Radworks Thesis: Powering the “Read Write Own” Revolution for Developers

Summary

Radworks is building a sovereign developer stack. Its two products are:
- Radicle, a “decentralised GitHub” that facilitates peer-to-peer code collaboration
- Drips, a decentralised toolkit for continuously funding critical software dependencies
Open-source software is experiencing significant growth, further accelerated by Web3. However, the majority of the developer activity happens on GitHub, a centralised platform owned by Microsoft. Its effective monopoly enhances censorship risks and fragility.
We posit that a confluence of emerging dynamics may compel developers towards neutral alternatives like Radicle:
- Polarisation and politicisation of software development (e.g. AI safety and code as free speech)
- Increasing traction of platforms that promote user-owned identity and data (e.g. Farcaster)
- Escalating geopolitical tension which heightens censorship risks
As Radworks’ core components mature, the team aims to create a Web3 native client by integrating Radicle and Drips. This client would allow Radicle repositories to be represented by developers’ ENS addresses and receive funding directly via Drips. We believe this self-sovereign infrastructure, at scale, could accelerate open-source innovation and transform global labour markets with transparent, impact-driven resource allocation.
An impending tokenomics update will transform Radworks’ governance token, $RAD, into a work token. Node operators on the Radicle network could stake $RAD to earn the right to provide storage and retrieval services for a fee. There is a path to cash-flow based value accrual for token holders, if the DAO implements a % fee from node operators’ rewards.
A rough sum-of-the-parts valuation shows converting 3-5% developers could increase the network’s value to $1.4-15 billion, offering a significant upside for $RAD which trades at $175 million FDV at the time of writing.

1. Large addressable market with structural demand drivers

1.1 The Growth of Open-Source Software (OSS)

The tech industry is shifting from proprietary software to open-source software. We see this trend in the database industry: open-source databases like MySQL, PostgreSQL and MongoDB have surpassed traditional commercial license juggernauts like Oracle and Microsoft SQL.

A survey by RedHat is supportive of this mega trend. It writes “Software may be eating the world. But, increasingly, it is open source software that is doing most of the chewing. The trend is not subtle. Especially when you consider the fact that enterprise software deployments are not ordinarily known for rapid change.”

Web3 is further driving the open-source movement. The 2023 Developer Report by Electric Capital found that from 2015 to 2023, active open-source developers in crypto rose 47% CAGR to over 22,000 developers. This is an incredible >30x growth. Despite market cyclicality, the long-term growth trajectory of web3 developers has been exponential.

In many ways, the market share gains of OSS are unsurprising. OSS is inherently more robust, since transparency draws more eyeballs and hence accelerates error resolution and innovation.

1.2. The Dominance of GitHub

Although the open-source community is enjoying robust growth, it faces substantial risks related to centralisation. The behemoth at the centre of this risk is GitHub, a code collaboration platform utilised by >100 million programmers worldwide. According to the 2022 Developer Survey by Stack Overflow, an overwhelming 87% of developers use GitHub for hosting personal projects and 56% for professional purposes. GitHub’s effective monopoly can be summarised by the following stats:

1.5% of internet users visit Github
Annual recurring revenue of $1 billion
>100m developers across the globe use Github, with the majority being in the US, China and India, collaborating on 420 million repositories
Over 90% of the Fortune 100 companies use Github

In 2018, Microsoft acquired GitHub for $7.5 billion, a move heralded by CEO Satya Nadella as a step to "strengthen our commitment to developer freedom, openness, and innovation." Despite these noble intentions, GitHub's subsequent market dominance has brought unintended consequences, centralising much of open-source software development and exposing it to vulnerabilities. The platform has faced recurring censorship challenges in nations such as China, India, and Russia. Moreover, its approach to content moderation has led to arbitrary account suspensions, raising concerns about governance and fairness. Somewhat ironically, GitHub's co-founder and former CEO, Chris Wanstrath (aka "defunkt") was banned from GitHub in February 2024, without an explanation. This prompted calls within the crypto and privacy-concerned communities for "decentralised GitHub."

