Effective on-chain governance: DoraHacks on-chain quadratic governance and improvement examples

DoraHacks, as a multi-chain developer incentive platform and hackathon platform, needs to allocate millions of dollars in funding to hackathons and open source developer communities every month. In this process, governance is an important part. Traditionally, there are two ways to award prizes: one is to rely on professional judges to decide the prize; the other is to vote through the community and finally distribute the prize according to the number of votes. However, the former may be out of touch with the community and lack a sense of participation from community members; the latter may evolve into a simple popularity contest, ignoring the value of the project itself.

In seeking a method that can reflect the will of the community and ensure the fairness of the selection, DoraHacks turned its attention to on-chain quadratic voting. This method allows voters to cast more than one vote, but as the number of votes increases, the cost per vote will also increase, similar to the tiered electricity price in life. This means that if a project is of great significance to some community members despite being niche, they can choose to invest more in exchange for a greater chance of winning the project.

The example at the beginning comes from the allocation of the $14,000 bonus pool in DoraHacks' quadratic voting example at the end of 2020 - ETH Hackathon@ Beijing. This voting method not only takes into account the number of votes, but also includes the tokens used for voting as a direct contribution to the project, so that each outstanding project receives a certain proportion of the bonus, while also receiving additional donations from the community. This vote took place on the BSC chain at the time. This initiative was not only the first attempt at on-chain quadratic voting, but also the first time that quadratic voting was applied to offline blockchain community activities.

Since then, the DoraHacks team has continued to promote quadratic governance in the multi-chain world, and has successfully applied it on mainstream non-EVM chains such as Solana, Aptos, TON, Cosmos Hub, Injective, Archway, and Flow. In 2022, at the ETHDenver BUIDLathon, DoraHacks supported an unprecedented offline quadratic voting event, and continued to expand the participation of the global community in the subsequent online BUIDLathon. Currently, as the quadratic governance platform and infrastructure with the most ecosystem support, DoraHacks has supported 32 Web3 ecosystems for on-chain quadratic funding, with a total of more than 300,000 community members participating.

Quadratic governance allows a large number of Web3 community members to participate in the construction of the ecosystem, and also provides important start-up funds and market opportunities for the early development of public goods in each ecosystem. In order to help more community members understand the process of quadratic governance and support high-quality projects in the ecosystem, DoraHacks recently launched the "Voting Community Incentive Pool" mechanism (Community Incentive Fund), using well-known Memecoin and NFTs from various ecosystems to encourage community members to actively participate in voting. Currently, in the two quadratic voting rounds of Injective Grant DAO and Aptos Grant DAO, voters will receive two popular memes (Memecoin), Injective Quant ($QUNT) and Aptos Gui Inu ($GUI), respectively. In addition, lucky voters will be selected by the device-independent quantum random number generator to receive rare NFTs. Through CIF, DoraHacks has turned quadratic funding and on-chain governance into an interesting process, changing the serious nature of on-chain governance and providing a new direction for the development of public goods funding.

Let's turn the topic back to on-chain governance. Even if we go beyond the vision of Web3 hackathons, the blockchain world itself has a lot of governance scenarios, and of course, there is an urgent need for a more democratic and efficient voting method. DoraHacks found many areas that need to be improved in the initial version of on-chain quadratic voting during its exploration. Some of these problems are new problems caused by the characteristics of blockchain, and some are chronic diseases of democratic governance mechanisms. After long-term practice and exploration, the DoraHacks team proposed a comprehensive solution to break these problems one by one and launched a new quadratic governance infrastructure.

First, there are problems caused by the characteristics of the blockchain itself. First, blockchain wallet addresses are extremely easy to obtain, which makes the cost of witch attacks in on-chain voting extremely low. DoraHacks has developed a closed-source anti-witch attack check algorithm for this purpose. After each on-chain quadratic vote, there is generally a 3-5 day anti-witch attack check period. The voting address detected as a "witch" will be removed from the bonus calculation (but the donation amount entered through the witch address will still be regarded as a direct donation to the voted project).

