Web3 Quadratic Funding Transforms Municipal Infrastructure Decisions in 2025

Web3 Quadratic Funding Transforms Municipal Infrastructure

Quadratic funding represents a shift in how cities allocate public resources. Instead of traditional top-down budgeting, this blockchain-based mechanism democratizes infrastructure decisions through community contributions matched by larger funding pools.

Split, Croatia launched the Municipal Quadratic Funding Initiative in September 2023, partnering with BlockSplit, Funding the Commons, Gitcoin, and Ethereum Foundation. The project evolved into Zazelenimo ("Let's Make it Green"), a platform that deployed in 2024-2025 focusing on green infrastructure projects.

The city committed to triple-match citizen donations, ensuring community-backed projects receive startup funding plus maintenance support for 3-4 years. Small contributions gain more matching power than large donations, preventing wealthy donors from controlling outcomes.

Zazelenimo Platform Launches in Split

Platform Development and Features

Muqa, founded by Tomislav Mamić in 2023, developed Zazelenimo after securing Ethereum Foundation's Next Billion Fellowship in 2024. The platform combines quadratic funding mathematics with blockchain transparency to tackle participatory budgeting problems.

Traditional participatory budgeting processes suffer from low engagement and opaque decision-making. Zazelenimo addresses these issues through mobile-first design, blockchain-verified transactions, and clear visualization of community preferences.

The pilot in Split enables residents to propose and fund pocket parks, community gardens, and public seating directly from smartphones. The platform launched in 2024-2025 and is building toward its first full funding rounds.

Expansion Plans for Western Balkans

Through the BOOST program, Muqa formed partnerships with Strumica, North Macedonia. The expansion demonstrates growing interest in Web3 municipal funding across Southeastern Europe.

Strumica, with approximately 55,000 residents, represents the next testing ground for quadratic funding beyond Croatia. Cross-border collaboration allows cities to share lessons learned and technical infrastructure, reducing implementation costs.

City	Country	Status	Implementation Year	Focus Areas
Split	Croatia	Active Pilot	2024-2025	Green spaces, parks, seating
Strumica	North Macedonia	Partnership Phase	2025 (planned)	Municipal infrastructure

Data: BOOST Programme 2025, Muqa Project Updates

Gitcoin Platform Dominates Quadratic Funding Space

Distribution Growth Through 2025

Gitcoin Grants distributed over $64 million across 22 rounds by late 2024, supporting 3,500+ projects. The platform transitioned from pure quadratic funding to multi-mechanism approaches in 2024.

Round 20 in April 2024 raised $680,935 total, with $484,000 in open-source software categories alone. The matching pool reached $1.6 million. Round 22 collected $294,972 from 28,000+ unique donors with $1.5 million matching funds.

Round 24 in October 2024 deployed $1.8 million total matching ($1.175M from Gitcoin plus $632.5K co-funding). For 2025, Gitcoin plans three major open-source rounds distributing $4.29 million.

Technical Evolution and Security

Gitcoin implemented COCM (Community-Owned Coin Models) and Passport Model-Based Detection in Round 20 to combat sybil attacks. The two-pronged strategy reduced suspicious project matching by up to 70% in Round 18.

The platform upgraded from Allo v1 to v2 protocol, enabling modular funding mechanisms beyond quadratic formulas. Developers can now build custom community funding experiences using the open-source infrastructure.

Gitcoin introduced Dynamic Quadratic Funding in 2025, adjusting eligibility and caps to benefit emerging builders. The system prevents donor fatigue by spacing major rounds and providing earlier scheduling transparency.

Gitcoin Grants Total Funding Distributed by Round

Data: Gitcoin Blog, Grants Program Reports 2024-2025

How Quadratic Funding Mathematics Works

Quadratic funding calculates matching amounts using the square root of individual contributions, then squares the sum. The formula: (√c1 + √c2 + √c3)² - (c1 + c2 + c3), where c represents individual contributions.

