Thanks to Rhys Lindmark, Noah Chon Lee, Dawn Drescher and Sinclair Chen for assistance with this post.

Last week Dony and I went down to the Schelling Point public goods conference in Bogota, Colombia, where Dony was leading a workshop on impact markets. Gitcoin hosted the event, which felt very professionally put on and their AV team was fantastic – here is a link to their official photos and videos in lieu of any of our own. Gitcoin is also writing its own retrospective which I’ll also link. I was surprised and taken in by the level of interest in public goods funding on display at the conference, which I think looked like it had at least 500 attendees. Even more unexpected was how much of the day’s discussion revolved around impact markets.

Impact markets as a solution for efficiently funding speculative interventions has been a topic of discussion (click for an explanation of the idea) in a weakly positive light (with some particular attention to drawbacks) on this forum from Paul Christiano’s introduction of the idea in 2014. More recently it has been discussed in the larger EA community, such as with Scott Alexander’s previous writing on the topic, experiments done by Clearer Thinking and Manifold Markets on market-directed funding mechanisms, and previous work by my co-author Dony alongside Dawn Drescher and Matt Brooks on impact certificates on this forum and at However, the space has remained fairly small within EA for such projects.

In contrast, in the past year the web3 community has quickly taken to the concept of impact markets, and several startups might be close to developing workable impact market implementations. It seems like this work hasn’t been discussed much on the forums, so I wanted to make a brief sketch of the emerging public goods scene within web3 to make this work more visible to EAs, and to think about how it might fit in with EA work. Some readers will be familiar with this development already, perhaps from some of Dawn and Dony’s posts and comments; I think most will be hearing about it for the first time, as I had just three weeks ago. At any rate, I think it is worth having another post written to bring it more to attention.

What’s web3? Web3 is a collection of internet projects which interface with decentralized ledgers (blockchains) such as Ethereum, aiming to implement a new vision of the World Wide Web with financial and epistemic decentralization. These use smart contracts involving tokens (which may represent parcels of data or legal rights such as ownership) to allow their developers to design custom economic incentive structures for specific use cases. Web3-based applications can be made more transparent and less mutable, properties which they derive from that interface with blockchains. 

The most prominent example of web3 is in NFT art, a digital ecosystem which uses unique tokens to represent legitimate ownership of artworks as conferred by the artist. More on NFTs (non-fungible tokens) later, as this concept readily translates to work on IP such as patents, as well as ownership of impact certificates. Web3 represents a community of projects and developers which are currently producing new technologies which can better support impact markets, and now are also working on creating those impact markets. 

I’m told that the public goods funding web3 scene coalesced a year ago around the first Funding the Commons event in November 2021. People in web3, largely developers, whose background was in creating infrastructure to support open source software projects came together with environmentalists and scientific progress advocates to discuss how to support each other, and one idea that all three coalesced around was using impact markets for funding their work. 

Why is web3 a good match for impact markets? We don’t think they’re necessary, and my coauthor’s work on GoodX is an example of going it using more traditional internet technologies, but web3 technologies built upon the existing infrastructure created by decentralized ledgers (blockchains) like Ethereum are able to offer impact certificates as tokens and use smart contracts to automate transfers of money based on many potential definitions of impact. 

The conference seemed fairly representative of the scene. Ethereum founder Vitalik Buterin gave a surprise opening talk appearance, and I caught just the tail end of it, having arrived late after landing in Bogota at 3 am. Glen Weyl, who co-wrote Radical Markets and gave an appearance on the 80,000 hours podcast, also spoke. 

A key talk at Schelling Point was Kevin Owocki’s discussion of Gitcoin Grants, Gitcoin’s quadratic funding project for democratizing public goods. Gitcoin is the team behind Schelling Point, and a big driver of web3 development – they primarily give grants to people hacking on FOSS (free and open source) blockchain-related projects and have incubated many of the projects that presented work at Schelling Point. Recently they ran a round focused on DeSci (explained later) and impact markets. As an aside, Gitcoin has also been supporting Creative Commons art, which I was overjoyed to hear – I studied how to enhance the intellectual and creative public sphere during my communications major in college, but at the time there weren’t really any people working on bringing viable funding mechanisms for public art into being.

