Incentivize open source: Sharing innovative ideas globally

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  Quantumrun Foresight
• January 11, 2022

Insight summary

Open-source development has shaped the digital landscape by allowing public access to and modification of software code. Its significance has grown with the rise of decentralized finance (DeFi) and cryptocurrencies, but the shortage of professional developers in DeFi poses a challenge. Despite this, new DeFi smart contracts attract substantial investments, highlighting the need for scrutiny and best practices. 

Context around incentivizing open-source development

The concept of open-source development has been a cornerstone of the digital world, predating the creation of well-known entities, such as Linux, Firefox, or Bitcoin. This approach to software development, where the source code is publicly accessible and can be modified or enhanced by anyone, has been instrumental in shaping the digital landscape. Key components of our daily digital interactions, including internet browsers, operating systems, and code libraries, are often the product of open-source development. The consensus is that these fundamental elements should not be under the exclusive control of a single entity, which helps to prevent potential misuse, such as charging excessive fees for usage, denying access to certain users, or other forms of exploitation.

The importance of open-source programming has grown exponentially during the 2010s and into the 2020s, particularly with the emergence of cryptocurrencies and decentralized finance, often referred to as DeFi. This financial ecosystem, built on blockchain technologies, operates without a central authority, instead relying on smart contracts and protocols that are open to public scrutiny. However, the DeFi sector faces a significant challenge: there is a shortage of professional developers. This scarcity has led to a situation where many new DeFi systems are launched by small, untested teams, akin to startups operating out of a garage.

Despite the lack of rigorous inspection and the relative inexperience of many DeFi teams, new DeFi smart contracts often attract substantial investments. These contracts can quickly gain millions of dollars in locked value, a term used to describe the total amount of assets currently being held within a DeFi protocol. While it demonstrates the potential of DeFi and the trust that investors place in these systems, it also underscores the need for greater scrutiny and the development of best practices to ensure the stability and security of these emerging financial systems.

Disruptive impact

Several companies and organizations are experimenting with novel approaches to collaborating with the open-source community. For example, Radix (a leading DiFi platform) unveiled its developer royalty program, which encourages professional open-source work inside the Radix ecosystem. When a programmer adds a feature to the Radix component catalog, they may specify a royalty charged automatically anytime the component is used.

Similar to gas taxes, these royalties are collected automatically on each transaction that employs the feature. This feature unlocks the open-source development power of a free market economy. Coders will likely be rewarded for creating value and well-functioning pieces since utilizing the details boost their earnings. This incentivizes the developer to build more useful features or construct more complex parts, which leads to an influx of higher royalties.

Similarly, Gitcoin is an easy method to donate and finance open-source projects. Radix's developer royalties' scheme, along with Gitcoin, offers a self-incentivizing market economy for adaptable components, allowing for the continuous support of professional open-source development. New coders may be encouraged to enter such marketplaces and supply their code in exchange for a subscription income, potentially helping the open-source industry to further innovate and flourish. 

Implications of incentivizing open-source development

Wider implications of incentivizing open-source development may include:

• More developers engaging in with code marketplaces, supplying increasingly effective and practical open-source code that provide them with an income if said code becomes popularized. 


• Helping nonprofit organizations and web platforms to continuously maintain and enhance their online offerings


• Helping new developers find a suitable point of entry into the market, causing an influx of new and innovative ideas, and allowing organizations to have an increased variety of open-source code to choose from when working on a project. 


• Governments recognizing the value of open-source development, prioritizing policies and initiatives that support and promote open-source technologies.


• Providing access to affordable technology solutions, enabling underprivileged communities and developing regions to benefit from technological advancements.


• Rapid innovation and continuous improvement, leading to the development of robust, reliable, and secure software solutions that benefit users across various industries.


• The creation of sustainable and eco-friendly technologies through the sharing of energy-efficient algorithms, recycling of code, and development of green solutions that minimize environmental impact.


• Security vulnerabilities and risks requiring the establishment of security standards and protocols to mitigate potential threats.

Questions to consider

• How can the open-source community improve its reputation and transparency? 


• How can the open-source community better measure the effectiveness of open-source code?