Gitcoin is about to launch a new round of donation activities, and here is what you should know

This article is a submission from Metablock Ventures.

Gitcoin is a decentralized community open collaboration platform based on Ethereum, promoting ecological development and prosperity, especially for the developer ecosystem, through resource allocation. Some project parties publish their needs and bounties on it, allowing programmers to take on tasks, while others host hackathons on the platform to attract more developers.

However, for ordinary users, the important aspect is Gitcoin's donation activities, which use GTC as a resource medium to create a funding pool that collects sponsorships from various relatively mature projects on Ethereum, and then distributes them to more new startup projects through donation activities. Since Gitcoin projects sometimes airdrop to donors, and the value of the airdropped tokens is generally high, this has become one of its most attractive and eye-catching features.

The Airdrop Feast of Gitcoin

Undeniably, the main reason for Gitcoin's popularity is that many new projects allocate a portion of their airdrops to Gitcoin donors. Among these projects are many hot star projects, naturally leading many to sniff out business opportunities with Gitcoin, starting to create addresses in bulk and make donations. Especially in the ninth round of donations in March, the fundraising scale set a historical record, demonstrating the high enthusiasm of crypto users for emerging projects. This round had a matching amount of up to $500,000, with over 12,000 donors contributing $1.38 million to 812 different projects, making it the largest round of funding to date.

In the past nine rounds of donation activities, Gitcoin has donated over $10 million to more than 1,600 important Web3 ecosystem projects. These projects include major DeFi projects, important Ethereum infrastructure, Web3 news media, and other art community projects.

In contrast, the matching funds for Gitcoin's 10th round of donations were allocated by category, specifically: infrastructure construction ($195,000), DApps ($162,500), global community ($130,000), Latin American projects ($65,000), organizations building Gitcoin ($50,000), NFT projects ($48,750), and DGOV ($48,750), raising a total of $1.1 million in community donations and $700,000 in partner grants for 1,658 Ethereum ecosystem projects.

A New Round of Donations Begins

According to official news, the open-source software funding platform Gitcoin will start its 11th round of donation activities at 23:00 Beijing time on September 8, ending on September 29. With the arrival of the 11th round of donations, many users are eager to try, continuously checking in the community for any opportunities to "shear wool," but there is no need to struggle with how to speculate.

As the profit-making effect of Gitcoin airdrops becomes widely known, subsequent projects have set clearer and more detailed requirements for Gitcoin donation airdrops. Through Gitcoin, some projects have also established very successful communities. After this, the Gitcoin (GTC) airdrop has also raised higher requirements for community participants' activity and contribution, with accounts suspected of being created for the purpose of gaming the system even facing bans. Therefore, if you want to support a project with donations while also seeking potential airdrop returns, you can consider the following dimensions:

First, look at the quality of the project itself, as this is the most important factor. The current investment is aimed at future investment returns and the future value accumulation of Gitcoin. From a higher perspective, donating to truly valuable projects is beneficial for the industry and Gitcoin in the long run. Thus, the quality of the project itself should be a primary consideration.

Second, consider whether the project is a community project or a financing project, and what its financing category is. Community projects have a large user base and stable consensus, so they require community support, while financing projects need to consider investors' returns to some extent.

Third, check whether the project has already issued tokens. Generally speaking, projects that have already issued tokens are less likely to conduct donation airdrops to the community.

Finally, from the perspective of current project categories, simply put, application layer, DApp development, and community projects are likely to receive over 70% of the donation funds. Additionally, the strength and background of these projects are also standards for our consideration. Based on past reviews, we see that among the more than 20 projects supported by Gitcoin in previous years, popular DEFI and NFT projects did not receive absolute attention. Therefore, it cannot be ruled out that in the next round of donations, Gitcoin may focus on projects in currently popular sectors.

Adjustment Mechanism to Combat Cheating and Fraud

In large-scale donations, collusion and fraud between projects may occur. The Gitcoin team, having learned from previous rounds, has implemented a series of measures to optimize governance methods to detect and respond to bad behavior. Official documents have previously stated that they do not wish to see teams using airdrops as an expectation to attract donations. If caught using airdrops to exchange for votes, they will be disqualified from this round. On the other hand, the Gitcoin team has also been cracking down on account farming. As the number of users interested in Gitcoin continues to increase, the corresponding airdrop projects have also raised the bar, aiming to ensure that the filtered users are all valid participants.

Vitalik also pointed out that the most challenging new phenomenon in Gitcoin donation activities is the emergence of large-scale fraud, where some unknown groups register a large number of accounts, attempting to conduct donation activities under the Gitcoin mechanism to obtain airdrops in bulk. If there exists a long-term model where a project offers retrospective airdrops to Gitcoin donors, then such behavior will no longer exist as a public project independently, but rather as donations based on the potential value of tokens, which contradicts the original intention of Gitcoin's second-round financing as a monetization strategy providing an alternative for token issuance.

Second-round financing refers to matching funds for projects, allowing them to receive a certain amount of donations and subsidies. The calculation formula it relies on is quite special: for a given project, first take the square root of each donation amount received, sum these square roots, and finally square the sum to output the total funding amount matched for that project.

I personally believe that second-round financing indeed has its necessity; it possesses significant development space and potential value. Without the need for the Ethereum Foundation's intervention, it can effectively adapt to the flow and utilization of various funds, while also extending a community culture that carries the characteristics of Ethereum itself, allowing users to weigh their value perspectives within the entire ecosystem and support projects they find valuable. A healthy market atmosphere is beneficial for the future development of the industry.

A Promising Economic Blue Ocean

From DeFi, NFT, UBI, privacy, trading to digital identity, infrastructure, etc., this round of Gitcoin fundraising projects almost covers the latest hot directions. Another trend is that more and more projects are focusing on product implementation. We hope to see more users join, understand the architectural art of Ethereum and the historical significance of this series of processes, bringing forward momentum to the industry and allowing value to return to those who truly drive the industry forward.

Regarding which projects should receive donations and how to participate in the entire donation process, we can all join the community for discussion. Ethereum has only six years of development history, and Gitcoin's second-round financing has only been around for two years. We look forward to it continuing to play its role in the future, even being widely applied, and hope that over time, its potential incubation value can surpass Ethereum itself.