Holke Brammer gave a talk representing Protocol Labs, another key player in web3 who created both the IPFS and Filecoin protocols. At Protocol, Holke leads the recently-announced Hypercerts team which builds off of impact certificate work by FHI scholar David Dalrymple. They’re hoping to pass a security audit this year and launch their first impact market based funding round (for open source software) in Q2 next year.

HyperCerts cites implementing a provable, economically sound carbon credits system as their key example use case. Carbon credits are a natural impact market – they work because companies have a reputation incentive to offset their carbon footprint, and thus act as terminal (philanthropic) funders, paying out based on tons of CO2 captured. However, there’s little transparency in this system, meaning a lot of work is currently needed to keep it honest. Making a transparent decentralized protocol be the norm for CO2 reduction could restore some accountability and create an efficient market which directs philanthropy to the most impactful interventions. 

In general, climate change and environmental conservation were the key cause areas discussed at Schelling point. Despite the primary conference language being English, many attendees naturally were from Colombia, and brought perspectives on how web3 could be deployed as leapfrogging technology for funding conservation projects in the region’s rainforests. For example, I attended a talk by KokoDAO, which was researching using web3 to deploy micropayments in post-conflict zones in which a lack of economic alternatives pushed locals towards deforestation for farming purposes, despite awareness of the long-term consequences of doing so. Impact markets could provide a cash advance to people whose livelihoods interface with rainforests and allow them to develop other forms of income, including being rewarded financially for provably responsible forest stewardship by international climate philanthropists.

Another major use case is DeSci (decentralized science), another scene within web3 quickly gaining traction. DeSci is an outgrowth of Open Science, the movement to change incentive structures to allow for freer data sharing within the science community in order to enable faster scientific progress. VitaDAO and Molecule are currently the major players in this space. One main idea they share is to create IP-NFTs (intellectual property NFTs), which represent the data and outcomes of specific studies, trials, or publications, providing financial incentives for publication or licensing without being paywalled through large publishers and facilitating patentability, enabling a larger ecosystem for transferring IP. For example, one proposal is that this could be used to incentivize pharmaceutical companies to publish the data from failed trials, which might have scientific value in other regards.

One application in DeSci where impact markets can increase throughput is in funding generic drug repurposing trials, which is currently worth little to most pharmaceutical companies as the product is already on the shelves. As I understand there are so many possible interventions to test that evaluators would have to choose which ones to target first, and impact markets would allow impact investors to contribute their information to the evaluation process. Furthermore these trials are relatively cheap relative to experimental drug trials as safety standards have already been established, and some people I spoke to believed that they could serve as a good test case within DeSci for the adoption of impact market mechanisms. Some projects in this area now have venture or philanthropic funding, and Crowd Funded Cures is a project in this field moving towards a first trial. It plans to pay impact investors based on percent improvement from usual care.

Besides the ones I mentioned, there were about a dozen web3 startups working directly on public goods funding, including work on impact certificates and markets. Most are established as some form of Decentralized Autonomous Organization, and use NFTs to support the implementation of impact certificates as true tradeable tokens. I wouldn’t be surprised if within the next five years some of them became major players in funding direction.

You might be wondering why I am telling EAs about things happening in open source software, open science, Creative Commons, and environmental stewardship? It is clear that the flexibility of impact markets applied to many different use cases and the accompanying decentralization is helping to make people outside of the EA movement also interested in impact markets (because they can choose projects which match their funding goals). The provision of a general solution that could meet the needs of many different approaches towards giving could mean better infrastructure for EAs in the long term, since it will be worth developing for a larger user base.

On the other hand, you might be wondering if everyone in web3 is now hopelessly ebullient about impact markets. I don’t know how they’ll overcome the hurdles of the difficulty of turning subjective evaluations into impact payouts, and the difficulty of avoiding Goodharting on impact measures. As mentioned in Ofer’s article linked earlier on, one of the major problems with the currently most-practical impact market implementations is the inability to penalize impact investors for funding projects that cause more harm than good. The proposed solution in that article was to delay deployment and focus on centralizing impact marketplaces, but this seems increasingly unlikely as the idea gains popularity; in some sense the cat is out of the bag.

