Vitalik thinks Quadratic Signaling solves Ethereum Community Support Problem

Vitalik Buterin has shared his thoughts and insights in the last Gitcoin Grants Round 6, believes that Quadratic signaling can resolve the issue.

By · Jul 23, 2020 . 9min read

Photo: TechCrunch / Flickr

Vitalik Buterin has shared his thoughts and insights in the last Gitcoin Grants Round 6. In his Retrospective for the round, Vitalik thinks the new Quadratic Signaling solves the age-long Ethereum community signalling problem.

Quadratic Signaling was noticed during the Gitcoin Grants Round 6 for EIP 1559 community fund. EIP 1559 is a major fee market reform proposal with far-reaching consequences. It aims to improve the user experience of sending Ethereum transactions and reducing economic inefficiencies. As well, it also provides an accurate in-protocol gas price oracle and burns a portion of fee revenue.

Even though the Ethereum community appears to be excited about this proposal, there’s been little to no much funding for it. And as such, it’s yet to be implemented into Ethereum. However, this round of the Gitcoin Grants provided an avenue to fixing this through community efforts.

Quadratic Signaling, an inadvertent solution

As noted by Vitalik and every other Ethereum community member, one of the surprising winners in the community category was the EIP 1559 which focusses on solving pertinent issues in the Ethereum network. Ethereum which aims to be the world computer, accommodating the large volume of transactions in a distributed manner has not been able to realize this dream. One of the key hurdles it constantly grapples to solve is the rising gas cost during network congestion. This affects distributed applications – dapps like games and other activities layering on the network. Solving this issue and other major upgrades within the network are always hot subjects to debate. One thing Ethereum hasn’t been able to solve is “community signaling”.

On-chain voting solutions are extreme and overrated

Vitalik who has long been a vocal critic of on-chain voting as a sure-fire way to making decisions on distributed networks like Ethereum and others blatantly think this mechanism is overrated. As a post-mortem and his general views on the round, Vitalik thinks Quadratic Signalling may play a huge role moving forward in how Ethereum and perhaps other communities make decisions.

He claims Quadratic Signaling falls as a perfect compromise between two extremes. These are the plutocratic coin votes system where a coin holder’s vote holds more weight in a decision making process than others because of his holdings. The other is social media sentiments across the likes of Reddit, Twitter and other social networks. Basing decisions on this also comes with a flaw. And that is the easily exploitable outcome because there’s usually no skin in the game.

Quadratic Signaling ensures that the need to contribute monetarily value to vote allows only those who really care about the project count more than the votes of less-concerned outsiders to vote. The square-root function then ensures that the votes of individual ultra-wealthy “whales” cannot beat out a poorer, but broader coalition. A perfect compromise between the other two extremes he thinks.

Image demonstrating quadratic payments and its applicability in voting systems
Source: Vitalik’s Gitcoin Round 6 Retrospective

A good solution still comes with its flaws. However, there are remedies

As noble as this new solution appears, it is still not perfect. Projects made attempts to collude, impersonation and multiple contributions from a single address. All these were attempts to influence the voting comes of “preferred” proposals in the round.

Even though some of these problems are not peculiar to Quadratic solution models, some of them could be solved by optional SMS verification, manual verification perhaps with decentralized solutions like Kleros. Another interesting solution he proposes is through incentivizing fraud reporting. By so doing, anyone can lay down a deposit and flag a project as fraudulent. After this, an investigation of such a project should follow. If the project turns out to be legitimate the deposit is lost. But if the project turns out to be fraudulent, the challenger gets half of the funds that were sent to that project. Quite an interesting solution especially with the collaborative nature of most of the open-source project.

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