Funding & Incentivising Ethereum's Core Protocol Development

Transcript

[Music] foreign all right hey everyone last event of the day thank you very very much for showing up I see some protocol Guild members thank you for representing uh yeah thanks to the ECC organizers for having me here today I am cheeky gorilla and I'm here to talk to you about the protocol Guild um but before we get started how many of you have heard of the protocol Guild before whoa that's more than I expected then you'll know all of this already enjoy right so over the next 20 or so minutes we'll talk about what is the protocol guilt why it needs to exist then I'll

tell you about our one year pilot which actually just ended and then I'll give you a sneak peek into what we have planned for after the pilot but before we talk about the protocol Guild let's talk about ethereum specifically ethereum's Vision now I'm sure that each of you have your own unique take on what ethereum's vision is or should be but One Vision could be for ethereum to be a Global Network that empowers individuals right a protocol for human coordination something that is uniquely enabled via programmable incentives in a way that was never really possible before but for this Vision to become a reality for ethereum to really maximize its impact what needs to happen is we need

to incentivize talented individuals from all over the world to contribute to this open source project but that's easier said than done and that's exactly why the protocol Guild was created to essentially enable a funding mechanism that can be used by ethereum's ecosystem and its Community to very easily and hopefully sustainably fund ethereum's core protocol work in a way that also provides compelling incentives to onboard and retain these contributors over the long term but let's take a step back why is this even needed in the first place and as I'm sure all of you already know Financial incentives are never aligned towards public goods and the same thing

applies to ethereum's core protocol development which is a public good today the vast majority of funding for this work comes from a handful of entities and unfortunately they only provide a fraction of the financial incentives that are otherwise available in the ecosystem for example working for projects with tokens like apps or layer twos so essentially we have the situation where ethereum has enabled a massive ecosystem of very valuable projects to be built on top of it now in an Ideal World wouldn't it be amazing if some of that value were to flow back to help support the core protocol development so that all these projects depend on and yet even if that were the case even if all these projects did want to help

support ethereum's core protocol development how would you design a mechanism to distribute that funding right in a way that's reasonably accurate over time in a way that's sufficiently fair and perhaps most importantly in a way that retains ethereum's credible neutrality imagine you were put in charge of Distributing ecosystem funding to ethereum's core protocol contributors what would you do would you perhaps go to bitcoin try to find all the various core protocol teams and donate to them there would you get more involved would you go to the eth r d Discord The ethereum Magician's Forum the ethereum GitHub and basically try to assimilate a list of all these contributors and then

somehow track down donation addresses for each one how do you make sure you don't miss anyone how do you make sure you don't incorrectly identify someone as an active contributor when in fact they are no longer actively contributing for example if you cheat and ask chatgpt for such a list it will mention Gavin wood which you know he hasn't exactly been active in ethereum for a number of years now the point that I'm trying to name that I'm trying to make is that identifying this contributor set is hard most people don't have the necessary context to do so and to really emphasize this point let's play a little game by show of hands how many of you can name one of ethereum's core protocol contributors there's some without hands up listen if

you've ever heard of the name Justin Drake Danny Ryan vitalik buterin your hand should be up right now yeah most of you fantastic keep your hand up if you can name 10 of ethereum's core protocol contributors protocol good members stop cheating keep your hand up if you can name 50 of these core protocol contributors they're protocol Guild members ignore them is there anyone here who can name 142 of ethereum's core protocol contributors protocol Guild members no interesting why 142 because today the protocol Guild has a list of 142 members each member represents an individual who is actively contributing to ethereum's

core protocol developments now there were a few of you superstars who said you could identify some of these individuals on that list which is amazing but I guess my question to you is would you still be able to do would you still be able to do this a few months from now imagine we're in November 2023 will you be following ethereum's core protocol development closely enough to be able to identify changes to this contributor set over time what about a few years from oh a few years from now imagine we're in 2030 will you still have a pulse on ethereum's core protocol development the point that I'm trying to make now is that tracking these contributors over time is also very difficult fortunately the protocol Guild has a

solution and at the core of the protocol Guild is a list a membership registry of ethereum's active core protocol contributors today this list has 142 individuals these are all their names these are individuals from all over the world all of whom have been actively contributing to ethereum's core protocol development for at least six months now I should probably call out this does not represent ethereum's core protocol contributor set the entirety of it there are some more but membership to the protocol Guild is voluntary it's opt-in no one is obligated to join now in isolation this list of names is not super useful so let's give it a

