Introduction

The Cardano ecosystem stands at a crucial point in its evolution. Having allocated over $150 million through Project Catalyst to fund 2,161 projects, we have witnessed both the remarkable potential and inherent challenges of our current funding mechanisms—challenges common across all blockchain ecosystems.

As Cardano matures, so too must our approach to fostering innovation and allocating resources within the ecosystem.

This proposal introduces Extended Quadratic Funding (EQF) as a complementary funding mechanism to Project Catalyst—designed not to replace but to enhance Cardano's innovation landscape by addressing five critical limitations in the current system: centralized voting power, limited treasury resources, inadequate impact reporting, unclear return on investment, and inefficient milestone management.

Extended Quadratic Funding combines the mathematical elegance of quadratic voting with reputation-based mechanisms and decentralized governance to create a more equitable, efficient, and sustainable funding ecosystem. Our approach draws inspiration from successful quadratic funding implementations in other blockchain ecosystems while incorporating unique elements tailored to Cardano's specific needs and values.

The Current Landscape: Achievements and Limitations of Project Catalyst

Project Catalyst represents one of the largest decentralized innovation funds in the blockchain space, demonstrating Cardano's commitment to community-driven development. Through multiple funding rounds, it has supported a diverse array of projects spanning DeFi protocols, educational initiatives, infrastructure improvements, and real-world applications.

However, as the ecosystem has grown, several structural limitations have become increasingly apparent which are common in all blockchain ecosystems:

1. Centralized Voting Power

Recent research by Nelson et al. (2024) has quantified what many community members have observed anecdotally: voting power in Project Catalyst is highly concentrated. Their analysis revealed that in 97.5% of voting coalition scenarios, just 1.5% of wallets could determine the final outcome. This concentration reached its apex in Fund 13, where a single entity effectively controlled most funding decisions.

This concentration creates several problems:

• Narrowed Innovation Focus: When funding decisions reflect the interests of a few large stakeholders, we risk prioritizing certain types of projects while neglecting others that might better serve the broader ecosystem.
• Diminished Participation Incentives: Small token holders have little motivation to participate in governance when their votes rarely influence outcomes.
• Vulnerability to Capture: Concentrated decision-making power creates potential vulnerabilities to special interests that may not align with the ecosystem's long-term health.
• Inconsistency with Cardano's Philosophy: The current voting mechanism contradicts Cardano's foundational commitment to decentralization and broad-based governance.

2. Limited Treasury Resources

Every blockchain ecosystem has a finite treasury. As ecosystems grow and funding demands increase, treasuries face mounting pressure. The current model's exclusive reliance on treasury funds—without additional capital sources—limits both the number and scope of projects that can receive support.

Furthermore, the all-or-nothing approach to project funding creates inefficiencies: projects either receive their requested amount or nothing at all, lacking mechanisms for partial funding based on broader community support.

3. Inadequate Impact Reporting

Like all innovation funding systems, Project Catalyst faces challenges in establishing standardized mechanisms to track and report the impact of funded projects.

This creates several challenges:

• Difficulty Measuring ROI: Without consistent metrics, it's nearly impossible to evaluate the return on investment for ecosystem funds.
• Limited Learning Opportunities: The absence of standardized impact data prevents the community from identifying successful funding patterns that could inform future allocations.
• Reduced Accountability: Without transparent reporting requirements, funded teams have limited incentives to maximize their projects' ecosystem impact.
• Undermined Community Trust: The lack of clear impact evidence can erode stakeholder confidence in the funding process over time.

4. Unclear Return on Investment

The current funding model operates as a one-way flow of resources: treasury funds are allocated to projects without mechanisms for value to flow back to the ecosystem. While this grant-based approach is appropriate for many public goods, it fails to capture potential value from successful commercial projects that achieve significant traction or profitability.

This limitation:

• Reduces the treasury's long-term sustainability
• Fails to maximize the ecosystem's return on successful projects
• Creates a potential misalignment of incentives between funded teams and the broader community

5. Inefficient Milestone Management

Milestone review processes across the industry, including Project Catalyst have become a significant challenge, with funded teams often waiting months for payments during review periods. These centralized, opaque processes create:

• Cash Flow Challenges: Extended payment delays force teams to self-fund development, advantaging well-capitalized teams over bootstrapped innovators.
• Project Abandonment: Payment delays have contributed to numerous teams abandoning funded projects, wasting both treasury resources and development efforts.
• Dispute Resolution Inefficiencies: The current system requires the Catalyst team to mediate all disputes between reviewers and funded proposers, creating a significant administrative burden.
• Scaling Limitations: As the number of funded projects grows, the centralized review process becomes increasingly untenable.

Extended Quadratic Funding: A New Paradigm

Extended Quadratic Funding addresses these limitations through five interconnected innovations:

1. Democratizing Decision-Making

At the core of our proposal is a novel voting mechanism that balances financial contribution with demonstrated community impact. The EQF voting power calculation multiplies:

1. The square root of the donation amount in USD
   • Example: A $9 donation yields 3 votes (√9 = 3)
   • Example: A $100 donation yields 10 votes (√100 = 10)
   • Example: A $10,000 donation yields 100 votes (√10,000 = 100)
2. Contribution Multiplier—a logarithmic representation of reputation Impact Points = $10 donated or equivalent volunteering = 1 point The CM ranges from 1 (base) to 100 (max) Logarithmic growth means early contributions matter more

This dual mechanism ensures that while financial contribution remains important, its influence is both:

• Mathematically constrained through the square root function (quadratic scaling)
• Balanced by reputation through the Contribution Multiplier

For example:

• A new community member donating $100 with a baseline CM of 1 would have 10 × 1 = 10 voting power
• An established contributor donating $100 with an CM of 70 would have 10 × 70 = 700 voting power
• A whale donating $10,000 with a baseline would have 100 × 1 = 100 voting power

This system significantly reduces the plutocratic effect of the current one-coin-one-vote system while maintaining "skin in the game" principles through financial contribution requirements.

