How Can $1 Turn Into $27? QUADRATIC FUNDING Explained
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- Опубліковано 6 гру 2020
- So what exactly is quadratic funding all about? How can it magnify the funding of public goods? And what are public goods in the first place? You’ll find answers to these questions in this video.
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Quadratic funding is a concept that extends ideas from quadratic voting to a funding mechanism. Both concepts were widely discussed by Vitalik Buterin in his blog posts and a paper that he co-authored together with Zoë Hitzig and Glen Weyl.
At the core of Quadratic funding is its matching pool. A matching pool is a pool of money that is provided by the matching partners. Matching partners are companies, individuals or even protocols supporting public goods projects.
The funds collected in the matching pool are used to magnify the individual contributions to different projects.
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When neutrino protocol review?
is it just me or this gent sound a lot like Dr. Károly Fehér from 2 min papers??? "What a time to be alive!!" 😂😂.... Both of these guys are very excellent. Bless them for their efforts.
Hold onto your papers!
Yes.
If you just create a bunch of accounts split your money between them. Wouldn't your project choice then have an advantage?
this gets answered below. essentially proof of humanity like things can solve this
Dude I thought you were some tech guy
But actually explaining the economics behind it is awesome
You are so good at explaining things, very impressive.
Thanks! :)
So why whale instead of spending 1000$ at once wouldn't split it into 1000x payment of 1$ from different wallets? The system will be always gamed. (numbers used just for reference, it can be 1m split into 1000$ contributions etc.)
What you're describing here is called "a sybil atttack". Gitcoin uses a "Trust Bonus" this means that you can increase your match if you are willing to take some extra steps to verify yourself. These steps include things like: BrightID, verifying google account, POAP, SMS and Twitter.
Amazing video! I'm already on Gitcoin Grants with my main game project (Ancient Beast) and did ok-ish, but will definitely have to push this more when time for next quadratic campaign comes :-)
If you have a sky full of air it is a public good. If you are down to your last tank of air it is a scarce private good.
That's a great explaining and informative video. Thanks for the great effort.
Thanks! Glad it was helpful :)
Thanks for your videos. What i somehow missed was where the money from the matching pool comes from?
I mean, 3*1000 $ is still just 3000 $ and not 10,000. Is there another external source which does not vote? Unfortunately that was not clear at all.
In the example, 3k comes from contributors - individuals who want to support public goods. 10k comes from matching partners. The main difference is that individual contributors decide which projects they want to support and they usually contribute small amounts.
Matching partners support the whole idea of quadratic funding and their funds are used to multiply other people's contributions. They also usually contribute bigger amounts. I hope this helps.
@@Finematics thanks for your quick reply. But why is it not 13,000 $ in the pool then? Or does each project get their funding plus the fraction (determined by the voting mechanism) of the matching pool?
Otherwise, great video. Really enjoy your content!
@@franzperdido yes each project gets their funding from individual contributors plus the fraction of the matching pool where funds are provided by the matching partners
@@Finematics got it. thanks! :)
went in the same loophole.. thanks!
Another awesome video, keep it up :D
Thanks! :)
Another great video Numerix 👍
This is amazing thank you so much for the valuable information, please keep going, I've learnt a lot form you.
Thanks! Appreciate your comment :)
Thanks for another great video! I have a suggestion. I love your end shot with all the snapshots in one screen and would like to capture as kind of short note to remind myself of key points in the video. However, because UA-cam always show the next recommended video and your log so these block half of the screen. Can you leave this 'one screen' on for a longer while before UA-cam distraction comes up. Thanks.
Thanks! Great suggestion. I'll see how I can do it next time.
It's a fantastic idea! Crypto funding for the common good. Real-life touched.
Love the vids! Can we get a video from you on the Flare Network project?
Hei, your videos are very amazing, just keep going. Thanks
The formula can be intimidating. It is easier to explain the matching amount using the percentages of the number of contributors or votes. For example, the option C receives a matching amount of 20/27*$10k = $7.4k. However there is no clear association between the votes and their quadratic cost.
