DAPPCON 2025: Circles-Money, Reimagined - Martin Koppelmann

Transcript

[Applause] All right. Yeah, another year of DevCon. Good to be here again talking about um circles or subline. Uh guess I get the question a lot uh after 10 years. Um yeah, why are why are you still here? Why are you still um building? And I want to um yeah connect that to a person I I appreciate Rutka Bman um who recently well published a a book moral moral ambition and yeah it's it's it's simply uh yeah tries to ask the

question um what are things that are yeah worse to put your talent and um your effort into and he obviously makes the observation that a lot of people Yeah, in a way waste their talent uh go into into corporate jobs. He calls it the uh yeah Bermuda where you start as a student and then you you end up in this uh Bermuda triangle between corporate law uh consulting and kind of uh yeah traditional finance and kind of in that Bermuda triangle lots of talent and work is essentially then uh wasted and and and people with initially ambitions yeah

spend their a on zero sum games and uh yeah essentially not improving the world. I tried to um before we go into circles tried to find uh the bigger picture of of the things um that in my view uh we as yeah a broader uh web 3 but kind of certainly also knows this um are trying to uh um are trying to contribute and in what way we are uh yeah potentially um can fill this this this moral ambition. mission of of well not not wasting our time but doing things uh

that have an impact. So um I I tried to uh summarize the things with the first one is yeah increase efficiency. So basically make things better work. Uh and and just another way to look at it is grow the overall pie just um don't do zero somethings do things that are actually productive. do things that actually um yeah make make more of something for the world. But the second thing is is as important um and that is well if we grow the pie if we can increase efficiency we still we still also make sure that um that the world benefits from it and that not only few

part is yeah distribution uh distributing ownership and um yeah again making sure that this hopefully larger pie is enjoyed by by more people and the third thing is also yeah That's a perfect articulation of that idea. But I do think well obviously we are uh polarizing um uh we are polarizing our world is more polarized. we we see wars and wars um again and I I I tried to articulate this the thought uh that also Julian As um articulated and he he tried to make the connection between um yeah essentially leaking data and uh therefore kind of

revealing the truth. um he made the connection to that uh ending wars because in his assessment he said every war is um is started or based on lies. So kind of uh some people believe that and or partially well but the people believe different things and those are lies and that that is required for them uh to be in war. So I would say at least uh if one has a better shared truth or shared understanding of each other, it seems to me at least that um that could be a way to um to reduce uh yeah wars.

So now the problem is um I think we have uh here a lot of um a lot of people who who share those uh those yeah I guess moral ambitions but I that's of course still not enough um because uh ultimately if you if you build stuff if you do things but you um yeah you just stay in your in your closed circle and you can't reach uh the world beyond you can't reach users then I would still think they even with the best moral ambitions and with uh having the right goals if they don't result in in in in yeah in concrete results then I would still say that's that's not enough

and of course we want uh uh to go beyond it and we will have a panel discussing that topic have we actually improved the world in in in a way um uh tomorrow uh here on on on stage at um yeah 3 um 310. So what are what have we done um at Nosis? So kind of here in the in the hall next to us, you see this um yeah this wall of kind of bit the history of of the last 10 years of of various products um yeah we have we have been working on and um I I tried to put put the various products here in into the categories. So we have things like um

yeah Nosis pay uh or just the general concept of uh using blockchain to facilitate uh payment stable coins and those certainly can increase efficiency um legacy uh banking and and financial software is is certainly there's a lot of ways and and and things can be done cheaper, more efficient and therefore give room to yeah essentially grow the pie, make more of Similar thing cow swap we we do believe um uh yeah that uh you can do trading without leaking value to to arbitrageers or reducing the role of market makers and again just making the thing more

efficient in that say in that sense uh growing the and yeah and and a few more nosis HQ product recently uh joined the NOS ecosystem. Okay. Anyhow, don't want to go all into all of them. Um, yeah, then the next one, ownership distribution, the concept of a DAO, the concept of the chain where the chain or or one of the core um promises of nos chain is that um it is actually run by the people who are using it. So, it's not one company, one entity running it. We we really uh yeah I think it's important that you can run your own validator have actual well power uh and and and ownership um of

over the platforms. The the third thing um that's probably least concrete but but I still still believe that prediction markets conditional token framework and all the techniques that you can use uh that result from this web of trust that we are creating with circles and we will look more into that that they can also be used to yeah better spread information and therefore uh better create this um shared uh truth. But then going back the reality is also yeah we also have not um have not uh uh um yeah reached the the reach uh we need

to reach. So we still we have been building for a long time and I still are just with at at a couple of thousand users. So, here's uh Nosis Pay uh weekly uh or those that transact weekly use the card and it's just still yeah shy of of or a little bit over 4,000 after um roughly one and a half years and okay with with circles it's now launched um um yeah couple of weeks ago and well now we are also in in in in in similar numbers still tiny tiny so Um absolutely the goal needs to be that um yeah I I I don't want to uh be on on on stage uh of

another depcon talk about moral ambitions and and what users so um so those things um yeah that is absolutely um or will be will be a priority for us and maybe one more thought on that. So on on on on the previous slide um yeah this this conflict between uh um yeah trying to do uh yeah important or the right things but um but then uh yeah not not not having users not reaching users so so one one thing even even here about depcon is people say and I think they mean it in a

positive way oh yeah it's it's a nice conference marketing and and and and so on. And yeah, to some extent that is a positive, but to some extent um yeah, I I definitely also see the risk of of just building um yeah, building stuff and and and then not uh well not having it used and not having um yeah not doing enough in that sense than uh marketing uh to get it out because again I do think if we want to make a difference we will need to um yeah get the things used and get the things out that we uh we are building.

