Please describe your proposed solution

Traditionally, buying votes has been viewed as a corrupt practice but this is only because it has been difficult to establish fair marketplaces for public rather than private decisions. The key breakthrough was recognizing that the value of a vote is proportional to the influence that vote has on the decision outcome. With this insight, Glen Weyl and his colleagues demonstrated that scaling the price of a vote quadratically led to a mechanism for properly pricing influence.

The second insight was that the vote payment is made to the full community and thus needs to be dispersed evenly to all of the participants. The combination of quadratic scaling in price for votes and even disbursement creates an effective balance between minorities willing to invest more and majorities with broad support. Minorities can protect their interests as long as they are willing to pay the community for their choices and majorities can be more influential since the quadratic scaling makes it easier for them to gain decisive support.

Quadratic voting is now referred to as Plural Voting given its ability to support a plurality of sub-communities within a large ecosystem. This contrasts with traditional voting systems, whether democratic or corporate, in which there is a tendency for controlling majorities to form which dominate all decision-making.

There are three key challenges which our concept development will seek to overcome so that we can progress to full product development.

1. What will the participation rates be for a voting system that requires a payment? Governance participation is an open challenge. To overcome this, our conceptual demonstration will need both an impactful decision and inexpensive currency. Thus we will focus on polling the Cardano community for decisions to be made by the Lalkul DRep team and we will initially use Hosky coins. Once the concept is proven we will progress to binding decisions for a DRep using ADA as the currency.
2. Smart-contract development for collecting payments, tabulating decisions, and disbursing receipts. Here we will leverage prior open-source development by Snapbrillia and others in order to accelerate the demonstration.
3. A plural voting system can be corrupted by correlating votes via either collusion between parties or wallet splitting by a participant. Our concept development will use a version of plural voting that discounts correlations between wallets. Measures of transactions between wallets will be used to measure the degree of correlation between two wallets. Successful implementations will utilize decentralized identifiers as that technology matures. For subsequent product development, we will integrate other efforts on identity and reputation management.

Use Case: DREP Polling Demonstration

The first use case to evaluate the Cardano Governance Exchange will be polling the community on upcoming Cardano DRep decisions. This use case will provide more accurate community sentiment for DReps as they consider their binding decisions and a real-world comparison between coin-weighted delegation and plural voting. The L∀LKUL DRep launched by Photrek will use the plural voting polling as part of their consent decision-making process. If the information proves to be valuable then it can form the basis for a self-sustaining product.

Please define the positive impact your project will have on the wider Cardano community

Photrek aspires to revolutionize Cardano governance by introducing a more equitable, transparent, and participatory model. By incorporating quadratic voting with redistribution of voting funds, Photrek seeks to create a system where influence is balanced, and participation is incentivized. This model not only enhances fairness but also offers a sustainable financial structure for dReps, addressing key concerns raised by the community. Ultimately, this approach fosters a more inclusive and representative governance system that can drive long-term innovation and engagement within the Cardano ecosystem.

Improving Quality of Community Decisions

Plural Voting [1-3] is designed to improve the quality of community decisions by properly pricing influence on the outcome. Since the probability of changing the outcome of a decision increases with the square of the votes, it’s important that the price of a vote also increases quadratically. This mechanism allows broad majorities to be decisive but at the same time permits minorities to invest more resources on decisions they consider to be of high importance. Nevertheless, there is protection from a minority dominating all decisions, since they have to pay the community for each decision. Evidence is provided in Figure 1 below, which shows the result of a data-driven Photrek simulation of the Singularity NET community, where we compare how several voting systems impact the voter's welfare. Preferential quadratic voting consistently provides higher welfare, improving the quality of community decisions. The details can be seen in SNET DF4B-RFP-2 M5 Voting Sim Final Report [4, 5].

Figure 1. Here we show how the aggregate voters' welfare of several voting systems changes with the voter's nonconformity (inertia). We used a community with 500 voters, 198 proposals**,** and 6 voting pools.

Incentivizing Participation

The redistribution of funds creates an incentive for more people to engage in the governance process. Voters who may not have significant financial resources and thus will not be highly influential on the outcomes will benefit from participation by receiving an equal share of the redistributed funds. If broader participation is achieved this will create a more robust and representative decision-making process. Our project will provide experimental evidence of how participation rates are affected by the pay-for-votes mechanism. One assumption to be evaluated is that the amount of money people would be willing to pay for their opinions will be limited but that the overall participation would improve. To mitigate the risks involved in implementing this system for a first trial with Cardano, we propose using Hosky or other low-cost tokens as a first means of exchange. These are already widely circulating in the Cardano community, and present a minimal risk to prove our concept.

