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Quadratic Voting: A How-To Guide

Quadratic Funding (QF) is a democratic funding mechanism that allows people to allocate funds to various projects by making monetary donations. The unique feature of QF is that it uses an algorithm to match these donations, amplifying the impact of individual contributions based on the number of unique donors.

Overview

Quadratic Voting (QV) is a closely related concept to Quadratic Funding (QF) that operates without the involvement of real money. In QV, individuals are allocated votes that they can distribute among a variety of options. Unlike QF, these votes are valueless and cannot be traded in a secondary market. The algorithm used to calculate the outcomes in QV is nearly identical to that of QF. In a grants round, the matching pool is distributed based on the aggregate sum of votes received by each project.

How Quadratic Voting Works

Quadratic Voting (QV) enables individuals to express their preferences without the necessitating monetary contributions. It offers flexibility in determining participant eligibility. For instance, a "vote faucet" can be activated, which means each individual is issued a token for the purpose of voting and allowed to vote through their token (the token may not have monetary value). Alternatively, voting could be unrestricted, granting every token holder the ability to cast unlimited votes.

Moreover, QV can be tailored to specific groups. For example, voting rights could be limited to holders of a particular NFT or those who exhibit certain on-chain behaviors. QV also enables different types of voting power. For instance, if someone has held an NFT for 10 days, they might receive five votes, while holding it for a year could grant them 100 votes. This adaptability allows for targeted incentivization and rewards, making it favorable for long-term, highly engaged community members.

Voting using QV is done in two parts:

  1. Credit Distribution

Every participant receives a set budget of "credits," for instance, 100 credits. These credits are then distributed among the various options at the voter's discretion. The distribution can be in any manner—whether it's allocating all 100 credits to a single option or dividing them across multiple options based on one’s preferences.

  1. Vote Tallying

The actual votes are determined by taking the square root of the credits assigned to each option. For example, if 100 credits are allocated to a single option, it translates to 10 votes. Similarly, 25 credits become 5 votes, 4 credits convert to 2 votes, and so forth.

Steps to Implement Quadratic Voting:

  1. Allocate Credits: Give each participant a fixed number of voting credits.
  2. Vote on Options: Allow participants to distribute these credits across various options.
  3. Calculate Costs: The cost of each vote is squared. 
  4. Tally Votes: Add up the square root of the total credits spent on each option.
  5. Declare Winner: The option with the highest tally wins.

When Quadratic Voting Might Be a Good Fit for a Community

Quadratic Voting is a compelling choice for community governance for several reasons. First, it enables expressive voting, allowing members to indicate not just their choices but also the strength of their preferences, which adds a layer of nuance to decision-making. Second, it offers a degree of protection for less popular opinions. Since individuals can allocate their voting credits to issues that matter most to them, voices in the minority have a better chance of being heard. Third, it allows for inclusivity in community-led decision making, wherein actual currency and donations don’t influence the decisions. Lastly, the system inherently discourages strategic voting or gaming the system, making for a more authentic and representative outcome.

How to Measure the Effectiveness of Quadratic Voting 

Combining both quantitative and qualitative metrics will help cultivate a comprehensive understanding of a QV round’s effectiveness.

Quantitative Metrics

  • Community Participation: 

Set targets for the number of community members you want to engage in the voting process. Measure the actual turnout against these targets.

  • Project Support: 

Establish goals for the number of projects you aim to support. Evaluate the number of projects that received votes and funding.

  • Funding Distribution

Review how the funds were allocated. Depending on your objectives, assess whether top projects received sufficient funding or if the round as a whole was equitably funded.

Qualitative Metrics

  • Application Quality

Evaluate the quality of the applications received. High-quality applications are an indicator of effectively harnessing your community's collective intelligence.

  • Community Feedback

Collect and analyze feedback from your community regarding their experience and level of engagement. This will give you insights into how inclusive and democratic the process was.

Pros and Cons of Quadratic Voting

The implementation of Quadratic Voting (QV) can vary significantly, which means that its advantages and disadvantages will also differ depending on the context. On the positive side, much like QF, QV offers benefits such as enhanced community engagement, selective intelligence, and a more equitable distribution of decision-making power.

On the flip side, QV may require more initial planning and strategy. Determining participant eligibility and establishing the criteria for vote weighting can be complex tasks that necessitate careful consideration.

