Questions about Project Catalyst - Is the voting incentive and distribution fundamentally flawed, or am I missing information?

Hello community.

First of all I want to say that I have read through and seen numerous Catalyst documents, FAQs, Discord, Videos, Presentations etc. But as you guys know, there is ALOT of information regarding Catalyst and even more being added by the day, so I have undoubtfully missed something.

This is where you guys come in, please educate me and prove my hypothesis is wrong or show me what I have missed.

(Let me make it very clear that I personally don’t like this idea, but I see it as a potential flaw/threat to our ecosystem)

Hypothesis: Voting no to all Catalyst proposals in current model is incentivized for personal gains

People are incentivized to participate in voting via personal gains/rewards and they are also incentivized to vote NO by the exact same incentives (personal gains/rewards).

As far as I have understood, the 20% rewards for voting is static, while all unspent funds are moved back to the treasury to use at a later date or a later funding round.

Lets say the following would occur:

Treasury 250k
20% for voters = 50k
everyone votes no for ALL the projects
unspent funds transferred to next fund 200k

Treasury 250k + 200k from previous fund = 450k
20% for voters = 90k
everyone votes no for ALL the projects
unspent funds transferred to next fund 360k

Treasury 250k + 360k from previous fund = 610k
20% for voters = 122k
everyone votes no for ALL the projects
unspent funds transferred to next fund 488k

and so on…

This way, the voters would get more and more accumulated rewards for voting over time and it would be harder and harder to break the vicious circle.

Could anyone explain to me what mechanics are in place to prevent this or where my theory is flawed?
Thank you in advance.

However, some positive upsides to this mechanic could be:

  • People ONLY voting for TRULY amazing proposals as they are sacrificing potential personal gains/rewards in the next funding.
  • A more secure blockchain if the rewards are staked + pledged and not sold off.

As I see it, the voter rewards serve two purposes. First, they incentivize ADA holders to vote at all. It’s like a staking reward with an obligation to vote attached to it.

The possibility to vote no for most or all proposals can also serve as a disincentive to submit junk proposals in the hope to get a cut of a budget only because it must be spent.

This is an experiment and I don’t think the rules are fundamentally flawed. It should be hard to get the money and probably it should cost something to submit a proposal.

Thank you for sharing your opinion.
Regarding the cost to submit a proposal is an excellent idea and could work as a spam-filter