The ninth round is now complete and marks its steps as the most successful of the company. Vitalik Buterin also believes that serious action should take part to prevent possible fraud.
Ethereum co-founder Vitalik Buterin questioned the ways in round 9 of the Gitcoin fundraiser, which ended this week. Buterin points out that possibly more than 15% of the contributions in this round were misleading or fraudulent.
The ninth collection is, perhaps, the most successful of all in terms of supply. In total, 812 different projects will receive USD 1.38 million that the company gathered thanks to the collaboration of 12,000 people.
According to a report on April 14 by Gitcoin, one of the main contributors to this ninth round was Paradigm, the crypto asset investment firm created by Fred Ehrsam, and Matt Huang, former partner of Sequoia Capital.
Bitcoin’s goal is to generate subsidies for open source projects on Ethereum. However, the growth of these fundraising rounds has also brought several “unprecedented” problems, such as conspiracy and fraud, Vitalik Buterin explains in a blog post.
Even though the vast majority of contributions can be considered legitimate, Buterin was “surprised by how long it took people to try to exploit this mechanism.” For this reason, the 15% detected as fraudulent stands out.
So-called Donors Would Cheat the Collection Mechanism
Vitalik Buterin carved more profound into the fraud discussion and described that one of the main struggles relates directly to the influence of small groups of taxpayers with multiple accounts that were likely coordinated individuals trying to “cheat the mechanism.”
This “trap” would occur thanks to the premise of quadratic financing of giving more importance to the number of donors than to the amounts donated per se. Thus, the more community support an excellent public project has, the more funding it will receive.
Buterin also expressed that “this is not the fault of Gitcoin”, but that the platform has become so extensive that it faces the same problems that social sites have had in recent years regarding malicious behaviors. For Buterin, implementing a community review could be an excellent step to maintain the legitimacy of the mechanism.
For this round, Gitcoin decided to “absorb” the costs of these fraudulent donations so that each project received the same amount of money that they would have obtained if the contributions had been accurate. This absorption represented a cost of USD 33,000 for the company.
Gitcoin has published a response on Medium that details all its strategies to detect and counter these attempts. However, for experts like Buterin, more severe action needs to happen to avoid these behaviors in the long term.
Gitcoin is Gaining Supporters and Donors
Contributions can happen in any of the categories: community, DApps technology, infrastructure, among other exciting projects. In the last two rounds (the eighth and the ninth), the «East Asia» category found its spot, which brought unexpected but favorable results and helped place several projects in this region in the first row of those in their class.
By: Jenson Nuñez