Second, based on the blockchain's broadcast mechanism, on-chain activities are traceable and verifiable. Although for the community, higher transparency may mean a higher degree of democracy, it will also be easier to breed collusion. For example, a candidate project in a hackathon can use certain rewards to guide more community members who are not familiar with the project to vote, and then exchange rewards based on the on-chain voting records; or some projects can also calculate the "most cost-effective" number of votes for themselves by analyzing the on-chain voting situation in real time. The best solution to this problem is currently the "Minimize Anti-Collusion Mechanism" (MACI), the details of which have been introduced and analyzed in previous articles. Please see Pioneering Decentralized Governance: A Retrospective on DoraHacks' MACI/aMACI Study and Implementation (https://dorahacks.io/blog/news/pioneering-dgov-dorahacks-amaci/).

On the other hand, democratic voting itself still has many problems to be solved, the most prominent of which is a new form of "winner takes all". Taking hackathons as an example, if the bonus pool is distributed according to the number of votes received by the project, even with quadratic voting, a mechanism that suppresses "tyranny of the majority", there is an extreme situation: if the number of votes received by project A far exceeds that of project B (for example, 100,000 times), then B will hardly get any bonus from the bonus pool, while A will take away most of the bonus.

DoraHacks originally created the "Quadratic Progressive Tax" mechanism. Simply put, PT is a bonus distribution coefficient. Although a certain gap between the rich and the poor is allowed in the distribution of the bonus pool, this gap is strictly limited by the PT coefficient. For example, if the PT coefficient of a bonus pool is 10, the bonus that the project with the first place in the vote will not take away more than 10 times the bonus of the last place. On the other hand, there will no longer be a situation where a small team gets nothing, because at worst they can take away a bonus equivalent to 10% of the first place. Quadratic progressive tax significantly improves the extremely uneven distribution of early quadratic funding, and greatly improves the fairness and effectiveness of quadratic funding.

Of course, quadratic governance provides a new option for multi-chain governance models. DoraHacks is rapidly innovating in exploring and optimizing more effective governance models and governance technologies. Through effective governance mechanisms, resource allocation is optimized, and more participation and fairness are brought to the community. DoraHacks' practice has proved that even in complex governance scenarios, innovative mechanisms such as on-chain quadratic voting and MACI mechanisms can effectively balance the interests of all parties and ensure the diversity of projects and the voices of small teams. These explorations are not only on the road to pursuing technological and governance innovation, DoraHacks has demonstrated the possibilities of the future blockchain world: a more democratic, transparent and inclusive decentralized ecosystem, and a more interesting and vibrant Web3 development path.

Related reading:

Quadratic Governance: What’s Working and What’s Not?: 

https://research.dorahacks.io/2022/07/11/quadratic-governance/

Leading decentralized governance: DoraHacks’ MACI and aMACI practice review: 

https://yakihonne.com/article/naddr1qvzqqqr4gupzp6aa4034guyk8pkmfsegz9ycmj2xpwggyxnp7ech284366h8jlxjqq25wvrkgehy64r22u642umtx9nh2ez3f5m5jq99sr3

https://research.dorahacks.io/2024/04/11/amaci-adoption

What Will aMACI Unlock?: How do hash-based post-quantum digital signatures work? (Part 1): https://research.dorahacks.io/2022/10/26/hash-based-post-quantum-signatures-1/ How do hash-based post-quantum digital signatures work? (Part 1): https://research.dorahacks.io/2022/10/26/hash-based-post-quantum-signatures-1/ How do hash-based post-quantum digital signatures work? work? (Part 2): https://research.dorahacks.io/2022/12/16/hash-based-post-quantum-signatures-2/ Original link: https://dorahacks.io/zh/blog/news/dorahacks-qf-retrospective/