Single Transferable Vote (STV)

DAOs use STV to allocate funds from a shared treasury to multiple competing proposals (e.g., grants, development work). This prevents a single majority faction from capturing all funds. Key steps include:

• Setting a spending quota based on available treasury funds.
• Allowing members to rank proposals.
• Transferring surplus votes from winning proposals to others, funding a diverse set of initiatives proportionally to community support.

Blockchain protocols like Optimism use STV to elect their Citizen's House or Security Council members. Instead of electing one winner, the community elects a slate of representatives (e.g., 5 out of 20 candidates). This ensures the governing body reflects the diversity of the stakeholder ecosystem—including developers, users, and token holders—rather than being dominated by a single large holder.

Organizations like the Ethereum Foundation or large DAOs can use STV to form grant review committees. Community members rank potential committee candidates. The system elects a group with varied expertise and perspectives (e.g., technical, community, research), ensuring a balanced and legitimate committee that represents different segments of the ecosystem.

Unlike first-past-the-post (plurality) where the candidate with the most votes wins everything, STV produces proportional outcomes. In a 3-seat election:

• Plurality: The top 3 vote-getters win, which can exclude minority groups.
• STV: A candidate needs a specific Droop quota (e.g., 25% +1 for 3 seats). Surplus votes for popular candidates and votes from eliminated candidates are redistributed, giving minority factions a chance to win a seat.

On-chain STV requires a quadratic voting-like interface for ranking and complex smart contract logic for tallying. Key technical components include:

• A vote transfer algorithm (e.g., Meek's method) to handle surplus redistribution.
• A quota calculation (Hare or Droop).
• Ballot privacy solutions like zero-knowledge proofs to conceal rankings while allowing verifiable tallying. Platforms like Snapshot with specialized modules enable these implementations.

STV's defining feature is the transfer of surplus votes. A voter ranks candidates in order of preference. If a candidate reaches the Droop quota (the minimum votes needed to win a seat), their surplus votes are proportionally transferred to the voter's next preferred candidate. This process continues until all seats are filled, minimizing wasted votes.

STV addresses key flaws in simple "one token, one vote" systems:

• Reduces Vote Splitting: Supporters of a minority view can coordinate behind ranked candidates without fear of diluting their influence.
• Enhances Representation: More accurately reflects the distribution of voter preferences, leading to more diverse and legitimate outcomes.
• Minimizes Tactical Voting: Voters can express true preferences without strategic compromise, as lower-ranked choices are only considered if their top choice is eliminated or elected.

Deploying STV on a blockchain introduces unique technical hurdles:

• Computational Complexity: The iterative counting and transfer process is more gas-intensive than tallying a simple yes/no vote.
• Ballot Privacy: Achieving privacy for ranked-choice ballots while maintaining verifiable results is difficult with current public ledger technology.
• Voter Comprehension: The mechanism is more complex for voters to understand and verify than a simple transaction.

A prime application is allocating funds from a DAO treasury across multiple grant proposals. Instead of voting for a single winner, community members rank all proposals. STV ensures the final set of funded projects best represents the collective preferences of the electorate, rather than just the most popular single idea. This is superior for distributing a budget across multiple worthy initiatives.

While STV optimizes for proportional representation in multi-winner elections, Quadratic Voting (QV) is designed for single-issue decisions. QV allows voters to express the intensity of their preference by allocating voting credits, with the cost of votes increasing quadratically. Both are advanced mechanisms moving beyond simple token-weighted voting to capture more nuanced community sentiment.

STV's primary advantage is its ability to produce a proportional outcome, where a group of voters representing 25% of the electorate can secure roughly 25% of the seats. This is achieved through the transfer of surplus and eliminated votes, ensuring minority viewpoints gain representation. This contrasts with 'first-past-the-post' systems where a 51% majority can win 100% of the power.

