Going Parabolic: Analyzing Sybil Resistance in Quadratic Voting Mechanisms for Blockchain-Based DAOs

With the emergence of cryptocurrencies as an asset class, the threat of over-centralization among large token holders has become increasingly important. For this reason, some Blockchain-based Decentralized Autonomous Organizations (DAOs) have cast aside the traditional “one token, one vote” mechanism, experimenting with a Quadratic Voting mechanism instead. In this thesis, we evaluate the feasibility of blockchain-based implementations of Quadratic Voting, where a network participant’s voting power is equal to the square root of their token holdings. We show how implementations of Quadratic Voting can have varying degrees of success depending on the structure of blockchain governance. In particular, we demonstrate that unpermissioned blockchains with a quadratic mechanism remain vulnerable to Sybil Attacks. We first show that using indirect Sybil Attack through wallet creation an attacker can devolve Quadratic Voting into a linear voting system. Then, we discuss mechanisms to discourage this strategy through authentication, fees, and vote thresholds. Finally, we provide recommendations to make blockchain-based voting systems more Sybil-resistant and discuss the design considerations for such blockchain governance systems.