Prop House Finance: Funding Decentralized Proposals

Prop House is a decentralized platform built on the Optimism blockchain, designed to facilitate community-led funding for projects and proposals within specific ecosystems, most notably, Optimism itself. It offers a transparent and democratic way for DAOs and communities to allocate resources and support initiatives that align with their strategic goals.

At its core, Prop House leverages a combination of quadratic voting and token-based delegation to distribute funding. Here’s a breakdown of the key financial mechanics:

Funding Rounds & Ecosystem Allocation

Prop House operates in rounds. Each round focuses on a specific theme or challenge, as defined by the sponsoring DAO or community. The DAO allocates a pool of funds (typically in OP tokens for Optimism) to be distributed among the winning proposals. This pool represents the “budget” for that specific round.

Proposal Submission & Evaluation

Individuals or teams submit proposals outlining their project, its potential impact, and the amount of funding they require. The proposals are then publicly visible and open for community evaluation.

Quadratic Voting & Token Delegation

Prop House employs quadratic voting, a system where the cost of votes increases quadratically with the number of votes cast for a single proposal. This aims to mitigate the influence of large token holders and promote a more equitable distribution of voting power. Users stake their tokens (typically OP) to gain voting power. This staked power can then be delegated to specific proposals. The square root of the number of tokens staked determines the number of votes a user can cast for that proposal. Thus, someone staking 100 tokens has 10 votes, whereas someone staking 400 tokens only has 20 votes, discouraging large holders from dominating voting.

Winning Proposals & Fund Disbursement

After the voting period concludes, proposals are ranked based on the total number of votes they received. The proposals with the highest vote counts are selected to receive funding, up to the total budget allocated for the round. The funds are then distributed to the winning teams based on the funding amount they requested in their original proposal.

Impact & Accountability

A crucial aspect of Prop House finance is the emphasis on impact and accountability. Winning teams are expected to deliver on their proposed objectives and provide updates on their progress to the community. This transparency ensures that funds are used effectively and contributes to the overall health and growth of the ecosystem.

Benefits of Prop House Funding

For project teams, Prop House offers access to decentralized funding, increased community visibility, and valuable feedback. For the sponsoring DAO, it provides a mechanism to foster innovation, support promising initiatives, and engage its community in a meaningful way. By decentralizing the funding process, Prop House promotes transparency, reduces bias, and encourages broader participation in shaping the future of the ecosystem.

Prop House represents a significant step towards more decentralized and community-driven finance, empowering individuals and teams to build valuable projects and contribute to the growth of decentralized ecosystems.