Digital Public Goods QF Experiments in the Government (Panel) - Tokyo 2024

okay so we are going to go into another panel uh next we'll be talking about quadratic funding experiments in government um and this panel will be led by Audrey Tang of plurality Donnet yoshiro tasaka of shabuya startup and shinuki tagi of plurality Tokyo and dig Dow all right all right um I'm very grad to have great CH this um actually we have a five page of Str like this is so simple Taiwan should dig up like this so um quick introduction myself I'm from the digal which is kind of the um Civic Tech Community uh fored by digal agency government of Japan uh we are trying to figure out how uh crypto mechanism could be uh used in the local government or public sector in the real world so uh that's the I'm doing uh recent digal had started actually now are opening right now uh started a quadratic funding experiment which is uh could be donate by the fat currency it's mean like you're credit card you're Japan Yen like there so we are hosting like that uh should be go to the Audrey yeah I'm Audrey Tong uh I served for eight years as taiwan's digital Minister uh and part of my work uh starting 2019 uh is to introduce the ideas uh that started from this space uh to uh the real world uh to the government uh we started introducing quadratic voting uh for presidential heathan in Taiwan uh since 2019 uh it's been doing every year since to elevate the local experiments into national public infrastructures uh and we work with the Ean uh Foundation uh to try out with presidential hackathon uh in 2022 uh September uh to distribute some funds I think 10K USD uh and today I will share a little bit about how we scaled that experiment from 10K USD uh to2 million US dollars or more uh and hopefully making it an annual thing uh hi everyone my name is yoshiro tasaka I work for the Sha City uh I doing uh uh startup divisions uh basically what what I've doing is uh building our uh infrastructure for Innovations so uh for example we uh providing a Visa for for entrepreneurs uh last three years we brought a 70 over 70 entrepreneurs to Shia and also we've been trying to make our startup friendly services with the corporations uh we I we have done we haven't done anything about uh web three qu funding yet unfortunately uh that's a sad part of but uh uh last two years we actively uh invit web3 Tech blockchain events to shria and then that's how we brought ocon to uh shria this time and then I'm glad that finding commment also happening uh this time uh yeah thank you right go so um for of the speaker have background which is working in the government what what the government so how do you spend your money as a government maybe uh all almost guys came from the like a nonprofit or public sector however uh they didn't know about how government spend the money uh from the budget like uh government going to be the taxation as a like insurance or income like that but where money going on so can you explain about what is the typical uh public purchase of the government sure uh so in Taiwan um the digital uh investments from the government falls into two different uh Pockets uh one is called infrastructure uh pocket and the infrastructure is like building airports Building train stations and so on uh because the ministry of digital Affairs is in the transportation committee uh in the parliament so so if we can prove that there is some digital investment that is good generally like a Highway uh except it's information highway but uh it's good generally for the society then it qualifies for the uh public infrastructure kind of uh budget the thing about this budget is that it's usually very longterm uh it's like four years 10 years or something like that uh and you need to have a very clear uh social return on investment uh knowing that for each dollar you put into it how much time will be saved uh how much um Commerce will be created and things like that so it needs to be very measurable uh even from the first year onward uh so that you can allocate very long-term budget but there's also uh the more Dynamic uh science uh and research budget uh for a science research and Technology budget it is more Dynamic uh you can change um the expected output every year uh you can use procurement uh proposals that are more agile uh but the problem is that there is no guaranteed uh so every year if it doesn't uh pass the review uh then maybe the budget goes uh elsewhere uh and so usually these are the two kind of trade-offs uh but a lot of the use of quadratic voting and quadratic funding uh is to start from smaller experiments and quickly uh figure out which ones are infrastructure in nature which ones are general purpose in nature and this is something that the quadratic uh mechanisms can really help I think many people now uh want to move to Taiwan now but uh but uh yeah probably everybody knows but uh Japan doesn't have such a budget especially the local government and then but uh I guess each local government has ICT department and then that have probably the small budget for their uh digitalization but uh it's not systematic like Taiwan so unfortunately unfortunately um I have a question for the uh tasaka San um is there money for the uh governance or execution I mean like uh I wish the government should be focused on the governance however almost uh especially like a local government spend the money for the execution to to spend day by day or year by year so what's the current situation maybe I I just want to hear about your criticism for the your organization right there uh probably if your Japanese you're so familiar with it but uh uh yeah yeah yeah uh so uh yeah I'm not the proper uh employee for the sh City uh I was uh assigned by mayor to start startup divisions uh four years ago so uh I was very surprised to see how the budget was uh built and then basically uh uh as you know uh uh uh each government each local government tend to uh