The system dramatically reduces wasted votes. If a voter's first-choice candidate is either overwhelmingly popular (surplus) or has no chance (eliminated), their vote is transferred to their next preference. This gives voters more expressive power and increases the likelihood that their vote contributes to electing someone they support, enhancing voter satisfaction and participation incentives.

A significant challenge is the computational overhead of the counting algorithm, which involves multiple rounds of tallying, surplus distribution, and candidate elimination. For on-chain execution, this requires complex, gas-intensive smart contracts. Furthermore, the voter experience is more complex than simple token-weighted voting, requiring voters to understand ranking and the transfer process to vote effectively.

While designed for fairness, STV can be susceptible to tactical voting strategies. Voters may misrepresent their true preferences (e.g., bullet voting for only one candidate) to influence outcomes. The specific quota formula (e.g., Droop vs. Hare) and the method for distributing surplus votes can also be manipulated, requiring careful, transparent parameterization in a decentralized setting.

Deploying STV on-chain introduces unique hurdles:

• Gas Costs: Multi-round counting is expensive for large electorates.
• Vote Privacy: Ranking preferences on a public ledger can compromise privacy and enable coercion.
• Result Verifiability: While the blockchain is transparent, the complexity of the algorithm can make it difficult for the average voter to independently audit the tally without specialized tools.

STV differs from systems prevalent in DAOs:

• vs. Token-Weighted Voting: STV is candidate/proposal-centric and proportional; token voting is capital-centric and often leads to plutocratic outcomes.
• vs. Quadratic Voting: Both aim for fairness, but QV focuses on limiting large stakeholders' power via a cost curve, while STV focuses on proportional representation via ranked choices and vote transfers.

A principle in electoral systems where the distribution of seats or influence is proportional to the votes received. STV is a specific method to achieve PR, ensuring that minority groups can achieve representation. In blockchain governance, PR aims to prevent a simple majority from dominating all decisions.

• Goal: Match voting power distribution to outcome distribution.
• Contrasts with: Winner-take-all or first-past-the-post systems.

A ranked-choice voting system used for single-winner elections. Voters rank candidates, and the candidate with the fewest first-choice votes is eliminated in rounds, with their votes redistributed. STV is essentially the multi-winner version of IRV.

• Key Difference: IRV selects one winner; STV selects multiple winners proportionally.
• Common Use: Political elections (e.g., Australia, Maine) and some DAO proposals for a single choice.

The vote threshold required for a candidate to be elected in an STV election. It is calculated as (Total Valid Votes / (Seats + 1)) + 1. Votes a candidate receives beyond this quota are surplus votes, which are transferred to voters' next choices.

• Purpose: Defines the precise point of "enough votes" to win, enabling proportional results.
• Alternative: The Droop quota is a more common variant: floor(Total Votes / (Seats + 1)) + 1.

The core mechanic of STV where votes are not wasted. If a voter's first-choice candidate is either elected with a surplus or eliminated, their vote is transferred to their next ranked candidate. This process continues until all seats are filled.

• Benefit: Maximizes voter influence and reduces the "spoiler effect."
• Blockchain Analogy: Similar to delegated proof-of-stake where stake can be redelegated, but applied to voting preferences.

A voting system where participants allocate a budget of voice credits to proposals, with the cost of additional votes on a single issue increasing quadratically. Unlike STV's ranked preferences, QV measures intensity of preference and is highly resistant to Sybil attacks.

• Key Contrast: STV is for electing candidates/options; QV is for funding or prioritizing multiple proposals.
• Blockchain Use: Common in DAOs for grant funding (e.g., Gitcoin) and preference aggregation.

Also known as first-past-the-post. The candidate or option with the most votes wins, regardless of whether they achieve a majority. This is the most common system STV seeks to improve upon, as it can lead to wasted votes and unrepresentative outcomes.

• Drawback: A candidate can win with less than 50% support, and minority views are not represented.
• DAO Context: A simple yes/no or one-token-one-vote proposal is a form of plurality voting.