Gitcoin Results Revealed: Blocktrend Ranks High and Challenges of Sybil Attacks
Gitcoin Results Revealed: Blocktrend Ranks High and Challenges of Sybil Attacks
#540
GM,
As we enter the second half of 2023, Blocktrend's most important goal for the upcoming months is to organize physical member activities, allowing everyone to have face-to-face interactions. The detailed event schedule and themes are currently being planned, with the location confirmed to be in Taipei. Additional information will be announced next week. Now, let's get to the main points.
In recent speeches, Ethereum founder Vitalik Buterin has repeatedly emphasized that blockchain and cryptocurrencies are not limited to the financial sector. The reason why decentralized finance (DeFi) has flourished in the past few years is that finance was the industry in most urgent need of an upgrade. However, the applications of blockchain and cryptocurrencies are quite extensive. Blocktrend has actively invited participation in public goods crowdfunding mechanisms in the first half of the year, such as RetroPGF and Gitcoin Grants, which Vitalik mentioned as promising new areas. Blocktrend members not only pioneered in this field in Taiwan but also stand among the few industry pioneers globally who have firsthand experience in participation.
In April and May this year, the results of the Gitcoin Grants Beta Round, a quadratic funding campaign, were finally announced last week. Blocktrend made it to the high-ranking projects thanks to the support and votes from everyone. In the "Web3 Community and Education" category, Blocktrend's vote count ranked third globally. However, this round of quadratic funding also faced controversies and disputes. For example, seven supporters of Blocktrend were labeled as "Sybil attacks" by Gitcoin, and their votes were not counted. It is quite unfortunate.
In this article, I will first announce the ranking results and then discuss the controversies surrounding the identification of Sybil attacks in this Gitcoin Grants quadratic funding campaign.
High Rankings
Gitcoin Grants is a funding distribution platform that adopts quadratic funding, which is akin to a mechanism where people collectively decide how the government budget should be allocated.
While the government's budget comes from taxes, the funding for Gitcoin Grants comes from individuals or businesses willing to contribute money to support the development of the Web3 ecosystem. They regularly donate a sum of money, which is then allocated to various projects through crowdsourcing intelligence. The mechanism that coordinates this crowdsourcing intelligence is quadratic funding, which has two key features:
Votes must be made with small contributions.
The number of people is more important than the amount of money.
In other words, if ten people each vote with $10, the budget allocation Blocktrend can receive will be more than if only one person votes with $200. The principles of quadratic funding should be familiar to long-time Blocktrend readers, and the funding allocation results this time serve as concrete evidence. According to Gitcoin's announcement:
The final funding allocation results of the Beta Round have been released. We recommend a 5-day period for discussion and review before submitting the proposal for approval to the governance forum. After community consensus, we will move on to the payment stage. This Beta Round lasted from April 25 to May 9, and unlike the Alpha Round, any qualified projects were allowed to participate freely. There were five different categories this time, with a total budget of $1.25 million. The categories included open-source software, climate solutions, community and education, infrastructure, and zero-knowledge proofs.
Blocktrend participated in the "Web3 Community and Education" category, alongside 216 other proposals in the same category. In the end, Blocktrend received approximately $9,000 in funding allocation, ranking seventh within the category. This is a fantastic achievement.
Projects with more contributors than Blocktrend tend to be primarily in English and some are even well-known individuals or communities in the industry, such as the online detective ZachXBT. Despite being at an "absolute disadvantage" in terms of voting base, Blocktrend's remarkable performance is truly commendable. We appreciate the response and affirmation from all Blocktrend readers regarding our content.
Next, let's interpret the meaning behind the numbers. In this round, Blocktrend received contributions from 37 qualified supporters, totaling $318.57 in donations. This helped Blocktrend receive a funding allocation of $9,037 from the Gitcoin funding pool. In other words, for every $1 donated, Blocktrend received nearly $30 in funding. The benefits are truly remarkable!
You may have seen advertisements online that promote a 1:1 benefit, where consumers donate $10 and the business will donate an additional $10 to a specific social welfare organization. However, in Gitcoin Grants, the ratio is 1:30. For every $10 donated, Gitcoin Grants provides an additional $300 allocation to Blocktrend. However, it's important to note that this ratio is not fixed.
