Tl;dr: Protocol Labs, the team behind IPFS and Filecoin, are working on impact markets.
Impact certificates have been a recurring theme in our conference series Funding the Commons and Gitcoin’s Schelling Point conferences. A few people have discussed them previously; you can find some further resources at the end of this post. Here we offer our current take on impact certificates, and on some possibilities of how, “hypercerts,” our proposed new primitive for public goods funding more generally, might be utilized.
Impact certificates are often said to enable retroactive public goods funding. Let’s start with a real-world example of why this kind of retroactive funding is useful.
The core idea, from the perspective of an entrepreneur building public goods, is this: If you can reasonably expect to get funded retroactively for your work once you produce a positive impact, then you can work now, in expectation of a probabilistic future cash flow. In another conception, you are effectively “borrowing” money from this anticipated future cash flow to fund the work in the first place; the expectation of future funding “retro-causes” the impactful work. Retroactive funding may be able to 1) provide incentives for creators to take on public goods projects with a potentially high, but uncertain, impact and 2) create a more efficient market by back-propagating signals on what outcomes were impactful post-hoc.
Hypercerts, as introduced by David Dalrymple at Funding the Commons, is an interoperable data layer for impact-funding mechanisms. Each hypercert is an impact claim described by (1) the scope of work that has been (or will be) performed in a given time period by a set of specified contributors and (2) the scope of impact that this work has had (or will have) in another given time period. In addition, a hypercert has the potential to declare which rights the owner of the hypercert has, e.g. the right to publicly display the hypercert.
Individuals or organizations could create hypercerts of their work and sell all or some of them to funders, or award them commemoratively, in recognition of the funding provided. When, if or how hypercerts are sold or awarded isn’t prescribed. Hypercerts open possibilities for creators of public goods to sell or award commemoratively some prospectively and others retrospectively. Hypercerts can be sold or awarded privately to a funder or as part of a public auction. Funders can outsource the funding decision to an expert panel or to a public poll via quadratic voting. These are just a few possibilities – hypercerts are agnostic about these mechanisms, and hence facilitate experimentation with them. This is the way in which hypercerts are a new primitive for public goods funding: They define the funding objects that claim to cause positive impact and make it possible to own and transfer this impact, including in new, innovative and diverse ways. All hypercerts together comprise a data layer for public goods funding.
Now let’s return to the central question, why funders might want to buy impact retrospectively. An advantage to retrospectively buying impact is that lots of uncertainty about projects and their impact is resolved. Hence, retrospective funders can, with less effort and costs, choose more impactful projects to fund.
The motivation to do this retrospectively is based on prestige, prior commitment and/or an understanding of the effectiveness of the whole system.
We want to build the foundations for hypercerts and support 3+ impact economies in the next 12 months. If you want to contribute to these efforts, either by building the infrastructure with us, by funding through hypercerts, or by evaluating hypercerts, please reach out to us at email@example.com. Our team is also actively looking for software engineers and a product manager.