Sustainable Financial Model for dReps

From the global CIP-1694 workshops, the community agreed that there should be some type of compensation for dReps, however**,** no specific provision has been made to address this yet. With the model we are proposing, the redistribution of voting funds could include administrative costs associated with running a DRep. This financial sustainability encourages dReps to remain engaged, fostering a healthier, long-term governance ecosystem.

[1] Lalley, Steven P., and E. Glen Weyl. “Quadratic Voting.” Available at SSRN, 2016. https://www.aeaweb.org/conference/2015/retrieve.php?pdfid=3009&tk=BHDG8H2E.

[2] Lalley, Steven P., and E. Glen Weyl. “Quadratic Voting: How Mechanism Design Can Radicalize Democracy.” AEA Papers and Proceedings 108 (May 2018): 33–37. <https://doi.org/10.1257/pandp.20181002>.

[3] Weeks, B. E. (2019). Thinking fast and furious: Emotional intensity and opinion polarization in online media. Public Opinion Quarterly, 82(S1), 866–887. <https://doi.org/10.1093/poq/nfy036>.

[4] Moe, Wendy W., and Michael Trusov. "The value of social dynamics in online product ratings forums." Journal of Marketing Research 48.3 (2011): 444-456.

[5] K. Nelson, E. Hansen, N. Battle, S. Macurdy, and N. Tran, “Sociocratic Pluralism governance for blockchain ecosystems,” Jul. 30, 2024, Rochester, NY: 4911180. Accessed: Aug. 07, 2024. [Online]. Available: https://papers.ssrn.com/abstract=4911180

What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Photrek is an international leader in the research and development of voting mechanisms, and introduced the quadratic voting mechanism to the Cardano community in 2021 with its F4 Catalyst project Diversify Voting Influence. Most recently, its F11 Socicratic DREP project published the paper, “Sociocratic Pluralism governance for blockchain ecosystems”. The team is currently partnered with IOG Research on the F12 Alternative Voting project, where we are advancing the capabilities of the Catalyst program.

Photrek’s product development team, led by Juana Attieh, has partnered with Trustlevel to deliver the Contribution Engagement Score platform used by SingularityNET to process the voting results for the Deep Funding program and is currently working on their entire reputation system design. This software was prototyped in DF3 and fully utilized in DF4. Maciej Nowosielski has recently joined the Photrek team to lead our blockchain development efforts.

Our validation will consist of both functional testing of the marketplace platform and participation rate evaluations. While we have a solid foundation of research to support the efficacy of our proposed model, including insights drawn from previous implementations of quadratic voting and feedback from our past projects, we recognize the importance of real-world data to substantiate our concepts. These metrics will allow us to fine-tune the platform, ensuring it meets the needs of the Cardano ecosystem while providing real, measurable value.

What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: Project Launch (2 months)

Milestone Output:

• Detailed definition of the milestones and statements of work for defining the vision and mechanics of the project
• Marketing roadmap and specification document

Acceptance Criteria:

• Milestones accepted by Cardano Catalyst
• Roadmap addressing Marketing strategy
• Specifications document

Evidence of Completion:

• Approved milestones
• Public release of roadmap and specifications document

Milestone 2: Marketplace Concept Development (2 months)

Milestone Output:

• Review of open-source quadratic voting platforms
• Evaluation of development requirements for marketplace payment &amp; distribution method
• Markup and Prototype for Marketplace Interface

Acceptance Criteria:

• Assessment of ability to leverage existing open-source QV platforms
• Specification of development requirements
• Prototype of the Marketplace Interface

Evidence of Completion:

• Documentation of existing QV platforms and the accessibility of the open-source code
• Specification of the development gaps required to be addressed
• Web prototype is publicly viewable on a UX design platform

Milestone 3: Infrastructure Prototyping (2 months)

Milestone Output:

• Configure development environment for the governance marketplace
• Develop smart contracts to manage vote payments, collection, and disbursement and empower the governance marketplace.

Acceptance Criteria:

• Initial dApp setup for all marketplace operations as specified in the specifications document
• Initial smart contract for vote processing and governance.

Evidence of Completion:

• GitHub link to source code made publicly available
• Report explaining the development environment setup

Milestone 4: Prototype Launch &amp; Testing (3 months)

Milestone Output:

• Marketplace prototype launch on testnet
• Internal testing

Acceptance Criteria:

• Launched on testnet
• Test data collected

Evidence of Completion:

• Link to prototype version of the marketplace on testnet
• Address of deployed smart contract and transaction metrics
• Document detailing feedback from testing

Milestone 5: Product Proposal (2 months)

Milestone Output:

• Proposal for Development of the Cardano Governance Exchange

Acceptance Criteria

• Realistic plan for how the exchange can be developed into a product

Evidence of Completion

• Proposal document with scope, schedule, and budget

Final Milestone: Evaluation and Final Report (1 month)

Milestone Output:

• Evaluation of the functional requirements for product development
• Evaluation of the participation rates during test phase
• Final Report

Acceptance Criteria:

• Strengths and weaknesses of functional test documented
• Participation rates during testing documented
• Final report and video submitted

Evidence of Completion:

• Assessment of functional test and participation rates
• Project Close-Out Report with video

Who is in the project team and what are their roles?

