Subsidy Allocation Mechanism

Distributing Funds to Support Quality Information across a broad range of topics and geography

Although Olas employs quadratic funding competitions to distribute funds among contributors writing on the same topics, the platform needs another mechanism to allocate passively donated funds to news topics in the first place before those competitions can take place. This mechanism is dedicated to news reporting and opinions as investigative journalism/academic research have a unique fundraising mechanism.

Funding Sources and Allocation

At the heart of Olas' funding ecosystem lies the Olas Global Pool, a pool of funds contributed by passive donors, such as high-net-worth individuals and government entities. These donors are committed to supporting journalism in a general sense, ensuring that financial resources are available to support diverse and high-quality reporting.

Since the Global Pool isn't controlled by any single entity, funds must be allocated by it using decentralised mechanisms. The challenge with using such mechanisms is to design them so they cannot be gamed by colluding agents. Olas has been designed with this in mind so that funds are allocated in a transparent, accountable and credibly neutral manner.

Topic Pool Establishment and Journalist Participation

To support diverse reporting, The Olas Foundation will establish specialised topic pools of the global pool at the request of users. It will have no say over how these pools are funded however. These targeted funding pools cater to journalists covering specific topics or localities. The approach enables the financing of a broad range of subjects increasingly overlooked by an ever centralising mainstream media employing an economic model ill-suited to fostering a plurality of voices.

Ranking Algorithm for Topic Pool Allocation

As is the case with contributor competitions, Olas uses a quadratic formula to distribute subsidies to topic pools based on the number of people plus the level of economic activity occuring in each topic pool. These measurements are taken from both methods of subsidisation: 1. Public Goods Funding (donations) 2. Retroactive Public Goods Funding (tips). The reason quadratic rules are used is to take a better measurement of the wider community. For a deeper discussion on quadratic funding refer to following sections. This algorithm considers various factors:

  1. Number of active donors that participated in previous funding rounds in each topic pool.

  2. Total donations received by each topic pool.

  3. Number of tippers in each topic pool.

  4. Total tips received by each topic pool.

Funds Distribution

Once all the topic pools receive a ranking for the next funding round, their share of the global pool is calculated. There is no guaranteed amount of matching funds, every topic pool simply receives a percentage of whats available, a percentage that's dictated by ranking scores. In order to prevent contributors 'banging the close' by publishing a bunch of articles at the end of every quarter to increase the funding prospects for their areas of specialty, snapshots will be randomised.

Mininum and Maximum Funding

To guard against the short-term whims of consumers of news causing centralisation of topics covered, Olas will ensure that there will be a minimum share of available matching funds for any topic there is at least some demand for, no matter how small that demand is, as well as a maximum share any single pool can receive. The goal of these limits is to avoid the ever-narrowing breadth of topics or over-funding of fashionable topics that occures in centralised news and science media. There is a long history of things that were written that received very little attention at the time of writing, but became very influential later on. Olas itself is using a number of concepts that fit this description. The goal is to increase the chances of information like this being created.

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