Go forth and build something that matters

For much of human history, effectively funding public goods has been a difficult problem with no clear solution. Flows presents a novel mechanism to effectively deploy capital to grassroots projects at scale.

No one has yet cracked how to move money online to the people who’ll use it best—whether in crypto or anywhere else. Judging quality of impact and honesty of the people involved is no easy task. Our hunch is a system that gives rise to effective capital allocation should emerge naturally from incentivizes, not from top-down central management or strict structure. Our main hypotheses for Flows is work that helps accurately allocate funds should be rewarded. People that verify impact and effectively allocate capital should have a natural incentive to do so, and their success should encourage more capital input and upside for them.

Today

Most crypto funding schemes ask too much of voters. As the pool of projects grows, so does the time it takes to check each one. Voters can’t keep up, so funders fall back on a handful of big, one‑off grants picked by small committees on a fixed schedule. DAOs run into the same wall. Their voters only have so much attention; in a good year they might fund a few hundred projects, and that’s it.

It is currently impossible to fund 100,000 quality projects.

Our hypothesis is that this unlock - funding millions of people around the world to make positive local impact - is the killer use case crypto needs to bring a billion people onchain. Flows positions crypto as a force for good in every local community it touches. So - how exactly does Flows fund public goods with a level of accuracy, fairness and open entry that at least approximates how markets fund private goods?

How it works

Flows steals Bitcoin’s main trick: pay people to protect the network. The value that protection creates is worth more than the cost of verifying. The work in this case is not hash functions, but verifying projects and impact. The unit is not hash power, but intelligence, the cost of which we expect to continue falling. Flows creates a system where the only economically viable thing to do is participate honestly and deliver. Instead of an electronic cash network that verifies payments like Bitcoin, Flows is a capital allocation network that verifies real world impact.

TCRs

Put simply, a flow is a Superfluid pool that streams money to projects on a Token Curated Registry. Funds come in, and every second a little flows out to whoever made the list. The real puzzle is choosing who gets on that list.

Take the Beach Cleaning flow as an example. It runs on a Token Curated Registry (TCR)—a token plus a pay‑to‑enter list. A team that wants funding pays the application fee in the Beach Cleaning token and joins the list. Token holders then vet every applicant.

Why would token holders bother to vet applicants? The list is the flow’s report card: the better its projects, the more outside funding the flow wins. TCR token holders earn a slice of that budget, so their income rises only when the list stays top‑notch. In short, curate high‑quality projects, get paid more; slack off, the flow—and their rewards—shrink.

Streaming funds

Approving good projects is only half the job; we also have to watch their impact as it happens. Traditional grants pay a lump sum amount either after the work (hard for new teams) or before it (easy for them to disappear). Flows solves this with Superfluid: money streams every second, like a live meter. Builders can withdraw from the stream whenever they want—so long as they keep shipping what they promised.

Streaming money cuts risk. Flows drips small amounts up front, and builders have to keep shipping to keep the flow alive. The mechanism meshes beautifully with the TCR: each flow lists clear rules, and curators can challenge any project that slips. Fail the test, you’re off the list and the stream shuts off immediately.

Our builders

For builders, the process is smooth. Send a short application with a small fee—you get the fee back if you’re accepted. Once approved, post your progress on Farcaster instead of filling out long reports. Those public updates, plus verified summaries on the Flows site, show curators who’s shipping and who’s stalling.

Flows to the future

The result is a self‑correcting system that keeps the funding bar high. We’ve paid out nearly $200k to over 250 projects, and the rug rate is less than 10%. The impact per dollar is also much higher for small grants vs. large. Many folks just need a bit of money to cover fixed costs and build what they’re already passionate about.

We recognize we will need to make adjustments as Flows takes in more capital. It’s no small feat that with our current setup it already pays more to be an honest builder, and our hunch is that with the right tweaks the system will get more secure with scale, just like Bitcoin. One thing top of mind for us: we need a stronger incentive flywheel for verifying impact, as we currently default trust builders. We are also exploring more mechanisms like revnets to encourage more capital input into Flows.