Doesn't this simplification only work because all of the projects received the same amount of initial funding (e.g. $1000 each)?
Great idea.
But what's the motivation for people with more, providing the matching, getting out of it? What's to keep the lower contributor accountable?
This is all my opinion: this inovation strives to increase "democratization" of these investments in the public good. I would imagine that people with lots of moneys would endorse and promote these strategies to attract investors and people to their financial (or else) ecosystem. Just like ethereum and gitcoin are doing, they are giving grants using this method and are consequently attracting and maintaining investors, speculators and stuff. Of course none of the big whales in finance would consider doing this outside of the experimental realm because it would mean a big loss in control for them, but these things are hopefully showing to be able to develop themselves within any community once it provides enough public awareness and confidence in its method, i guess...
ps.: i dont understand what you mean by ur Q: "What's to keep the lower contributor accountable?".
@@vasconcelossentimento yeah I think that's a great explanation. I think I'd add that it actually incentivises larger investors to put their money into the projects that provide the most benefit to society as opposed to the current model of where can the most profit be made. And how do you know that these projects will be most beneficial to society? Because there is a consensus across a much larger spread of investors.
This mechanism is just brilliant. How to turn the econommy into a cooperative-inclined one, by incentivicing public contribution.
Actually, a variation of this quadratic funding could lead to an economical system where the richness doesn't concentrate in a very small sector of the population. This has been the richness distribution behaviour along the last decades, concentrating around one point just like an approximation of identity like the Fejer nucleus does
You clearly lack understanding of the past and of the future, you know nothing of the 4IR
Where is the promised link to the calculator mentioned at 8:36? I see links in the description but I don't see which one is the calculator.
vitalik is a genius
Thank you very much for sharing your knowledge. It is very insipiring, Honestly I think It is the most interesting video that I saw in my life.
Glad it was helpful!
where is the calculator?
great vid btw
Also wich site u recommend for doing this?
I wish all UA-cam learning videos was like this. 👍
thanks!
Very great explanation for such a complex topic.
Can a bot abuse quadratic funding, e.g use multiple wallets for higher rewards?
Where does the matching contributions come from? Who provides them?
Fascinating
I didn't understand what the model tries to optimize ? Some sort of 'democratic' ampification/leverage based on the count of 'votes' on specific 'public goods' with the money pool 'being redistributted' to projects ?
i didnt get the part of matched money. if i invest 1 dollar it can be matched with more than 20, and then? what does this mean? what do i have from it?
Can you guys explain how the RSR# protocol works? I sort of get it but arbitrage is a bit confusing.
Are there any upcoming quadratic projects you are researching and looking into? If so which ones are they?
How did you make this video?. On which software or website
osum. great, we want more.
So basically the whole idea is to help the matching partners split their money on of public interest project? Otherwise if I'm a matching partner and have, say 5milion$, why wouldn't I directly donate it to my own interest project?
Super duper se bhi uper
This could never work practically. The biggest problem with this is assurance of matching pool size for effective allocation. You only need to scale up slightly for a requirement for a massive pool if the requirement is quadratic.
Which is the incentive to contribute to the matching pool?
I was thinking the same too. It kinda feels like an algorithm for charity.
There are two main reasons I think:
1) Individuals who already "made it" and want to use their spare funds to help other open-source projects to achieve their goals
2) Companies/protocols that want to support other projects. By doing that they become more visible to the whole DeFi space (example: Binance, Kraken). So in this case it is kind of like marketing.
@@Finematics It's basically charity with extra steps.
@@kalamansihans no really, there is a difference between charity and supporting open source / free projects. In the former you support individuals who are worse off than you and they cannot provide anything in return. In the latter someone is producing open-source code or free content that benefits other people who are willing to support someone's effort.
@@Finematics I guess you're right. It's just the norm in crypto nowadays that there is always a sort of "returns" for investment. In this case, we can say that the nature of the returns are not monetary.