little bit more context these individuals are involved in all of the various functions related to building and maintaining ethereum's core protocol this includes research testing security implementation coordination they come from over 20 different ecosystem teams you may have heard of research groups like The robust incentive group you may have heard of coordination teams like ethereum cat herders you may have heard of client teams like geph and Aragon or besu in Lighthouse but the fact that some of these members are part of a team is actually irrelevant right membership is centered around individuals not teams so that these members have the flexibility to work independently if they want to

here we go what makes this list special what makes it more than just a list is that it combines specific assurances and capabilities that ultimately make it an ideal funding mechanism for ethereum's core protocol development something that can be used by ethereum's ecosystem and its Community to fund this work in a very unique way that takes into consideration the past the present and the future so let's look at what some of those assurances are number one as you might expect this list this membership registry is on chain and that enables the the uh the funding mechanism because this on-chain membership registry is tied to a single ethereum address that anyone can send funds to

so think about how much complexity has been abstracted away here for potential donors we're providing a single ethereum address that anyone can use to donate directly to 142 of ethereum's core protocol contributors but I hear you ask how is that funding distributed in part it's distributed via a retroactive time waiting which is a very fancy way of saying that the longer a member has been contributing the longer they're the higher their share of donated funds and so this time waiting is actually a square root function of the number of months a contributor has been contributing multiplied by either one or 0.5 depending on if they've been working full-time or part-time retroactive time waiting is really

important because it essentially allows us to recognize past contributions by these members and reward them accordingly but distribution isn't only retroactive it's also forward-looking and it's forward-looking because it uses a vesting module to trustlessly distribute These funds to the membership over time during our pilot the vesting period was one year after the pilot we plan on increasing it to four years vesting is important because it gives assurances to donors that their entire donation won't just be spent all in one go right rather it'll slowly be distributed over time to these contributors which creates long-term incentives for them to continue contributing this facilitates knowledge Handover and and reduces membership

churn contributor churn so now you know how this list can be used to receive funding and how that funding is distributed but one very important thing who maintains this list and this list is actually self-curated and by that I mean it is the existing members that coordinate to add or remove members and this is incredibly important because honestly for the protocol Guild to have any legitimacy this list needs to be accurate right otherwise what's the point and the reality is most individuals do not have the necessary context do not have the necessary domain expertise to be able to curate this list even me I spend almost every day thinking about the protocol Guild and I cannot name all

142 contributors so in that same vein we really cannot expect an external entity or organization to both create this list and maintain it over time on the other hand protocol Guild members who again are ethereum's core protocol contributors due to the very nature of their day-to-day job they have all the necessary context they have all the necessary domain expertise to be able to curate this list so by delegating the responsibility of curation to the membership we have the highest assurances that this list will remain accurate both now and in the future another interesting attribute is that this list is inclusive we encourage donations in ecosystem tokens right not just eth the more that different tokens

are donated the more that these core protocol contributors get to benefit from the financial upside of tokens in ethereum's ecosystem while remaining focused on their core protocol work so in essence everyone gets to benefit from each other's success the last attribute that I'll highlight for you today is that this is a neutral list as the name implies the protocol Guild seeks to fund the protocol and not features of the protocol this is why membership eligibility is Broad enough to include all the various functions related to building and maintaining ethereum's core protocol but nothing beyond that and also why all those functions are weighted equally we really don't want to get into a situation where a wealthy entity comes in and sends funding towards specific

features of the protocol that benefit them at the expense of other core protocol functions so for all those different reasons we like to think of the protocol Guild as kind of like a magic list something that is uniquely tailored to its purpose of very easily and very effectively funding ethereum's core protocol development and accordingly we would encourage ethereum's ecosystem and Community to use the protocol Guild as kind of like an open API for funding this work but I hear you thinking why should I donate I don't want to donate let me give you a couple reasons number one if you built on ethereum in any way you

have a dependency on it right it might be for data availability it might be for uptime whatever else by donating to the protocol Guild you are helping to fund your dependency you are helping to rebalance incentives towards core protocol work to ensure that someone talented will always be around to maintain the protocol that you depend on it's also a great channel for retroactive public goods funding given the foundational impact that these members have had on ethereum's community and lastly as I mentioned towards the start ethereum's core protocol work is a public good right and we all know public goods are good so by going into the protocol Guild you are helping to support public goods let's talk about our pilot shall we the protocol Guild was inspired by a

tweet from Danny Ryan back in October of 2021 where he called on ethereum's community to establish the norm the project built on ethereum donate a portion of their tokens towards core protocol development a few months later the protocol Guild was announced and in May of last year the protocol Guild was actually the march in March of May May of last year the protocol Guild's one-year pilot was launched what happened during that time well the membership Grew From 90 members at the start to 142 members today that happened via the addition of 71 members and the removal of 19 members during that time ethereum's ecosystem and Community generously donated over 13