We have a long way to go before Flows is accurate enough to deploy billions of dollars in capital. We must continuously improve the incentive game, curation tools, and ultimately work to help projects become sustainable.

That being said, the impact we’ve seen all around the world so far is a sight to behold.

Fund a flow, change the world.

- rocketman and riderway

Ensuring capital is effectively allocated to people making real impact is a largely unsolved problem in decentralized systems and more broadly in the world. Verifying quality of impact and genuineness of the people involved is no easy task. A main hypotheses for this streaming grants program is work that helps accurately allocate funding and verify impact should be rewarded. A system that gives rise to effective capital allocation should emerge naturally from incentivizes, not from top-down central management or strict structure. People that verify impact and effectively allocate capital should have a natural incentive to do so, and their success should encourage more capital input and upside for them.

By pairing a streaming money protocol with TCRs, we believe we can come closer to an ideal method of capital allocation that maximizes impact in the world.

Beach cleaning

Assume a stream of $1,000 per month is sent in per-second increments to a list of people that regularly clean up trash on beaches. Nouns DAO pays to make this happen, and anyone in the world can apply to receive funding to do cleanups. Nouns holders help decide how the $1,000 is split to the list of approved recipients.

How do we build a list of funds recipients in a decentralized manner that is resistant to capture, and ensures money flows to the most impactful beach cleaners while also accounting for the preferences of Nouns holders?

Assume we set up a TCR, with a token called $beach. 10% of the $1,000 per month is paid proportionally to $beach holders. In order to submit an application to receive funding, you must buy and post a bond in $beach. Once you’re on the list, you get paid every second. When you are removed from the list, your stream of funding stops.

There are 3 user types, consumers (Nouns holders), candidates (beach cleaners), and token holders (list curators).

Nouns holders (consumers)

Nouns holders desire that the $1,000 is spent maximizing the outcome of clean beaches where it matters most to them. Said another way, holders desire that the highest quality list of beach cleaners are paid. Holders might also want to express their relative preference over the list to help decide how the money is split.

Beach cleaners (candidates)

People cleaning beaches around the world would like to be funded for their efforts. They desire to be included in the list of approved recipients, so that they can be paid to to make impact.

Token holders (curators)

Token holders of $beach desire to increase the price of their tokens, and to receive their share of the 10% split of the beach cleaning budget. In order to do this, they must curate a high quality list of beach cleaners. If Nouns holders judge that their $1,000 is being spent effectively, money will continue to be streamed, and the demand for $beach will remain high and holders will continue to receive their rewards.

Incentives

To paraphrase the original TCR doc in this new paradigm, to keep both demand and rewards for $beach holders high, $beach holders must keep cleaners desirous of having listings in the registry by maintaining DAO interest in funding the registry by keeping the quality of recipients high. Stated in reverse, if the quality of funds recipients are high, then the DAO will be interested in funding the registry such that beach cleaners will desire to be listed in the registry for funding.

Token holders realize a direct financial benefit for curating the list in an expert manner, and the degree of their benefit increases proportionally to the quality of their curation as consumer (Nouns DAO) and candidate (beach cleaner) interest rise in lockstep.

- Mike Goldin

Problems

Real world impact in different areas and the work required to make impact can be measured in many ways. So the verification and funding of this work must be open to new strategies and means of authentication, and the incentives must line up to output effective capital allocation.

After running an MVP of this streaming grants program in Vrbs, we’ve identified and highlight some problems below that this v1 aims to solve.

Zero Sum

With a fixed budget of $1,000 to stream, each new beach cleaner dilutes funding for existing recipients.

Need minimum amount of funding to make impact

Many folks might be able to make real impact cleaning a beach for $100 a month, but maybe not for $5 a month.

Complex decision for curators

In a traditional TCR, curators only have to decide whether a candidate should be on the list or not. In streaming grants, there is now another axes to evaluate: what proportion of the stream does this recipient deserve compared to others? Is the proportion they’re receiving allocating funding most effectively? Additionally, this proportion should reflect at least in part the preferences of Nouns holders.