I spoke with Evan Miyazono from Protocol Labs, who cares deeply about avoiding downside risk in creating this funding solution. For the time being, it seems that averting catastrophic risks would require some commitment on the part of terminal (purely philanthropic) funders not to retrofund any project in certain fields, such as gain-of-function pathogen research. In general the Hypercerts team is pretty close to EA philosophically – they would like to create an impact market funding system which was viable for retrofunding AI safety work – and I would not be surprised to see more from the team on this forum in the future.

Discussion of DeSci and other areas of interest around public goods funding continued into DevCon Bogota, this season’s flagship event for the Ethereum community, of which Schelling Point was a satellite event. I think a lot of people in web3 are going to be interfacing with impact markets in the near future, which brings me hope that some of the major questions around implementation will be resolved and that the EA movement will benefit from being part of a broader coalition for creating infrastructure which supports provision of public goods.

How can we keep up with the space? New Schelling Point events are advertised at, which is also where the talks will be uploaded. Funding the Commons events are advertised at . Interested people also ought to follow Kevin Owocki on Twitter as @owocki, and Evan Miyazono as @emiyazono, as well as Rhys Lindmark @rhyslindmark and of course, @donychristie. Kevin Owocki has a book called Green Pill, and a podcast with the same name. We also think the EA movement should reach out to web3 public goods organizations to present their work to EA conferences and to EA funding organizations. 

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Nice writeup! Impact markets are a really cool idea that could plausibly make public goods funding much more efficient.

Still, I have doubts. Funding decisions ultimately come down to someone doing an impact analysis, and let's just say that's a really hard job.

Getting to the correct order of magnitude of impact for a project like, say, deworming, would require a lot of careful data collection and analysis and maybe even interviewing a random sample of those affected over time. And even then, it's easy to be wrong.

Moreover, the incentives are not right. A project seeking the highest price for their impact certs could invest in a PR campaign about how much good they are doing. Instead of pursuing impact, they could pursue perception of impact. It's easier for them to tweak and cherry-pick their stats to show they are doing a lot of good than actually doing that good.

In other words, impact markets have disconnected their funding source from their customers. When customers are not paying directly for the service, there's no feedback on whether that service is good or not.

Summarizing the problems:

  • Impact analysis is hard to do accurately
  • Projects will find it easier to cheat than achieve real impact
  • Funders will be tempted to donate based on their own interests, like getting a PR story about how they saved the world
  • Funders are likely to have counter-productive goals, which could be dangerous if impact markets work

For-profit companies by-and-large side-step these problems because when the customer is voluntarily paying for a good or service that is evidence that utility was created for the customer. Businesses thus have decentralized verification of positive utility.

A surprising but important consequence of needing to profit is that company goals are immediately constrained to ones that mostly help the world.

The same cannot be said of impact markets. And this is what I think is the strongest objection to impact markets: even if they are an efficient tool for implementing funders' goals, that power could be net-negative if funders are misaligned. Worse, it could be hard to figure out they are misaligned if the primary incentive of projects is to appear good.

Ordering the world correctly is threading a needle. There are far more ways to destroy value than create it. Human ideologies change by the season, frequently contradicting past beliefs. We should be careful cranking up the power-level of tools that bypass our best method of utility-verification: decentralized self-interest.

You correctly imply something worth restating clearly: despite their initial framing, impact markets are not a way to achieve public goods per se, they are a way to efficiently achieve funder goals in contexts where the path to that goal is uncertain, there are many plausible options, and there is lots of information that can be potentially priced into the market about those options.

With some impact market designs decentralized self interest can in fact come into play, perhaps in the form of bounty pools pledged into escrow by some subset of the people who would benefit from the existence of the public good they are offering the bounty for. In this case funders have a vested interest in what is achieved, and will evaluate based on such. Maybe in the long run markets that enable such a design will gain reputability relative to markets solely funded and assessed by fly-by philanthropists.

I agree with you that disinterested funders often end up having counterproductive goals, although not in all domains. The above example of generic pharmaceutical repurposing trials might be such, where the market can bear useful information about which of many interventions would have the highest impact and chance of success, but the work to achieve that goal is kind of hard to do serious harm with, given that the risk profiles of those drugs is already well quantified. In such cases I see especially little risk to encouraging philanthropy.

If some funder intentionally wishes to achieve nefarious goals with impact markets, I admit the existence of impact market infrastructure might facilitate that. But we have legal and social tools to counteract bad ends and I don’t think that impact markets are so powerful as to enable an end run around these.