For example, Project CryptoCurious, ranked number 9, received a substantial $2,545 in donations during the voting phase, but it only came from 7 supporters. In the end, this project received a funding allocation of $5,342 from Gitcoin, resulting in a donation ratio of 1:2. For every $1 donated, CryptoCurious only received $2 in funding allocation.
This is a concrete demonstration of the principle that "the number of people is more important than the amount of money" in quadratic funding. Although CryptoCurious received a higher total donation amount during the voting phase, quadratic funding places greater emphasis on the number of people willing to contribute financially. This led to CryptoCurious receiving less funding allocation compared to other projects.
Keen observers may have noticed other exceptions. For example, Project Boring Security, ranked number 7, received less than half the number of supporters compared to Blocktrend, yet it received a funding allocation of $9,433. This leads to the controversy that will be discussed next.
Controversies and Disputes
On the Gitcoin forum, another user named thedevanshmehta raised a similar question:
Why did Project CryptoCurious, supported by only 7 people, receive more funding allocation than GreenPill Podcast, which had the support of 37 people? CryptoCurious received $5,342 in allocation, while GreenPill Podcast, with more supporters, only received $4,397.
I'm not criticizing specific projects, but I've noticed more than one exception. This is problematic because it encourages people to engage in transaction washing. Wealthy individuals can donate large amounts of money to help their own projects receive more funding. We need to think about how to prevent people from engaging in transaction washing.
The original intention of quadratic funding, where "the number of people is more important than the amount of money," is to take into account public goods that people consider important but may not be willing to spend a large amount of money to obtain, such as parks and media. Therefore, quadratic funding encourages people to make small donations rather than large sponsorships.
However, why are there exceptions? The key lies in the 2-week voting period of Gitcoin Grants, during which Ethereum transaction fees became unusually expensive. Each vote required paying over 300 TWD worth of ETH as a transaction fee, significantly raising the participation threshold for individuals.
Previously, I used the example of bus or subway fare, with the assumption that a small donation amount would be around 50 TWD. But this time, the voting transaction fee alone amounted to a staggering 300 TWD, which undoubtedly discouraged many people from participating. This situation is clearly reflected in the statistics of Gitcoin Grants.
The chart below shows the distribution of donors by category. It can be seen that the majority of donors are concentrated in the "Web3 Open Source Software" category. Even the second-ranked "Zero-Knowledge Proofs" category is significantly behind in terms of donor numbers. This is due to the high Ethereum transaction fees and Gitcoin's restriction on cross-category voting. For example, I cannot vote for DefiLlama in the "Open Source Software" category and vote for Blocktrend in the "Community and Education" category within the same transaction.
This has led to most people choosing only one category to vote in, and the "Open Source Software" category has the most well-known project names such as Lenster, DefiLlama, or Revoke.cash, resulting in a high concentration of voters in this category.
The voting totals in the "Open Source Software" category reached a staggering 81,000 votes, reflecting the rule that "the number of people is more important than the amount of money." However, in categories with fewer votes, such as "Community and Education" and "Climate Solutions," there is an unusual phenomenon where money seems to be more important than the number of people.
Greenpill Podcast received support from 37 people, five times more than CryptoCurious, which only had 7 supporters. However, due to the small absolute numbers, both projects are considered to have a "small number" of supporters in the quadratic funding formula. In this case, the amount of funds donated by each person becomes the determining factor. Despite having only 7 donors, CryptoCurious received a larger funding allocation than Greenpill Podcast, which had 37 supporters but donated only $151.
The same logic applies to the projects ranked ahead of Blocktrend. Only BanklessDAO and ZachXBT received more votes. However, other projects received larger donations, resulting in them receiving more funding allocation than Blocktrend.
This is the unusual situation that has arisen in this round of Gitcoin Grants and is a problem that Gitcoin must address. How can participation be increased and the barriers lowered? The simplest and most effective method would be to allow people to vote using the OP Mainnet, Arbitrum, or other layer-two networks with lower transaction fees, instead of using the Ethereum blockchain.
In addition to the expensive transaction fees that have reduced participation, Gitcoin also faces the challenge of determining Sybil attacks.
Sybil Attacks
A Sybil attack refers to a problem similar to zombie accounts, named after the novel "Sybil" published in the United States in 1973, which depicts the life of the protagonist Sybil, who suffers from multiple personality disorder. The term "Sybil" has been borrowed in the field of software engineering to specifically refer to malicious behavior where numerous fake accounts are created to disrupt network services.
