Monetizing Open Source on the Ethereum Blockchain

June 03, 2017

It is well known that open source software (OSS) is incredibly difficult to make financially lucrative for developers. Despite the number of talented individuals building open source tools, the lack of incentive to continue building and maintenance beyond project launch, often leaves high quality repositories abandoned or orphaned to other developers. While there have been wonderful initiatives such as Gratipay to keep OSS projects funded, there are clear limitations to funding based on a donation type approach versus a traditional capitalistic model. However, with the advancements in decentralized technology such as Ethereum, a future of economical OSS may be closer than previously thought.

Ethereum provides a decentralized platform for developing self executing smart contracts, enabling applications such as prediction markets, decentralized governance, escrow services, and much more. One extremely valueable feature in the Ethereum ecosystem is the ability to issue tokens via smart contracts, providing the unique opportunity to develop synthetic assets and subcurrency economies. In general, tokens represent any fungible tradible good such as coins, loyalty points, gold certificates, in game items and more. Interestingly, the idea of a token is not foreign to traditional web or OSS community. For example GitHub’s repository stars roughly measure how useful developers within the GitHub community percieve a project to be. Yet, a large drawback of this system is that stars provide little more than vanity metrics for developers rather than a direct linkage to a financial assets or other incentive.

Perhaps Ethereum provides a solution for enabling developers to monetize their OSS projects through the formation of a decentralized organizations (DO) that issues tokens, owns and manages intellectual property on the blockchain. For example, consider the creation of a developer reputation token, call it CRED that represents a developer’s compentency and contribution within the DO while still having liquidity in ether currency. By providing a token representing reputation as well as financial investment, developers in the ecosystem can quantitatively measure and build their reputation while still having the opportunity to be financially rewarded for their efforts.

The financial and reputation value within the CRED token creates a two opposing incentives for would be participants in the DO. On one hand, the financial value gives engineers and developers positive incentive to participate and exchange IP with the DO, in hopes of creating future returns for their immediate term exchange. At the same time, the token’s additional dimension in representing reputation and contribution to the open source community creates negative pressure against liquidating the asset, as higher reputation increases vote weighting and a developer’s branding.