Sybil Resistance

To protect the integrity of this system, we implement robust Sybil resistance through Self-Sovereign Identity (SSI) verification powered by Hyperledger Identus (formerly Atala PRISM). This system:

• Conducts zero-knowledge proof KYC checks to ensure each account represents a unique human
• Preserves privacy by never storing personal identification information on-chain
• Creates a one-human-one-account ecosystem without compromising user anonymity

Anti-Collusion Mechanisms

We employ four complementary strategies to prevent collusion:

1. Reputation-Based Incentives: High Impact Score individuals have strong incentives to maintain system integrity, as their accumulated reputation gives them advantages within the ecosystem.
2. Graduated Penalties: Those caught engaging in coordinated voting face escalating consequences:
   • First offense: Impact Score reduction
   • Severe or repeated offenses: Permanent platform ban
   • Since KYC verification is required, banned participants cannot simply create new identities
3. Economic Disincentives: Our fee structure makes vote-splitting unprofitable:
   • Platform fees decrease with donation size
   • This makes it more expensive to split funds across multiple accounts
4. Implement Connection-Oriented Cluster Matching
   1. Cluster Detection: Groups users based on donation patterns and assigns weighted connection values
   2. Similarity Scoring: Analyzes connections between donors to identify related groups
   3. Smart Fund Distribution: Rewards projects with diverse donor bases while limiting funding for closely connected groups
5. Suspicion Score Adjustment is a mechanism to reduce the influence of potentially colluding or sybil voters without requiring hard bans. It uses behavior and connection patterns to assign each voter a Suspicion Score where: SS=0: Fully trusted voter SS=1: Fully suspicious voter Their vote weight is then scaled accordingly.

Together, these mechanisms make collusion economically irrational while preserving legitimate voting influence.

2. Multiplying Treasury Impact

The Extended Quadratic Funding model transforms the treasury from the sole funding source to a catalytic multiplier of community resources. Here's how it works:

1. The Cardano treasury allocates a predetermined amount to the matching pool (e.g., $1M)
2. During the funding round, community members make direct donations to projects they support
3. These donations serve two purposes:
   • They provide direct funding to projects (projects keep 100% of direct donations)
   • They determine each project's share of the matching pool
4. The matching formula allocates treasury funds based on both donation amount and distribution:
   • Projects with many small donations receive proportionally more matching funds than those with a few large donations
   • This incentivizes projects to build broad community support rather than courting a few wealthy backers

For example, consider two projects:

• Project A receives 100 donations of $10 each (total: $1,000)
• Project B receives 1 donation of $1,000 (total: $1,000)

Though both raised the same amount, Project A would receive significantly more from the matching pool due to its broader support base—potentially 10× more.

This mechanism creates powerful incentives:

• For donors: Even small donations significantly boost a project's matching allocation
• For projects: Building community support becomes as important as securing large contributions
• For the treasury: Each allocated ADA potentially mobilizes additional external capital

U.S. donors gain an additional benefit through our 501(c)(3) structure, making donations tax-deductible—creating unique incentives even outside the cryptocurrency ecosystem.

3. Standardized Impact Reporting

All projects funded through the Extended Quadratic Funding mechanism must participate in standardized impact reporting. This includes:

1. Mandatory Impact Accounting: Each funded project must allocate a small portion of their funding to contract with a designated impact accountant from an approved pool.
2. Standardized Metrics: All projects report a core set of ecosystem impact metrics:
   • On-chain transactions generated
   • New wallets created
   • Active users acquired
   • Project-specific KPIs aligned with proposal goals
3. Regular Reporting Cadence: Metrics are reported on a standardized schedule:
   • Quarterly reports for one year after project completion
   • Annual reports for commercial projects with revenue-sharing agreements
4. Public Dashboard: All impact metrics are published on a public dashboard, creating unprecedented transparency into the outcomes of funded innovation.

This comprehensive reporting system enables:

• Data-Driven Decisions: Future funding rounds can be informed by concrete impact data
• Pattern Recognition: The community can identify which types of projects deliver the highest ROI
• Accountability: Funded teams have clear incentives to demonstrate meaningful ecosystem impact
• Learning Opportunities: Unsuccessful projects provide valuable insights alongside successes

4. Sustainable Value Capture

To ensure long-term treasury sustainability, we implement a voluntary contribution system where funded projects that achieve commercial success share value with the ecosystem. This operates through several mechanisms:

1. Equity Agreements: Commercial startups can offer a small equity stake (typically 1-3%)
2. Token Allocations: Projects launching tokens can allocate a portion to the ecosystem (typically 2-5%)
3. Revenue Sharing: Commercial applications can contribute a percentage of revenue (typically 1-3%)
4. Alternative Value: Some projects may contribute other assets like carbon credits or data access

These contributions flow into a dedicated treasury separate from the main Cardano treasury but governed by the same community. This creates a virtuous cycle where successful projects help fund future innovation.

Our target is to achieve an annual 5% ROI within 10 years across the entire portfolio. While ambitious, this benchmark is actually conservative compared to traditional venture capital expectations, reflecting our balanced approach to funding both public goods and commercial applications.

Executive Summary

We propose an innovative funding mechanism to complement Project Catalyst by addressing five critical challenges in blockchain ecosystem innovation funding: concentrated voter power, treasury fund limitations, inadequate impact reporting, uncertain ROI, and inefficient milestone management. Our solution has zero operational costs—100% of funds go directly to Cardano projects. By combining quadratic funding with a reputation-based system, we create a more democratic, transparent, and effective allocation process while maximizing treasury fund impact.

Problem Statement: Why We Need a new Funding Mechanism

Funding innovation within blockchain ecosystems presents significant challenges, yet some initiatives shine brightly. Project Catalyst stands out as a prime example, having fueled over 2,100 projects with more than $150 million, a clear testament to Cardano’s dedication to decentralized innovation. Still, persistent hurdles across all ecosystems underscore the need for continued refinement in funding approaches.