Gitcoin emphasizes the importance of more people rather than more money. If subjected to a Sybil attack, the $1.25 million intended to fund public goods may flow into the pockets of a very small number of individuals. In the physical world, verifying one's identity is necessary when it comes to distributing money, but in the blockchain world, everyone can create an unlimited number of anonymous wallet addresses. In the case of limited data, it is extremely difficult to combat Sybil attacks.
Therefore, the funding allocation results of this round of Gitcoin Grants have experienced ups and downs. The Gitcoin team initially announced the preliminary results on May 27th, but as people reviewed the results, signs of Sybil attacks were discovered, leading Gitcoin to realize that something was amiss and make revisions. Gitcoin went through two rounds of community "rejects" until the third version was finally confirmed. In the case of Blocktrend, our initial funding allocation was $7,000, then increased to $8,000, and finally settled at $9,000.
The amount of funds to be distributed remains the same. The increase in the amount received by Blocktrend means that another project had its allocation reduced. The most extreme case is diosdao.xyz by Mycelia in the "Climate Solutions" category. Initially, it was eligible for a $30,000 funding allocation, then it increased to $35,000, but in the final round, it was reduced to only $250. The stark difference in results is due to the project being identified as a Sybil attack.
The following image is a visualization of the on-chain flow of funds for this project. The graph can be roughly divided into three types of actors: fund providers, voting forces, and the project receiving donations.
In the center of the green circle on the left side of the graph, there is a wallet address starting with "0x53," which represents the fund provider. The wallet addresses in a row from top to bottom in the middle of the graph represent the voting forces. The two gears on the right side are where all the fund flows converge, representing the wallet addresses of the projects receiving donations.
Without looking at individual wallet addresses or knowing the specific amounts represented by each line, even if you're not a detective like Conan, you can't help but wonder why the wallet address "0x53" has to go through an intermediate wallet before transferring funds to the two projects behind it.
Based on the limited information known from on-chain data, Gitcoin sees this as a typical Sybil attack. It creates an illusion of many supporters voting by creating multiple accounts on the chain, thereby obtaining more matching funds from Gitcoin.
Afterward, the project clarified on the governance forum that they are working on a project related to South American indigenous peoples. Although the indigenous friends are willing to donate and support this project, they don't have wallet addresses and don't know how to operate on-chain microtransaction voting. Therefore, they brought in some wallet addresses previously used by team members and relatives as substitutes for the indigenous friends on the chain. A single wallet (0x53) provided the funding to cover the gas fees, with the purpose of donating to support their own project.
All this information is not visible on the chain. Assuming they are not lying, is this behavior considered a Sybil attack? Alternatively, can people without on-chain history participate in on-chain resource allocation? This is a difficult question. On one hand, Gitcoin welcomes more people willing to participate in quadratic funding but finds it challenging to confirm whether these voters are real "people." In the end, Gitcoin chose to err on the side of caution and identified these accounts as Sybil attacks.
This may be a possible reason why the number of donors to Blocktrend was reduced from 44 to 37. Seeing the number of donors being cut, even I want to ask Gitcoin which wallets were determined to be Sybil attacks and find out where the misunderstanding lies. However, Gitcoin cannot answer directly.
This round of Gitcoin Grants received a total of up to 100,000 donations. If every project wants to appeal, it would be an endless process. Moreover, Gitcoin has not publicly disclosed the criteria for identifying Sybil attacks, fearing that hackers will cleverly evade them in the next round. In the short term, Gitcoin must strike a balance between transparency and "black box operations." This is quite challenging. Even though I believe those 7 readers who were identified as Sybil attacks by Gitcoin are unjustly treated, I am currently powerless.
This highlights the importance of on-chain history, which is also the main reason why I want to start organizing physical events. Gitcoin currently uses Gitcoin Passport scores and on-chain transaction analysis to determine whether it is a Sybil attack. The higher the score, the more likely it is a real person, while the latter is temporarily a "black box operation."
I hope to distribute participation certificates (POAP) to members through physical events, thereby accumulating on-chain history and increasing the Gitcoin Passport score for everyone. When every member of Blocktrend becomes a digital citizen with rich on-chain records, they will no longer be mistaken for zombie accounts launching Sybil attacks when participating in on-chain public affairs.
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