Introduction

Quadratic funding has received a lot of attention recently as a mechanism for funding public goods—especially in the web3 space. The Gitcoin grants program alone has distributed over $59M through QF funding rounds as of January 2024¹. QF is appealing because it is theoretically optimal under certain assumptions².

The problem is that these assumptions don’t ever hold in reality.

The theory behind QF is sound and elegant, and the authors of the original paper are clear about the assumptions. They don’t claim they are likely to hold in reality, and warn about the consequences when they don’t hold.

Measuring Uncertainty

How do you measure uncertainty?

That may seem like an odd question. But let’s just dive right into it, because it leads us down an interesting path to the definition of entropy.

I’m 99% Certain

We can start with one common way people express certainty. You might say “I’m 99% certain it will rain today”. This, of course, implies that you’re 1% uncertain. Or if you say “I’m 50% certain it will rain”, then you’re 50% uncertain.

“Democracy is a technology. Like any technology, it gets better when more people strive to improve it.”

– Audrey Tang, Taiwan’s first digital minister

There is increasing momentum in the world of “digital democracy”. But I don’t think the general public understands what digital democracy is, nor its potential to make the world a better place.

In a very general sense, digital democracy just means the use of digital technology in the democratic process. But digital democracy is more than just a government I.T. department. Its potential is not limited to making existing democratic processes more efficient and modern. Rather, it promises a new paradigm for democracy that is more fundamentally democratic, because citizens more directly and effectively control government. New technology not only makes more direct participation possible; it can make democratic processes more fair, transparent, and resistant to manipulation and concentration of power; it can help people make decisions that are more informed and intelligent; and it can help groups overcome the dilemmas of collective action that prevent us from coordinating to solve some of humanities biggest problems.