Inside BrightID’s Funding Model

Sustainable Funding for a Public Commons Project

The Journey

It has taken us a long time to settle on an appropriate funding model for BrightID. BrightID is unlike many other startups: It is a social identity platform, which is a public good, and is consequently unsuitable for most traditional business models. We hope to explain here how we arrived at selling sponsorships in order to fund BrightID long-term.

At first, BrightID was supported entirely by grants, donations, and volunteer work. Organizations such as Giveth and Aragon were early funders, and countless people volunteered considerable time and energy to get us off the ground. It quickly became apparent, however, that we needed a more sustainable solution.

It was crucial that BrightID always remain free for its users, so our first funding idea was to create a for-profit consulting business targeted to apps integrating BrightID; this business could then dedicate a portion of its profits to BrightID. It didn’t seem right, though, to have only one organization paying to support BrightID—what if such an organization went away or stopped caring about BrightID? Besides, the investor-owner model seemed distasteful to a project that absolutely needed to remain open for anyone to use.

If we wanted support from a variety of businesses, though, we had to contend with the free-rider problem: apps wanting to use BrightID, but none preferring to pay to support it if some other business might do so (particularly if that other business was a competitor).

We needed a way to allow businesses to provide monetary support to BrightID and gain an advantage in doing so, but not a controlling role.

There’s another key insight that we have been told many times: BrightID is only as valuable as the apps it integrates with; the apps are what bring users to BrightID.

The Concept

With all this in mind, we landed on the idea to sell a “sponsorship” for each person at a price of $1 per lifetime. This would be paid by one of the apps that brought the person to BrightID in the first place: a $1 lifetime fee per user. Apps buy sponsorships to anchor their position as the “first stop” for users. There’s no problem at all if a business doesn’t have the funds to pay $1 per user; they simply send users to another app first. Hedge for Humanity (a public tax-exempt U.S. charity) will have just enough sponsorships in their Dollar for Everyone app to serve as a backstop for users who can’t get a sponsorship any other way.

Since the early stages of BrightID’s growth will be critical to its future success, batches of sponsorships are on sale at a very generous discount for those who are willing to receive them spread out over several years. This funding model feels a lot better than selling equity in a company, and any businesses or individuals* who want to support the project can participate.

Conclusion

As a global identity platform, BrightID is a public good, and it must be governed as such. (For more on this, see BrightID Main DAO’s constitution.) In the spirit of full transparency, we hope this article clarifies both the purpose of sponsorships, as well as the thought that went into choosing an appropriate funding model. We are incredibly thankful to all of the people who worked to get BrightID to this stage, and we are very excited for this next step in our journey.

Further Reading

* Check your local laws and the application’s terms of use.

Announcing Sponsorships

To prepare for the release of the first apps to use BrightID, we’re announcing the launch of sponsorships. Sponsorships have already been described in the whitepaper, but it’s important to talk about them since they will now be a reality for every BrightID user.

Here’s how sponsorships work

Let’s say you find out about a wonderful new app called BurnSignal and you want to try it out. You find out that to use all the features, you need to prove you’re not using multiple accounts. You download BrightID, connect up with some friends who are already using it and get your verification sticker . Now you head back to BurnSignal to share that verification. It accepts your verification and you’re good to go.

Behind the scenes, BurnSignal didn’t just accept your verification, it sponsored you. That means it paid $1 on your behalf. That $1 went to fund the core development of BrightID.

That’s basically it. Everyone needs to be sponsored just once in their lifetime, and it’s usually by the first app you use. If for some reason, the first app doesn’t have a sponsorship for you, you wouldn’t be able to use that app just yet. In that case, you would first try other apps until you find one that does.

Since we’ve made sponsorships a requirement for users, we’ve also created a web page at https://sp.brightid.org that allows app creators or independent supporters to buy sponsorships through our smart contract.

Funds from sponsorship sales go the BrightID Main DAO, the governing body for BrightID.

Further reading