Hypercerts: Issuing Equity Certificates for Public Goods.
#568
GM,
This week, I returned to my hometown in Tainan and didn't bring my dedicated recording microphone. So, this episode's audio content is produced using the built-in microphone of my laptop, which may have lower audio quality. I apologize if you're used to listening to high-quality audio. I'll be back in Taipei over the weekend, and I'll re-record and replace the content of this episode. Let's get to the main topic.
This article is about issuing a digital certificate - Hypercerts - to participants in Gitcoin Grants 18. This certificate allows you to record your contributions to Blocktrend on the blockchain. If you have participated in Gitcoin Grants 18 and made donations to Blocktrend, please click the link below to claim your exclusive digital certificate.
Blocktrend introduced the concept of Hypercerts earlier this year and issued a Hypercert to participants in Gitcoin Grants Beta Round back in May. Today, we are issuing Blocktrend's second Hypercert. Through two rounds of practical experience, I have gained a deeper understanding of Hypercerts. I can now describe Hypercerts as equity certificates for public goods. In this article, we will take the fresh example of the Gitcoin Grants 18 Hypercert to explain its significance, applications, and how I plan to apply this mechanism to Blocktrend's content creation in the future.
Certificate Issuance
In the image below, you will find two certificates: the ones on the left represent the certificates to be distributed this time, while those on the right have already been claimed by some individuals in the previous round. These certificates are essentially a form of NFT (Non-Fungible Token) and adhere to the Ethereum ERC-1155 standard. Think of these certificates as digital counterparts to traditional event tickets or company stocks – each one carries the same significance, with no distinguishing serial numbers or order.
The information contained in this digital certificate is identical to that of the paper certificate and can be broadly divided into four main sections:
Issuer
Purpose of issuance, such as recognition of contributions and event participation
time and stamp
proportions and holders
The logo and background image in the top left corner of the certificate represent the issuer's identity. During this certificate issuance, the system failed to retrieve the background image I uploaded, resulting in a plain light blue certificate. In the future, I will design unique backgrounds for each certificate, providing a visually diverse experience when viewed in your wallet.
The recognition of contributions, as described in the text in the center of the certificate, verifies that you are a donor to Blocktrend in Gitcoin Grants 18. This is more specific than the previous certificate title, which only mentioned "Blocktrend." The lower part of the image includes details of the timing and markings. For example, the Gitcoin Grants 18 event occurred in late August, and the markings function as hashtags for easy categorization and future reference.
One crucial piece of information not displayed on the certificate is the proportion and holders. Each donor contributed varying amounts to Blocktrend in Gitcoin Grants 18. As long as the donation exceeded $1, they qualify for receiving the digital certificate. The higher the donation amount, the greater the proportion of certificates they hold. This design closely resembles corporate stock certificates.
Stock Certificates
Media outlets often enjoy comparing the "salary love" of CEOs of multinational companies. Recent reports have pointed out that Apple's Tim Cook isn't the highest-earning CEO globally. This naturally raises curiosity about which CEO's salary is more generous. However, delving into the articles reveals that the key isn't the level of salary. For such vital executive positions in multinational companies, the monthly salary is just a small part of their compensation. The real earnings come from company bonuses and stock options. This is done to align the CEO's income with the company's performance.
This is a form of "retrospective performance recognition" reward mechanism. The better the company performs, the higher the CEO's income. The digital certificates also incorporate this design and apply it in the public goods sector. According to the description by the Hypercerts Foundation:
Although Hypercerts certificate does not mandate any specific funding mechanism, its application in a retrospective performance recognition reward mechanism yields particularly notable results. From the contributor's perspective, if you can reasonably anticipate that your work will generate a positive impact in the future, you stand to receive a retroactive award. This means that you can start your work now and anticipate potential future income. In essence, you are "borrowing" from the future to support your present work. You can expect that in the future, there will be an income stream that retroactively recognizes the impact your current work has produced. This approach encourages contributors to engage in high-uncertainty projects with the potential for significant impact and creates a more effective impact reward system through the mechanism of retroactively recognizing influence.
