Overview
Butter believes Conditional Funding Markets (CFMs) can coordinate capital from across the Ethereum ecosystem to fund key growth initiatives, such as increasing daily active users, stablecoin settlement, or ETH burned.
We’re therefore asking for community participation to shape and support the Ethereum Growth CFM.
Join us at Edge Esmeralda to define the objective, structure, and key requirements for a CFM that assesses and funds proposals to grow Ethereum.
Why this matters
Ethereum’s growth depends on its ability to fund outcomes that advance key objectives. However, current funding mechanisms, such as token votes or committees, struggle to surface the best outcomes and coordinate capital at scale.
As a result, high-value initiatives are underfunded, and cross-ecosystem funding is rare. Despite over $16B in on-chain treasury assets, most capital is siloed, deployed in isolation by each ecosystem. This results in a small number of initiatives focused on funding shared outcomes.
Yet the need is clear: metrics like price, active users, and fees matter to everyone in Ethereum, from L2s and apps to core protocol teams and users.
What this pilot will do
Instead of defining an objective and market design ourselves, we are inviting the community to shape both. At Edge Esmeralda, we will work together to define the key objectives Ethereum should focus on and co-create CFMs that support these objectives.
After the co-design process at Edge Esmeralda, the market(s) will launch fund the shared priorities that emerge as well as explore a new path for Ethereum to fund ecosystem growth by assessing CFM’s ability to:
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Maximize impact. CFMs allocate every dollar to the outcome predicted to most effectively achieve an objective. Instead of funding based on influence, narrative, or subjective decisions, allocation decisions are made based on the market’s forecast.
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Coordinate capital from across ecosystems. CFMs enable multiple ecosystems to pool capital toward shared goals. Rather than working in isolation to advance their own goals, ecosystems can pool resources to fund outcomes which benefit all of Ethereum, such as increasing onchain users, or growing Ethereum’s GDP, both of which have stagnated since 2022.
What CFMs enable
CFMs are a new capital allocation mechanism leveraging prediction markets to surface proposals most likely to achieve a measurable objective.
Rather than relying on centralized committees or governance token votes, CFMs allow traders to forecast a measurable outcome for each proposal, conditional on whether the proposal receives funding. This estimate is then used to make funding decisions.
This enables a fundamentally different approach to capital allocation. Here’s how CFMs compare to the status quo.
| Feature | Traditional funding (e.g. token votes or committees) | Conditional Funding Markets (CFMs) |
|---|---|---|
| Performance-driven decisions | While proposals can include KPIs, decisions are often based discretion, politics, or popularity | Markets forecast which proposals are expected to deliver the best outcome |
| Responsive to new information | Voters or committee members often lack time, context, or incentives to be properly informed - especially as the number of proposals grow | Markets update continuously as new data or beliefs emerge |
| Ecosystem-wide coordination | Most capital is allocated independently within individual ecosystems | Capital can be pooled from across ecosystems to fund shared objectives |
| Accountability if wrong | Decision makers face no direct consequences if they are wrong | Traders lose capital when they make incorrect forecasts |
Why Edge Esmeralda
GG '25 at Edge Esmeralda is the ideal setting to design the Ethereum Growth CFM. It will feature key governance decision makers and mechanism experts and give attendees hands-on experience participating in a CFM.
Running alongside GG '25 is d/acc week, a vision sparked by Vitalik’s ‘My techno-optimism’. One of the areas of d/acc is information defense - building tools that advance coordination, truth, and resilience in adversarial condition. CFMs align directly with this vision as a new mechanism Ethereum can use to reason clearly, act collectively, and fund what matters.
Draft market requirements
This is a starting point for the inputs that will be co-designed and iterated on at Edge Esmeralda. As inspiration for what could be designed, we have put together separate posts outlining potential objectives:
- Accelerate info defense technology, aiming to support Ethereum as a hub of info defense in the digital age.
- Ethereum GDP growth, aiming to increase L1 + L2 application fees.
Overview
| Input | Description |
|---|---|
| Market Owner | Butter |
| Tentative Launch Date | Post GG '25 |
| Objective | tbd |
| Target Metric | tbd |
| Total Capital | $100,000* |
| Allocation per Proposal | Variable |
| Market Collateral | tbd |
| Market Duration | Decision Period: 1 week Evaluation Period: 3 months |
*The total amount of capital and allocation per proposal will depend on the total funding commitments received.
Functions
| Rule | Description |
|---|---|
| Decision Rule | 1. Order outcomes by highest predicted metric 2. Select top x project(s) 3. Cancel all markets for outcomes that do not receive funding |
| Funding Rule | Deployer distributes funding to outcomes as advised by the decision rule |
| Resolution Rule | Metrics Oracle reports on [Target Metic] achieved by the funded outcome(s) at a date approx. 3 months after the market concludes |
What we need
We’re looking for individuals, DAOs, and teams to help design and launch the Ethereum Growth CFM.
Join us at Edge Esmeralda to:
- Co-create an objective
- Define a measurable outcome to track the objective
- Brainstorm and source potential outcomes for the market
- Gain capital commitments for the eventual launch
If you’re interested in partnering at GG '25, participating, or committing capital for the eventual launch, please comment below or contact the Butter team.