Proportionality in Stake-based Voting

[GENERAL] Name and surname of main applicant

Qin Wang

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Individual

[GENERAL] Co-proposers and additional applicants

Manvir Schneider, manvir.schneider@gmail.com

Yuzhe Zhang, yuzhe.zhang@data61.csiro.au

Davide Grossi, d.grossi@rug.nl

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

12

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

No

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

We plan to create a voting system that adjusts vote weight based on stake ownership, ensuring proportional fairness (i.e., aligning voting power with the amount of stake held).

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

No

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

No dependencies.

[GENERAL] Will your project’s output/s be fully open source?

Yes

[GENERAL] Please provide here more information on the open source status of your project outputs

Our project outcomes will be an open-released research paper (via preprint platforms such as arXiv, eprint, etc.) together with its open-sourced codes (via Github) used for our simulation and evaluation. 

The license could be OSS license and cc by 4.0, which gives recipients maximum freedom to do what they want with the work of the licensor. The source will also be under public domain even

[METADATA] Horizons

Governance

[SOLUTION] Please describe your proposed solution

[Problem statement and its big threat to communities]

Our solution in this proposal aims to address the critical issue of disproportionate influence held by large stakeholders in PoS voting systems (e.g., Cardano in Voltaire phase), a sector capitalizing over US$300 billion. Currently, a minority with significant stakes (in extreme cases, even a single voter holding more than 51% of the votes) can control the outcome (i.e., voting power equals 100%), which severely undermines decentralization. 

Specifically, the concentration of power threatens the integrity of the entire blockchain ecosystem, with particularly damaging consequences in high-stakes governance decisions such as protocol upgrades, forks, or project funding. In these scenarios, a few "whales" can dominate the decision-making process, sidelining smaller stakeholders and compromising the collective interests of the community. 

A particular use-case is Project Catalyst: Large stake-holders can vote on their own proposals and win with high probability. Similarly, other proposals can be decided by their participation. This poses a significant threat to the integrity of the voting process.

We focus on such an overlooked issue. 

[Our approach and justification]

Existing voting mechanisms in PoS systems fail to provide a fair distribution of power, especially in high-stakes decisions. 

We propose an adjustable weighted quota voting mechanism designed to ensure proportional fairness. Our approach directly aligns each stakeholder's voting power with their stake size, preventing any single large stakeholder from wielding outsized influence. 

Our approach leverages the Banzhaf power index to accurately measure a voter's actual influence on decision outcomes. By adjusting both the voting weight allocation and the required quota for decisions, we ensure that voting power is distributed fairly while maintaining the efficiency and effectiveness of the governance process. Our solution is underpinned by rigorous theoretical analysis and validated through practical simulations.

[Project engagement]

Internally, our project team consists of research fellows and scientists, each specializing in a specific subdomain crucial to this project, including blockchain technology, PoS protocols, voting mechanisms, game theory, and social choice theory. 

Externally, we aim to actively engage key players within the Cardano ecosystem, including blockchain researchers, developers, and governance bodies. We may build a community-driven initiative that incorporates feedback from various stakeholders. 

[Towards Governance]

Our solution can address centralization concerns within PoS governance, enhancing both the integrity and inclusiveness of voting processes on Cardano. By ensuring that voting power is proportionally distributed, we enable more equitable decision-making, allowing community-driven outcomes to better reflect the collective interests of all participants.

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

[Value to Cardano]

We address one of the core challenges in stake-based governance (overlooked for long-terms): the disproportionate influence of large stakeholders. Our proportional voting mechanism will ensure that all stakeholders, regardless of their stake size, have an equitable influence on governance decisions. 

This will enhance decentralization, strengthen community trust, and increase participation in governance. All of those are vital for the long-term sustainability of Cardano.

[Masureament of success]

Quantitative metrics include:

• The analysis of voting power distributions before and after implementing the new mechanism, focusing on how effectively power is redistributed among small and large stakeholders. 
• Practical simulations will deliver a concrete result for quantitative results. 
• Track community participation rates in governance decisions to determine if the new model has greater inclusiveness.

Qualitative metrics include feedback from stakeholders, governance bodies, and developers within the Cardano communities on how the new system affects decision-making fairness.

[Exposure to public (Deliverables)]

We will share the results of our project through various channels :

• an internal report
• open-sourced code during the simulation
• one research paper submitted to top-tier venues
• Formulated problem statement in a CPS (Cardano Problem Statement) 
• Formulated solution in a CIP (Cardano Improvement Proposal)
• Workshops and presentations within the Cardano community to explain the model, gather feedback, and encourage wider adoption

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

[Why us?]

