Quadratic Funding
Quadratic Funding is one of the optimization methods for Fundraising. It prioritizes the number of contributors rather than the amount raised. It applies the mechanism of Secondary voting. Let's consider some Specific Examples. Suppose there is a pool of $10,000 and the following contributors appear in an additional round:
- Project A receives $1,000 from 5 donors.
- Project B receives $1,000 from 2 donors.
- Project C receives $1,000 from 20 donors.
In this scenario, it is important to note that All donation amounts are the same $1000.
By simulating this scenario using the Quadratic Funding mechanism, the distribution of additional funds would be as follows: https://gyazo.com/78849c0f8fe3617c575f00eceebbf6ca
- Project A (Grant#1 in the image) receives an additional $1851.85 in funding.
- Project B (Grant#2 in the image) receives an additional $740.74 in funding.
- Project C (Grant#3 in the image) receives an additional $7407.41 in funding.
As we can see, The more "donors" there are, the higher the additional amount (distributed from the match pool) will be.
Furthermore, the system provides incentives for small donations. For example, if a 21st donor contributes to Project C, the The influence of donations is set as follows: - If someone donates $1, their donation is matched with $26.97, increasing their impact by 27 times.
- If someone donates $5, their donation is matched with $59.8, increasing their donation amount by 12 times.
- If someone donates $20, their donation is matched with $117.77, increasing their donation amount by 6 times.
For more information on Quadratic Funding, you can refer to Resources on QV.