The mechanism design here is well-constructed, but I think it’s aimed at the wrong problem.
Funding allocation doesn’t drive contribution. Conviction does. Linux kernel development has never had a coordination mechanism for compensating contributors, yet it has never lacked them. The reason is straightforward: contributing to the Linux kernel is so obviously valuable that the contribution itself functions as currency elsewhere. It converts directly into employment offers, consulting contracts, reputation, and access. Nobody needs to be incentivized to contribute to something the world recognizes as important. They compete for the chance.
The same holds for early Ethereum. In 2016-2018, people were building for free because the ecosystem had a credible claim to being the most consequential technical project of the decade. The free-rider problem wasn’t salient then, not because the game theory was different, but because the perceived value of participation was high enough to make the question of compensation irrelevant.
What changed isn’t the funding structure. What changed is conviction. When contributors look at the ecosystem and aren’t sure what it’s for beyond moving tokenized equities and stablecoins around, the expected reputational and career return of contributing drops. At that point, no allocation mechanism can compensate for the missing conviction. People who doubt the mission will find ways around any mandatory contribution, or simply leave.
This suggests the bottleneck isn’t “how do we distribute funding” but “what is Ethereum actually for.” If that question gets a compelling answer, the funding problem solves itself the way it solves itself in every thriving open-source ecosystem: people show up and build because they want to be part of it. If it doesn’t, redirecting validator rewards is optimizing the supply side of a demand that isn’t there.