just uh do whatever they did first 50 60 years so uh that's why uh we don't have a prible budget and then and then we don't have a uh way to assess what we have done much and then uh CB city uh under mayor's initiative we Tred to kind of you know uh kind of uh you know try to kind of check what we have done and what we were wrong but uh uh not really critical ways that's why uh you know uh we we cannot use the money like Taiwan does got got it um in my opinion uh the order is work looks like focus on the how to governance by the government um or uh can go to the next right um this is my uh impressive example uh by thawan J minister of government uh this is quadratic funding experiment by Taiwan model um it's uh kind of the crowdfunding platform uh powered by web 2 uh crowdfunding platform so in Taiwan they are trying to uh figure out how quadratic funding could be useful for the uh resource allocation for the Civic take or kind of the NPO project so hard to I'm just wondering uh this project is hard to start it or hard to stock or if you have any criticism or yeah sure yeah Insight yeah as I mentioned uh the collaboration uh with uh Ean foundation and the local Taiwan web3 Community was really the beginning uh in the September of 2022 uh they work with uh some winners of the presidential hackathon to try a very small scale uh round of quadratic funding just to uh let people understand uh what that actually means uh and so just a very quick primer uh it means that instead of counting just the total amount of donation you receive and then matching the same donation uh we count instead the square root of each individual donation added uh together uh the good thing about taking the square root is that uh you cannot just have one single donor to donate like $5 million and then Force the government to match $5 million right you have to actually convince a lot more people uh to uh donate small amounts of money uh and so similar uh to a gitcoin uh Grant ground uh we need to have some Focus some uh topic uh in the experimentation and so uh one we learned from that small uh experiment with the etherum foundation uh was that uh we really want the ones that corresponds uh to the sustainable development goals uh and so because that's like public good is universally more recognized this way instead of the project saying I'm a public good it is better if you can prove uh in which of the 17 uh categories uh you can actually make measurable uh impact um and so uh there's almost a thousand applications when we started this round of uh the public interest Innovation uh and then we chose uh 100 of them that clearly has uh some potentially future measurable value uh in uh the social return of investment sroi scheme and each of them uh receive uh 500,000 Yen uh as just kind of getting them into the mood of starting their pilot or experiments uh and once they do that then we give them a few months and then each of them receive uh 1.3 million uh if they make the cut of 50 uh projects and so the quadratic funding actually only works with those 50 projects and the reason why is that uh we are not building our own platform we're working with existing uh crowdfunding Platforms in Taiwan the three largest ones uh W Flying V and zza uh and they have their own way uh to tell a story of a project of coaching the project to reach a wider audience so we do not want to reinvent the wheel uh we instead re rely on kind of multi-party computation thing uh to uh make sure that if you're a single individual and you contribute uh to all the three cor funding sites uh you're still only counted as one person uh but then at the end of the day uh we choose the top 20 uh based on the Sorting of quadratic funding and allocate uh the Final prices to them uh that's ranging from 23 million yen uh to or 9 million yen uh and so on so as you can see this is not a pure quadratic funding uh formula it is more like staggered uh so the ones that are the best uh no matter what the formula says will only get at most 23 million yen it is the ceiling is Set uh in the beginning and the uh people who are come on the 20 uh the last uh will nevertheless have 9 million yen if they did meet uh their social return on investment values so you can see it as a kind of midway between voting and funding it is not exactly matching the funding but it is trying to approximate the matching funding but the reason why is that this is uh in the policym uh structur as a prize and the prize money uh cannot be fluctuate and so we have to start uh designing the stagered uh steps and so the lesson the main lesson we learned uh is that it is quite intuitive if you work with existing uh crowdfunding sites uh they already have a way to explain this kind of things uh and you do not need a crypto wallet or something like that uh the loog in is already very easy so working with existing web 2 infrastructure turns out to be one of the better decisions uh that we have made uh the main challenge is that not many people have heard of sroi social return on investment is not yet a mainstream practice so we spend a lot of time to coach them into calculating sroi interesting interesting uh I also have a question for the AY um what is the most different point Point um compare the typical public purchases and uh quad funding are allocation because it seems like a quadratic funding the structure looks like a crow fund sorry quad funding like a a crowdfunding it is so a kind of crowdfunding yeah um that's made a like a application radier project could be attract more than infrastructure project so what the project should be putting on the this kind of the quadratic funding run so yeah yeah I mean it's a mix right if you get uh a lot of people from from crowdfunding at least it means that your story touches a lot more people but it doesn't automatically mean that your project delivers uh on the infrastructure level that is for the sroi to proof so the both comp components