Please describe your proposed solution.
Problem and 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.
Source: https://www.wtfisqf.com/
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 (i.e. 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 Ukranian children's improved education and mental health outcomes produced by 21 different organizations.
Demonstrating Impact
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 toward 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.
Reasons for this Approach:
- Equity and Inclusion: We incorporated the Impact Score into our model to ensure a fair and diverse representation in funding decisions, moving away from favoring only those with substantial financial resources.
- Transparency and Decentralization: We chose a transparent and decentralized decision-making process to democratize funding and build trust within our community.
- Sustainability and Impact: Our model's sustainability lies in verifying and selling social outcomes, creating a circular economy of public goods, and ensuring the funded projects deliver tangible societal benefits.
- Optimal Allocation of Funds: By considering social outcomes in our Impact Score and fund allocation, we aim to direct funds to projects that generate the most significant social impact.
- Fostering Innovation: We believe in nurturing innovation by providing an inclusive platform that supports diverse and underrepresented groups, particularly in open-source projects.
Engagement:
The Extended Quadratic Funding model is designed to engage a wide range of individuals and organizations. It's intended for open-source project creators, especially those working on projects that generate social or environmental benefits. Simultaneously, it empowers contributors who have a high Impact Score, regardless of their financial status.
Uniqueness
Our approach of Extended Quadratic Funding is unique because it adds a layer of fairness to the quadratic funding model by considering an "Impact Score." This score, developed by Socious, reflects an individual's contributions to social and environmental impact. By accounting for this score, our system provides individuals who may not have substantial financial resources but have made significant contributions to society with greater voting power. This, in turn, helps create a more equitable funding process and ensures the inclusion of diverse voices.
Importance for Cardano
Our solution holds immense value for the Cardano ecosystem. By encouraging and supporting open-source projects, we are fostering innovation, promoting inclusivity, and contributing to a more sustainable and equitable world. Cardano, with its commitment to peer-reviewed academic research and providing fresh avenues for global financial and social systems, can significantly benefit from the positive social and environmental impacts generated by projects funded through our model. In addition, this project has the potential to attract more projects and developers to build open-source Dapps on Cardano in order to get funding via the Extended Quadratic Funding. Furthermore, the transparency and decentralized decision-making inherent in our model align well with Cardano's principles, enhancing trust and community participation within the ecosystem.
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.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
Our proposed Extended Quadratic Funding solution addresses the challenge at hand from multiple angles:
- Prioritizing Key Tools: The challenge seeks to identify critical tools for prioritization. We believe a fair funding scheme should take precedence. Traditional crowdfunding methods often overlook small, underrepresented open-source projects. By introducing Extended Quadratic Funding, we ensure these projects have a fair shot at acquiring necessary funding.
- Attracting External Developers: The challenge also underscores the need to engage developers outside the current community. Our solution offers an appealing incentive structure. The Extended Quadratic Funding system not only facilitates access to funding but also promotes improving one's Impact Score. A high Impact Score enhances the chances of securing funding and increases one's voting power. This structure motivates individuals to contribute positively via their open-source projects in the Cardano ecosystem.
- Support and Collaborative Structures: Our solution directly aligns with potential directions of the challenge, including "Support structures" and "Collaborative structures". We provide financial backing for underrepresented open-source projects through an inclusive funding system. Quadratic funding inherently promotes collaboration as it rewards projects with wider community support with higher matching grants.
- Increasing Open-Source Projects: In line with the goal of bolstering the number of open-source projects on Cardano, Socious is itself an open-source initiative. It leverages the Extended Quadratic Funding mechanism to financially aid open-source projects on Cardano.
Our project aligns seamlessly with the key metrics for the challenge:
- Number of developers actively building on top of Cardano: By offering financial backing to open-source projects via an equitable crowdfunding platform, we aim to attract a larger developer community to the Cardano ecosystem.
- A vibrant community of developers and proposers engaged in project collaboration: As a social networking app, Socious cultivates connections among developers, fosters a sense of community, and encourages dynamic discussions.
Currently, Socious boasts over 3,800 registered users, including many developers who hadn't had the opportunity to build on Cardano before joining our platform. We firmly believe that through our project, we can significantly increase the number of developers actively contributing to the Cardano ecosystem.
How do you intend to measure the success of your project?
The primary benefits of our project to the Cardano ecosystem include:
- Attraction of external developers to the Cardano platform by offering financial support for small, underrepresented open-source projects. This diversifies the pool of innovators contributing to the ecosystem.
- Encouragement of impactful open-source projects through incentivization tools such as voting power under Extended Quadratic Funding and the Socious Impact Score.
We intend to measure the success of our project using both quantitative and qualitative metrics:
- Quantitatively, we will track the number of open-source projects funded via our platform. For this pilot phase, our realistic target is to fund at least 10 projects. We benchmark this expectation on the success rate of other crowdfunding schemes such as Project Catalyst.
- Qualitatively, we plan to gather user feedback and testimonials. Understanding our users' experiences and their opinions of the platform will provide critical insights into how well the system works and where improvements can be made.
In terms of productivity and growth, we believe our innovation will make a positive impact on Cardano in both the short and long term. In the immediate future, it provides Cardano developers with alternative funding opportunities outside of Project Catalyst, thereby enabling the creation of more impactful open-source projects.
In the long run, by utilizing the unique incentives of Extended Quadratic Funding and Impact Score, we aim to draw a larger pool of developers to build open-source projects on Cardano. This continued influx of creative talent and innovative solutions is expected to propel sustained growth in the Cardano ecosystem.
Please describe your plans to share the outputs and results of your project?
We plan to spread the project's outputs during and after its completion. While building, we provide monthly and milestone reports, and present in two Town Hall meetings every two weeks: the Eastern Town Hall and the Pacific Town Hall. We regularly attend these town hall meetings to provide project updates and will continue to do so in the foreseeable future. While we are based in Japan, which naturally aligns our schedules more closely with these two Town Halls, we make efforts to reach beyond these forums. At significant moments, such as the completion of a project phase, we expand our participation to include other town halls, overcoming time zone challenges to do so. We greatly value these occasions as they present an opportunity to share our accomplishments and engage in beneficial discussions with a wider audience.
We will share the projects’s outputs, impact and opportunities with the community members. The links to our close-out report and video will be publicly available on Youtube. We will also share information on our website and social media. Because we have a gig marketplace, gig opportunities for Cardano developers will be listed on our Socious platform.
As Socious is an open-source project, our codebase is publicly available on our GitHub page. Cardano developers are encouraged to fork and use it for other projects.
We will analyze the results of this pilot project and use the findings to inform our future development activities and future rounds of crowdfunding.