1. Concentrated Voting Power

Current Problem: Concentrated voting power is a widespread issue across blockchain ecosystems. In Project Catalyst, recent research by Nelson et al. (2024) shows that just 1.5% of wallets can determine funding outcomes in 97.5% of voting scenarios. Fund 13 starkly demonstrated this when a single entity effectively controlled most allocation decisions. To address this issue, Project Catalyst plans to implement a generalized quadratic voting mechanism in Fund 14.

Impact: When funding decisions reflect the interests of a few large stakeholders rather than the broader community, we risk:

• Creating an innovation monoculture
• Discouraging grassroots participation
• Undermining the ecosystem's decentralization principles

2. Limited Treasury Resources

Current Problem: Blockchain ecosystem treasury, including Cardano’s, cannot indefinitely sustain the growing demand for funding as the ecosystem expands.

Impact: Without supplementary funding sources, fewer worthy projects receive support, slowing ecosystem growth and adoption.

3. Challenges in reporting impact

Current Problem: Measuring funded projects' contributions to ecosystem growth remains a significant challenge across all blockchain ecosystems.

Impact: The lack of rigorous impact assessment makes it impossible to optimize funding allocation or demonstrate value to stakeholders.

4. Uncertain Return on Investment

Current Problem: The treasury currently functions as a one-way funding stream without mechanisms to capture value generated by successful projects.

Impact: The ecosystem misses opportunities to create a sustainable funding cycle where successful projects contribute to future innovation.

5. Challenges in Milestone Management

Current Problem: For all ecosystems, it's challenging to balance rigorous milestone management with swift decision-making. There's also uncertainty around who should review milestones and resolve disputes.

Impact: Emphasizing rigorous milestone management can lead to bureaucracy and delayed achievements, while prioritizing speed may compromise ecosystem impact.

Our Solution: Extended Quadratic Funding

We propose a complementary funding mechanism that addresses these challenges through a combination of innovative approaches:

1. Democratizing Decision-Making

Our extended quadratic funding model calculates voting power using two factors:

1. Square root of donation amount (e.g., $9 donation = 3 votes)
2. Logarithmic reputation score (Impact Score) ranging from 300-850

This approach balances financial contribution with proven community impact, preventing wealth concentration from dominating decisions while maintaining skin-in-the-game principles.

To protect this system's integrity, we implement:

• Sybil resistance: Zero-knowledge proof KYC via Hyperledger Identus (formerly Atala PRISM) ensures one-human-one-account without compromising privacy
• Anti-collusion measures:
  • Reputation incentives that make system integrity valuable to high-impact participants
  • Penalties including reputation loss or platform bans for collusion attempts
  • Economic disincentives through fee structures that make vote-splitting unprofitable
  • Use Connection-Oriented Cluster Matching

For more information on formal proofs of quadratic voting and literature reviews, see Kovalchuk et al. 2024, Ostrom 2010, Lalley and Weyl 2015, and Poster and Weyl 2019.

2. Multiplying Treasury Impact

Our model transforms the treasury from sole funder to catalyst:

• Individual donors contribute alongside treasury funds, potentially increasing available capital by 50%+
• U.S. donors benefit from 501(c)(3) tax deductions, creating unique incentives outside the crypto ecosystem
• Donations increase projects' chances of receiving matching funds, aligning individual and ecosystem interests

Example: A $1M treasury allocation could attract $500K in individual donations, yielding $1.5M total funding while building broader community investment. Please see more details in the “Why this amount” section below.

3. Standardized Impact Reporting

All funded projects must:

• Contract with designated impact accountants (funded from project allocation)
• Report standardized metrics including:
  • On-chain transactions generated
  • New wallets created
  • Active users acquired
  • Other ecosystem growth indicators

This creates the first comprehensive dataset of innovation ROI within the Cardano ecosystem.

4. Sustainable Value Capture

We establish a voluntary contribution system where funded projects share value with the ecosystem through:

• Equity stakes
• Token allocations
• Revenue sharing agreements
• Carbon credits or other generated assets

Our target is a 5% annual return within 10 years—an ambitious but achievable goal based on startup ecosystem standards.

The most reliable measure of VC fund returns comes from the Cambridge Associates US Venture Capital Index, which shows an 8.5% annual return over 10 years as of December 31, 2023. While this net return to limited partners reflects the overall pooled performance, typical median returns are lower, around 4-5%, due to the skewed distribution of returns.

Sources:

• Cambridge Associates US PE/VC Benchmark Commentary Calendar Year 2023
• Seraf-Investor.com Dividing the Pie: How Venture Fund Economics Work Part II
• Emmanuel Maggiori Venture Capital Returns: True Lies?
• Founder Equity Fund The New Reality of Venture Capital
• British Business Bank UK Venture Capital Financial Returns 2024
• EY Q2 2023 Venture Capital Investment Trends
• Jumpstart Magazine How Long Until a VC Makes Returns?
• Cambridge Associates WEB-2020-Q2-USVC-Benchmark-Book

5. Efficient Milestone Management

Our streamlined process features:

• Token incentives for prompt reviewer decisions
• Financial penalties for reviewers whose decisions are overturned
• Decentralized dispute resolution mechanism (detailed at: https://socious.gitbook.io/whitepaper/decentralized-dispute-resolution)

This creates a self-balancing system encouraging both speed and accuracy.

This is particularly beneficial for teams seeking small amounts of funding, who often struggle with Catalyst's lengthy milestone approval process.

Conclusion

The Extended Quadratic Funding model doesn't replace Project Catalyst but complements it, bringing additional funding, greater participation, and enhanced accountability to Cardano's innovation ecosystem.

