How Quadratic Funding and Quadratic Voting Shape VeBetter

How Quadratic Funding and Quadratic Voting Shape VeBetter

Jun 27, 2024

The Tech Industry: Embracing Quadratic Voting and Quadratic Funding

The tech industry, known for its rapid innovation and disruptive technologies, is now embracing novel mechanisms to democratize decision-making and funding. Two such mechanisms, quadratic funding and quadratic voting, are proving to be game-changers. They ensure that everyone's voice is heard and valued. VeBetterDAO is using these methods to make voting and funding fair and balanced. Let’s explore how they work.  

Quadratic Funding: A Boost for Open-Source Projects

Open-source software is the backbone of much of today’s technological infrastructure, yet it often struggles with sustainable funding. Traditional funding models can be dominated by a few large donors, overshadowing the contributions of smaller supporters. That’s where quadratic funding comes in: it offers a more balanced approach. 

In the quadratic funding model used by VeBetterDAO, the allocation of governance funds is determined by both the number and weight of votes cast, with a mathematical twist. Instead of monetary contributions, users cast votes to express their preferences for a given XApp. The effective voting power is calculated using the square of the sum of the square roots of the individual votes. This means that an XApp supported by many users with smaller votes receives more funds than one supported by a few users with larger votes, even if the total number of votes is the same. 

VeBetterDAO uses quadratic funding to increase resources and democratize fund allocation for X-2-earn apps in its ecosystem. This encourages users to participate in funding and motivates developers to keep innovating. 


Quadratic Voting: A New Dimension in Decision-Making

In the tech industry, decisions about product features, company policies, and governance are critical and can benefit from more nuanced inputs. Traditional voting systems, where each person has 1 vote per decision, often fail to capture the intensity of stakeholders’ preferences. Quadratic voting shows up in the picture to change this dynamic. 

On VeBetterDAO, with quadratic voting, participants use their vote tokens (VOT3) to vote on various governance proposals. While the number of votes corresponds directly to the number of VOT3 tokens spent, the effective voting power is calculated using a quadratic 

formula. For instance, casting 1 vote grants a voting power of 1, but casting 4 votes grants a voting power of 2 (sqrt(4)), and casting 9 votes grants a voting power of 3 (sqrt(9)). This system allows stakeholders to express stronger preferences on issues they care deeply about, without letting any single participant disproportionately influence the outcome. 

VeBetterDAO uses quadratic voting to ensure that community members have a fair say in governance decisions. This method helps to balance majority and minority interests, leading to more representative and inclusive outcomes.


The Broader Impact on the Tech Industry

The adoption of quadratic funding and quadratic voting has significant real-world implications for the tech industry. By prioritizing broader community engagement and fairer resource distribution, these mechanisms foster a more inclusive and innovative environment. 

As the tech industry continues to evolve, the principles of quadratic funding and quadratic voting offer promising avenues for more democratic and equitable participation. These innovations hold the potential to reshape not only how projects are funded and decisions are made, but also how the tech community collaborates and grows.

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