How Does the Concept of “Cost” Relate to Voting in a Quadratic System?
In a quadratic voting system, the cost to the voter is measured not just in the number of tokens, but in the square of the votes they wish to cast. For example, to cast V votes, the cost is V^2 tokens.
This means the marginal cost of each additional vote increases linearly. This increasing marginal cost structure is the mathematical core that encourages voters to distribute their influence across many proposals rather than concentrating it on one.
Glossar
Marginal Cost
Calculation ⎊ Marginal cost in the context of cryptocurrency issuance or transaction processing represents the incremental cost required to process one additional unit of work, such as one more transaction or one more block validation.
Quadratic Funding
Funding ⎊ Quadratic funding represents a mechanism designed to incentivize public goods contributions within decentralized ecosystems, particularly those leveraging blockchain technology.
Increasing Marginal Cost
Cost ⎊ Increasing marginal cost in financial markets refers to the phenomenon where the cost of executing additional trades or acquiring more assets rises disproportionately with volume.
Quadratic Voting
Formula ⎊ The core principle employs a cost function where the expense to cast additional votes increases quadratically, typically requiring $n^2$ tokens for $n$ votes.
Voting
Governance ⎊ Voting within cryptocurrency, options trading, and financial derivatives represents a mechanism for stakeholders to exert influence over protocol parameters, listing decisions, or the direction of decentralized autonomous organizations (DAOs).