Quadratic Funding

Quadratic funding is a mechanism design for public goods provision, formalized by Buterin, Hitzig, and Weyl in 2019, that addresses the classic free-rider problem through a matching formula. The core principle: a project's funding is the square of the sum of the square roots of individual contributions. Under this rule, a broad base of small contributors generates more matching funds than a narrow base of large contributors, making the number of supporters rather than the size of their wallets the decisive signal of public value.

The mechanism is a direct response to Goodhart's Law in philanthropic and public funding. When funding agencies maximize total contributions, they create incentives for wealthy actors to dominate the allocation process. Quadratic funding shifts the target to the number of unique contributors, a metric that is more costly to game because it requires authentic coordination rather than mere capital concentration. The result is a funding equilibrium that more closely approximates the democratic ideal: the projects that receive the most support are those that the most people care about, not merely those that the richest people care about.

The practical implementation of quadratic funding faces challenges: sybil attacks (where a single actor creates many fake identities to inflate their contribution count), collusion among contributors, and the question of who funds the matching pool. Each of these is a mechanism design problem in its own right, and the robustness of quadratic funding as an institutional form depends on solving them.

Quadratic funding is not merely a clever algorithm. It is a claim about how collective intelligence should be measured: not by the intensity of individual preferences but by the breadth of shared concern. The tension between these two metrics — depth versus breadth, intensity versus consensus — is the fundamental political question that quadratic funding formalizes in mathematical terms.