But where does the “matched” money come from? Like does some person/company agree to match all donations using the quadratic formula? Sounds like the person matching the donations is getting wrecked.
@Elias Håkansson I agree. Got a good project going on (Ancient Beast) but most people just lurk. And if providing incentives, need to avoid to not turn up into another crowdfunding or patreon type of thing that would take a lot of time and money for rewards, so digital goods as incentives, recognition and access to extra stuff behind the scenes are probably best ways to go about it.
@Elias Håkansson Indeed. The GPS tax thing sounds fair and according to another video from this channel, it will be very possible, such as the video about Lightning Network plus chain.link, which I actually trying to imagine awesome real world scenarios for :-)
@Elias Håkansson wouldn't that create a case where poorer people are forced to drive less if they're getting taxed per the roads they drive? Genuinely curious
He said that the matched money comes from sponsors who support the concept of QF. The contributions are from individual contributors and their portions are matched by the sponsors donations. Sponsors get notoriety out if it.
Wouldn't this incentivise creators of the public good, to create multiple accounts, and multiply their own money by funding themselves through a lot of small amounts? One could create 100 wallets and 100 accounts.
Or what if the grant was set to anonym, and one would send the the grant a 100 times? would it add up to a single 100 grant, since it's from the same adress or not?
That is where things like Bright ID come into play
Only the shady ones. lol
@@tyebeach What's that? simple KYC? Tho on Gitcoin there was no verification
@@andrews1540 No Bright ID is a new way of verifying that you are a human. It takes around 25 different human connections to prove you are a human. You have to use a webcam and chat with people for an hour and you are then verified.
Please put a subtitles.
If getting rich gets punished, so is the incentive to produce for the market. It's like a Casino where in the end of the night people who got more are forced to pay to people who got less, so what is the incentive to risk your hard earned money there in the first place? To me it seems that they are trying to "equalize the unequal's" at the cost of the natural law.
Can you make a video of a flywheel on crypto? Please.
Subtitles Please!
Doesn't this create an opportunity for someone to "game the system"? Instead of sending a donation directly to a project, send it to Bob's Quadratic Amplifier. Bob takes a commission off the top, and divides the rest among his army of sock puppet accounts, who make individual small donations. The project receives more total money, so this is a win for the original donor, at the expense of the matching pool donors.
Yes, it's called a "sybil attack". Platforms like Gitcoin introduce extra measures to prevent this from happening. Gitcoin calls it a Trust Bonus. You can opt in to verify yourself to increase your match. They use multiple things such as: github account, SMS, twitter account, BrightID etc.
@@Finematics OK, so a group of people interested in Effective Altruism decide to form a Sybil Club. They all opt in and verify themselves. They have periodic meetings where Alice announces that she wants to give $100 to Project A, Bob says he has $200 for Project B, etc. They do some work with a spreadsheet, and everybody gives small amounts to everyone else's projects. Every project receives more from the Matching Pool than it would otherwise, and the members of the Sybil Club congratulate each other on their cleverness.
@@Regruntled What would be the incentive to form a club like this? They would have to create a fake project that someone would flag sooner or later. Other option would be to collude with a grant owner. In that case the grant owner would risk their reputation.
@@Finematics No fake project needed! Let me try a simpler example. Alice and Bob meet for lunch. Alice mentions that she wants to give $100 to Project A. Bob says he wants to give $100 to Project B, so why not help each other? So Alice and Bob each give $50 to Project A and $50 to Project B. Alice and Bob have each given the $100 they intended. Each project receives more money from the Matching Pool for 2 $50 donations than it would have from a single $100 donation. Alice says "That was fun, let's do it again next month!" Bob says "OK, and I think I'll invite Cathy and Dave."
@@Regruntled yes agree, that would be one of the potential ways of cheating the system. I'm not sure how Gitcoin would prevent something like this. Traditional financial companies would build models around interactions like this to see repetitive patterns emerging.