Example: Project A receives 100 donations of $10 each ($1,000 total). Project B receives 10 donations of $100 each ($1,000 total). Despite identical total contributions, Project A gets $7,407 matching versus $741 for Project B.

This mathematical design rewards broad community support. Ten people donating $1 each unlock more matching than one person donating $10. The mechanism prevents wealthy individuals from dominating funding decisions.

The formula creates incentives for grassroots mobilization. Projects must build diverse supporter bases rather than courting large donors. Smaller contributors gain proportionally more influence than traditional fundraising models.

Scenario	Contributors	Avg. Donation	Direct Funding	Matching Amount	Total Funding
Broad Support	100 people	$10	$1,000	$7,407	$8,407
Moderate Support	10 people	$100	$1,000	$1,852	$2,852
Limited Support	1 person	$1,000	$1,000	$741	$1,741

Data: Quadratic Funding Mathematical Model Examples

Matching Fund Distribution Comparison by Support Type

Data: WTF is QF Educational Resources

Security Through MACI Implementation

Anti-Collusion Infrastructure

Minimal Anti-Collusion Infrastructure (MACI) uses encryption and zero-knowledge proofs to prevent bribery in blockchain voting. Voters cannot prove how they voted, making bribe payments unreliable.

Built by Privacy & Scaling Explorations team, MACI employs ECDH encryption and zk-SNARKs on Ethereum. The system requires a trusted coordinator who computes tallies but cannot censor or tamper with votes.

clr.fund deployed MACI in production since 2020, distributing millions to Ethereum public goods. ETH Latam used MACI v1.2 in 2024 to distribute 30,000 DAI across 60+ conference participants supporting Central American projects.

Technical Challenges and Solutions

The coordinator role represents a centralization point. While coordinators see votes in cleartext, they cannot modify results without detection. MACI v1.2 released in 2024 simplified the codebase and improved developer experience.

Gitcoin explored MACI integration for Allo protocol in 2024-2025 to enhance privacy and bribery resistance. The Privacy & Scaling Explorations team developed a Coordinator Service to automate tasks and remove technical barriers.

Future development includes decentralized coordinator networks using multi-party computation. Research focuses on scaling explorations like SNARK folding schemes and Nova integration for improved performance.

Security Feature	Technology	Attack Prevention	Status 2025
Vote Privacy	ECDH Encryption	Prevents vote selling	Deployed
Correct Tallying	zk-SNARKs	Prevents result tampering	Deployed
Sybil Resistance	BrightID Integration	Prevents fake accounts	Deployed
Bribery Prevention	Non-Provable Votes	Eliminates proof of voting	Deployed
Coordinator Decentralization	Multi-Party Computation	Removes single point of trust	Research Phase

Data: MACI Documentation 2024-2025, Privacy & Scaling Explorations

Municipal Adoption Barriers in 2025

Technical Complexity Challenges

Running MACI polls requires developer expertise to deploy smart contracts, configure circuits, and generate proofs. Community organizers without technical backgrounds cannot easily operate rounds.

The coordinator must handle cryptographic key management, proof generation hardware, and blockchain transaction submission. These requirements limit adoption to technically sophisticated organizations.

Proposed Coordinator Service aims to automate these tasks through web interfaces. The service would handle deployments, proof generation, and on-chain submissions without requiring deep technical knowledge.

Legal and Regulatory Uncertainty

Municipalities face unclear regulatory status for blockchain-based budgeting. Public fund management laws typically require traditional accounting and transparency measures that conflict with privacy features.

Smart contract immutability creates challenges when errors occur or requirements change. Traditional government systems allow reversals and corrections that blockchain systems cannot easily accommodate.

Tax treatment of cryptocurrency donations remains unclear in many jurisdictions. Cities accepting crypto contributions may face accounting and reporting challenges under existing financial regulations.