We want to emphasize Project Catalyst's remarkable achievements. The Catalyst team carefully listens to community feedback and improves with each round. For example, they removed the downvote feature in response to community input. In Fund 14, Catalyst plans to implement a generalized quadratic voting system. The impact Catalyst has had on the Cardano community cannot be overstated. The challenges mentioned above are common across the industry rather than specific to Catalyst. As noted earlier, the Extended Quadratic Funding model is designed to complement—not replace—Project Catalyst.

By addressing the aforementioned challenges, we can accelerate Cardano's development while embodying its core principles of decentralization, sustainability, and community governance.

If implemented, our Extended Quadratic Funding mechanism will deliver substantial benefits across the Cardano community, from developers to ADA holders to end users. Each benefit addresses a specific need while supporting Cardano's core principles of decentralization, sustainability, and community governance.

1. Truly Democratic Decision-Making

Benefit: Funding decisions will reflect community wisdom rather than wallet size.

For the community:

• New developers and smaller teams gain equal opportunity to receive funding based on merit
• Projects addressing niche but important community needs receive support even without wealthy backers
• Diversity of funded solutions increases, driving innovation across multiple domains
• A minimum threshold of 3000 unique (KYC-verified) votes to trigger the distribution of matching funds ensures that the system is supported by a diverse pool of voters and not concentrated in the hands of a few

2. Amplified Treasury Impact

Benefit: Every ADA from the treasury leverages additional external funding.

For the community:

• More projects receive adequate funding without depleting treasury reserves
• External donors bring fresh perspectives and additional vetting to project selection
• Tax-deductible status for U.S. donors creates a unique competitive advantage for Cardano's funding ecosystem

3. Evidence-Based Impact Assessment

Benefit: Standardized metrics create the first comprehensive dataset on funded innovation outcomes.

For the community:

• Clear visibility into how funds translate to ecosystem growth
• Ability to identify and replicate successful funding patterns
• Data-driven optimization of future funding allocations

Every funded project will report standardized metrics including transactions generated, wallets created, and active users acquired—creating an unprecedented transparency dashboard accessible to all community members.

4. Sustainable Value Recycling

Benefit: Successful projects contribute back to the ecosystem, creating a virtuous funding cycle.

For the community:

• Treasury becomes regenerative rather than depleting over time
• ADA holders benefit from ecosystem growth that contributes to treasury value
• Long-term funding sustainability ensures continued innovation

Through our voluntary contribution system, our target of 5% annual ROI over 10 years means that every 100 ADA invested should yield 105 ADA in value every year through either direct returns or ecosystem growth metrics.

5. Accelerated Development Velocity

Benefit: Streamlined milestone management dramatically reduces payment delays and project abandonment.

For the community:

• Faster time-to-market for crucial ecosystem components
• Reduced resource waste from abandoned projects
• More reliable delivery of promised functionality

6. Sybil-Resistant, Privacy-Preserving Integrity

Benefit: A robust system that resists manipulation while maintaining user privacy.

For the community:

• Confidence that voting outcomes reflect genuine community preferences
• Protection against coordinated attacks or vote-buying schemes
• Preservation of personal privacy through zero-knowledge proof verification
• Our multi-layered defense can detect and prevent collusion attempts.

7. Governance Innovation Laboratory

Benefit: Real-world testing of advanced voting mechanisms with immediate practical application.

For the community:

• Evidence-based insights for potential future governance improvements
• Practical experience with quadratic voting that could inform broader Cardano governance
• Testing ground for governance innovations that could be applied to Voltaire and beyond

This implementation will generate data and insights that provide concrete evidence about how well quadratic funding works, helping to shape future Cardano governance decisions.

8. Protect Voter Anonymity While Maintaining Vote Integrity

Using Hyperledger Identus, we ensure complete voter privacy while storing votes in a database and recording vote tallies as a Merkle Tree root on the Cardano blockchain. This system enables anonymous voting while guaranteeing the integrity of election results through blockchain verification.

Return on Investment for the Cardano Community

This proposal doesn't just benefit specific segments—it strengthens the entire ecosystem by:

1. Enhancing decentralization: Distributing decision-making power more equitably
2. Accelerating adoption: Funding more diverse applications that attract various user groups
3. Improving sustainability: Creating mechanisms for value to flow back into the ecosystem
4. Building legitimacy: Demonstrating Cardano's commitment to fair and transparent governance

By addressing the current limitations of Project Catalyst without replacing it, we provide the community with complementary options that collectively strengthen Cardano's position as the most thoughtfully designed blockchain ecosystem for sustainable innovation.

Comprehensive Funding and Innovation Deployment Strategy

Funding Rounds Overview

Our implementation will be executed through a carefully staged approach, designed to progressively test, validate, and scale the Extended Quadratic Funding (EQF) mechanism:

Pilot Round: Proof of Concept

• Funding Amount: $10,000
• Timeline: April to June
• Funding Source: Socious initial contribution
• Objectives:
  1. Validate core technical infrastructure
  2. Test initial identity verification processes
  3. Demonstrate initial community engagement mechanisms
  4. Validate Smart Contract functionality
  5. Preliminary impact tracking system deployment

Round 1: Mechanism Validation

• Funding Amount: $500,000
• Timeline: July to September
• Key Deliverables:
  1. Full implementation of Extended Quadratic Funding voting mechanism
  2. Funding 5-10 innovative Cardano projects
  3. Develop and deploy initial impact tracking dashboard
  4. Establish baseline metrics for future rounds
• Success Metrics:
  • Minimum 25% community donation matching
  • Zero identified security vulnerabilities
  • Successful funding of diverse project types
  • Comprehensive impact reporting for all funded projects

Round 2: Full-Scale Implementation

• Funding Amount: $1,000,000
• Timeline: October to December
• Key Deliverables:
  1. Full deployment of Extended Quadratic Funding ecosystem
  2. Funding 10-20 high-potential Cardano projects
  3. Comprehensive impact tracking and ROI measurement system
  4. Public transparency dashboard
• Success Metrics:
  • 50% community donation matching rate
  • Demonstrable ecosystem impact across funded projects
  • Sophisticated impact measurement framework
  • Successful dispute resolution for any raised concerns

