Quadratic Funding
A matching-pool mechanism that allocates shared funds in proportion to the number of contributors a project attracts, not the size of the contributions. Breadth of support counts for more than depth of any one wallet.
Also known as: QF, quadratic matching, CLR matching
Quadratic funding is a way to divide a shared matching pool among projects so that the count of distinct supporters drives the allocation more than the amount any individual gives. The arithmetic is simple to state. For each project, take the square root of every contribution, add those roots together, then square the total. A project funded by a hundred small donors lands far ahead of a project given the same money by one large donor, because squaring a sum of many small roots produces a bigger number than squaring one large root. The square root compresses the weight of large cheques; the final squaring restores scale in favour of breadth.
The mechanism was formalised by Vitalik Buterin, Zoë Hitzig and E. Glen Weyl in their 2018 paper “Liberal Radicalism: A Flexible Design For Philanthropic Matching Funds”, later published in Management Science. The design targets the free-rider problem in public goods: things everyone benefits from tend to be underfunded because no single contributor captures the return, so a matching pool tops up community contributions in a way that reads the breadth of demand as the signal for how much to add. Gitcoin Grants is the best-known deployment. Gitcoin reports it has distributed over 60 million US dollars to more than 3,700 projects through quadratic rounds.
The weakness is identity. Because adding contributors matters more than adding money, splitting one wallet into many fake ones (a sybil attack) is the obvious exploit, as is collusion between coordinated donors. Production systems answer this with project review before a round, identity scoring such as Gitcoin Passport, and pairwise-bounded or connection-oriented cluster matching that detects wallets behaving as a single coordinated block and discounts their combined weight. None of these defences is perfect, and each trades some false positives against the leakage it prevents. The structural point holds regardless: quadratic funding makes a thousand backers worth more than one whale, which is the opposite of what a linear stake-weighted system does.