Blockchain and other web3 projects are rushing to reach developers, organize hackathons, provide grants and other benefits to entice those who can build. But they don’t currently have the bandwidth to assess the sizable number of applications they receive, pushing away some of the same builders who can add tremendous value to those projects.
QuestBooka startup trying to solve that and more said today it has raised $8.3 million in its Series A funding as it looks to scale its efforts.
The funding round was led by Lemniscap and saw participation from dozens of investors, including Coinbase Ventures, Alameda Research, Dragonfly, Hashed, Polygon, Balaji Srinivasan, Raj Gokal of Solana, Arjun Sethi of Tribe Capital and Maneesh Sharma of GitHub.
QuestBook operates a platform of the same name that allows companies to grant grants and invest in them in an efficient and more transparent way. It also screens projects using a number of factors such as a developer’s on-chain and GitHub history to take on much of the burden of various blockchain and web3 companies.
Founded in May 2021, the startup was originally intended to help builders earn in crypto. But it soon became clear, explained Madhavan Malolanone of the co-founders, that there weren’t many developers who knew how to code in Solidity and Rust, the programming languages behind Ethereum and Solana blockchains, respectively.
There is a lot of white space in the developer ecosystem these days. Just as retail investor appetites wane as crypto enters the bear cycle, many developers are also starting to explore other more well-known opportunities.
But more importantly, there aren’t too many developers coding for web3 in the first place, a problem that can be solved with long-term incentives. Even if more than 34,000 new developers committed code for a web3 project in 2021, this is still a small fraction of the global software engineer base, according to a recent report from Electric Capitala venture firm that invests in web3 startups.
For starters, QuestBook started teaching developers to code in these languages for free and got published more than 100 tutorials for everyone to get started. The program took off quickly, Malolan said, gathering more than 18,000 developers. Since attracting a large enough base, QuestBook has been exploring ways to help developers raise funds to build their projects.
“That’s something we always kind of have a vibe with,” he said in an interview. “For example, I have never bought crypto in my life. All the crypto I have has been earned by contributing to open source projects.”
“One of the things we saw during the late December break was that people didn’t see crypto as a full-time job. They saw it as a side job. We wondered how we could give these people the opportunity to get a side income so they can find financial mobility and then double that,” he said.
Almost every blockchain, their foundations or companies that build on top of these projects offer grants. They typically fund these projects with their own tokens, increasing the value of their own digital assets as more developers build something viable on their platforms.
But as mutually beneficial as this transaction may seem, it is sometimes confusing and overwhelming to identify the themes the various companies want to support and the speed with which they deploy the funds. Often, for example, it can take a developer months just to hear about the protocol.
And these companies need extra help in obtaining credentials for the applications in order to remove potential bad players. Uniswap, a decentralized network on Ethereum credited with the rise of the DeFi ecosystem on the mothership, has learned this lesson the hard way.
The company offered a $20 million no-obligation grant to developers last year, quickly channeling more than 50% of its capital into exchanged for a stablecoin†
QuestBook today partners with the Ethereum Foundation, Polygon, Aave, Near and Harmony and has helped them provide developers with over $1.5 million in grant money. The startup, which currently doesn’t monetize its software, plans to increase the payout of these grants to $30 million to $50 million over the next two quarters.
It has much bigger ambitions than helping developers get grants, he said.
QuestBook’s tool is already helping companies create small funds around the world so that local talent can find and invest in new projects. The investments are all transparent and if the developers think the person running the show isn’t doing a good job, they can vote to have the person replaced.
“They are minimal grants DAO with maximum community participation. I know we need to come up with a better name,” Malolan laughed. “The idea is that let’s say you run a network or a protocol, and you’re able to see innovation happening in a space or a region that you don’t have the expertise or bandwidth to evaluate, you’re delegating your capital to others.”
QuestBook is also working to broaden the ways developers can find work.
“Right now we are solving the problem of capital allocation,” Malolan said. “What we strive for is to bring permissionless work to crypto. An Uber driver can tap a button and get the job and start earning. The same infrastructure is not available to developers. To solve this, of course, you need strong references, strong workflows and capital. We are starting to tackle the workflows.”
Hesitant to talk much about it, Malolan said the effort is at an early stage, but shared that QuestBook has built its own wallet that does gasless transactions (meaning users don’t have to pay transaction fees to transact.)
“Wallets we all use today are designed for DeFi. Since in our case we don’t transact money, only information, it made sense for us to build our own gasless wallet where it costs people nothing to store information. For the most part, developers won’t even know, and they shouldn’t even know, that a wallet is involved,” he said.
