Tomislav MamićThere is one particular deficiency in quadratic funding which is a trait inherited from the broader family of democratic voting systems. The issue arises when asking a large group of non experts to make a decision which requires some level of expert knowledge.
This was already noticed in Gitcoin Round 5 Health Grants when Gitcoin ran a matching round where Ethereum community was making contributions to public health focused projects and organisations.
Here are the top grantees from Gitcoin Health Grants Round:
The fact that health is a common issue for all of us, doesn’t mean that all of us have enough knowledge to decide what healthcare efforts should be supported.
It the same with culture. How would an ordinary person know which of the cultural projects in a city should be supported? At best, the project’s subsidy will be a linear function of project’s audience. But should the most popular cultural project be supported at all?
If everyone has the same voice, then candidates can
Of course, as the Gitcoin rounds show, popularity contest isn’t something that is consistently happening in QF. Over the number of rounds, contributors have changed their preferences, not just by how the popularity of a project shifted, but also by making calculated decisions to fund what they think matters the most.
Current approach to funding municipal culture in Croatia is to elect an expert committee which then decides how to allocate the funding to maximise the cultural value created.
Here is committee decision in Split for Theatrical and scenical organisations in 2023:
The biggest problem with this approach is that such committees have a hard time maintaining credible neutrality. This was evidenced in the example of the city of Split’s first local media grant program, when one of the grantees openly questioned this. The city never revealed who was on the grant committee, but revealing that probably wouldn’t have helped.
An improvement to this would be if the city would create a deterministic formula that would be used to calculate the allocation. For example, if the organisation has a long history it can get more points than a newly founded organisation, or if the organisation has some full time employees, it can get more points than an organisation formed by volunteers. However, this method only compares the projects and gives some indication of priority but doesn’t provide any solution to the question how much funding each project should get.
On another hand, Quadratic funding doesn’t suggest the quality of a project but determines exactly how much each project should get.
Quadratic funding could prevent problem of tribalism in cultural projects funding with Pairwise coordination subsidy. This gadget would increase the value of opinions of those who don’t have any coordination with either of nominated projects, which arguably is the most valuable type of contribution. This means that Quadratic funding already has an inbuilt partial remedy to the problem of lack of expertise in the audience.