are equally important you have to get the story out because that is what led the people actually try out the service so you can have a good sroi calculation if there's only five people using the service you cannot make a sroi calculation uh but on the end of the day maybe um you know the top 50 maybe 30 of them did not actually match uh the sroi targets if you invest one uh dollar but the entire Society only save half a dollar then you might as well just give the money back to the society right you're not achieving a positive more than one sroi uh and so I think uh whether something is infrastructural can only be seen after a small Scale Pilot and this is what this quadratic funding round is trying to do is just to get the sufficient Buy in from the population so that we can have a sizable try out maybe uh T we should be exper our experiment as a dig and the C can you go that next TR thanks uh actually uh one the project manager uh of digal marching donation uh this is kind of We are following the Taiwan experiment as a quadratic funding round for the Civic Tech Technologies so maybe some of the Japanese people could be understand like it's mean like we can uh join showing the decision making uh how to allocate our Capital our taxation our tax to the AIC Tech projects so that's the concept is uh for the qu funding also the next SL now we are working on this is uh on live right now so you can search dig Ming donation you can find our project so uh we said the like 800 user as a matching pool and then we attract 100 for the this experiment this is the first time experiment quadratic funding to distribute money uh for the Civic Tech project uh without like a cryptocurrency or something any e ecosystem so we could see like a how can I say like a long tail graph uh allocation distribution meaning like um typical uh public purchases only provide uh one provider like a government gonna decide oh we're GNA buy this Services we're GNA trade we're gonna uh like that however when we going to using the quadratic funding um we could be distribute money based on the our democracy like kind of opinion that based on the skin that how much you skin the game for the your fav project so that's the uh we how to do that and uh go to the next SL uh here is a real data uh we are on live so we have like 1880 18 projects on live at our initial stage so uh we're going to publish the anal rater but maybe uh I'm just wondering to Audrey uh what's the uh um Insight after you try to experiment in the quadratic fun round in the Taiwan yeah I mean next next month uh there will be a final report uh so the final report is not out yet so I cannot uh say that much uh but we do see a very similar uh long tail uh distribution uh the ones that tells the story very well receive a lot of crowdfunding for a lot of people uh and the ones that didn't tell the story so well maybe they have one or to wealthy contributors but they cannot uh spread that message uh that that well so something like that is usually seen but I think one other thing that is useful and that we have seen from the presidential hackathon quadratic voting as well is that you can also analyze uh like the kind of people who vote uh for uh different projects and to find a Synergy uh between those projects so even the ones that did not make the cut uh the final 20 or the final 10 in the Pres presidential hackathon uh you can still find the teams that are good Synergy with them just based on the quadratic voting or quadratic funding materials uh and then suggest uh those team that didn't make the cut uh to join the ecosystem to join the project that was uh chosen uh by the quadratic voting or funding uh mechanisms so I think that part uh we don't see that from the graph yet uh but that was very useful uh when I served uh in the public sector to see kind of a radar of what what kind of project is a good hub for other project to build on means that it's more infrastructural uh in nature because many people consider it has more Synergy uh with other projects toally totally um maybe some of the uh Ro government people is really interesting about oh how we can start this quadratic funding experiment in my rocker town so I'm just curious about like uh vasaka uh which is uh how to start kind of this experiment in their uh own roer area or how to coordinate uh internal like organization as a government right there uh yeah so uh actually last year I wanted to secure a budget for CTIC funding and actually so kindly he made an estimate and I uh proposed the budget but rejected last year unfortunately uh but uh uh uh I think uh uh uh because we've been doing a lot of web eventss like this and then uh thanks to uh gr and a uh yesterday actually they had a lunch with the mayor thank you and then so uh I think uh now decision makers are now like you know uh motivated to do it so I'm I'm hoping next year we can try uh quod atic funding so this is a r question what is the future of De government actually I asked the same question with c and a andan so I just want to hear about your perspective what's the future should be sorry uh what what should be by the future of the government like a like a pro uh government as a platform or just experimenting right there yeah yeah I think um I really see um ideas like this uh as expanding uh the kind of uh continuous smooth uh zone between the uh Civic sector uh and the public sector uh in previous ways like procurement it it is very uh zero and one right only one uh vendor gets the tender and everybody else uh don't get a tender uh and then only the procured solution provider provide a solution at least for the next year uh but uh this kind of experiment because it is structured as a prize so uh in Taiwan when you win the quadratic funding the matching um fund is not structured as a subsidy because in quadratic funding it is possible if you get a lot of people donating a very small amount of money then the matching fund you will