PROOF OF DUE DILIGENCE (PoDD) SYSTEM FOR DECENTRALIZED GOVERNANCE USING REWARD-BASED MAJORITY VOTING INCENTIVES

Abstract

A blockchain-based Proof of Due Diligence (PoDD) system for decentralized governance incentivizes token holders to engage in informed voting by rewarding those who align with the majority outcome. Proposals are submitted to a decentralized organization, and eligible token holders cast their votes on-chain during a defined period. Upon conclusion, the system automatically tallies the votes, determines the majority outcome, and mints new tokens that are proportionally distributed as rewards to majority-aligned voters. This mechanism promotes thorough due diligence, increases participation, and enhances decision quality in governance processes, particularly in subjective decision scenarios such as investment proposals.

Description

PROOF OF DUE DILIGENCE (PoDD) SYSTEM FOR DECENTRALIZED GOVERNANCE USING REWARD-BASED MAJORITY VOTING INCENTIVES1. Technical FieldThe present invention relates to blockchain-based governance systems and, more particularly, to a reward-based voting mechanism that encourages thorough research (“due diligence”) among participants in a decentralized autonomous organization (DAO) or similar environment.2. Background of the InventionDecentralized autonomous organizations employ blockchain technology to enable token holders to propose and vote on governance matters such as funding decisions or protocol modifications. In conventional systems, participants receive minimal direct incentive to perform detailed research on proposals. This often leads to low participation levels and suboptimal decisionmaking, especially when decisions are subjective in nature — such as whether to invest in a particular startup — where no external “truth” is available at the time of voting.Existing incentive mechanisms, such as those used in Schelling games or decentralized oracle systems, typically reward participants based on their convergence toward an objectively verifiable outcome. However, these methods do not address the unique challenges of incentivizing due diligence in subjective governance decisions. There is thus a clear need for a system that directly rewards token holders for aligning their votes with the majority outcome, thereby promoting more informed and diligent decision-making.3. Summary of the InventionThe invention, termed the Proof of Due Diligence (PoDD) system, introduces a reward-based majority voting model within decentralized governance. The system operates as follows:• Proposal Submission: A proposal — such as an investment opportunity — is published to the DAO community.• Voting: Eligible token holders cast their votes on-chain during a designated voting period.• Majority Determination: At the close of the voting period, the system automatically tallies the votes and identifies the outcome with the highest support.• Reward Distribution: Immediately following majority determination, the system mints new tokens and allocates them proportionally to voters who supported the majority outcome.By providing immediate economic benefits for aligning with the majority decision, the PoDD system transforms governance voting into an engaging, incentive-driven process. This encourages participants to perform thorough due diligence and fosters higher-quality decisionmaking within the DAO.4. Detailed Description of the Invention4.1 System OverviewThe PoDD system is implemented using a series of smart contracts deployed on a blockchain. These contracts manage the entire lifecycle of a proposal — from submission and voting to the determination of the majority outcome and distribution of rewards. The system consists of the following primary components:1. Proposal Module:o This module is responsible for registering and publishing proposals on the blockchain.o Each proposal is assigned a unique identifier and is associated with a defined voting period.o Supporting documentation and other relevant information are linked to the proposal to aid in due diligence.2. Voting Module:o The voting module enables eligible DAO members (i.e., token holders) to cast votes on active proposals.o Votes may be cast as “Yes” or “No” (or other designated options) and are recorded on the blockchain to ensure transparency and immutability.o Optionally, a commit-reveal protocol can be implemented to prevent early disclosure of votes, thereby mitigating strategic behavior.3. Majority Determination:o At the end of the voting period, a tally function aggregates all votes. o The system automatically determines the majority outcome based on the vote counts or weights.o In the event of a tie, predetermined fallback rules may be applied to decide the outcome or suspend reward distribution.4. Reward Distribution Module:o Upon determining the majority outcome, the system mints new tokens to form a fixed reward pool.o These newly minted tokens are then distributed proportionally to those voters whose votes align with the majority decision.o The distribution may be based on factors such as the voter’s token holdings or staked amount, ensuring that rewards correlate with each voter’s contribution.4.2 Voting and Reward ProcessIn practice, the PoDD system operates as follows:• Voting Phase:Eligible token holders review the proposal and cast their votes during the designated voting window. The process may optionally utilize a commit-reveal scheme to preserve vote confidentiality until the end of the voting period.• Majority Outcome Determination:Once the voting period expires, the smart contract automatically tallies the votes. The option with the highest aggregate support is declared the majority outcome.• Reward Allocation:Following the determination of the majority, the system mints a predetermined number of tokens to create a reward pool. The reward distribution module then allocates these tokens proportionally among all majority-aligned voters, based on their relative voting weight.4.3 Advantages of the InventionThe PoDD system offers several advantages over traditional decentralized governance models:• Increased Participation:The promise of immediate rewards motivates more token holders to participate in the voting process.• Enhanced Due Diligence:By financially incentivizing votes that align with the majority, the system encourages voters to conduct thorough research and careful analysis before casting their vote.• Transparent and Trustless Execution:All operations — from proposal submission to reward distribution — are executed automatically by blockchain smart contracts. This ensures transparency, verifiability, and resistance to tampering.• Applicability to Subjective Decisions:The PoDD system is particularly well-suited for decisions where an external “truth” is not available at the time of voting, such as investment decisions, thereby ensuring that governance outcomes reflect informed collective judgment.4.4 Exemplary EmbodimentAs an example, consider a DAO faced with the decision to invest in a particular startup. The DAO publishes an investment proposal with supporting documentation. During the voting period, token holders cast their votes after reviewing the proposal. At the end of the period, suppose 60% of the votes favor investment. The system then mints a set number of tokens (e.g., 1,000 tokens) as rewards, which are distributed among the 60% who voted in favor, proportionally based on their individual voting weights. This reward system not only incentivizes participation but also reinforces the importance of due diligence, as voters are directly rewarded for aligning with what they determine to be the most beneficial decision.5.5 ConclusionThe Proof of Due Diligence (PoDD) system provides a novel, blockchain-based mechanism for enhancing governance in decentralized organizations. By integrating a reward-based majority voting model, the invention incentivizes thorough due diligence and active participation, leading to more informed decision-making. The system’s trustless, automated processes ensure that rewards are distributed transparently, ultimately improving the quality of governance outcomes in DAOs.

