Abstract:
Dominant Assurance Contracts (DACs) present a compelling opportunity for the private funding of public goods.
- Mechanism experiments:
- Refund Bonus: (What happens when the goal is not met)
- Flat
- Linear
- Quadratic
- Fund Distribution: (How do you distribute funds from the pool)
- To the entrepreneur
- Bounty, by committee
- Refund Bonus: (What happens when the goal is not met)
- Other experiments:
- Impact Cert: could you issue an NFT for the contribution (mint on contribute; burn on claiming refund)
- game-theoretic mechanism designed to facilitate voluntary creation of public goods
- solve collective action problems (such as free rider problem)
- Created by Alex Tabarrok
- Add an extra component: entrepreneur who profits when quorum is reached and pays the signors if it is not
- To create a contract, an entrepreneur must make the initial pledge
- If quorum is not reached, signors receive their pledge back with their share of the entrepreneur's initial pledge
- A player benefits whether or not quorum succeeds
- This creates a dominant strategy of participation: in the best interest to participate because you'll either get paid or get a public good
- What are the mechanisms by which a dominant assurance contract works?
Two areas within the mechanism for experimentation:
- The refund bonus
- The distribution of funds
A third experiment is offered as well, which is: the ability to "mint" your contribution towards a contract pool as an impact certificate
- Refund Bonus: (What happens when the goal is not met)
- Flat
- Proportional
- Quadratic
- How the refund bonus is distributed
Bonus Type | Contract | Description |
---|---|---|
Flat | Flat.sol |
Every donor is given an equal share of the refund bonus. |
Proportional | Proportional.sol |
Donors are given a refund bonus proprtional to how much they contributed. |
Quadratic | Quadratic.sol |
The refund bonus is distributed along a quadratic curve, based on when an address donated. |
With a flat refund bonus, every donor receives the same payout. This happens regardless of when they contributed and how much: the refund pool is simply divided evenly by the number of donors.
Allocation Method | Description |
---|---|
registerRecipient |
|
allocate |
|
distribute |
With a proportional refund bonus, donors receive a refund proportional to the amount they contributed. Contributing more means you receive more of the refund pool.
Allocation Method | Description |
---|---|
registerRecipient |
|
allocate |
|
distribute |
In a quadratic refund bonus, the amount you receive is determined by when you contributed. The earlier you contribute, the more you receive
Allocation Method | Description |
---|---|
registerRecipient |
|
allocate |
|
distribute |
- Fund Distribution: (How do you distribute funds from the pool)
- To the entrepreneur
- Bounty, by committee
Could you issue an NFT for the contribution (mint on contribute; burn on claiming refund)?
- DAC's introduce the entrepreneur: someone who is willing to take a risk to build a public good, provided a dominant strategy can be determined
What if, instead of paying out the contract to the entrepreneur if the goal is met, the sum was used as collateral on a loan. The loaned sum goes to cove the entrepreneur's development and implementation costs and can be paid back b the contract fund.