New builders don’t receive funding

In the current implementation, even if your application is approved, you start out with no funding unless you can find someone to vote for you. This requires a lot of up-front effort for the beach cleaner.

There are many of people around the world interested in receiving money to clean beaches. With a fixed budget, the salary for each cleaner will trend to zero as more people are accepted to the list. To solve this, we propose that each budget has a maxRecipients and funding is split evenly between each recipient to start. This creates a cap on the number of possible recipients for the beach cleaning list, and fosters competition between applicants. Additionally, new builders will know that they can receive a minimum amount of funding if they are accepted, and can decide to apply or not based on that information. They also don’t have to campaign heavily for votes to get paid.

maxRecipients also reduces decision complexity for list curators. Instead of having to decide both whether a beach cleaner deserves money and also constantly evaluate whether the relative work they do is worth the money they’re getting, token holders just need to decide whether the current candidate or recipient is worthy of being in the streaming funding list of length maxRecipients.

Meritocracy

We want to reward people who are building above and beyond to be rewarded.

We plan to introduce a secondary “bonus” stream on top of the baseline salary that Nouns holders can vote to change. This will encourage existing stream recipients to compete to earn more. For the scope of the MVP, we will limit Nouns holder voting to the top level budgets for now.

Conclusion

We believe we are zeroing in on a powerful capital allocation primitive driven by new advances in money streaming, low txn fees on L2s, and TCRs. We plan to build in public and share updates on design decisions, problems, and proposed solutions as we build out a production grade system for Nouns DAO over the next 4 months.

Stay tuned for the next article in our streaming grants series. We plan to continue building in public to get feedback as we prepare for the protocol audit in early October.

Further Reading

https://docs.google.com/document/d/1BWWC__-Kmso9b7yCI_R7ysoGFIT9D_sfjH3axQsmB6E/edit

https://www.nouns.camp/proposals/582

What is Nouns?

Nouns is a protocol for spreading nounish culture. In Nouns, 1 membership (a Noun) is auctioned off every day, forever. 100% of sale proceeds go into a shared treasury, and owning a Noun gets you a vote on how to spend the treasury. The Nouns treasury funds public good, art, open source software, and more. Nouns has the most vibrant and well-intentioned community I’ve seen in more than a decade in crypto.

Nouns has been able to focus the otherwise degenerative speculative energy of crypto into more productive means for the common good. For example, my friend Davin was recently funded $250k to rebuild a community school in his hometown of Kiyanga, Uganda.

Anyone can build on Nouns, the brand is in the public domain. This has led to a Cambrian explosion of entrepreneurial, philanthropic, artistic, and otherwise massive creative energy on top of the Nouns brand ( ⌐◨-◨ ). Instead of competing for attention and creating in single player mode, you can build together with a community and get funded to do it.

⌐◨-◨ is a rallying cry onchain. Calling everyone to build a better world, together.

Why did we build Vrbs?

Our only gripe with the Nouns protocol, for all it got right, is that most people building the movement do not have a vote. And grassroots movements should be owned by the people.

In Nouns, the daily auction is a fantastic onboarding mechanism. But the auctions are expensive and exclusionary by nature, with only one new member onboarded every day. There are thousands of artists, creatives, builders, developers, and people building on Nouns. Only a small fraction of them have a vote.

That’s not to say Nouns holders are not contributing their time and energy to Nouns. Our only contention is that voting power is not accessible for most people.

Vrbs makes it possible for anyone to earn a vote for their efforts.

How does Vrbs work?

At a high level, Vrbs is a fork of Nouns. One Vrb is auctioned off every day, forever. Proceeds fund a shared treasury. Vrbs takes the meme machine pioneered by Nouns and adds more accessible incentive mechanisms. That way, more people can own votes.

The first major difference is the art. Anyone can create the next Vrb.

Vrbs are original art pieces. Artists create and upload art on vrbs.build. Art pieces are fully onchain SVGs.