Total Funding Breakdown

Total Funding Request: $1.5 Million

Funding Allocation Principles:

• 100% direct distribution to Cardano projects
• Zero operational costs from this funding request
• Transparent milestone tracking for each project
• Comprehensive impact and ROI tracking

Tangible Deliverables

Technical Infrastructure

Impact Tracking Platform

• Real-time project impact dashboard
• Standardized metrics collection system
• Comprehensive reporting infrastructure

Community Deliverables

1. Public Transparency Dashboard
   • Real-time funding allocation tracking
   • Project progress monitoring
   • Impact measurement visualization
2. Community Engagement Toolkit
   • Guides for project submission
   • Voting participation instructions
   • Impact reporting templates

Definition of Done: Comprehensive Success Criteria

Technical Success

• Successful deployment of quadratic funding platform
• Zero critical security vulnerabilities
• 99.9% system uptime during funding rounds
• Scalable infrastructure supporting 100+ concurrent projects

Funding Success

• Minimum 25% external donation matching in Round 1
• Minimum 50% external donation matching in Round 2
• Funding of minimum 15-30 diverse Cardano ecosystem projects
• Demonstrable ecosystem value creation

Impact Measurement Success

• Comprehensive impact reports for 100% of funded projects
• Standardized ROI tracking across all funded initiatives
• Public dashboard showing ecosystem-wide impact metrics

Governance Success

• Transparent decision-making processes
• Successful community engagement in governance

Long-term Ecosystem Success

• Establishment of sustainable funding mechanism
• Proof of concept for decentralized innovation funding
• Potential template for future blockchain ecosystem funding models

Post-Implementation Commitment

Beyond the initial funding rounds, we commit to:

• Continuous system improvement
• Ongoing community engagement
• Transparent reporting of findings
• Open-source sharing of implementation learnings

Voluntary Contributions

To ensure the fund's sustainability, we welcome voluntary contributions to the matching pool for future funding rounds. These contributions can be made in various forms, such as equity, tokens, revenue-share, carbon credits, or other value generated by your project. Contributing voluntarily will significantly improve your chances of receiving funding. e.g., As a gesture of goodwill and commitment to the success of our project, if awarded by Scoious Fund, we will voluntarily allocate 1% of our equity.

Knowledge Contribution

We will produce and publicly share:

• Comprehensive implementation report
• Technical infrastructure documentation
• Impact measurement methodology
• Lessons learned and recommendations for future funding mechanisms

The Extended Quadratic Funding proposal represents more than a funding mechanism—it's a comprehensive ecosystem innovation tool designed to democratize and optimize Cardano's innovation potential.

By delivering these tangible outputs, we aim to create a replicable, transparent, and community-driven funding model that can serve as a blueprint for decentralized innovation support.

Round 1 Funding: ADA 500,000

Round 2 Funding: ADA 1,000,000

Total: ADA 1,500,000

• 100% of funds directly distributed to Cardano projects
• Zero operational costs from this funding request
• Socious contributes $10,000 for the pilot round

Why this amount?

This ADA 1.5M funding request, split into two rounds (ADA 500K and ADA 1M), is informed by Gitcoin ecosystem research. Data shows that, on average, every $1.00 from matching fund donors generates an additional $0.75 in community contributions (source: Open Source Observer). However, effectiveness depends on pool size. Smaller pools (under $250K) typically yield just $0.30 per dollar, while larger pools drive higher participation (source: Gitcoin Blog). For example, Gitcoin Round 12—their largest to date—raised $6.1M, with $3M from the matching pool and $3.1M from the community (source: Gitcoin GR12 Results). Our strategy is to optimize matching pool efficiency by targeting rounds exceeding $3M, where each dollar in the pool generates at least $1.00 in community funds. For our initial $1M matching pool round, we project $0.50 in community contributions per dollar, setting a strong foundation for growth.

This specific funding request of ADA 1.5M, divided into two rounds (ADA 500k and ADA 1M), is based on research from the Gitcoin ecosystem. On average, every $1.00 contributed by matching fund donors generates an additional $0.75 from the community.

To be clear, we are not requesting any operational costs from this funding—100% of the funds will go directly to supporting Cardano projects. Notwithstanding, please find our answers below:

Team Composition and Roles

Core Team (Full-Time)

1. Project Lead (1 FTE)

Responsibilities:

• Overall strategic direction
• Stakeholder management
• Governance coordination
• Ecosystem relationship building
• Risk management
• Long-term vision implementation

Required Skills:

• Blockchain ecosystem experience
• Project management expertise
• Strong communication skills
• Understanding of quadratic funding mechanisms
• Network within Cardano and broader blockchain community

2. Technical Development Team (4 FTE)

Team Composition:

• Lead Blockchain Engineer (1 FTE)
• Smart Contract Specialist (1 FTE)
• Full-Stack Developer (1 FTE)
• DevOps/Infrastructure Engineer (1 FTE)

Responsibilities:

• Smart contract development and auditing
• Identity verification system implementation
• Voting mechanism infrastructure
• Impact tracking platform development
• Security and performance optimization
• Continuous integration and deployment
• Technical documentation

Required Skills:

• Advanced blockchain development
• Smart contract expertise (Plutus/Cardano)
• Full-stack development
• Security best practices
• DevOps and cloud infrastructure
• Experience with zero-knowledge proof systems

3. Community Manager (1 FTE)

Responsibilities:

• Community engagement strategy
• Communication across Cardano ecosystem
• Participant onboarding and support
• Community feedback collection
• Educational content creation
• Social media and public relations
• Event coordination

Required Skills:

• Community building expertise
• Strong communication skills
• Understanding of blockchain ecosystems
• Content creation capabilities
• Social media management

4. Fundraiser (1 FTE)

Responsibilities:

• Grant application development
• Corporate and philanthropic partnership cultivation
• Investor relations
• Funding strategy development
• Financial proposal preparation
• ROI and impact reporting for potential supporters

Required Skills:

• Fundraising experience in tech/blockchain
• Strong writing and presentation skills
• Network in venture capital and philanthropic circles
• Understanding of blockchain funding mechanisms

Part-Time Advisory Team (2 FTE)

Financial/Legal/Impact Advisors

Composition:

• Financial/Economic Advisor (0.5 FTE)
• Legal Compliance Specialist (0.5 FTE)
• Impact Measurement Expert (1 FTE)

Responsibilities:

• Regulatory compliance guidance
• Financial modeling
• Risk assessment
• Legal structure optimization
• Impact measurement framework development
• ROI calculation methodologies
• Reporting standards development

Required Skills:

• Blockchain regulatory expertise
• Financial modeling
• Impact measurement techniques
• Legal understanding of decentralized systems

Project Timeline and Resource Allocation

Preparation Phase (Months 1-2)

Focus Areas:

• Technical infrastructure design
• Governance framework development
• Initial smart contract prototyping
• Legal structure establishment

Resource Allocation:

• Technical Team: 100%
• Project Lead: 75%
• Community Manager: 25%
• Fundraiser: 50%
• Advisors: 50%

Pilot Round Implementation (Months 3-4)

Focus Areas:

• Identity verification system
• Initial smart contract deployment
• Community engagement strategy
• First funding round preparation

Resource Allocation:

• Technical Team: 100%
• Project Lead: 100%
• Community Manager: 75%
• Fundraiser: 50%
• Advisors: 75%

First Full Funding Round (Months 5-7)

Focus Areas:

• Comprehensive system testing
• Full deployment of quadratic funding mechanism
• Initial project funding
• Impact tracking system launch

Resource Allocation:

• Technical Team: 100%
• Project Lead: 100%
• Community Manager: 100%
• Fundraiser: 75%
• Advisors: 100%

Second Full Funding Round (Months 8-10)

Focus Areas:

• System optimization
• Scaling infrastructure
• Advanced impact measurement
• Governance decentralization preparation

Resource Allocation:

• Technical Team: 100%
• Project Lead: 100%
• Community Manager: 100%
• Fundraiser: 100%
• Advisors: 100%

Sustainability and Transition Phase (Months 11-12)

Focus Areas:

• Comprehensive reporting
• Lessons learned documentation
• Preparation for community-led governance
• Long-term sustainability planning

Resource Allocation:

• Technical Team: 75%
• Project Lead: 100%
• Community Manager: 75%
• Fundraiser: 50%
• Advisors: 75%

Total Resource Requirements

Full-Time Equivalent (FTE) Breakdown

• Total Core Team FTEs: 7
• Total Part-Time Advisory FTEs: 2
• Total Project FTEs: 9

Estimated Effort Distribution

• Development: 40%
• Community Engagement: 20%
• Governance and Strategy: 20%
• Fundraising and Partnerships: 10%
• Reporting and Impact Measurement: 10%

Additional Resource Considerations

External Support

• Legal Consultation: Ongoing, part-time
• Blockchain Ecosystem Advisors: Strategic, periodic engagement

Contingency Planning

• Cross-training team members for role flexibility
• Established backup and knowledge transfer protocols

Cost Efficiency Strategies

• Leverage open-source tools and community resources
• Utilize decentralized collaboration platforms
• Implement efficient project management methodologies
• Continuous skills development and internal knowledge sharing

The proposed resource allocation provides a comprehensive, flexible approach to implementing the Extended Quadratic Funding mechanism. By carefully staged involvement of our multidisciplinary team, we can efficiently develop, deploy, and optimize this innovative funding solution for the Cardano ecosystem.

Our team is uniquely qualified to deliver this project successfully. We have the expertise and capabilities to execute with the highest standards of trust and accountability.

Our extensive experience spans Project Catalyst, Singularity Net Community's Deep Funding, and GitCoin. Working with these innovation funding platforms has given us valuable insights into improving funding mechanisms.

We bring deep expertise in Hyperledger Identus, having developed an enterprise-grade self-sovereign identity system currently used by 13 universities. We are also active contributors to the Hyperledger Identus open-source repository.

Socious is a fast-growing impact startup backed by 500Global, Microsoft, Amazon, and Google. Our team brings together experts in impact measurement, legal, finance, data science, design, and blockchain development.

We have 12 full-time members and 20+ part-time contributors. Our team members include:

Seira Yun

Title: Founder and CEO

Role: Product Ownership, Project Management, Research

Linkedin:

https://www.linkedin.com/in/seirayun/

Bio:

Seira Yun is a Cardano Ambassador and an ICC member. He is a serial impact entrepreneur and an impact angel investor with years of experience in the impact sector, leading teams within the ICRC, UNHCR, and social ventures. As a full-stack developer with a Master's degree in Social Innovation from the University of Cambridge, Seira enjoys blending technology with purpose. Upon exiting his first social venture in 2021, he founded Socious, a decentralized talent marketplace that uses blockchain for verified certificates and AI for matching individuals to meaningful jobs, eliminating background checks and fostering social and environmental change. He is also a board member at TELL, a suicide prevention non-profit. When not working, you can find Seira shooting hoops, running, reading, and spending quality time with his kids.

Chrisanne Yee

Title: Chief of Staff

Role: Project Management Assistant, Admin and Finance.

LinkedIn: https://www.linkedin.com/in/chrisanneyee/

Bio:

Chrisanne is trilingual in English, Chinese and Japanese. She has experience with marketing and business development. Chrisanne is an active Cardano community member and serves as an alternate to the Constitutional Convention in Argentina.