Claims

AMENDED CLAIMSreceived by the International Bureau on 27 November 2025(27.11.2025)1. A decentralized governance system implemented on a blockchain, comprising: a proposal submission interface configured to publish proposals regarding governance matters for which no objectively verifiable external truth exists at the time of voting; a voting module that allows eligible token holders to cast votes on said proposals during a defined voting period; a tally function that aggregates votes and determines a majority outcome based on the recorded votes; and a reward distribution mechanism configured to: (a) determine the winning outcome solely based on the majority consensus of the tally function without reference to an external data source; and (b) immediately upon determining said majority outcome, automatically mint new tokens and allocate them proportionally to those voters whose votes align with the majority outcome; whereby token holders are incentivized to align with the consensus of the community rather than verifying an external fact.

2. The system of claim 1, wherein the reward distribution mechanism allocates rewards from a fixed token pool replenished by the minting of new tokens immediately following the determination of the majority outcome.

3. The system of claim 1, wherein the voting module optionally employs a commit-reveal protocol to maintain vote confidentiality until the conclusion of the voting period, thereby mitigating strategic vote copying.

4. A method for decentralized decision-making in governance matters for which no objectively verifiable external truth exists, comprising: receiving and registering a proposal on a blockchain-based platform; allowing eligible token holders to cast votes during a defined voting period; tallying the votes to determine a majority outcome; and automatically distributing newly minted tokens as rewards to those participants whose votes correspond with the majority outcome, thereby incentivizing participants to align with the informed consensus of the community.

5. The method of claim 4, wherein the reward for each majority-aligned voter is calculated proportionally based on the voter’s voting weight relative to the total weight of the majority vote.

6. A non-transitory computer-readable medium storing instructions that, when executed by one or more processors in a blockchain environment, cause the performance of the method of claim 4, thereby implementing the reward-based voting model.STATEMENT UNDER ARTICLE 19 (1)Claim 1 has been revised to specify that:

1. The proposals concern governance matters for which no objectively verifiable external truth exists at the time of voting;2. The majority outcome is determined solely on the basis of community consensus and without reference to an external data source; and3. Newly minted tokens are distributed proportionally to voters who aligned with that consensus.Distinction from Prior Art (Gutierrez): These amendments explicitly distinguish the invention from the cited reference US 2023 / 0261863 (Gutierrez). The cited reference discloses an oracle system designed to incentivize participants to vote based on "independent knowledge of [a proposition's] truth or falsity" (see Gutierrez, Para [0580] ). In contrast, the amended claims restrict the present invention to subjective governance decisions where no external "truth" exists to be verified. Unlike Gutierrez, which aggregates votes to reveal a fact, the claimed invention utilizes the majority outcome solely to establish a consensus.Distinction from Prior Art (SmartContract): Furthermore, the limitation in Claim 1 regarding the determination of an outcome "without reference to an external data source" distinguishes the invention from US 11,854,101 (SmartContract , which relies on querying collections of external sources (oracle nodes) to obtain data responses (see SmartContract, Col. 9, 11. 32-50 ).These features are fully supported by the original description, which explains that the Proof of Due Diligence (PoDD) system is intended for subjective governance decisions, such as investment or funding decisions, where no external "truth" exists at the time of voting and where rewards are allocated based on majority alignment.Claims 2-6 refine and support this core concept by reciting the proportional reward mechanism, optional commit-reveal voting confidentiality, the method implementation, and the non-transitory computer-readable medium, all consistent with the originally filed disclosure.No new subject matter has been introduced.

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