Persistent Funding

In addition to Quadratic Voting, thinkers like Glen Weyl and Vitalik Buterin have also invented another exciting and related mechanism called Quadratic Funding that allows pledges toward any kind of project to be matched with public funds in a way that optimally incentivizes private actors to pledge towards projects that create the greatest social welfare. However the mechanism could often require matching amounts that exhaust the public funding pool, creating a tricky situation in which projects either don't receive the full optimal funding specified by the system, or must be arbitrarily prioritized.

We can solve this problem by combining persistent prioritization and commitments to ensure every project is matched fully, in the order that will bring greatest social welfare.

Description

Let's say a group allocates some percentage of their recurring budget to a quadratic funding pool. This means at any time the pool has some amount of money, and regularly receives more from the budget. We want a system to decide how this money should be used for quadratic matching that isn't arbitrary and gives projects the full optimal amount specified by the mechanism.

Anyone can nominate or anti-nominate a project for pool funding by placing quadratic weights on it, and separately can make monetary pledges. The project must state some funding goal, and is only eligible for fund matching once the total possible matched funds meet that goal.

Fund matches are granted in cycles of persistent commitments, such as every month. There could be a default decision document to fund projects in priority order until the fund is exhausted, or to fund no projects.

However projects aren't prioritized merely by their democratic weight, but by the ratio of democratic weight against the size of the public match. This ensures the fundable project with the highest social welfare return on investment is funded first. If the funding pool is unable to fully match the highest priority project, all projects must wait behind it until the pool fills enough. This creates an incentive for members of society to place democratic weights on projects honestly, since their favorite projects could get stuck behind others and will require more priority weight to move up.

Of course, the group can nominate different funding decision documents for a cycle. These documents could specify a list of possible actions:

  • Guaranteeing the funding of some list of projects regardless of their existing order, useful in situations where some project is unusually large.
  • Adding one-time lumpsums to the pool, such as by taking on debt or issuing inflationary currency.
  • Striking "nuisance" projects from the list.
  • The default action of merely funding projects according to the priority order. Nominated decision documents could choose to perform this normal action before or after other actions.

In general it is safer for groups to err on the side of not funding projects, since anyone in the group could propose spurious ones. This application of persistent commitments allows groups to inspect and approve all funded projects.

Benefits

  • Quadratic Funding is extremely powerful and exciting, and it only really needs some way to address prioritization.
  • As with any application of persistent commitments, a group can make irreversible decision in a cautious way.

Potential Objections

Any problems with persistent commitments will be felt in this system.

Open Questions

Groups won't only want to fund one-time projects, but also ongoing work such as that funded using websites like patreon.com. There could be many slightly different ways to fit that kind of funding into this system, and I haven't yet puzzled out what might be best.


Table of Contents

Introduction
In Defense of Pure Logic
Persistent Voting
Quadratic Range Voting
Persistent Documents
Persistent Prioritization
Persistent Endorsement
Persistent Commitments
Persistent Funding
A Theory of Minimum Necessary Rights
Markets and Rights
Common Resource Taxes
The Crowdsell Mechanism and Intellectual Property
Democratic Districts
Free Borders
Persistent Logistics
Democratic Adjudication
Misinformation Trials
Member Cooperatives and Economic Activism
Coda
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