The Rise of Crypto's Brand of Regenerative Finance
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When society broke down, the people stepped up. This is what Manuel Alzuru observed in 2020, during the depths of Covid, when he moved to Barcelona. He had just caught Covid. “And there was no help,” Alzuru says now. “All of the hospitals and clinics had completely collapsed.”
Then Alzuru noticed something in his building. Something surprising. Something even wonderful. People had put sticky notes on the front door of the apartment building that said things like, “The neighbor on the fifth floor needs medicine,” or “The neighbor on the third floor needs food.” Alzuru saw similar notes on other buildings. He realized that the government might have failed, but the neighbors rallied to do the right thing.
Alzuru loved the spirit of this generosity, but he was surprised there wasn’t a more structured system to coordinate the aid. “It was kind of crazy that there are applications for showing your ass and showing your muscles [like dating apps], but there’s no applications for helping each other out.”
So he created FightPandemics, an online portal to connect the people who needed help with those who wanted to give. Then he took the idea one step further. Alzuru had already dabbled in Web3 (contributing to a few early decentralized autonomous organizations, or DAOs), so he launched a project called DoinGud, which began as an NFT marketplace that used proceeds to fund charitable causes. It’s now an ecosystem intended to fund worthy causes.
“The idea is that we come together from all over the world, and that we start to decide what is creating impact,” says Alzuru, with cheerful energy in his voice. “Instead of relying on governments, we come together and we self-organize.”
DoinGud is one of the growing number of “Regenerative Finance” projects, or “ReFi,” which can be loosely thought of as a counter to “Degen” culture, as in degenerative gambling. The Degens care about making money on crypto, the Regens care about doing good. Imagine stripping Web3 of its price speculation looking only at the social impact.
“I think of regenerative finance as a system that increases its resource capacity over time,” says Kevin Owocki, a software engineer and one of the leading voices of ReFi. Owocki is the co-founder of GitCoin (which uses crypto to fund open-sourced projects) and the author of the book “Greenpilled: How Crypto Can Regenerate the World,” which is something of a Regenerative Finance manifesto.
For Owocki, ReFi is a way to replenish the “public goods,” and that can take many forms. “We don’t just want to regenerate our wallets,” he says. “We want to regenerate our material capital, our cultural capital, our intellectual capital, our spiritual capital.”
The scope of ReFi is still a little fuzzy and up for debate. “I don’t think it’s something that’s super well-defined,” says Paul J. Dylan-Ennis, a professor at the University College Dublin who studies cryptocurrencies and has written about Regenerative Finance. He describes your typical “Regen” as an Ethereum enthusiast who’s “trying to build infrastructure that’s long-lasting,” and often focused on “climate-friendly-type projects.” (Although both Owocki and Alzuru are quick to clarify that the scope of ReFi is broader than the environment and sustainability.)
See also: From Degen to Regen: How Web3 Started Playing Positive-Sum Games / Opinion
The “Greenpilled” book includes prefaces and endorsements from heavy-hitters like Vitalik Buterin, Glen Weyl (of RadicalXChange, a nonprofit organization that advocates for political and economic reform) and the “Network State’s” Balaji Srinivasan, who (in the book) gives this encapsulation of Regenerative cryptoeconomics: “Like renewable energy of the nuclear variety, it helps make crypto sustainable. It’s not zero-sum gambling, or negative-sum hacking. It’s positive-sum wealth creation.”
These are a lot of abstract theories. What does it look like in reality? Arguably the most consequential ReFi project to date is Gitcoin, launched in 2017 (it predates the term ReFi), which claims to have funded $72 million across over 3,000 open source projects. Some of these were tiny seed projects that grew into juggernauts like UniSwap and Yearn.
Then there’s the Regen Network, a blockchain-imbued marketplace that does things like tokenize carbon credits. Or Giveth, which describes itself as “the future of giving,” and lets people donate crypto to projects such as experiments with universal basic income, giving school supplies to children and “relocating Web3 Iranians.”
This is just a small sampling. TheReFiDAO shares more examples in a recent blog post (which cheerfully framed 2022 as “The Year of Regenerative Finance”) and Owocki highlights others in a recent essay for CoinDesk, expecting 2023 to be the year of “regenerative cryptoeconomics.”
Regen weaves in the concepts of quadratic funding (developed in part by Glen Weyl and Vitalik Buterin as a more effective way to determine what projects should be prioritized), the Network State (you can read my recent deep-dive) and a bit of wide-eyed optimism. Consider the “Solar Punks.”
Manuel Alzuru is a Solar Punk. He describes it as a form of technological optimism. “I suffer a lot from my government. But I don’t want to be a victim. I don’t want to live in fear. I choose to not live in fear. I choose to live in love. And a lot of people who call themselves Solar Punks had similar values.”
You know those renderings of futuristic cities that have flying cars and lush greenery all over the buildings? That’s Solar Punk. Then Alzuru throws me a curveball: “To be honest, I don’t like the label anymore,” he says, because of a quasi-rivalry with the “Lunar Punks.” (Dylan-Ennis wrote a CoinDesk explainer on the Solarpunk/Lunarpunk distinction, and Owocki breaks it down in detail on his GreenPill podcast.)
But even the optimistic Alzuru acknowledges that ReFi has been hurt by crypto winter. During the bear market, “funding has been terrible for regenerative projects. Terrible,” says Alzuru. He says that the treasuries of many ReFi projects have slimmed, that DoinGud has been forced to trim its team and that “We’re basically all just trying to survive this bear market.”
Owocki agrees that funding has slowed but thinks of crypto winter as the “culling of the herd,” or even a form of natural selection, with projects that survive likely to become the “keystone species” moving forward. In other words, donors are “being more choosey,” he says.
See also: Crypto for Good: How to Donate Crypto and Who Accepts It / Learn
Dylan-Ennis even considers the bear market as a blessing for ReFi. “Crypto winter works in its favor,” he says. “It sharpens their message that we’ll be trapped in these four-year cycles [of price booms and busts] forever unless we can break the culture, and that’s going to involve introducing some sort of philosophy.”
Now that philosophy seems to be gaining traction. “The movement is going to keep growing, for sure,” says Alzuru, who still thinks of those sticky notes from people who wanted to help. “A social awakening is happening. This is the very beginning.”