All right. Um now um with that uh kind of introduction and or maybe um yeah high high level thoughts on why we are doing what we are doing um again quickly or well going uh talking about circles again. So it's probably not the first time you have or for many not the first time you have uh yeah hear me talk about circles. Um but yeah we made significant um well progress again last year I was also here stage talked about circles but now finally um yeah a couple of weeks ago we launched Metri. Hopefully many of you had already the chance to um to try it.

There will there are more yeah experiences here or things you can uh try it out. But again now quickly going going through the why money is a technology and it's probably the most um the most widespread and most uh the technology that defines our our lives uh the most. So again if you go to another country you don't speak the language you don't speak the culture but almost every almost everyone in the world understands money and in that sense uh the rule of of kind of how money works is uh yeah is defining our society like hardly anything else and there is one element of money that is easy to understand for everyone. So you somehow for the

individual you um you somehow get money by earning it in some form uh and then you can spend it. That that's that's easy. And on the surface it seems like there's not much uh to decide here. But if you go one step deeper and if you try to understand where does the money initially come from, how does it get into circulation? Who can decide when it gets into circulation? Then you do understand that uh money is absolutely um yeah not neutral and that those decisions of exactly how this money creation process works play a huge role in in shaping um yeah shaping shaping our society

and circus essentially tries to say okay let's reinvent money and let's apply the um yeah I guess those principles of making sure that that the power is is is distributed and the benefit um of it is distributed. So money circles fundamentally puts the human the individual um at the center of that very critical process uh or very critical role of where does the money initially come from? How is it um created? So yeah and we have the technology to rewire this um uh the stack. So again probably also have seen that a couple of times.

So in circles all money is created on a personal level uh people are can who join the system are allowed to issue one unit um per account uh per hour and that is how it comes in initially into circulation. After that it behaves just like money. You can spend it, you can buy it, you can earn it, you can trade it, you can convert it into other currencies. But but this initial how does it come into yeah into the world that happens timebased per person. The second thing is there is a constant if we continuously issue new money um the total supply would would always grow and over a long period of time then this

right to issue just one more unit would essentially its value would diminish if the total supply would would go towards infinity if we just would keep issuing money. Therefore, the second rule is important because that makes sure uh that in a way old money or money is also old money is also constantly yeah we call demoragashed burned in the app. So it basically disappears and that leads to a situation where this right to issue new money will will have um a fixed a fixed value. And the third one, selective trust system. Yeah, just means there is no central gatekeeper, no one who can say um who can join the system.

But to protect against civil or decide with whom you want to interact, we have this web of trust and we will look into that uh in in in in more detail. Here's just again the curve that follows from rule one and two. So uh it it's just a hypothetical uh one one person that is um yeah issuing money for 80 years and in the beginning it increases more or less linear uh linear and then this the 7% kicks in and essentially uh it leads to a stable supply of or eventually it will lead to a stable supply of 120 uh 120,000 units per person. uh and here hypothetically if they stop issuing because let's say they die after 80

years then essentially the money they have issued will still stay around for a while but over time um it will it will disappear from the system and that's again because of the 7% demarrage yeah so uh long term uh bitcoin has this magic number of 21 million encircles the magic number is um 120 thou 120,000 units times the people number of people um in the system. If it's only 10, it would just be yeah 1.2 million. If it's a million people, then it would be a million times 120,000. Um yeah, quickly here uh it just another perspective is all balances

are continuously converging uh towards this larger number or at least all balances of humans. If you have less than this 120,000 in your account right now, then the right of issuance is larger or that will produce a larger amount than those 7% demarrage. uh and if your balance would be larger than 120,000 or is larger than 120,000 then this demo rush would be uh more significant that you uh that or your your your your total amount will every day slightly decrease and kind of um the the effective tax rate uh that you you pay kind of the burn

uh kind of offset by the issuance uh converges towards 7% if you would hold an infinite uh amount of of circles. All right. Um again core core idea of circles it is completely open and permissionless. Everyone um can uh issue uh currency. everyone who is in some form part of this um web of trust and uh and now this of course always um triggers the question of civil civil attack. So the idea of how how do we prevent that uh person or person can create multiple um accounts and the key