Our team comprises members with diverse backgrounds and expertise: Qin brings a robust understanding of blockchain and is deeply familiar with the Ethereum ecosystem. Their expertise enables detailed assessments of Ethereum systems and nuanced analyses, particularly regarding security and consensus protocols. Yuzhe excels in game theory and model building, making significant contributions to formalizing underground models. His expertise enhances our ability to develop and analyze complex models. Manvir possesses extensive experience in staking and staking power dynamics, offering valuable insights into both staking models and mechanisms. Additionally, he has a deep knowledge of Cardano. Davide specializes in reasoning and decision-making within groups, with a focus on modeling, analysis, and algorithmic support. Their active involvement across multiple domains including multi-agent systems, knowledge representation, computational social choice, AI & law, and computational argumentation. Notably, Davide’s interdisciplinary research (with blockchain) has been recognized with the Best Paper Award in the Blue Sky track at AAMAS'22. 

In essence, stake-based voting mechanisms are closely intertwined with computational social choice and game theory. We underscore our robust background in this domain, supported by a wealth of prior experience and expertise. 

[Steps and progress?]

We have already laid the groundwork for this project/reserach over the last 10 months (with biweekly updates), and plan to continue on it for another 12 months (covering the period of this project)

During the past 10 months, we made the following progress.

• We have established the basic mathematical model for our proportional voting mechanisms.
• We obtained several initial theoretical observations on the model, driven by our theoretical discussion.
• We developed initial simulations on the potential of optimal quota and their relations with our theoretical assumptions. 

In the next 12 months, we plan to

• complete the entire theoretical model and its analysis;
• simulate with real onchain data to validate the model effectiveness;
• complete at least one research paper;
• formulate our problem in CPS and propose solution in CIP;
• engage with projects in the Cardano ecosystem that run voting systems;
• oversee governance processes like Catalyst, Intersect or the Summon Platform;
• widely distribute our outpost to communities.

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: Theoretical Development of Weighted Quota Voting Mechanism

(6 months)

A: Milestone Outputs:

• Completion of the theoretical framework for the weighted quota voting mechanism, including the Banzhaf power index and adjustments for voting weight allocation and quota settings.
• Formalization of mathematical models ensuring proportional fairness in voting power.
• Completion of a CPS stating our above research questions.

B: Acceptance Criteria:

• The theoretical framework is fully documented and peer-reviewed by internal research team members, including several key concepts such as the Banzhaf index, voting weight allocations, and quota adjustments.
• CPS is fully reviewed and discussed by the peer-review process within Cardano.

C: Evidence of Milestone Completion:

• Internal peer-review feedback from the research team.
• Formulated CPS doc.

Milestone 2: Simulation

(2 months)

A: Milestone Outputs:

• Development of a prototype for the weighted quota voting mechanism.
• Conducting multiple rounds of simulation testing to evaluate how the mechanism performs under various stakeholder distributions.
• Measuring how closely voting power aligns with proportional fairness metrics.

B: Acceptance Criteria:

• Successful implementation of the prototype with the Banzhaf power index in place.
• Simulations confirm that the weighted quota mechanism performs as expected and adjusts voting power according to stake size without domination by large stakeholders.

C: Evidence of Milestone Completion:

• Submission of simulation data and analysis reports.

Milestone 3: Community Engagement and Feedback Integration

(1-3 months, slightly overlapped with the fourth stage)

A: Milestone Outputs:

• Presenting the prototype and simulation results to key stakeholders in the Cardano community, including developers, researchers, and governance bodies.
• Organizing workshops and discussions to gather feedback and suggestions for improving the mechanism.
• Refining the prototype based on feedback and producing a revised version of the voting mechanism.

B: Acceptance Criteria:

• Feedback is actively collected from at least three key groups within the Cardano ecosystem.
• Integration of community feedback into a refined version of the weighted quota voting mechanism.

C: Evidence of Milestone Completion:

• Documentation of feedback from stakeholders, including workshop minutes and suggestions.
• Release of the updated prototype reflecting feedback from the community.

N/A

N/A

Final Milestone: Project Close-out Paper

(4 months)

A: Milestone Outputs:

• A final report summarizing the project’s outcomes, including the theoretical framework, simulations, community feedback, and refined prototype.
• Publication of open-source code and all relevant documentation for community adoption.
• Writing the research paper for submission based on our outputs.
• Summarsing our results in a CIP

B: Acceptance Criteria:

• Final report reviewed and approved by internal and external reviewers.
• Research paper ready for review by the academy
• CIP reviewed by Cardano

C: Evidence of Milestone Completion:

• Submission of the final report to the Cardano community.
• Public repositories hosting the open-source code and project documentation.
• Submission of the research paper to top-tier conferences
• Submission of CIP

[RESOURCES] Who is in the project team and what are their roles?

