Problem(s). Projects in the area of Public Goods struggle to attract timely funds, needed in order to bring innovation openly, limiting the rate of abandonment (unsustainability) and delays (lack of resources). They either have to wait for lengthy local/governmental procedures (for grants), or rely on public donations, that may be unpredictable, and too tightly bounded to (often unviable practices such as) Marketing & Advertisement.
Gitcoin was one of the 1st successful experiments of Quadratic Funding, and their platform was able to attract a wopping 1M+ USD in donations, distributing them to public grants. Nonetheless, with the growth of the platform and the increase in the amount of projects, issues such as sybil-attacks (to achieve matching pool manipulation) and "popularity games" (where the grant position and the popularity of a project determine their success in directing donations) started to become more and more influential, and harder to overcome.
Solution. Quadratic Treasury leverages on AAVE Native Credit Delegation & on a Mutual Credit system (DistributedTown) to offer a solution to these problems, by (1) letting Public Goods donors and supporters donate directly in a specific area of Public Goods (currently: Blockchain/Open-source; Art&Events; Local Communities), and (2) by using a 2-step quadratic distribution to match this area-specific pool of funds with the public projects that achieved the highest amount of milestones in that given range of time. It also uses (i.) a Mutual Credit system that works as an internal "score" for DAOs & Communities, and (ii.) a unique, universal Identity layer (DID) based on Skills & Contributions, rather than personal data. Making it sybil-resistant and 100% pseudonymous by design.
The project aims to let local and online communities & DAOs manage their projects (larger or smaller) in full autonomy - both by receiving constant inflow of grants from a pooled fund, or by pooling their funds together, accruing interest on them, and redistributing them to the most impactful projects, in a fully automated fashion.
How it works: Roles: On one side, Members of a DAO, a collective, or a local community can easily Stake and Pool together their funds providing liquidity to the AAVE protocol, in order to accrue returns and redistribute funds and interest to internal projects based on each project's individual milestones achieved. This allows them to organize their projects in an efficient manner ("coordination problem"), and administrate collective funds in a sustainable, fully decentralized way.
On the other side, individual supporters and larger donors can seamlessly and trustlessly delegate their donations to the Quadratic Treasury, for it to automatically distribute it to the projects in the area of Public Goods based on milestones achieved in each distribution snapshot. In just 2 steps, they can select the Area (currently: Blockchain/Open-source; Art&Events; Local Communities) of Public Goods they want to support, and the repayment structure (0-to-50%), in case they wish to receive back part of their investment+interest. Also, this model allows Q2T to bring non-repayable loans/grants on the DeFi space, and spares DAOs/projects the time that they would have wasted in tiring and bureaucratic processes to attract grants and external expertise.
The QuadraticTreasury (Q2T) uses:
AAVE for Native Credit Delegation, and Lending.
DistributedTown for Credit System, Scoring & DID verification
Chainlink for off-chain / on-chain Milestone verification.
This way, on one side (1) provides a sybil-resistant, fair mean for donors to support Public Goods - and on the other side (2) a meritocratic way for DAO Projects to attract funds and non-repayable loans in a permissionless fashion, based exclusively on the milestones achieved.
Also, it replaces the temporary-grant model of Gitcoin with a continuous funding approach, that lets projects receive constant inflow of funding through micro-grants. Now, not only this increases projects’ long-term sustainability, but it also brings to Blockchain the non-repayable loans, one of the last financial instruments missing in the DeFi space.