Please describe your proposed solution.
Existing crowdfunding platforms have been criticized for being biased towards wealthy individuals, leading to a lack of representation and diversity of projects. This has made it difficult for small, underrepresented open-source projects to receive support. Therefore, we propose a new approach called extended quadratic crowdfunding. This approach “extends” or improves upon quadratic funding schemes.
Quadratic funding combines small individual contributions with larger matching sums. This means that contributions made by more people will be matched more generously than contributions made by fewer people. For example, the quadratic formula would give the project with 10 donations of $10 each more matching funds because it has more favored donors than the project with 1 donation of $100 each.
For more information about quadratic funding, visit <https://arxiv.org/pdf/1809.06421.pdf>.
So, what is Extended Quadratic Funding? It's an improvement on Quadratic Funding that adds another layer: the "impact score" of individuals. Socious' Impact Score indicates how much an individual has contributed to social and environmental impact. You can find more information about Impact Score here: <https://www.notion.so/socious/Socious-Whitepaper-58fbe2c106f547898df42e409a00c73e?pvs=4#27759763f0d941788af336561a40d8d7>.
Extended Quadratic Funding takes into account the contributor's impact score, making the system more equitable. This means that people who have made contributions to improve the world can have more voting power than wealthy individuals. The goal is to create a more decentralized and fair system that promotes inclusive funding for public goods.* By allowing individuals who may not have large sums of money to participate in the funding process, we can increase diversity and enhance the representation of all voices. This, in turn, may lead to a more equitable distribution of funds and an increase in support for public goods.
The decision-making process on extended quadratic crowdfunding platforms is decentralized and transparent. This can help to build trust among users and ensure that decisions are made in the best interests of the community as a whole.
Our long-term goal is to create a circular economy that sustainably produces public goods in perpetuity. In this system, funded projects produce verified outcomes (or impact), which are verified by the Impact Genome Registry. These outcomes are then sold on OutcomesX, a marketplace for social outcomes. For example, UBS Optimus purchased USD 2 million worth of verified outcomes related to improved education and mental health outcomes produced by 21 different organizations.
In the "Extended Quadratic Funding" project, all funded projects' social outcomes will be verified by the Impact Genome Registry. The verified outcomes will then be sold on OutcomesX, and the proceeds of these sales will go towards the matching pool for the next round of crowdfunding. Additionally, since the efficiency of projects to produce social outcomes is verified, funding is optimally allocated in the next round to projects that are best suited to deliver social outcomes. Our impact score also takes into account social outcomes, so those who create more verified outcomes have more voting power. This system creates a virtuous circle in which the funding pool is constantly replenished and optimally allocated where it's needed.
In summary, the proposal of Extended Quadratic Funding seeks to remedy the biases and underrepresentation prevalent in existing crowdfunding platforms. This approach builds upon the concept of Quadratic Funding, which uses a combination of small individual contributions and larger matched sums. The extension lies in the integration of an "Impact Score", an assessment of an individual's contribution to social and environmental causes. This means individuals with significant social contributions have more voting power than merely wealthy patrons, creating a more equitable system. Furthermore, the decision-making process is decentralized and transparent, encouraging trust and community-centric decisions. The overarching objective is to create a sustainable, circular economy of public goods. Projects funded through this method produce verified outcomes, confirmed by the Impact Genome Registry and sold on OutcomesX, a marketplace for social outcomes. The income from these sales then replenishes the funding pool, which, along with the Impact Score, guides the allocation of funds in subsequent rounds, thus creating a self-sustaining cycle of public good generation. we believe that this system attracts more people to build open-source projects in the Cardano ecosystem.
*In economics, public goods are commodities or services that are provided to all members of a society, either by the government or by a private individual or organization. Examples of public goods include clean air, public parks, street lighting, and public infrastructure like roads and bridges. In the context of this proposal, public goods could also include open-source projects and other initiatives that generate social or environmental benefits.
References:
- Mankiw, N. Gregory. Principles of Economics, 8th Edition. Cengage Learning, 2017.
- Samuelson, Paul A. "The Pure Theory of Public Expenditure". Review of Economics and Statistics (The MIT Press) 36 (4): 387–389, 1954.