Quadratic Funding is a mechanism used to distribute funds in a decentralized manner. It is designed to address the problem of funding public goods in a fair and efficient way. The concept was first introduced by Vitalik Buterin, the co-founder of Ethereum.
In traditional funding models, the amount of funding received by a project or initiative is often determined by a small number of wealthy donors or organizations. This can lead to a concentration of power and limited access to funding for smaller, less well-known projects.
Quadratic Funding aims to solve this problem by taking into account not only the total amount of funding received, but also the number of individual contributors. The basic idea is that the more people who contribute to a project, the more funding it should receive.
Under the Quadratic Funding model, the amount of funding received by a project is determined by the square of the number of contributors. This means that projects with a large number of individual contributors will receive a larger proportion of the funding.
The implementation of Quadratic Funding typically involves the use of a matching fund, where a central pool of funds is set aside to match individual contributions. The matching ratio is determined by a quadratic formula, which ensures that the more contributors a project has, the higher the matching ratio will be.
By using Quadratic Funding, it is hoped that a more diverse range of projects and initiatives will be able to receive funding, and that decision-making power will be distributed more equitably. This can help to foster innovation and support projects that might otherwise struggle to attract funding.
Overall, Quadratic Funding is an innovative approach to funding public goods that aims to promote fairness, inclusivity, and decentralization. It has the potential to revolutionize the way funding is distributed and empower a wider range of projects and initiatives.