get will be more than 50 % uh of your entire uh budget right uh and so uh but if it is a uh kind State subsidy it means that your company become state owned company or that uh your project become a state control project uh which is why we don't structure it this way uh because then it will go back uh to the old like the state must control the future of the project uh uh very discret uh and so instead we say no this is a prize uh award that we give you for um successfully attracting these many people to support you and for successfully demonstrating you have a positive uh social return on investment uh your success in demonstrating this is like writing a good novel or uh having a good film or something like that uh and so whatever matching funding we give you is a prize a recognition uh and so prize money uh does not carry any strings right you don't have to change your course your your governance uh because you receive a prize uh from the government and so because it's structured this way it's then much more smooth because then the governance from those projects stay with the governance Community uh in those projects and so if we can discover uh more ways that can be structured like prizes uh and things that are awarded kind of uh retrospectively uh after the fact uh and then I believe gradu funding or retroactive funding and things like that uh will enable a much better interface between the government uh and the Civil Society so that the government can support the ones that just happens to have infrastructural value or just happens to deliver public value without necessarily having to control the direction of where the Civil Society is going uh and then the public goods that are built upon such infrastructure become much more fluid because they're not locked in to specific uh procurement winners do you have any opin uh uh not opinion but but uh uh so uh it's been four years in our government and then it's very difficult to uh create a new things but uh uh uh but meantime uh of course the the capitalism you know go so first and then our society has a lot of issues and the city has a lot of issues and then we have to tackle on and then definitely uh Shia wants to uh do something you have done in Taiwan like a small version of Taiwan so uh I hope we can do that with your help yeah perfect maybe we can answer some question by the participate so if you have any question raise your hand only two minutes yeah only two minutes right go there is a all right let's go let take you hi um I'm haliki from kot Japan and thank you for sharing the Great uh exper uh use cases uh my question is how can we find a good area to work with the government I think it's really important to not just explain this kind of Technical Solutions uh because the government officials have their priorities they want to solve the problems not they they don't want just want to use the fancy Tech things so we need the space for collaboration uh and how we can find the the the very nice area to work with that collaboration is needed yeah I think uh ultimately very small scale experiments have its place because uh for the government that is not much to lose anyway uh and so if you start many such smaller experiments and get people into a mood of experimenting uh most governments should be okay if as I said we only started uh with like 10K USD uh with the ethereum foundations help right uh and so for most governments if it's very very small scale uh but then it raises the profile of the government then each government agency each government Department also have their relative priorities compared to other departments right so in a sense uh if trying out a new mechanism is a effective way to uh uplift their relative priority compared to other departments or compared to other cities or compared to other uh jurisdictions uh then that by itself increase the legitimacy uh of the decision maker of that Ministry or that department of that jurisdiction so I in a sense I I don't think uh this way of crowfunding and so on is necessarily just because it's a good mechanism uh for decision- making it is also a um popularity and legitimacy uh mechanism so I think it's important to frame it as such like you can then let these many people know about your priority these many people now know about the digital public infrastructure these many people now know uh the importance of this sdg uh and then you can uplift that voice and so compared to the uh money uh that they spent on advertisement agency or something uh this small experiments are nothing right and so it's always easier uh to frame it this way thank you very much all right first I want to say you are my hero you are amazing thank you so much for the work that you do we're trying to do the same thing in New York and it's very very hard so really appreciate the fact that you're actually [Applause] executing and next I want to say so much of the success of quadratic funding is actually based on the model itself you talked a little bit about creating a ceiling a floor Etc and I'd love for you to give us a little insight into how you expect to iterate on that model and how we can uh perfect that model for for this use case yes thank you so I think the the ceiling and steps uh are necessary uh because we structure it as a price uh and so people don't like a price which value is only calculated when you issue the price it is doesn't sound like a price at all right but I think this stepwise is also useful in setting expectations so that people do not um monopolize uh the most of the areas if they really have something truly very very successful Nationwide uh then everybody else will be uh kind of compressed if you have a allocated a total budget so I think the stepwise uh in retrospect uh served also as a function of people feeling it's more fair it's a more fair playing field than the pure quadratic funding area calculation yeah all right thanks so much this is all [Applause]