<u>Photrek</u><u> Team</u>

Administration

Megan Hess, Project Lead

Development/Technical

Kenric Nelson, Ph. D. Advisor

Maciej Nowosielski, Senior Developer

Igor Oliviera, Junior Developer

Customer Engagement

Megan Hess, Customer Engagement Lead

Raymond Mata, Customer Engagement Developer

Megan Hess, Operations and Communications Lead at Photrek. With 4+ years of experience in the Cardano ecosystem, Megan has led initiatives for startups like Wada and DIT in Cameroon, as well as managing a family farm in Cameroon. Currently, she serves as project manager for key projects, focused on dRep development and AI-powered tools to support governance. Megan first collaborated with Photrek on their F4 Catalyst project, "Diversifying Voting Influence," and has been selected to lead the Photrek Cardano Circle, where she is committed to driving innovation and supporting decentralized governance and risk intelligence. With a Bachelor’s degree in Physics from the University of Denver and a background in teaching math and physics, Megan excels in communication, team facilitation, and applying sociocratic principles to her management style. Living between the US and Cameroon for the past 5 years with her family, Megan brings a global perspective and a commitment to driving innovation in decentralized governance for the Cardano ecosystem.

Dr. Kenric Nelson is the Founder and President of Photrek, LLC which is developing novel approaches to Complex Decision Systems, including risk-aware machine intelligence, particularly for environmental risks, and governance policies for decentralized communities. He served on the Cardano Catalyst Circle governance council and is leading a revitalization of Sociocracy for All’s <member communityid="163" id="90982">work</member> circle. Prior to launching Photrek, Nelson was a Research Professor with Boston University Electrical &amp; Computer Engineering (2014-2019) and Sr. Principal Systems Engineer with Raytheon Company (2007-2019). He has pioneered novel information metrics that are improving the training of machine learning algorithms. His education in electrical engineering includes a B.S. degree Summa Cum Laude from Tulane University, a M.S. degree from Rensselaer Polytechnic Institute, and a Ph.D. degree from Boston University. His management education includes an Executive Certificate from MIT Sloan and participation in NSF’s I-Corp program.

Maciej Nowosielski is an experienced full-stack developer with a diverse skill set in hardware and software development, including proficiency in front and back-end languages, responsive frameworks, databases, and IT support. Committed to delivering high-quality solutions and contributing to company growth in a rapidly changing tech landscape, he continuously refines his skills to meet evolving organizational needs. Drawing on his disciplined problem-solving approach developed as a United States Army Veteran, Maciej excels in Web Development, Mobile Application Development, and emerging technologies such as WEB3 Blockchain development. His expertise also extends to IT support, where he focuses on maintaining seamless operations and resolving technical issues efficiently.

Please provide a cost breakdown of the proposed work and resources

The project will review open-source voting platforms that have implemented versions of quadratic voting and/or funding. From these resources, an accelerated development path will be planned for the payment and disbursement version of quadratic voting.

How does the cost of the project represent value for money for the Cardano ecosystem?

Photrek has been delivering high-quality projects for the Cardano ecosystem, from fund 4 to 12, with a strong commitment to fair compensation and efficient resource management. Our estimated Day-Person cost is approximately $1,000, reflecting the value we place on skilled team members and our dedication to meeting the highest standards. Our rates are based on self-employment in the US &amp; Canada. The rates take into account the employment overheads of the resources contracted. Furthermore, for collaborators who commit to multiple projects over a year, we provide a working partner contract that includes portable benefits. This has strengthened our sociocratic commitment to building a strong, capable team. The amounts are calculated for each milestone based on the hours to complete. For example, the chart for engineering and scientific salaries in the Commonwealth of Massachusetts is provided here.

By funding this proposal, the Cardano community can expect a governance marketplace delivered on time, with increased engagement, fairness, and sustainability in decision-making while providing excellent value for the investment. The proposed pricing mechanism fosters a more transparent and decentralized governance system, where influence is quantifiable and subject to clear market dynamics. This approach reduces the risk of fund misuse or manipulation, ensuring that governance remains inclusive and accessible to all. By promoting a fair and equitable process, the project advances Cardano’s goal of a truly decentralized ecosystem, where every community member can participate meaningfully and benefit from their contributions.