million dollars in value which is worth around 16 million dollars today we received almost 5 000 donations and shout out to the top five donors arbitrum Lido uniswap ens malkdow and nounsdale for helping to seed the pilot but of course the protocol good isn't just about receiving donations it's also about Distributing those donations and accordingly over 11 million dollars in value has been distributed to ethereum's core protocol contributors today that represents approximately seventy thousand dollars which depending on where you live is either a nice bonus or it's a full year salary ultimately we want to get to a place where regardless of where you live that

amount is high enough to incentivize you to stick around as a contributor for the long term what have members been up to during this time they've been pretty busy you may have heard about their success with the merge and withdrawals more recently they're focusing on the next hard Fork which is centered around proto-dang sharding which will scale layer twos by orders of magnitude but the reality is they're working on a large amount of very exciting things for ethereum's ecosystem which will help scale and secure it over the long term but I need to make a clarification here the protocol Guild as an entity is in no way responsible for the planning or execution of ethereum's core protocol development roadmap right the protocol

Guild is simply a funding mechanism to help support the individuals who are doing this work we've learned one or two things during our pilot let's talk about the good stuff number one uh I think it's fair to say given the volume of donations we've received buy-in from ethereum's ecosystem and Community which we are incredibly grateful for we've also received pretty good feedback from members who said that today already the financial incentives are significant enough to be relevant in discussions to join or leave core protocol work and lastly if we look at this on-chain membership registry today we think it represents a reasonably accurate snapshot of ethereum's core protocol contributor set which means self-curation is working there are some things that we could do

better especially if we want to scale or fundraising which spoiler we do number one we will need to make changes to our smart contract architecture to remove trusted dependencies willing to move our governance on chain today's off chain and of course if we want to multiply our impact we will need to multiply our funding so overall the one-year pilot represented a successful proof of concept in our minds and so accordingly I'm very excited to tell you about what we have planned to do next we have been working on protocol Guild V2 for a number of months already longer than I care to admit and there are three key parts to protocol Guild V2 the first one is to upgrade our smart contact architecture to remove trusted

elements right we need to replace our multi-sig dependencies we need to automate registry updates and we need to expand this mechanism to layer twos and so we are in the process of building a modular smart contract architecture which has three modules the first module will handle all finances and it's actually unchanged from the pilot we have been using smart contracts written by the team over at 0x Splits for vesting and distribution of vested funds um shout out to Xerox Blitz team for that they have been working beautifully since the start of the pilot we will continue using them for the foreseeable future again that will handle all finances the second module is for governance and we will be leveraging a Malik V3 Dao shout out to Deacon Rowdy Santiago from the Dow House crew for helping us set

this up the the Dow will be used for governance decisions related to updating our on-chain membership registry the last module will of course be the actual on chain membership registry itself which will live separately from the Dow the way all this will work together very briefly is that we will have our Dow populated with members of the protocol Guild who can create proposals to add or remove members at which point there will be a voting period once a proposal is passed and executed it will update the membership registry at which point a separate function can be triggered to uh push the membership registry into the vesting contracts to update the recipient list there in terms of expanding the mechanism to layer twos during the Pilot We Consolidated all donations from layer

twos onto mainnet we are now planning on doing the opposite I guess uh we're planning on um deploying vesting contracts onto all the various layer 2 Chains so that donations on layer twos can vest on those chains as well but we'll share more information about this in the coming weeks the second part of particle Guild V2 we intend to raise 100 million dollars over four years that represents approximately a two and a half volt increase over what we raised for the pilot and we think that will put us a step in the right direction towards rebalancing incentives towards core protocol work right ideally we want to get to a place where compensation for ethereum's core protocol work is

comparable on a risk-adjusted basis to work for apps or layer twos but of course raising 100 million is difficult and it's not exactly something that we want to have to do proactively forever which brings us to the third point of protocol Guild V2 we want to establish the norm that all projects built on ethereum donate one percent of their initial token supply of their revenue of their profit towards ethereum score protocol development via the protocol Guild why because this is the only way that ethereum's core protocol development can have us truly sustainable uh truly sustainable um financing mechanism that doesn't rely

on the ethereum foundation or other or or other charitable entities um and also it doesn't rely on proactive fundraising which is kind of what I'm doing here today this will be hard but we believe that ethereum's ecosystem has a necessary culture and values to adopt this norm and hey shout out to some of the early Trailblazers who have already adopted this Norm when protocol Guild V2 soon in true ethereum core protocol development fashion it'll be ready when it's ready but I guess soon so follow us on Twitter and we'll tell you when and that's it thank you all so much for being here today thank you to everyone who contributed to our pilot if you want to contribute in a non-financial way you

