How does quadratic voting work in a DAO?

Core Mechanism of Quadratic Voting

1. Each participant receives a fixed number of voting credits, not votes. These credits can be allocated across multiple proposals or concentrated on a single one.

2. The cost of casting v votes on a proposal is v² credits. For example, 1 vote costs 1 credit, 2 votes cost 4 credits, 3 votes cost 9 credits, and so on.

3. This quadratic cost function creates diminishing returns for concentrated influence—spending all credits on one issue becomes exponentially expensive.

4. Voters must decide how to distribute their finite credit pool based on the intensity of their preference across different governance items.

5. Final outcomes are determined by summing the square roots of total credits spent per proposal, preserving proportional weight while curbing plutocratic dominance.

Implementation in DAO Governance Frameworks

1. Smart contracts enforce credit issuance, allocation, and vote tallying without centralized intermediaries. Credits are often minted as non-transferable ERC-20 tokens.

2. Integration with wallet-based identity layers like ENS or Sybil-resistant attestations helps limit credential duplication while maintaining pseudonymity.

3. Time-bound voting windows are enforced on-chain, with final results immutably recorded and automatically triggering protocol actions if thresholds are met.

4. Some DAOs layer quadratic voting atop delegation systems, allowing members to assign both voting power and credit management authority to trusted representatives.

5. Gas optimization techniques such as batched credit transfers and off-chain signature aggregation reduce friction during high-participation rounds.

Economic Incentives and Behavioral Effects

1. Users internalize the marginal cost of expressing stronger preferences, leading to more thoughtful participation rather than reflexive mass voting.

2. Small stakeholders gain amplified relative influence on issues they care deeply about, countering the default tendency toward apathy in large-scale coordination.

3. Token-weighted voting models often produce winner-take-all dynamics; quadratic voting instead encourages coalition formation around shared priorities.

4. Empirical data from DAO experiments shows increased proposal diversity and reduced veto concentration among top 5% token holders.

5. The system inherently penalizes strategic vote splitting or ballot stuffing, since fragmented allocations yield lower aggregate impact per credit spent.

Technical Constraints and On-Chain Limitations

1. Credit balances must be tracked per address, requiring either on-chain state storage or verifiable off-chain snapshots anchored via Merkle proofs.

2. Rebalancing credit pools between voting cycles introduces complexity—some protocols burn unused credits, others roll them over with decay penalties.

3. Front-running risks exist during credit allocation phases unless commit-reveal schemes or time-locked transactions are enforced.

4. Cross-chain quadratic voting remains largely theoretical due to latency, bridging trust assumptions, and inconsistent identity resolution across L1s.

5. Audit trails for credit usage are fully transparent but not always human-readable without dedicated frontend tooling, creating accessibility barriers.

Frequently Asked Questions

Q: Can quadratic voting be gamed through coordinated multi-wallet strategies?Yes. Colluding actors using sybil wallets can artificially inflate preference signals. Mitigations include proof-of-personhood or hardware-bound key attestations.

Q: How are initial credit allocations determined?Allocation methods vary: some DAOs use token balances as proxies, others distribute equally, and a few tie credits to historical contribution metrics like code commits or forum activity.

Q: Is quadratic voting compatible with snapshot-based off-chain voting?It is compatible only if the snapshot includes verifiable, signed credit allocation data and enforces quadratic cost logic before result submission to chain.

Q: Does quadratic voting eliminate majority tyranny?No. It does not override simple majority rules—it reshapes how preference intensity translates into decision weight, leaving threshold mechanics unchanged.