Leveling the Field: How Connection-Oriented Cluster Matching Strengthens Quadratic Funding

“When we talked to round operators about their experiences with COCM after GG21, almost all of them told us that COCM gave a better signal of what their community as a whole wanted. Plus, everyone was happy with how COCM made it much harder to game the system.” - Joel Miller, Creator of COCM

The Problem: Quadratic Funding's Vulnerability

Quadratic Funding (QF) was designed to democratize funding for community projects by giving more matching to projects with more donors, thereby amplifying the impact of small donations. However, it has a critical weakness: it is vulnerable to manipulation through Sybil attacks and coordinated groups. To get more matching you simply need to get more donors.

At Gitcoin, we noticed a concerning pattern: Less legitimate projects would secure more funding than projects that seemed best for the ecosystem, solely by attracting many single-issue voters through bots or promises of kickbacks and airdrops. This skewed funding results by way of the artificial increase of donations. The more credible projects were left with less matching funds.

Here is an example from a real Gitcoin Grants Round of a sybil attack, to illustrate the problem:

It is noticeable how Crypto Babes Club is distanced away from the cluster of projects. It has 207 connections in total. Here is what is visible: 

1. All 207 connections came from wallets that donated a similar amount of funds. 
2. The wallets were all created around the same time.
3. The wallets only donated to Crypto Babes Club.

Even if the Crypto Babes donors weren’t bots, they’d still be really misaligned with the larger community. COCM is better at reflecting what your community as a whole wants.

The Solution: Connection-Oriented Cluster Matching (COCM)

To address these vulnerabilities, we developed Connection-Oriented Cluster Matching (COCM). COCM builds on QF's strengths while introducing crucial safeguards against manipulation.

How COCM Works

1. Cluster Identification: COCM identifies "clusters" or overlapping groups of users based on donation patterns or other relevant datasets. Each user's involvement in a cluster is assigned a weight (or value), reflecting the strength of their connection.
2. Similarity Calculation: Using this weighted data, COCM calculates similarity scores between donors, considering both direct and indirect connections. 
3. Matching Fund Allocation: COCM allocates matching funds based on these similarity scores. Projects with donors from diverse social circles receive more funding, while those from tightly connected groups receive less.

“COCM does a better job than Quadratic Funding at reflecting the values of the community. What I’m proud of with COCM is that we got the math, the algorithms, to reflect the human values that people have in this community.” - Joel Miller, Creator of COCM

The Benefits of COCM

• Fairer Funding Distribution: COCM ensures that projects with genuine, broad support receive fairer funding, prioritizing quality over mere influence. COCM can identify when sybil attacks are happening, being able to identify this prevents the scam project from collecting a majority of the matching fund pool to ensure that other projects with real donors and impact are receiving funding. 
• Sybil Attack Resistance: By analyzing social networks, COCM significantly reduces the impact of Sybil attacks and coordinated groups.
• Improved Community Signal: Round operators report that COCM provides a more precise signal of what their community wants to support.

Umar Khan, Data Lead at Gitcoin, adds: "Over the past six months we shifted almost all of our rounds from running on base QF to running on the COCM version of QF because of how much it improves funding results. It's an upgrade from asking 'who has the biggest network' to 'who has the most consensus in our shared network'."

COCM in Action

• Based on past rounds, COCM shows approximately a 50% improvement in funding allocations compared to traditional QF.
• We've used COCM to distribute over $5.5M across more than 20 funding rounds to date.

How Projects Should Communicate with Donors

To maximize matching under COCM, projects should encourage:

1. Diverse Support: Emphasize the importance of attracting donations from various independent supporters.
2. Multi-Project Engagement: Encourage donors to support multiple projects within the ecosystem.
3. Authentic Connections: Build genuine community relationships rather than artificially inflating supporter numbers.

The Future of COCM

While COCM significantly improves upon QF, it's important to note that it may present challenges for newer projects or those with highly focused communities. We're continuously working to refine the algorithm to balance these considerations.

A few things to keep in mind: 

• COCM is best for large, diverse communities.
• Avoid using COCM in tight-knit groups or if you want to encourage heavy advertising.
• Ideal if you want to reward projects with broad community appeal.
• You can also blend QF and COCM results for a balanced outcome.
• You always have the option of inputting other clusters if you have the data on hand

For a deeper dive into COCM, including interactive visualizations, visit our COCM Explainer App.