can go to the other building and go to the octant booth they have a public goods funding mechanism where you will get a pop where you can vote on funding to be allocated to a bunch of different public goods projects including the protocol Guild so please participate in that and thank you all for being here today [Applause] thank you are there any questions from the audience hi chicky um so you guys have this massive treasury sitting there um have you guys thought about nv2 having it generate Revenue in any way yeah we thought we thought about that for V1 already

um and although it's tempting we don't necessarily want to um if we start actively managing our treasury right which in theory should just be sitting there resting one could argue that we are no longer being incredibly neutral right imagine we dump certain tokens for other tokens that's a kind of worms we don't want to get involved in and the reality is it's kind of like you know seed investing we're hoping to encourage these early stage crypto projects to donate a portion of their token Supply right will they be successful we don't know right but that's okay like as long as we're all doing this together establishing the norm then we're incredibly grateful for every single donation but I wouldn't expect us to start actively managing this treasury no

adding to the previous question you can State and that would be neutral um whatever the question is as follows um I've Just Seen uh grief green presentation on public goods financing and what's mentioned like the model that I see is around for a while is that you issue your token you create the need for that token and this is what ethereum does in in a way so do you see perhaps that that should be like this is the tax on a block because that would be like a more efficient and probably this is something that you can as a product called Guild could just you know code that this is not like one percent from the products

but one percent uh From the Block reward and um and it sounds like a joke uh when I see your reaction but I'm absolutely serious you know perhaps this is something you should like a lot before you know taking a portion of block rewards to support ethereum's core protocol development has done by has been done by other layer ones um it will never be ethereum that does that again it infringes on credible neutrality one could argue that it empowers these developers to like like an oligopoly kind of thing um ethereum's governance doesn't work in that way and nor could you know protocol Guild members band together and code such a such a feature and then like

there's all these different stop gaps that exist to prevent that from happening I encourage you all to check out Tim Baker's presentation from yesterday he talks about this in detail about why this is not possible from my perspective you know we don't need to stake our Eve because there are other public goods projects out there like octant sir who are staking their eth and giving it potentially two different public goods projects right we're never going to infringe on the credible neutrality of ethereum this is a core tenet of us so it's not something that we'll do all right so I want to ask you uh specifically you mentioned that so the list is self-governing or self let's say curating

um as somebody when somebody is a member what exactly does the person specifically do to curate the list on a daily weekly monthly whatever basis yeah so today and this is where I talked about the uh I guess I didn't really talk about but I mentioned off chain governance and so we actually have a private GitHub repository where members can propose or basically create PRS to to add or remove members right and so we have uh different members who will then come in look at that PR um and say like do they agree or do they not agree and so there will be a deliberation period on this PR but in essence at at this point there is no kind of formal process it kind of works

in the same way as ethereum's core protocol development which is rough consensus right we ultimately always come to an agreement and I would also say that like the self-curation is one layer of the curation of the protocol guilds members right but since a lot of these members are also employed by teams right maybe client teams or whatever else that in a way is also a curation layer because um if those people are employed by those teams then that kind of vouches for the work that they're doing it kind of vouches for their legitimacy right but um yeah when it comes to in our private GitHub what we're doing um people can just basically comment on this and today there haven't been any like any scandals it hasn't been any like major disagreement on this obviously with our V2 smart contact architecture this will all be done in a

Dao hi uh curious to know if during the creation the ideation of this protocol Guild and when you guys were doing the pilot um were there any privacy concerns around the set of 142 addresses on chain I know you said that some devs could opt out and it's or it's all like often totally voluntary but have there been a lot of devs that were like no I'm not going to do do this because I don't want my address like labeled as a core Dev um are there any Dune dashboards where like people are tracking where those funds go from like so that's the protocol but like I'm just wondering if there's like people that are like kind

of searching like 142 addresses they're all core devs like where is that money going um any privacy concerns around those addresses being public yeah it's a good question um and the 142 members or all protocol good members um that list is public right it's an on-chain membership registry so everyone can see those addresses it is up to the members themselves if they want to associate that with an address that is maybe tied to their ens or whatever else right so they can practice opsec in any way that they want to right some some members they have actually tied it to their main ens so everyone knows that that's theirs right then others have used a brand new address a brand new yeah eoa specifically for the protocol Guild and so if members are privacy

conscious in that way then they can just use a brand new eoa then the flip side of that is I guess like we talk about transparency being like a key value of ethereum how transparent should the protocol Guild be does that transparency include doxing members and doxing their addresses probably it shouldn't right but as of right now we basically given members the flexibility to make that judgment call themselves thank you [Applause] [Music]