4 people in general + others (only when needed)

Dr. Qin Wang 

P: Research Scientist at CSIRO Data61

W: https://qinwang.tech/

X: qin_tech

G: https://scholar.google.com/citations?user=6jdTO0cAAAAJ&hl=en

Qin has been dedicated to researching blockchain-related technologies for over eight years. His research background covers the core protocol layer (consensus, structure) and application layers (e.g., NFT, stablecoins). He has two patents and led three draft standards (EIP5521, EIP7634, and IETF Gateway Discovery). 

He serves as the project proposer role.

Dr. Manvir Schneider (Unpaid)

P: Research Scientist at Cardano Foundation

X: @manv_sc

G:https://scholar.google.com/citations?hl=en&user=1N2L-skAAAAJ

Manvir has been doing research since 2019 and started working as a research scientist after completing his PhD in 2023 at ETH Zurich. His research focuses on vote delegation and staking. His team also won the 1st prize at the 2023 Ethereum Zürich hackathon. 

He serves as the project co-proposer role.

Dr. Yuzhe Zhang 

P: Research Fellow at CSIRO Data61

W: https://iamyoezy.github.io/yuzhe/

G:https://scholar.google.com/citations?hl=en&user=p13e02YAAAAJ

Yuzhe received his PhD in Artificial Intelligence from the University of Groningen in 2023, where his thesis research focuses on liquid democracy. Now, his research interests mainly include multi-agent systems, computational social choice, blockchain, and causal inference.

He serves as the project co-proposer role.

Prof. Davide Grossi 

P: Associate Professor at the University of Groningen (Bernoulli Institute for Mathematics, Computer Science and AI) and University of Amsterdam (Institute for Logic, Language and Computation, Amsterdam Center for Law and Economics)

G: https://scholar.google.com/citations?user=nMKIVrIAAAAJ&hl=en

Grossi holds a PhD in Computer Science from the University of Utrecht (2007). His research focuses on algorithmic aspects of collective decision-making. He contributed over 80 scientific papers across several areas within AI and computer science research, including multi-agent systems, computational social choice, knowledge representation and reasoning, blockchain, and computational logic.

He serves as the project co-proposer role.

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

In one sentence: 

Total Requested Budget: 150,000 ADA ~US$52,500 (rate at 0.35, 03/10/2024).

Budget breakdown:

A total of US$52,500 

• Team members, including in-kind and research candidates: approx. US$46,900
• Data collection, including license, cloud services, and staking provider services: approx. US$3,000
• Publication fees, conference attendance, or any fees occurring during and after the publication process: approx. US$2,600

Based on the crypto exchange rate in Oct 2024, the cost equals 150,000 ADA.

Detailed costs:  

Personnel

• Approximate total: US$46,900

Research Candidate 1

• Name: Qin Wang (equiv. Assistant Prof.)
• Annual Salary: US$80,000
• FTE: 0.2
• Total Cost: US$16,000

Research Candidate 2

• Name: Yuzhe Zhang (equiv. PostDoc)
• Annual Salary: US$72,000
• FTE: 0.2
• Total Cost: US$14,400

Research Candidate 3

• Name: Davide Grossi (equiv. Professor)
• Annual Salary: US$165,000 (~12,510 EUR/Month)
• FTE: 0.1
• Total Cost: US$16,500

Data Collection

• Approximate total: US$3,000

Publication & After

• Approximate total: US$2,600

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

The costs of this project have been carefully calculated to reflect the expertise required and the time commitment necessary for successful delivery. 

The primary costs are allocated as follows:

• Research (Major component): This involves a team of three paid blockchain researchers and one non-paid contributor, all of whom specialize in PoS protocols, voting mechanisms, and game theory.  

The budget for this part is based on typical freelance rates for research scientists and blockchain experts, and aligns with the average wage in the countries where the team operates.

• Simulations (Minor component): Although most personnel costs are covered in the research and development budget, there may be additional computational resources needed for running simulations and refining the model. The personnel involved in simulations are already included in the research budget, keeping additional costs minimal.

• Community Engagement (Minimal cost): Engaging the Cardano community through workshops, presentations, and feedback sessions will involve little to no additional costs, as much of this work can be done through existing channels and community platforms.

• All of our deliverables will be fully open-sourced, providing reusable tools and frameworks for future governance initiatives.

Our project offers excellent value for money.