Financial contributions

Financial contribution based approach for determining voting power

Overview

Financial contribution based voting power is determined by someone's financial contributions towards a voting option. Financial contributions could also be considered donations as these same funds can be used to directly fund an initiative. A large risk around using a financial contribution based voting power approach is the risk of a lack of funding being raised to support impactful ecosystem initiatives. A lack of funding could lead to a stagnating ecosystem that gets outcompeted by other ecosystems that have a more stable and well incentivised group of contributors that are paid to help with consistently maintaining and improving the ecosystem.

Moderate execution & scaling complexity (Score - 3)

From a technical implementation standpoint this should not be a complex voting power approach to execute as it relies on contributions being made from community members. The main complexity of this voting process is if assets are pooled together to make a decision there could be a risk that people suddenly contribute financially to influence the outcome of a vote. This would be especially important in situations where financial contributions are determining how other funds are being allocated. The scaling complexity with this voting approach is it requires people to donate their own funds to make decisions which could limit the number of people that are willing to engage in the process at scale.

Low fairness for network decisions (Score - 2)

A financial contribution approach would mean ignoring the capital that people invested into the network to make it successful and also ignoring the transaction fees that other people have contributed to maintain the network. A key issue with this approach is it would mean that anyone could purchase coins from the ecosystem to make a vote that changes the network with malicious intent. This action then forces other ecosystem holders to spend a large amount of aggregated capital to defend against this vote. It would also mean that the individuals with the largest amount of disposable wealth would have the most amount of control over the network. This approach might be an effective supplementary approach to use on top of another voting power approach where someone could increase their voting power a small amount based on their direct financial contributions to the voting option. This could help with enabling voters to express an increased level of preference towards a voting option.

Moderate fairness for treasury decisions (Score - 3)

If no ecosystem treasury funds are available and initiatives are only funded by people's financial contributions there is a risk that only initiatives that are supported by the wealthy will be funded. An approach focused on donations might be less reliable for funding meaningful contribution efforts as it can require ongoing voluntary donations from individuals who have disposable capital. This approach could lead to stagnation or negatively influence the direction of the ecosystem in what changes and improvements get prioritised. Wealthier individuals might also not even be the ones who are regularly using the network. In terms of fairness, the capital is owned by the individuals who are contributing it so it is difficult to say it is unfair for them to contribute their own capital to initiatives they want to support - these individuals can prioritise whatever they want to. Funding that requires donations instead of being captured through a taxation system could create a heightened problem around the initiatives being self-serving and not for the greater good of the network. It is also less fair for the people who contribute to the ecosystem financially to maintain and improve it when there also can be other individuals who also have a similar amount of wealth but decide to not contribute anything. The people who contribute little to nothing to the ecosystem would still benefit from the initiatives that are funded by the people that do regularly contribute.

Total score = 8 / 15