In QF, there’s an absence of gatekeeping, allowing for a democratic process where anyone can participate and donate. This inclusivity extends to the monetary aspect as well; all donations are treated equally. For example, a donation from a high-profile individual like Vitalik Buterin carries the same weight as one from any other participant. Depending on the specific use case, this level playing field can be viewed as either an advantage or a limitation. Whereas, in QV, it’s possible to be more selective and create voting hierarchies. This can be used for incentivizing more voter engagement and result in more commitment, longer term (more is at stake as a reward for users who are able to reach higher weight vote groups). The con to this is voters with a higher voting weight can influence decision making, and potentially game the system.

Use Cases of QV

Quadratic Voting in Blockchain Governance

Quadratic voting serves as a mechanism to balance the distribution of voting power within blockchain governance frameworks. Unlike the traditional "one share, one vote" model, quadratic voting adjusts voting power based on the square root of the total stake or tokens held by each participant.

In delegated Proof of Stake (dPoS) systems, a validator's voting influence is determined by the square root of their total delegated stake. This ensures that voting power doesn't scale linearly with the number of tokens held. In practical terms, a participant needs only a single token to cast one vote. However, casting two votes requires four tokens, and three votes necessitate nine tokens, and so forth.

Quadratic voting aims to address several challenges in blockchain governance, such as:

  • Preventing a single entity or a small group from amassing a majority of tokens to exercise undue control or censorship.
  • Limiting the disproportionate influence that large stakeholders can exert over governance decisions via their token holdings.
  • These issues are particularly relevant in DAOs, where they can skew governance votes. They are even more critical in dPoS and Proof of Stake (PoS) systems, where stakeholder governance plays a vital role in the network's daily operations. While quadratic voting isn't a fix for all governance issues, it does offer a useful way to address some of them.

Quadratic Voting in Public Goods Funding 

Quadratic Voting has emerged as a novel tool for allocating funding for public goods. Fantom’s Ecosystem Vault rounds on Gitcoin Grants Stack are a prime example of this. Before their QV round, earlier governance models that Fantom used hindered project approval and made it difficult for builders to access funds collected in their Vault, which were generated through transaction fees on the network. By leveraging Grants Stack’s QV capabilities, the Fantom Foundation was able to democratically distribute these funds without participants having to donate their own funding. The creation of a unique valueless GitcoinVote (GCV) token enabled broader community participation, while the Gitcoin Passport score requirement added a layer of security against Sybil attacks. 

This multi-faceted governance approach not only amplified community voices but also scaled efficiently, making it an exemplary use case of Quadratic Voting in public goods funding. The use of QV in this case promoted transparent and inclusive funding decisions without the need for participants to donate directly themselves. As a result, the round democratically distributed 750,000 FTM tokens across nine curated projects. 

Quadratic Voting in Government Decision-Making 

QV also has practical applications in the real world, such as being able to support state-level decision making. In the aftermath of the 2018 elections, Colorado's Democratic Caucus faced a unique challenge: deciding how to prioritize 60 to 100 appropriations bills. Rather than default to a conventional voting method, they used quadratic voting. 

The purpose of using QV was to more accurately capture voters' preferences by associating a cost with each vote, where the cost would increase exponentially with the number of votes cast. Meaning, casting two votes would cost four units of value, and three votes would cost nine. Colorado's House Democrats used a modified version, employing virtual tokens instead of actual money, to determine caucus members' priorities. This experiment led to a clearer signal on which bills were most important, such as the Equal Pay for Equal Work Act. Critics argue that quadratic voting diverges from the principle of "one-person-one-vote" and may be vulnerable to exploitation by interest groups or lobbyists. Yet, its application in Colorado offered a glimpse into how alternative voting systems might improve legislative decision-making and address flaws in more traditional forms of democratic governance.

How Grants Stack Supports QV

Gitcoin Grants Stack is designed to facilitate both Quadratic Voting and Quadratic Funding. It provides an easy-to-use interface for setting up and running QV campaigns, tallying votes, and declaring winners. It also offers analytics tools to evaluate the effectiveness of the voting process.

Interested in running a QV round on Grants Stack? Sign up here to schedule a demo with our team.

Additional Links

Quadratic Voting: How Mechanism Design Can Radicalize Democracy

Quadratic Payments: A Primer

Colorado Tried a New Way to Vote: Make People Pay—Quadratically

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