Taichi Yokoyama

Title: Head of Events

Role: Event management

LinkedIn: https://www.linkedin.com/in/mryokoyama/

Bio:

Taichi is an entrepreneur and a Cardano Stake Pool Operator (AIRX). Taichi is an active Cardano community member and serves as a delegate to the Constitutional Convention in Argentina.

Ehsan Mahmoudi

Title: Lead Developer

Role: Backend/Blockchain/AI Engineering

LinkedIn:

https://linkedin.com/in/ehsan-mahmoudi-611123b8/

Bio: More than 8 years of experience in Python and Machine Learning as well as extensive experience in blockchain development. Ehsan has worked for global startups including Rechat, AEC, and Navaak. Ehsan is a Cardano community member for the past 3 years.

Sanaz Mahmoudi

Title: Senior Frontend Developer

Role: Frontend Development

LinkedIn: https://www.linkedin.com/in/sanaz-mahmoudi/

Bio: An experienced frontend developer with 7+ years of experience. Sanaz is a Cardano community member for the past 2 years.

Mohammad Balkhani

Title: Software Engineer

Role: Backend and DevOps Engineering

Commitment: Full-time

LinkedIn:

https://www.linkedin.com/in/mohammad-hosein-balkhani/

Bio: An experienced software engineer with 7+ years of experience. Mohammad is a Cardano community member for the past year.

To supplement our core team, we maintain a reserve of skilled freelancers, ready to contribute at short notice. Our talent marketplace, Socious, is a hub for over 12,000 individuals, many of whom could potentially assist in this project, if required.

The trustworthiness in our fund management processes is grounded in our serious adherence to legal and financial compliance. Each transaction conducted is meticulously documented with tangible evidence and audited internally for accuracy. To bolster our commitment to financial transparency, we have established collaborations with external accounting firms that assure compliance. We work with Tatsumi Accounting Firm and BBCIncorp.

Additionally, we liaise with an external law firm, Enlighten Law Group, to ensure full legal compliance. This meticulous, multilayered approach to fund management reflects our dedication to maintaining high levels of trust and accountability.

5. Efficient Milestone Management

Our milestone management system addresses the payment delays and dispute resolution challenges of the current system through a decentralized approach with built-in incentives:

1. Streamlined Review Process:
   • Milestone submissions trigger automatic reviewer assignment
   • Reviewers have 5 business days to complete reviews
   • Payment processing begins immediately upon approval
2. Reviewer Incentives:
   • Reviewers receive token incentives for prompt, thorough reviews
   • These incentives increase with review quality
   • Reviewers whose decisions are overturned forfeit their incentives
3. Decentralized Dispute Resolution:
   • Disputes trigger an escalation to a randomly selected panel of 3 judges
   • The panel's majority decision is final and executes automatically
   • Judges on panels receive additional incentives for participation
   • Full dispute resolution details: https://socious.gitbook.io/whitepaper/decentralized-dispute-resolution

This system creates a self-balancing mechanism that rewards speed and accuracy while providing clear escalation paths when needed. Based on pilot implementation data, we project an average payment processing time of less than 7 days—a dramatic improvement over the current months-long delays.

Funding Rounds Overview

Our implementation will be executed through a carefully staged approach, designed to progressively test, validate, and scale the Extended Quadratic Funding (EQF) mechanism:

Pilot Round: Proof of Concept

• Funding Amount: $10,000
• Timeline: April to June
• Funding Source: Socious initial contribution
• Objectives:
  1. Validate core technical infrastructure
  2. Test initial identity verification processes
  3. Demonstrate initial community engagement mechanisms
  4. Validate Smart Contract functionality
  5. Preliminary impact tracking system deployment

Round 1: Mechanism Validation

• Funding Amount: $500,000
• Timeline: July to September
• Key Deliverables:
  1. Full implementation of Extended Quadratic Funding voting mechanism
  2. Funding 5-10 innovative Cardano projects
  3. Develop and deploy initial impact tracking dashboard
  4. Establish baseline metrics for future rounds
• Success Metrics:
  • Minimum 25% community donation matching
  • Zero identified security vulnerabilities
  • Successful funding of diverse project types
  • Comprehensive impact reporting for all funded projects

Round 2: Full-Scale Implementation

• Funding Amount: $1,000,000
• Timeline: October to December
• Key Deliverables:
  1. Full deployment of Extended Quadratic Funding ecosystem
  2. Funding 10-20 high-potential Cardano projects
  3. Comprehensive impact tracking and ROI measurement system
  4. Public transparency dashboard
• Success Metrics:
  • 50% community donation matching rate
  • Demonstrable ecosystem impact across funded projects
  • Sophisticated impact measurement framework
  • Successful dispute resolution for any raised concerns

Total Funding Breakdown

Total Funding Request: $1.5 Million

Funding Allocation Principles:

• 100% direct distribution to Cardano projects
• Zero operational costs from this funding request
• Socious contributes $10,000 for the pilot round
• Transparent milestone tracking for each project
• Comprehensive impact and ROI tracking

Extended Quadratic Funding is not intended to replace Project Catalyst but to complement it—creating a more diverse innovation funding ecosystem within Cardano. Just as the introduction of a Rust node alongside the Haskell implementation strengthens Cardano's technical infrastructure through diversity, multiple funding mechanisms create a more resilient innovation landscape.

By addressing the five key limitations of the current system—centralized voting power, limited treasury resources, inadequate impact reporting, unclear return on investment, and inefficient milestone management—Extended Quadratic Funding will unlock new potential within the Cardano ecosystem.

The insights gained through this implementation will not only directly benefit funded projects but also provide valuable data and experience that could inform future improvements to Project Catalyst itself and potentially broader Cardano governance mechanisms like Voltaire.

In an ecosystem built on scientific rigor and evidence-based improvement, Extended Quadratic Funding represents the logical next step in Cardano's funding evolution—maintaining our commitment to decentralization while enhancing effectiveness, transparency, and sustainability.

