What You Will Be Able To Do

• Explain mechanism design.
• Describe a Sybil attack and defenses.
• Compute quadratic voting and funding.
• Compare conviction voting and futarchy.
• Apply cosmo-local ideas.

Recap Of Week 8: Where DAOs Fail

• Plutocracy: money decides.
• Voter apathy: few participate.
• Attacks: flash loans and hidden keys.
• This week offers rule changes that respond.

Mechanism Design

• Game theory predicts behavior under given rules.
• Mechanism design chooses rules for a wanted outcome.
• Work backward from the goal.
• Nobel Prize 2007: Hurwicz, Maskin, Myerson.

Three Design Questions

• What behavior does the rule reward?
• Who can fake that behavior cheaply?
• What does an attacker gain?

Sybil Attacks

• One attacker creates many fake accounts.
• New addresses cost almost nothing.
• Counting addresses does not count people.
• Every one person one vote system faces this.

Defenses Against Sybils

• Cost: make identities expensive.
• Identity: check for one unique human.
• Social graph: members vouch for each other.
• In person: verify at gatherings.

Quadratic Voting: The Rule

• Each voter gets a budget of credits.
• n votes on one issue cost n squared.
• Strong preferences cost more per vote.
• Voters spread credits across issues.

votes  cost
  1      1
  2      4
  3      9
 10    100

Quadratic Voting: The Catch

• Splitting credits across fake accounts is cheaper.
• It needs Sybil resistance to work.
• Collusion and vote buying remain risks.
• MACI-style privacy reduces proof of how you voted.

Public Goods

• Many benefit, few pay.
• Open-source software is a typical example.
• Markets underfund them.
• Quadratic funding targets this gap.

Quadratic Funding

• Donors give small amounts to projects.
• A matching pool tops up each project.
• Match rewards the number of contributors.
• Gitcoin Grants ran many rounds.

total = (sum of sqrt(d_i)) ** 2

[100]     -> 100
[1]*100   -> 10000

Conviction Voting

• Stake tokens on a proposal.
• Support grows the longer the stake stays.
• A threshold releases the funds.
• Moving stake resets that part of the conviction.

conviction(t+1) = a * conviction(t) + stake
0 < a < 1 (decay)

Futarchy

• Vote on values, bet on beliefs.
• A vote sets a measurable goal.
• Markets predict the goal under each policy.
• The better predicted policy is adopted.

Futarchy: Open Questions

• Liquidity must resist manipulation.
• The goal metric must be hard to game.
• Members must trust an abstract system.
• MetaDAO ran early experiments on Solana.

Plurality And Cosmo-Local Ideas

• Pol.is clusters opinions and shows common ground.
• vTaiwan used it for policy talks.
• Cosmo-local: light global, heavy local.
• Share designs globally, build locally.

Recap

• Design rules backward from the goal.
• Sybil resistance underpins fair voting.
• Quadratic tools reward breadth of support.
• Conviction and futarchy change timing and information.

Next Week: Interoperability And The Open Web

• Oracles and cross-chain messaging.
• Mastodon, ActivityPub, and Nostr.
• Local-first software.

Questions And Exercise

• Exercise: compute quadratic costs and matching.
• Simulate a Sybil split and note the effect.
• Read the Liberal Radicalism paper's introduction.