*Source:* *Twitter* *(@ilblackdragon),* *Twitter* *(@gregosuri)*

1.3. Structural Drivers for a decentralised GitHub

GitHub’s network effects have been incredibly resilient over many years. GitHub is the main code collaboration platform used even by Web3 developers, who typically value decentralisation, user sovereignty and censorship resistance. So the question is, what would prompt developers to switch from GitHub?

We posit that three broad emerging structural drivers could motivate users to migrate to alternative platforms:

1. Polarisation and politicisation of software development: In November 2023, OpenAI’s boardroom became a battleground over AI safety, leading to the temporary ousting of CEO Sam Altman. This incident exemplified the growing rift between proponents of AI accelerationism and those advocating for more cautious approaches. Similarly, the discourse on free speech in relation to open-source code has reached a fever pitch. Most notably, Alexey Pertsev, the developer of Tornado Cash, is accused of facilitating >$1 billion in money laundering through open-source code. Pertsev’s trial has evoked a strong emotional response from the open-source community.

As software becomes increasingly politicised, maintaining neutrality becomes more challenging. In fact, censorship on GitHub has been growing exponentially, with a 123% YoY rise in accounts hidden from public view and 3054% YoY rise in accounts restricted in 2023. Sceptics have questioned whether Microsoft's commercial interests, such as its investment in OpenAI, could influence content moderation on GitHub. The concerns seem warranted, given Microsoft’s proactivity on AI safety and heavy lobbying efforts in Congress. For example, during a recent judiciary hearing, Microsoft advocated for a federal licensing regime and for only licensed AI infrastructure to be deployed for certain use cases. The tech giant’s increasingly assertive stance on thorny issues may alienate some developers, compelling them to migrate from GitHub to platforms that uphold neutrality. We expect developers who prioritise privacy, freedom, and censorship resistance to be most likely to make this shift first.

2. Rising popularity of platforms with user-owned data: So far in 2024, Web3 has witnessed an ascent of Farcaster. Farcaster epitomises the “Read, Write and Own” thesis advocated by Chris Dixon, by allowing users not only to engage with traditional social features, but also to possess their data and digital identities.

As public consciousness about data and digital identity ownership deepens, a similar shift from centralised platforms to decentralised alternatives may happen in software development. Recent issues like account lockouts on GitHub will prompt developers to question their reliance on centralised platforms for hosting open-source code and social artefacts. Platforms like Radicle that enable users to have greater control over their code are well-positioned to capitalise on these shifting paradigms.

3. Escalating geopolitical tension, particularly between the US and China, increases the risk of technology becoming a battleground between the two global superpowers. Github, while widely utilised by Chinese developers, faces sporadic blocks in China. Local alternatives like Gitee have been introduced to reduce reliance on US-controlled services. National interests leading to technological silos impede innovation and the free exchange of open-source code in an era of increasing cross-border collaboration. We believe political constraints on open-source collaboration could drive open-source developers towards neutral infrastructure like Radicle that helps maintain global technological progress and stability.

2. Competitive Advantage (Internal Execution)

2.1. Radicle Overview

Radicle is a sovereign peer-to-peer (P2P) network for code collaboration. It provides greater resilience and autonomy to developers by removing reliance on centralised platforms like GitHub.

The project was started in 2018 by co-founders Alexis Sellier and Ele Diakomichalis, who are former colleagues from Soundcloud. Sellier focused on infrastructure development, while Diakomichalis headed up the data science and data engineering team at Soundcloud. The mission-driven team has shown their steadfast commitment to tackling the complex technical challenges of building Radicle. The evolution of the project can be traced through various iterations documented in the history section here. Following five years of dedicated development, the team officially launched Radicle v1.0 in March 2024.

