Plasma Group, a small nonprofit research team working on Ethereum scalability, joined Gitcoin Grants in Round 1 (2019) as one of the earliest participants in quadratic funding. The community support they received — both financial and psychological — helped sustain the team during a period when their open-source research had no revenue model.
In late 2019, Plasma Group transitioned into Optimism, raised $3.5 million from Paradigm and IDEO, and went on to build one of Ethereum's most widely adopted Layer 2 scaling solutions. By 2023, Optimism had accumulated over $2 billion in onchain value locked and saved users an estimated $3 billion in gas fees. The Optimism Collective later became a major contributor to Gitcoin's matching pools and launched its own retroactive public goods funding program, distributing over 60 million OP tokens.
Background
Ethereum's scalability limitations were well understood by 2018, but the path to solutions was unclear. Multiple research approaches competed for attention, including plasma chains, state channels, and various rollup architectures. The technical work required to advance any of these approaches was a public good — essential to Ethereum's future but difficult to monetize.
Plasma Group formed as a nonprofit research team dedicated to Ethereum scalability, investigating plasma chain architectures and later optimistic rollup designs. As a five-person research team operating without venture funding or foundation grants, the group depended on small donations and community goodwill to sustain day-to-day operations. The team's CEO, Jinglan Wang, later described the nonprofit fundraising experience as "a full-time job of piecing together a hundred different small donations just so you can make the next paycheck."
Gitcoin Grants Round 1 in early 2019 offered a new model: quadratic funding, where broad community support translated into amplified matching. For a team whose work benefited the entire Ethereum ecosystem, this alignment between broad impact and broad contribution was structurally well-suited.
The Mechanism / Program
Plasma Group participated in Gitcoin Grants from Round 1 through Round 4 (2019), receiving community contributions that were amplified through quadratic funding matching pools. During each round, community members donated to Plasma Group alongside other Ethereum infrastructure projects, and the QF formula distributed matching funds proportionally to projects with the broadest contributor base.
In these early rounds, Gitcoin Grants distributed less than $1 million combined across more than 300 applicants, but the rounds were highly focused on core Ethereum infrastructure. Plasma Group consistently appeared among the projects with the strongest community support, alongside other early-stage public goods like EthHub, Prysm, Lighthouse, and ethers.js.
No formal Sybil resistance mechanisms existed in these early rounds. The community was small enough and the amounts modest enough that contribution patterns largely reflected genuine support from Ethereum's core technical community.
Outcomes
The financial support from Gitcoin Grants was modest in absolute terms — early rounds distributed small amounts across many projects — but the team consistently cited the community validation as equally important to the capital. As the Plasma Group wrote in their farewell post: "Those donations helped keep us going, but it's not just the money: it's a sense of community and a show of support. The validation that we received from seeing so many members of the community contribute was just as valuable as the money they gave."
In December 2019, Plasma Group shut down as a nonprofit, donated its remaining fund reserve to Gitcoin, and the team founded Optimism as a for-profit company. In January 2020, Optimism raised $3.5 million from Paradigm and IDEO to pursue optimistic rollup implementation.
The trajectory from there is well-documented: Optimism became one of Ethereum's leading Layer 2 scaling solutions, accumulating over $2 billion in onchain value locked and saving users an estimated $3 billion in gas fees. The Optimism Collective established the Citizens' House and launched retroactive public goods funding, distributing over 60 million OP tokens to hundreds of projects and reserving 850 million OP (20% of total supply) for public goods funding. Optimism also contributed back to Gitcoin's matching pools, completing a full cycle from grant recipient to ecosystem funder.
Challenges and Solutions
Challenge: Nonprofit sustainability for protocol research
Plasma Group's experience illustrates a structural problem: critical protocol research requires sustained, focused effort, but nonprofit funding models produce unpredictable and often insufficient revenue. Piecing together small donations consumed significant team bandwidth.
Solution: The team ultimately transitioned to a for-profit model with venture backing, using the community credibility and technical reputation built during the nonprofit phase. Quadratic funding served as a bridge, not a permanent funding model.
Challenge: Measuring the impact of early-stage research
During the Gitcoin Grants period, Plasma Group's output was research — papers, proofs of concept, and protocol designs. These contributions were difficult to quantify or compare against more tangible deliverables like working applications.
Solution: Quadratic funding's strength in this context was that it did not require quantified impact metrics. Community contributions served as a proxy for perceived value, allowing research teams to receive support based on informed technical judgment rather than usage statistics.
Challenge: Transition risk from public goods to private company
The shift from nonprofit research to venture-backed company raised questions about whether public goods funding was effectively subsidizing future private value capture.
Solution: Optimism's subsequent commitment to public goods — 20% of token supply reserved for retroactive funding, ongoing contributions to Gitcoin matching pools — represents one model for addressing this concern, though the tension between early public funding and later private capture remains an open design question for the ecosystem.
Lessons Learned
- Quadratic funding can sustain pre-product research teams. Plasma Group had no product, no users, and no revenue — only research output. QF's democratic signal allowed the Ethereum community to express support for work that traditional funding mechanisms would struggle to evaluate or sustain.
- Community validation matters independently of capital. The team repeatedly emphasized that the social signal from hundreds of individual contributors was as important as the money. In a space where research teams can feel isolated, visible community support sustains motivation and legitimacy.
- Early QF recipients can become ecosystem funders. Optimism's trajectory — from Gitcoin grantee to matching pool contributor to operator of its own retroactive funding program — demonstrates a flywheel effect where early-stage public goods funding produces organizations that later fund public goods at much larger scale.
- QF complements rather than replaces venture funding for infrastructure. Plasma Group's transition suggests that quadratic funding is most effective as a bridge for early-stage public goods work, providing sustenance and community signal during the period before more substantial funding models (venture, protocol revenue, or foundation grants) become available.
- Donation of remaining funds to Gitcoin set a community norm. Plasma Group's decision to donate its remaining nonprofit reserve to Gitcoin upon transitioning to a for-profit entity established an early precedent for how teams can responsibly manage the nonprofit-to-company transition in the Ethereum ecosystem.
Conclusion
The Plasma Group / Optimism trajectory is one of the most compelling origin stories in quadratic funding: a small, unfunded research team sustained by community contributions through a novel mechanism, which then built one of Ethereum's most important scaling solutions and returned to fund public goods at orders of magnitude greater scale.
The case demonstrates QF's unique value in supporting pre-product, research-stage work where traditional funding mechanisms fail, and illustrates how early-stage community funding can seed organizations that fundamentally reshape ecosystem infrastructure.