Mest is taking part in the Gitcoin Grant Round 15 in the aim of helping the community understand more about Gitcoin by describing the on-chain data stories when Grant 2.0 is released. Before that, let’s introduce the GR and do the data review of GR1 - 14 at first.
Gitcoin Grant is implemented as quadratic funding, but the concept originated in a paper by E. Glen Weyl (author of Radical Markets) and Vitalik, Zo Hitzig, Liberal Radicalism: A Flexible Design For Philanthropic Matching Funds. This paper is emphasize on individuals allocating votes to express the degree of their preferences, rather than just the direction of their preferences.
Traditional voting schemes is “ one person, one vote” or “one dollar, one vote”.
However, there are 2 problems with traditional voting schemes: The specific needs of the minority, like same-sex marrige will be disregarded, since majority is justice. When it comes to “one dollar, one vote”, the rich seems to count for more.
Unlike traditional voting schemes, quadratic voting maintains voting equality while also allowing minorities to buy more votes to protect their interests or needs. It optimizes social welfare by balancing the conflict between the minority and the majority. Based on quadratic voting, the cost of voting equals to the square of the number of votes. If you have 100 voting credits, 1 vote costs 1 credit, but 2 votes cost 4 credits and so on. As a result,the more you vote, the higher you cost. Voters can allocate voting credits according to their preference and the degree of preference. You can read Vitalik's paper to learn how it operates and the following square curve depicts quadratic voting. But we won't go any further.
As an attempt to improve traditional voting, quadratic voting still has some drawbacks, such as
When those issues arise, the worst situation may is to change the voting scheme from quadratic to traditional. Instead of focusing on how well the Gitcoin Grant is performing, it is preferable to ask whether this experiment is reasonable. The Gitcoin Grant has been performing well now. There are more engaged in terms of people, projects, and money. The community conducts evaluations and improvement plans at the end of each round, such as
The on-chain stories of the Grant begin with the initial objective of quadratic funding:
Gitcoin Grant has raised a total of $18.04M over the last 14 rounds, of which 66.93% came from contributions made by community users and 33.07% from the matching pool. With 2,380,689 donations from 142,776 users, 3,161 grants have benefited overall.
Grant funding per round is growing strongly higher with an average increase of 52.54% year over year, but it fell by 36.86% in the first quarter of 2022, the stage of bear market. Grant funding and donor performance is also positively correlated with market trading activity.
Over the past 14 GR rounds, the largest grant was given to Coin Center for public blockchain education, totaling $1.15 million.The rest projects are primarily non-profit organization and work on privacy, longevity and charity. Unexpectedly, open source projects do not receive the largest share of total funds.
The community, dApp Tech, and infra tech categories received the majority of the money from GR1 to GR12, sharing for 88.22% of the whole funding. Every round of funding flow may serve as a proxy for the current state of the market, as is the case with the current GR15 for DeSci, zkTech, etc.
The community projects, which raised a total of $5.14M and included more than 2100 projects, are where funding first goes. Also, after GR5, there is a noticeable trend of NFTs projects, which accounted for 7.21% of the total number of projects by the end of GR12 and had raised more than $1M.
The effectiveness of quadratic fundraising can be determined by the matching ratio. If the matching ratiois too high, Sybil attacks could result; if it is too low, the impact of each individual will not be fully utilized. The average match ratio for Grant was 1.05, with a peak of 2.64 on GR5. This indicates that every $1 in crowdfunding could leverage $2.64 in matches from the matching pool.
However, we also discovered that 83.5% of projects collected less than $1,000, and over 74.63% of past GRs had a match ratio of less than 1. It demonstrates the obvious Matthew effect on Grants donations.
The donation of all projects reveals an odd trend: over the past 6 rounds, existing projects have received 64.83% of donation funding, but new projects have only garnered 35.16%.
Actually, rather than offering large sums of funds for short periods of time, the Gitcoin Grant's vision offers steady and stable support for public goods. Long-term funding provided quarterly gives developers a consistent stream of income to run their projects.
All 42,776 donors made an average donation of $15.73, however 40.69% of those donations were less than $2 and only 13.72 % were larger than $1,000. This is in consistent with rational expectations for quadratic voting, but not with donating behavior's actual performance. It probably is related to the retroactive airdrop (It is a type of event that distributes tokens to early adopters who went with the projects in the specific period). The Gitcoin community has kept upping the standards for identity verification to avoid pointless donations.
You can see that quadratic voting is still an experiment and does not always produce the best results. Even while funds may not always be spent on the proper public goods and the donation's initial goal may no longer be pure, we could still feel the power and coordination of the Gitcoin community. All of us are know that the free market is a long-term, dynamic, and repeating game in an equilibrium process.
These little narratives are based on open data sources from the Gitcoin, some of which may not be accurate and full. After Grant 2.0, we're anticipated to make it better! Please feel free to correct any errors we may have made, and we sincerely hope that these stories inspired you in some way.