Radicle, like GitHub, uses Git as its underlying version control system, but adds decentralised features like peer-to-peer gossip/networking and DID (Decentralised Identifiers) compatibility. Instead of relying on a centralised server, users can host their repositories locally or on the Radicle network, with code changes synchronised directly between peers. This means that there is no single entity controlling the network. Instead, users are in full control of their data and workflow.

In order to adapt Git to be fully peer-to-peer, the Radicle engineering team had to solve two major problems.

Git assumes a trusted environment. Although Git is ostensibly designed to support peer-to-peer interactions, it inherently lacks the functionality required for deployment in a true peer-to-peer network. All existing deployments adhere to a client-server model. Specifically, Git has no way of verifying the authenticity of a repository following a ‘git clone’ operation, necessitating reliance on cloning from a trusted server. Radicle solves this by assigning verifiable, stable identities to repositories that can be verified locally, allowing repositories to be served by untrusted parties.
Handling conflicts in a P2P environment. Without an authoritative single source of truth such as a server, conflicts could arise. Conflict resolution between divergent paths to converge on the same state is important for seamless P2P collaboration. Radicle developed its own model for issues and pull requests (called “patches”), implemented via Collaborative Objects (COBs) explained below.

Radicle’s architecture is essentially a stack of four components that keeps Git compatibility and interface, but also extends the peer-to-peer networking capability.

Radicle node: All nodes are identified by unique Decentralised Identifiers (DIDs) on the network; they can directly refer to each other via a public key and an address. Through Radicle’s gossip protocol, nodes exchange messages to discover and replicate repositories. When a secure connection is established between nodes, a fetch operation is initiated via Git to pull relevant objects into the node’s storage.
Radicle Storage: Storage employs a local-first design, eliminating the need for centralised servers. Radicle repositories are simply Git repositories stored on disk. Storage manages user identities, signatures and social artifacts like issues and patches. Users work with two copies: the working copy and the remote copy (in local storage) which are synced via Radicle’s git-remote-helper using typical developer workflow practices.
Collaborative objects (COBs): Radicle enhances Git by adding data structures called Collaborative objects. COBs represent social features and are directly in the repositories to facilitate conflict-free collaboration. There are three predefined COB types: issues (used for tracking bugs/feature requests), patches (used for proposing changes), and identities (used to represent identity documents), but users can customise new COB types.
Interface: Radicle offers both a CLI and a web-interface. Users can access a hosted web interface that links to their local node, or set up their own. Features such as code browsing are still being improved on.
A comprehensive user guide is available on the project website. Additionally, Nader Dabit has created a video guide, “How to Replace GitHub with Radicle to Take Ownership of Your Code.”

2.2. Drips Network: Payment Infrastructure for FOSS (Free and Open-source Software)

The Radworks core team’s vision from the project’s inception in 2018 was to create “decentralised GitHub” that also facilitates blockchain-enabled global value flow to developers. This was an incredibly ambitious vision; as such, the approach the team has taken is to build the two products separately, with the view to integrating them once both products reach stability.

Drips is Radwork’s second product that addresses the financial value flow side. Released in July 2023, Drips can be thought of as a funding router. It programmatically distributes an individual’s or project’s income among specified recipients (called “dependencies”). Each stream can support up to 200 dependencies, which for now, are either open-source GitHub repositories or Ethereum addresses. Funding is calculated per-second, and automatically divided and settled monthly for gas efficiency. Once Drips integrates with Radicle, users will be able to stream funds directly to Radicle nodes. Drips currently supports more than 80 projects, not only in Web3 (e.g. Snapshot Labs, OpenZepplin, Starknet, the Graph), but also in traditional FOSS (e.g. Flask, Pandas, NumPy).

The importance of continuous funding infrastructure like Drips is illustrated by the below image. Modern digital infrastructure relies heavily on open-source libraries, often maintained by developers without sufficient incentives. Continuous funding support for a project’s critical dependencies strengthens the robustness of digital networks. enhance the robustness of digital networks. Further, continuous funding fosters sustainability, contrasting with the transient nature of one-off funding models like grants.

