Designing Refund Bonus Schemes for Provision Point Mechanism in Civic Crowdfunding

Sankarshan Damle, Moin Hussain Moti, Praphul Chandra, Sujit Gujar

Civic crowdfunding (CC) is a practice with which interested players can raise funds for a civic project. With Blockchains gaining traction, CC can be implemented in a reliable, transparent and secure manner with smart contracts. The fundamental challenge in CC is free riding. PPR, the proposal by [Zubrickas, 2014] of refund bonus to the contributors in the case of the project not getting provisioned has interesting properties. As observed by [Chandra et al, 2016], PPR faces a challenge of race condition. To address this, their proposal, PPS considers the temporal aspects of a contribution. However, PPS is computationally complex and is difficult to explain to a layperson. In this work, we look for all important properties a refund bonus scheme must satisfy in order to discourage free riding while avoiding the race condition. We identify Contribution Monotonicity and Time Monotonicity as sufficient conditions for this. We propose three refund bonus schemes satisfying these two conditions leading to three novel mechanisms for CC - PPRG, PPRE, and PPRP. We show that PPRG is the most cost-effective mechanism when deployed as a smart contract. We then prove that under certain assumptions on valuations of the players, in PPRG, the project is funded at equilibrium.

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