The community picks their favorite art, and the top voted piece is auctioned off as the next Vrb to the highest bidder.

The artist behind each Vrb earns 20% of the auction proceeds in ETH and voting power.

Artists from all around the world create Vrbs and earn votes in the Vrbs movement.

Why is this important?

Anyone contributing time and energy to Vrbs has an avenue to grow their say in the movement.

Through the daily auction, a new member and artist get votes in Vrbs. Artists are able to do what they do best, and earn votes in the process.

This is just the tip of the iceberg. Imagine you build a business on the Vrbs brand. Split revenue with Vrbs, earn votes, and incentivize consumers who can earn votes for their purchases as well.

Anyone who builds on Vrbs now has an accessible entrypoint to earn a vote. As the movement scales, all new members can get votes and start growing their stake in Vrbs.

Vrbs is a grassroots onchain movement, owned by the people building it.

How does it work?

One Vrb is sold every day to the highest bidder. Each Vrb is 1000 votes in Vrbs DAO.

In addition, 1000 Vrb Votes, an ERC20 token, are sold on average each day by a continuous VRGDA.

The VRGDA is where the real magic happens. It works by targeting an issuance of tokens over time (1000 a day), and adjusting the price of each token depending on the difference between the current and scheduled supply of tokens.

This means anyone can send any amount of money to the VRGDA contract at any time, and receive Vrb Votes in the process. Funds spent to buy votes go directly to the Vrbs treasury.

You can start a merch shop or work with your favorite charity to split money raised with the Vrbs treasury. There’s a direct incentive to do so.

Anyone can earn votes for their efforts.

What can Vrbs do?

Our potential is massive. Nouns has raised over $100m and funded thousands of people millions of dollars to spread positivity and build public good in the world.

Vrbs builds on Nouns in a way that can bring ⌐◨-◨ to the masses. With Vrbs, there is now a direct incentive to grow our shared treasury. Anyone can earn votes in Vrbs by helping to spread nounish culture.

Like Nouns, Vrbs should be bold with spending the treasury. We should dare greatly and empower people to uplift their communities to build a positive future we can all be excited about.

New apps, giving platforms, storefronts, services, IRL events, products and more can all be built on the Vrbs brand. By splitting money with the treasury to earn votes, every transaction in the Vrbs ecosystem can be a force for good.

With these new incentives, everything you purchase or give your energy to can grow treasury and earn you voting power in the movement. The power of this public goods flywheel cannot be understated, and we are excited to see what people will build with it.

What’s next?

To paraphrase owocki - the rise of smart contracts means we can now program our values into money. We have a revolutionary opportunity to design new incentive mechanisms to help people coordinate towards positive ends that benefit humanity as a whole, not just corporate shareholders.

The Vrbs purpose, taken largely from 4156’s answer to “What does it mean to be nounish”, calls us to reorient our collective consciousness to a culture that rewards positive impact and public good.

The building blocks we have put in place with Vrbs open up a massive new design space for experimentation and innovation in line with these ideals.

We need to build tools that help us direct our time and energy towards the common good. Help people come together with friends to uplift their local communities. Steward public spaces in a time when legacy institutions are failing us. Create positive externalities that regenerate the world and the lives of everyone in it.

Ultimately, help people envision the positive future that is within reach, if only we can come together to build it.

With ⌐◨-◨ and ▀▄▀,

- the Vrbs Architects

How can you help?

Have an idea for a product or service or business want to build with Vrbs? Create a splits contract and earn votes.

Want to join the community, support incredible artists, and own a piece of history? Bid on the next Vrb.

Want to get funded for an idea you’ve always wanted to build that makes the world a better place? Make a proposal to get funded.

Want to help create Vrbs culture onchain? Fire up a pixel art editor and create the next Vrb.

Not sure where to start? Visit the build page to view current goals in Vrbs, or participate in contests to build with the community.

The onchain revolution is here, we can’t waste this historic opportunity to reorient the world in a positive direction, both for ourselves and for posterity.

⌐◨-◨