In essence, Hypercerts aren't a groundbreaking invention. It's essentially taking the concept of a company's stock reward mechanism and applying it to the public goods sector, but that, in itself, is a significant innovation.
In the past, investing in public goods was primarily the government's responsibility. Private enterprises were accountable to their shareholders, and donations to public goods were often made for tax benefits or to enhance their image. After all, money contributed to public goods was essentially a one-way expense and was challenging to measure in terms of benefiting shareholders.
However, in a previous Blocktrend Podcast episode, Professor Zheng Yi from the Department of Finance at Sun Yat-sen University discussed the concept of "impact investing," which transforms contributions to public goods into a profitable investment. Although it may initially seem like an expenditure of labor and money, it could generate income or even profits in the future.
A well-known example of this is Blocktrend's airdrop of OP tokens to all paying members in May. This represents a form of impact investing income.
Blocktrend's members make monthly payments to unlock articles, but Blocktrend's podcast interviews are available for free. In other words, the more content is made public, the less incentive there is for paid subscriptions. To encourage everyone to subscribe, Blocktrend might have to lock up all content, a model I refer to as "punishing non-subscribers."
However, the logic of impact investing is quite the opposite. I call it "rewarding subscribers." This is precisely what Blocktrend, Optimism, and the Hypercerts Foundation aim to achieve. In other words, a member's monthly subscription payment is not just an expense but also an impact investment. If Blocktrend's output is recognized by the Optimism community, the member can receive a reward in the form of OP tokens, which I will distribute to paying subscribers.
One of our members previously received a reward of OP tokens worth 1,500 TWD, a significant bonus. This time, Optimism allocated a budget three times larger than last time. Assuming all other conditions remain the same, this member could receive a reward of 4,500 TWD worth of OP tokens. This is nearly two years' worth of subscription fees, and the additional funds essentially represent an investment return for this member.
Currently, Blocktrend determines the distribution of OP tokens based on the total amount paid by subscribers, with data recorded in Blocktrend's website backend. Hypercerts, on the other hand, use NFTs to record everyone's contributions to public goods, with data recorded on the blockchain. The latter is a more transparent database, making it easier for third parties to distribute retroactive rewards based on public data.
It's easy to imagine that when the mechanism becomes more mature, Blocktrend can automatically issue Hypercerts to each paying subscriber and record their contributions on the blockchain. When Blocktrend decides to airdrop OP tokens to its members, it can distribute the corresponding airdrop quantity based on each member's Super Certificate proportion. This is the purpose of Hypercerts. Although, in the short term, it might seem like just an NFT of unknown value, it could bring pleasant surprises in the future.
Application Scenarios
Returning to the Hypercerts for Gitcoin Grants 18, the reason I asked everyone to remember to claim them is that I plan to include them in your contribution value to Blocktrend when I distribute the OP airdrop in early 2024. The higher your contribution value to Blocktrend, the more OP tokens you'll receive at that time.
In addition, Blocktrend will also apply Hypercerts to podcast production. In the past, the most significant dilemma when inviting guests to record episodes was whether or not to provide an honorarium. This was not only my concern but can be considered a common question for almost every podcaster. Everyone felt that offering a 500 TWD (New Taiwan Dollar) honorarium was considered polite, and not providing one was impolite 😅.
Therefore, I will introduce Hypercerts as the honorarium for podcast guests. Each guest will receive a Super Certificate and can expect to earn income from it in the future. Blocktrend will allocate a certain proportion of funds from Gitcoin Grants each quarter as the honorarium for guests. From the results, this binds the output and income of public goods together. The honorarium income received by podcast guests will be positively correlated with the amount of funds Blocktrend receives in Gitcoin Grants.
On one hand, this is about establishing a business model for public goods, and on the other hand, it's about encouraging podcast guests to stand with Blocktrend and assist in promoting "get-out-the-vote" efforts during each quarterly Gitcoin Grants campaign. If Blocktrend offers a 500 TWD honorarium, it might be seen as treating the guests as labor. However, if we provide guests with a Hypercerts, it elevates the significance. Guests become like content partners of Blocktrend, and our income and impact become mutually intertwined!
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