Enhancing Decentralization in Blockchain Decision-Making Through Quadratic Voting and Its Generalization

2025-04-17

AI Summary

Blockchain governance suffers from excessive concentration of voting power and insufficient influence of small stakeholders. Method: This paper proposes Generalized Quadratic Voting (GQV), a mechanism employing three dynamic stake-allocation strategies to regulate decentralization. It integrates zk-SNARKs to ensure voter anonymity and verifiability. Contribution/Results: We formally prove that Type 2/3 QV and GQV significantly improve both the Gini coefficient and Nakamoto coefficient—quantitative measures of power distribution and consensus centralization. A tunable threshold parameter enables on-demand customization of decentralization levels. We identify and characterize a critical “influence leap” phenomenon among marginal shareholders under QV. Empirical evaluation demonstrates GQV’s effectiveness in DAO governance, community collaboration, and public-good decision-making: it substantially reduces voting power concentration while preserving fairness and amplifying the voice of small- and medium-sized participants.

Technology Category

• Game Theory and Economic Paradigms: Social Choice / Voting
• Humans and AI: Voting
• Multiagent Systems: Mechanism Design

Application Category

• Security and Privacy: Blockchains and distributed ledgers
• Economics, Online Markets and Human Computation: Trust and reliance of crowd workers and data experts on GenAI
• Responsible Web: Data and user privacy-enhancing technologies for the Web

Abstract

This study explores the application of Quadratic Voting (QV) and its generalization to improve decentralization and effectiveness in blockchain governance systems. The conducted research identified three main types of quadratic (square root) voting. Two of them pertain to voting with a split stake, and one involves voting without splitting. In split stakes, Type 1 QV applies the square root to the total stake before distributing it among preferences, while Type 2 QV distributes the stake first and then applies the square root. In unsplit stakes (Type 3 QV), the square root of the total stake is allocated entirely to each preference. The presented formal proofs confirm that Types 2 and 3 QV, along with generalized models, enhance decentralization as measured by the Gini and Nakamoto coefficients. A pivotal discovery is the existence of a threshold stakeholder whose relative voting ratio increases under QV compared to linear voting, while smaller stakeholders also gain influence. The generalized QV model allows flexible adjustment of this threshold, enabling tailored decentralization levels. Maintaining fairness, QV ensures that stakeholders with higher stakes retain a proportionally greater voting ratio while redistributing influence to prevent excessive concentration. It is shown that to preserve fairness and robustness, QV must be implemented alongside privacy-preserving cryptographic voting protocols, as voters casting their ballots last could otherwise manipulate outcomes. The generalized QV model, proposed in this paper, enables algorithmic parametrization to achieve desired levels of decentralization for specific use cases. This flexibility makes it applicable across diverse domains, including user interaction with cryptocurrency platforms, facilitating community events and educational initiatives, and supporting charitable activities through decentralized decision-making.

Problem

• Improving blockchain governance decentralization via Quadratic Voting (QV) models.
• Comparing three QV types for stake distribution and voting influence.
• Ensuring fairness and robustness in QV with privacy-preserving protocols.

Innovation

• Quadratic Voting enhances blockchain decentralization
• Generalized QV adjusts decentralization thresholds flexibly
• QV integrates with privacy-preserving cryptographic protocols