2.3. Roadmap and the End Game Vision

One of the improvements that Radworks is planning for 2024 is the introduction of third-party gateway services called Radworks Seed Network (RSN). RSN opens up the network to a decentralised set of professional infrastructure providers to run Radicle nodes. These nodes would offer hosting and retrieval services for users seeking to outsource running their own node for higher convenience and performance. This concept is similar to IPFS pinning services like Pinata and Saturn.

Infrastructure providers participating in RSN will be compensated by users, with initial incentives likely provided in $RAD tokens from the DAO treasury. RSN will enable both self-hosting and third-party hosting options on the Radicle network, evolving to include more extensive services akin to those seen in other decentralised physical infrastructure networks (DePIN).

Looking ahead, integrating Radicle, Drips, and RSN represents a significant step toward realising Radworks' original vision of a fully-integrated "Radworks client." This client would facilitate a peer-to-peer code collaboration network linked to a blockchain-based funding router and decentralised, market-based third-party hosting and retrieval services. It would feature ENS for identity authentication, DAO-governed repositories, and programmable fund streaming among Radicle nodes in various ERC20 tokens.

Ultimately, Radworks’ expanded infrastructure aims to empower developers to own their repositories and secure funding for impactful open-source work. At scale, we believe this infrastructure has the potential to accelerate open-source innovation and transform global labour markets through more transparent, impact-driven resource allocation. Juan Benet, the founder of Protocol Labs (R&D lab behind IPFS and Filecoin) has recently explained this vision very elegantly, in the context of Filecoin’s own retroactive public goods funding (FIL-RetroPGF) program. He states:

“A lot of us have been working on retrospective funding. Since 2017/18, a bunch of us realised if you use blockchains to reward impact retroactively, it is much easier to route the money to the things that actually produce impact, because you can easily measure that, you can see what worked. At least much more easily than speculative impact, which is the traditional grant program structure. There has been a number of projects that have tried to do it. The original Gitcoin vision was wiring incentives through GitHub repositories, SourceGraph was another project that was exploring that same idea space… Recently Optimism revived that same interest and idea and now is scaling retroPGF, deploying hundreds of millions of dollars per year into retrospective funding for an ecosystem. Then, Drips is a new tool that launched in the last couple months that is now realising the goal that Gitcoin originally and SourceGraph had of wiring incentives and money into the GitHub contribution graph. Today you can go to the Drips page and see the amount of money flowing through the dependency graph which is pretty awesome… When you look around the world, why do people work on the jobs they do, instead of what they really care about very deeply, or used to care about? It’s because they need money and capital. They need to eat and need shelter. You can rewire and reorganise all of society if you have better funding flows. If you create money router structures, you can aim them at solving all kinds of problems and get the outcome” - Juan Benet @ ETH Denver 2024 (clip minute 12:20)

2.4. Peer Comparisons

The below diagram compares Radicle with mainstream alternatives on their primary value propositions.

In short:

GitHub, as the leading platform with a vast community and ecosystem, is ideal for discovering open-source projects and global collaboration. Its drawback is that it is closed-source and offers self-hosting only at its most expensive, Enterprise tier.
GitLab, a strong competitor, focuses on efficiency and comprehensive DevOps tooling. Its integrated approach to the DevOps lifecycle makes it appealing to enterprise customers.
Radicle is optimised for sovereignty, privacy, and control over data and user workflows. Because additional functionalities like CI/CD (Continuous Integration and Continuous Deployment) and repository search are not yet live, Radicle will initially appeal to developers inspired by the cypherpunk culture and/or those living in countries with high censorship risks. Over time, we believe the roll-out of mainstream equivalent features will lower the UX barriers to onboard more developers. Additionally, integrating Drips and a ‘Web3 client’ will bring unique benefits to users and DAOs, such as financial inclusion and on-chain governance facilitating code change approvals.