User Experience Limitations

Requiring cryptocurrency wallets creates barriers for residents unfamiliar with Web3 technologies. Wallet setup, private key management, and gas fee payments intimidate non-technical users.

Transaction costs on Ethereum mainnet make small contributions uneconomical. Layer 2 solutions like Arbitrum and Optimism reduce fees but add complexity through bridging requirements.

Voting result delays frustrate users accustomed to instant feedback. Zero-knowledge proof generation takes time, preventing real-time tally updates during funding rounds.

Primary Adoption Barriers Reported by Municipal Implementers

Data: Based on Muqa Implementation Experience, MACI Development Team Feedback

Comparison With Traditional Municipal Funding

Traditional participatory budgeting processes engage 1-3% of eligible residents in most cities. Zazelenimo aims to increase participation through mobile accessibility and simplified contribution flows.

Conventional systems favor organized groups with resources to mobilize supporters. Quadratic funding's mathematical design neutralizes this advantage by rewarding contributor diversity over contribution size.

Standard municipal budgets allocate resources annually through council votes. Quadratic platforms enable continuous funding rounds, allowing communities to respond quickly to emerging needs.

Public budget processes often lack transparency about decision criteria. Blockchain-based systems record all contributions and calculations on-chain, enabling independent verification of outcomes.

Traditional systems concentrate power among elected officials and bureaucrats. Quadratic mechanisms distribute influence across all contributors, reducing opportunities for corruption or lobbying influence.

Characteristic	Traditional Budgeting	Quadratic Funding	Impact
Participation Rate	1-3%	Target: Higher	Increased engagement
Decision Cycle	Annual	Continuous rounds	Faster response
Transparency	Limited visibility	On-chain verification	Reduced corruption
Wealth Influence	High	Mathematically limited	More equitable
Technical Barrier	Low	High (wallet required)	Excludes non-tech users
Administrative Cost	Moderate	High (infrastructure)	Resource intensive

Data: Muqa Project Analysis, Municipal Budgeting Studies 2024-2025

Economic Impact and ROI Analysis

Community Funding Multipliers

Gitcoin's matching fund donors receive an average $0.65-$0.75 return per dollar invested through community contributions. Round 20 achieved $0.75 multiplier, meaning $100 in matching funds attracted $75 in direct donations.

Split's triple-match commitment creates 3:1 leverage on citizen donations. A resident contributing $10 generates $30 in city matching, plus receives community-sourced funds from other participants.

The matching mechanism incentivizes small donor participation more effectively than traditional fundraising. Studies show quadratic rounds attract 3-5x more unique contributors than conventional grant programs.

Long-Term Maintenance Considerations

Zazelenimo's 3-4 year maintenance commitment addresses project sustainability concerns. Green infrastructure requires ongoing care that many participatory budgets ignore after initial construction.

Traditional participatory budgets allocate capital expenses without operational funding. Projects deteriorate quickly when maintenance responsibilities remain undefined or unfunded.

By bundling initial funding with multi-year maintenance support, quadratic mechanisms ensure community investments deliver lasting value. This approach better reflects total project costs.

Funding Leverage Ratio Across Different Matching Models

Data: Gitcoin Grants Analysis 2019-2025, Split Municipal Commitments

Future Development Roadmap

Platform Scaling Plans

Gitcoin 3.0 framework emphasizes network-first coordination and plural funding mechanisms. The platform introduced Dedicated Domain Allocation in Round 24, routing capital into problem-specific categories.

Each domain uses tailored mechanisms beyond pure quadratic funding: retroactive funding, conviction voting, deep funding, and InfoFi-native experiments. This diversification addresses different project maturity stages.

MACI development focuses on Coordinator Service automation, removing technical barriers for community organizers. The service provides web interfaces for deployment and automated proof generation.

Geographic Expansion Targets

Western Balkans represents the near-term expansion focus, with Strumica following Split's implementation. The region's smaller cities provide testing grounds before scaling to larger metropolitan areas.