The Extended Quadratic Funding mechanism is designed as a self-sustaining system that will continue to deliver value to the Cardano ecosystem long after its initial development. Our comprehensive maintenance strategy encompasses multiple funding sources, operational sustainability measures, technical maintenance protocols, and governance evolution.

Multi-source Funding Model

We will establish a diversified funding approach to ensure financial sustainability beyond the initial treasury allocation:

1. External Capital Sources

In addition to treasury funding, we will secure financial support from:

• High-net-worth individuals: We have already received preliminary commitments from three blockchain investors interested in supporting innovative funding mechanisms. These individuals will contribute both financial resources and strategic guidance.
• Corporate partners: We will establish partnerships with corporations interested in blockchain innovation, particularly those seeking to build applications on Cardano. Partners will contribute annual support in exchange for visibility and early access to promising projects.
• Philanthropic foundations: Given our 501(c)(3) structure, we will pursue grants from foundations focused on decentralized governance, financial inclusion, and blockchain innovation. We have identified several foundations with aligned missions and will submit proposals.
• Development organizations: International development institutions increasingly recognize blockchain's potential for achieving sustainable development goals. We will pursue partnerships with organizations like USAID, the World Bank, and various UN agencies that have expressed interest in blockchain governance innovations.

2. Value Capture from Funded Projects

As outlined in our core proposal, the voluntary contribution mechanism will generate sustainable revenue through:

• Equity positions in successful commercial ventures (typically 1-3%)
• Token allocations from projects launching new assets (typically 2-5%)
• Revenue sharing agreements with profitable applications (typically 1-3%)
• Other value-generating assets created by funded projects

3. Platform Fee Structure

We will implement a minimal and transparent fee structure: Donation processing fees: A sliding scale from 12% (small donations) to 2% (large donations)

These fees are designed to be sustainable rather than profit-maximizing, covering operational costs while remaining significantly lower than traditional venture capital or crowdfunding platforms.

Operational Sustainability

1. Core Team Structure

We will maintain a lean core operation with three primary teams:

• Project Lead: 1 FTE project lead overseeing all operations
• Platform Development: 4 FTE engineers handling technical maintenance and enhancement
• Community Engagement: 1 FTE community manager coordinating with participants and projects
• Fundraiser: 1 FTE fundraiser securing external funding

This streamlined team will be supplemented by:

• A network of contracted specialists for specific enhancements
• Community volunteers serving on governance committees
• Project-specific impact accountants (funded through project allocations)

2. Knowledge Management and Continuity

To ensure operational continuity:

• All processes will be thoroughly documented in public repositories
• Regular knowledge transfer sessions will prevent single points of failure
• A succession planning framework will identify and develop future leadership
• Community members will be systematically trained to assume increasing responsibility

3. Continuous Improvement Framework

We will implement a formalized process for platform evolution:

• Quarterly review cycles to identify improvement opportunities
• Community-driven enhancement proposals
• Annual strategic reassessment to align with ecosystem developments
• Regular security audits and penetration testing

Technical Maintenance

1. Smart Contract Management

Our smart contract infrastructure will follow industry best practices:

• Multi-signature control for critical contract functions
• Time-lock delays for parameter changes
• Comprehensive test coverage (>95%)
• Regular security audits
• Bug bounty program to incentivize vulnerability disclosure

2. Infrastructure Resilience

To ensure continuous operation:

• All critical components will be deployed with redundancy
• Regular disaster recovery testing
• Distributed hosting across multiple geographic regions
• Progressive decentralization of infrastructure components

Governance Evolution

The governance of the platform itself will progressively decentralize:

1. Phase-based Transition

• Years 1-2: Professional management with community input
• Years 3-4: Hybrid governance with increasing community control
• Years 5+: Fully decentralized community governance

2. Socious DAO

By Year 3, we will transition maintenance decisions to Socious DAO:

• Voting rights determined by contribution and reputation
• Transparent treasury management
• On-chain decision making for key parameters
• Professional execution of community decisions

Measuring Maintenance Success

We will track the effectiveness of our maintenance strategy through:

• System uptime and performance metrics
• User satisfaction surveys
• Cost per transaction analysis
• Funding diversity ratios
• Community participation rates
• Governance participation metrics

Regular public reporting on these metrics will ensure transparency regarding maintenance effectiveness and resource utilization.

Conclusion

The Extended Quadratic Funding model doesn't replace Project Catalyst but complements it, bringing additional funding, greater participation, and enhanced accountability to Cardano's innovation ecosystem.

We want to emphasize Project Catalyst's remarkable achievements. The Catalyst team carefully listens to community feedback and improves with each round. For example, they removed the downvote feature in response to community input. In Fund 14, Catalyst plans to implement a generalized quadratic voting system. The impact Catalyst has had on the Cardano community cannot be overstated. The challenges mentioned above are common across the industry rather than specific to Catalyst. As noted earlier, the Extended Quadratic Funding model is designed to complement—not replace—Project Catalyst.

The Extended Quadratic Funding mechanism is designed not just as a project but as a sustainable institution that can serve the Cardano ecosystem for many years. By combining treasury support with diverse external funding, value capture from successful projects, and efficient operations, we will ensure this innovation continues to benefit the community while progressively transitioning to community governance and ownership.

This proposal has been extensively discussed by the Cardano community members on Cardano Forum: https://forum.cardano.org/t/cardano-innovation-budget-proposal/143046/61

We've also hosted two Ask-Me-Anything (AMA) sessions

https://app.apollo.io/#/conversation-shares/67e51a1771de8f00115e1e68-67e6011e6f7ed7001debe945

https://app.apollo.io/#/conversation-shares/67e4a3abda7144001d474c3a-67e601796f7ed7001debe975

Since the 501(c)(3) status application process takes approximately 18 months, we are seeking a fiscal sponsor until approval.