Wow crazy my project happened to get 1 million donations of 1¢ each
Hey Finematics,
Isnt quadratic funding just "eating an elephant by divide and conquer"?
What is to stop Sybil attacks, like big whales splitting their contribution into small accounts.?
Aavegot chi mainnet tomorrow. You will regret if you miss it!!!
Why cardanos treasury isnt using this algorithm??
Until now 1$ contribution in erc20 token ia not possible beacuse expensive transaction cost. After eip upgrade may be a marvellous revolution. I hope quadratic funding will be available also on polygon, bsc and other blockchain
Could somebody fund my wallet in quadratic funding manner for the public good? I will enjoy it too in no rivalrous manner!
They need a whale balancer to even out the playing field for the smaller investors. Whales can find a way to create shadow whale pools by distributing their large holds into smaller chunks. How does quad funding fight this?
Whales get diminished returns. So if you're lucky enough to have someone drop stacks on your project, that person gets punished? Why would any bit players want to invest then? This sounds a bit ridiculous.
This isn't an investment product 🤦
@@bacchy8877 If you want your idea to be funded then you need investors. I don't see how this isn't an investment product. Someone gives you money now at the promise of a reward later.
@@blackmagick77 He literally says it's to fund public goods. You're not doing it to get a return
@@bacchy8877 Then why reward people differently, if it's just to fundd public goods and not to make money then why not donate or just pay everyone equal if it's supposed to be out of the goodness of your heart?
@@blackmagick77 You need to watch the video again man
Noice
Subtitles Please
What is to stop whales sending multiple small amounts??
they have multiple things in place to protect against this (which is also called a sybil attack)
What is preventing me to make a million accounts to increase my profits?
Gitcoin uses their own Trust Bonus system to prevent sybil attacks. If you're willing to take some extra measures to verify your account you would get a better match. You can provide things like your Twitter account, verify your phone number, BrightID and a few other things.
They also must have some anti-fraud measures in place. For example, a project that would get hundreds of contributions from basic accounts with no extra trust bonus would be flagged and maybe potentially banned.
@@Finematics So I can make hundreds of contributions from basic accounts to a project to cause it to be banned?
Where does the extra $27 dollars come from ?
if you'd put the last picture(all picture) on Patreon, you would be my first Patreon sub😉
Great contribution. Unfortunately, the formula you are showing is not the correct formula. I honestly do not understand why you are showing that formula that is misleading. The correct formula in latex notation is: $$\sum_i \sqrt{c_i(p)}^2$$.
Here is the R code to compute the matching funds in the example:
# matching pool
mp = 10000
# matching values
a = (200^0.5 * 5)^2
b = (500^0.5 * 2)^2
c = (50^0.5 * 20)^2
# matching fund
mp * a / (a + b + c)
mp * b / (a + b + c)
mp * c / (a + b + c)
ok, you are just saying numbers now.
Why wouldn't whales just divide up their stake into thousands of different accounts? This doesn't stop whales at all. What am I missing?
This is not an investment scheme but funding of public goods. No one wants to stop whales. It's just that small contributions are rewarded more so people are willing to contribute small amount, but if someone wants to contribute a large amount of money to a project they are free to do that. When it comes to preventing sybil attacks, Gitcoin uses Trust Bonus which basically increases a match if a user can prove they are not using a fake account. They use multiple things such as verifying via twitter, sms, BrightID and a few other options. I hope this helps.
@@Finematics VERY helpful. Thanks.
BUY ADA
Isn't it quite easy to cheat? Instead of donating $100, I could give $20 to five people each and even if they only forward half of that money, the matched money might be higher. Instead of donating a lot of money I could also spend that on ads to convince a lot of people to make a small donation. So even with that system the big donors have a lot of influence.
Turn $1 into $27, just get people to give it to you! Its SO SIMPLE. ONE TRICK BANKS HATE THIS HUNGHHHHH
Is this a good investment tho? I mean my 1 dollar becoming 27 dollars I nice but keeping 1000 dollars doesn't seem so nice. Also anyone who is supporting any grants?