Ethereum Foundation's support through Next Billion Fellowship indicates commitment to emerging market adoption. The program provides technical assistance and funding for municipal implementations.

Cross-border collaboration between Bulgarian, Croatian, and North Macedonian cities enables infrastructure sharing. Joint technical development reduces costs compared to independent implementations.

Integration With Existing Systems

Municipal integration requires connecting blockchain systems with traditional financial reporting. Cities need APIs that translate on-chain transactions into standard accounting formats.

Identity verification remains a challenge without compromising privacy. Solutions like Gitcoin Passport score users without revealing personal information, balancing sybil resistance with anonymity.

Mobile payment integration through traditional methods (credit cards, bank transfers) could reduce cryptocurrency barriers. Platforms might accept fiat donations while recording votes on-chain.

Projected Municipal Quadratic Funding Adoption Timeline 2025-2030

Data: Projected estimates based on current pilots and expansion plans

Frequently Asked Questions

1. What makes quadratic funding different from regular crowdfunding?

Quadratic funding uses matching pools from large donors to amplify small contributions. The matching formula rewards number of contributors over contribution size, preventing wealthy donors from dominating outcomes. Ten people giving $1 each receive more matching than one person giving $10.

2. How does MACI prevent vote buying and bribery?

MACI encrypts votes so contributors cannot prove how they voted. Without proof, bribers cannot verify compliance and payment becomes unreliable. The system uses zero-knowledge proofs to tally votes correctly while maintaining individual privacy.

3. Why did Split choose green infrastructure for the pilot?

Green spaces generate broad community interest across demographic groups. Pocket parks, gardens, and public seating create visible improvements that residents can easily understand and support. The focus builds momentum for future expansions into other municipal categories.

4. What technical skills do residents need to participate?

Current implementations require cryptocurrency wallets and basic blockchain knowledge. Zazelenimo prioritizes mobile-first design to simplify participation, but wallet setup remains a barrier. Future versions may integrate traditional payment methods while recording votes on-chain.

5. How much has Gitcoin distributed through quadratic funding?

Gitcoin distributed over $64 million across 3,500+ projects through 22+ rounds since 2019. Round 20 in 2024 raised $680,935 with $1.6 million matching. For 2025, three major rounds plan to distribute $4.29 million in open-source software funding.

6. What prevents someone from creating multiple accounts to game the system?

Platforms implement sybil resistance through identity verification systems like BrightID or Gitcoin Passport. These tools score users based on on-chain history and social connections without revealing personal information. COCM and Model-Based Detection reduced suspicious matching by 70% in recent rounds.

7. Can municipalities legally use blockchain for public budgeting?

Legal frameworks vary by jurisdiction. Most cities implementing quadratic funding use it for participatory budgeting portions, not entire municipal budgets. Smart contract systems operate alongside traditional accounting to maintain compliance with public fund management laws.

8. What happens if a funded project fails or needs modification?

Split's model includes 3-4 year maintenance commitments to ensure project sustainability. If modifications are needed, traditional municipal processes still apply since blockchain records funding decisions, not project execution. Smart contract funds can include milestone-based releases.

9. How do transaction fees affect small contributions?

Ethereum mainnet gas fees make micro-contributions uneconomical. Most implementations use Layer 2 networks like Arbitrum or Optimism where fees range from $0.01-$0.50. Some platforms cover user transaction costs from matching pools to eliminate participation barriers.

10. What cities are implementing quadratic funding besides Split?

Strumica, North Macedonia partnered with Muqa for 2025 implementation. Gitcoin supports ecosystem-specific rounds rather than municipal applications. Most quadratic funding currently focuses on open-source software and public goods in the Ethereum ecosystem rather than city infrastructure.

Web3 Quadratic Funding Transforms Municipal Infrastructure Decisions in 2025

Makoto Takahiro