Given Radicle's emphasis on sovereignty and privacy, we assess its potential adoption by examining trends across various tech verticals. Historically, privacy-centric applications have seen adoption rates, relative to those of incumbents, from low single digits in sectors such as social media and finance, to mid single digits in email. Although precise predictions of developer behaviour are impossible, we project a 3-5% adoption rate for Radicle, which informs our valuation analysis in the following section.

*Source: 1.* *Protonmail*, *Demandsage; 2.* *Brave*, *Backlinko; 3.* *Techcrunch*, *Statista*;
4. *Fiatmarketcap; 5.* *DuneAnalytics* *(@pixelhack),* *Backlinko*

3. Path to sustainable value transmission to token holders

3.1. Tokenomics

Radworks raised $12m in seed funding in February 2021. Investors included Placeholder, Galaxy, NFX, Electric Capital, ParaFi, BlueYard, 1kx, Balaji Srinivasan, Naval Ravikant, Fred Ehrsam and more. The native token $RAD launched in March 2021. With early investors already fully vested and most unlocks taken place, circulating supply has been stable. ~51% tokens are in circulation out of a fixed supply of 100 million. Remaining tokens are held in the community treasury.

$RAD is presently a governance token. But the upcoming implementation of Radworks Seed Network (RSN) will evolve it into a work token. This change will allow infrastructure providers to stake $RAD to earn income from the network and its users. Specific parameters of this model are yet to be determined, albeit the Radworks DAO may introduce a fee on node operator rewards to ensure self-sustainability. We believe RSN establishes a reliable path towards token utility and value accrual.

3.2. Valuation

Radworks’ growth potential is modelled via the sum-of-the-parts projections shown below.

Radicle: Network value is derived from assumptions about developer conversion and fee opportunities for third-party node operators in the RSN. For reference, GitHub was acquired by Microsoft in 2018 for $7.5bn and is estimated to be generating >$1bn in recurring revenues with >40% YoY growth in 2023. GitLab, which IPO-ed in 2021, currently has enterprise value of >$8bn and generated $570m in revenues in 2023 (+37% YoY growth).
Drips: The growth in public goods funding as a new funding mechanism provides tailwinds. Inspired by Optimism’s retroPGF program, an increasing number of Web3 projects have launched their own public goods funding programs in recent years, including Uniswap and Filecoin. Network value is derived from assumptions about the potential payment volume within the network.

Risk Considerations and Monitoring Criteria

Crypto scepticism in the wider open-source community: While Radicle is not inherently crypto-focused, DAO funding via the $RAD token appears to raise questions from certain crypto-sceptical developers. The team actively educates developers in forums that using Radicle doesn’t necessitate the use of cryptocurrencies.
Radicle’s P2P gossip layer stability: Historically, stabilising Radicle’s P2P gossip layer has been challenging, with previous releases encountering technical issues. The revamped code base (Heartwood) behind Radicle v1.0 is nearly two years old, and has been internally utilised by the Radworks team without issues for over a year.
The network effect of GitHub and competition from other centralised providers: Despite concerns over centralised control and censorship, GitHub's dominance and developer inertia may limit Radicle's market share gains. Competing platforms like GitLab and Bitbucket also present alternatives for privacy-conscious developers with their self-hosting options. We will closely monitor the adoption and growth trends within the Radicle user base.

Special thanks to Ele Diakomichalis (co-founder, Radworks), Jake Brukhman (CoinFund) and Vaclav Pavlin (Waku) for their review and feedback.

LEGAL DISCLAIMERS:

This content serves solely for informational purposes and should not be considered as investment advice. It is not designed, nor should it be utilised, as legal, tax, investment, accounting, or any other form of advice. This content is not an offer to sell or a solicitation to purchase any securities, investment product, or engage in any investment advisory service.
This content does not constitute a recommendation for any security or investment. No part of this content should be construed or employed in any manner as investment advice. The details presented regarding these portfolio investments are for informational purposes only and are not indicative of the current or future performance of Progrmd Capital’s portfolio investments.

Radworks Thesis: Powering the “Read Write Own” Revolution for Developers

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