Crypto Networks: The Voting Systems
Voting Systems
Introduction
Voting systems are an essential part of any democratic society, and they play a vital role in ensuring that the ‘governing entity’ is accountable to the people/community. In crypto networks and protocols, DAOs (Decentralized Autonomous Organizations) are used to make decisions about the network or protocol itself. This could include things like:
Changes to the protocol: Voting systems can be used to decide whether to make changes to the protocol, such as adding new features or fixing bugs.
Funding of projects: Voting systems can be used to decide how to allocate funding for different projects, such as the development of new features or marketing campaigns.
Election of leaders: Voting systems can be used to elect leaders of the network or protocol, such as the members of the governing council.
Changes to the rules: Voting systems can be used to decide whether to make changes to the rules of the network or protocol, such as the fees charged for transactions or the way that blocks are mined.
While the benefits of voting systems often outweigh the drawbacks, what often goes unnoticed, are the types of voting systems that are available to implement.
Voting Systems
One person one vote (1P1V).
This is the democratic ideal (and self-explanatory). It’s also how some executive teams function, including at foundations, DAOs, and major corporations.
Challenge 1: People who are less informed have the same influence as those who are more knowledgeable and informed. This can happen in practice when there are many issues to vote on, and busy people don’t have the bandwidth to get sufficiently educated.
Challenge 2: People with little skin in the game may have undue influence.
One person one vote (1P1V), with delegation.
Someone with a vote can delegate their vote to others. This is a representative democracy, like the US. This retains the democratic ideal while letting busy people defer to better-informed people. The action of delegation may be rare and wide-spanning, like we see in nations (one choice every four years, for many topics at once).
Challenge 1: Delegation could be fine-grained in time and issues, where for example a person has delegated to someone else for most issues but retains the right to withdraw that delegation for any given issue. This is the realm of liquid democracy.
One token one vote (1T1V).
This accounts for skin in the game akin to ApeCoin DAO. It’s the “shareholder” ideal. The more skin in the game, the more influence a person has.
Challenge 1: This has the opposite problem of democracy i.e. a handful of token whales can unduly influence the whole system.
Quadratic voting (QV) and Quadratic Funding (QF).
This is an approach trying to balance “1P1V” with “1T1V”. QV gives people a “votes” budget that they then can apply across several polls. For instance, a person can spend 0, 1, or more votes on a given poll, where the person’s influence on that issue is the square root of the votes they spent. This allows the person to emphasize the polls (issues) that they care most about, without getting unreasonable influence anywhere.
Quadratic Voting (QV)
Note, Quadratic Funding (QF) is a variant of QV explicitly for payments scenarios like funding. A person contributes tokens to fund a proposed project or team. Then, there is “matching funding” that takes the square root of each person’s spend and adds the spend. Gitcoin is been using QF, with promising results.
Quadtratic Funding in Math speak
So, for example, if both Project X and Project Y get $100K in contributions, but Project X has way more individual donors, then Project X will get way more matching funding.
Signal on “Utility”.
People (or bots) voting on code-based projects need the information to identify what projects might add value. Traditionally this is subjective, or a using measurement not designed for this purpose. Colony also uses an algorithm (Google’s page-rank equivalent) but has more emphasis on DAOs.
Rough consensus.
Here, one or more leaders conduct an informal survey among the broader community, then make the final judgment call on what to implement. For example, this is how new Ethereum functionality gets chosen by core developers.
Challenge 1: It’s a slow process, and often has a single point of failure from a decision-making standpoint.
Conclusion
Of course, voting systems have some potential drawbacks, especially in DAOs. For example, voting systems can be complex, challenging to understand and implement. Additionally, voting systems can be vulnerable to fraud or manipulation. However, Voting systems are an essential part of any governance structure, centralized or decentralized, and they play a vital role in ensuring that the DAO is run transparent, accountable, and efficient.