesn’t mean spreading incentive mechanisms into every corner of the world, into the depths of our souls—individual or collective. We must learn and ally with other communities and knowledge traditions, invite diverse people into dialogue, and seek a universal language while recognizing our equal yet different starting points. This must begin in small communities, building channels of dialogue across heterogeneity through experimental projects and communities. Of course, for ultimate grand goals, this may be futile—or it may succeed.
We cannot expect solutions designed for large-scale coordination to automatically solve smaller-scale problems. Problems exist at different scales—small ones no less valuable than big ones. We don’t always need “scalable” methods.
In other words, the Ethereum community cannot ignore everyday exploitation and power dynamics. Without this, all we build is castles in the air. Here, the token isn’t today’s trendy cryptocurrency, but the autonomous spaces we bodily build and live in—diverse bubbles where we embody, not just describe, the values we uphold. Prefiguration is our token.
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