thing here is um that circles are not fungeible or are are by default everyone again has their own personal circles and they are only made funible through this web of trust. So here A, B, C, A and B are trusting each other. B and C is is trusting each other and A wants to pay to C. Then um C would not accept the A circles that A holds uh because they don't know them. They don't trust those circles. They don't want to hold those circles. But it is possible that and this can happen without person B being involved in this. uh it can happen

uh that so A will send 100 circles there and without B being involved 100 of B's circle can be forwarded by yeah the smart contracts to person C and person C is happy they receive uh B tokens uh or circles from a person they trust and they know um and person B uh now has um yeah kind of after the transaction has more of of the A token less of the B tokens but their total balance doesn't has changed. Here is how that looks today in in in the metry app. Um this is my account uh today in the morning. Um I hold 37,000 uh circles and high level that's all I care about. But if I if I

click on the on on on this yeah on the circles balance I kind of get a get a breakdown of of the individual circles I hold. So kind of I hold 2,000 of my very own uh and then I hold yeah the the list is a bit longer but I hold circles of of those per people I I yeah I'm I trust in the in the circles uh trust cuff. Now that composition again might change at any time. So if um if someone right now is doing a circuits transfer it's possible that it will go through my account. So uh if if for example um they pay someone who accepts uh Martin tokens um and they the person that is sending

doesn't have Martin tokens. It's very possible that just in this very moment uh someone is sending me more let's say Ella tokens uh thousand and so then I would have a thousand of that more and a thousand less of the margin tokens. But for me that's fine because my overall balance um stays the same um to so the fun or that that that pure web of trust system uh creates yeah creates a system where if the graph is densely enough um connected then there should always be a connection from anyone to anyone and kind of essentially the circle should be spendable. In practice

that already right now is sometimes not the case. So sometimes you will hold circles that um where you can't find a path to uh to the person or to the thing you want to interact with. And here and here groups uh are or will play uh an important role. And groups essentially um yeah give a way to delegate trust to say okay I I not only trust those couple of people individually. there is a group mechanism that and for for example for Devcon we have a group that everyone who visits DevCon can join the Devcon group and then you can basically just say okay I trust this Devcon group and implicitly that means I trust everyone um who is in

the group so it's just a way to scale um the um the web of trust fundamentally by doing that we are giving up a little bit of the extreme resilience that circles has because if such a group is um or Those groups of course can um well can could develop uh into yeah very large groups and therefore um uh then also kind of into into into powerpoints or into into choke points let's say. Um but but it is possible for the user to yeah kind of to pick whether they only kind of are very local trust trust uh people directly um or um yeah

or or or even trust groups and you can have groups of groups and in in theory you can have um yeah then very large groups here how that looks concrete again in the app. So we have a bunch of groups right now. Um and that also means it is possible to um to also hold group circles. So group means uh or group circles means those are all uh backed or or um yeah if I hold right now 11,000 uh or 5,000 200 DevCon uh circles then it means um those are all circles that

have been backed by members of the Devcon group. So uh yeah so so if you hold an individual is part of a group you can convert this individual circle um uh to the group circle. If you go back from the group to the individual you have no guarantee that you will get back this individual that you put in. We will just get any individual um circle uh from um or from yeah just just any uh or it can happen that you get any who's who's who's a member. Uh yeah, here's just a visual representation of of the Devcon group.

Um uh as it yeah looks looked today in the morning. Yeah, this is kind of the web of trust of um yeah, many people here in the room. Um last quick two remarks. Uh we do think that um for a long time I think the ethos in the in the in the uh web 3 yeah community was always yeah no fees, no rent uh no rent extraction and so on. in circles. We right now have um introduced quite a bit of fees uh and very deliberately because um in my view if if um if something is offered for

free then usually the the playbook is that okay there's a lot of VC money going in you offer something for free you kind of create network effects and then years later once you have uh once you have uh once you have kind of those network effects then usually uh the model goes that then you can start to extract value in circles. Circles is a protocol at its core without any fees without any owner without any admin without uh without anyone who has yeah a privileged role and in that sense um uh and in that sense it's also to some extent a problem because uh yeah there is no large investor who who who can uh push

circles. So what we did is that we uh we do think it is important for those who are building around circles let's say wallets and and yeah right now in to large degree uh Nosis is doing that um that on those levels um fees are taken so that it is um yeah that is essentially then sustainable or or worth it to put in significant resources that are needed to uh to bring to bring um yeah uh something to the world and and to some extent it's also then an invitation uh for other wallets to build to build also a wallet um that can also charge a fee because if we would build a

wallet and um it wouldn't charge um a fee then yeah it would be very hard to build another circuit wallet which we certainly hope. That being said uh no fees on the protocol level. If you uh want to avoid the fees, you can absolutely do that. Um yeah, just just as a side note. Um liquidity uh I think I don't have time uh for that but but also here liquidity is is is distributed. So circles are tradable. Uh we have this concept of circles backers.

People who individually put some liquidity behind their circles but most liquidity is in groups but then all of that is somehow connected through the trust uh network because the trust network is also a form of liquidity. So if some valu uh some circles have or someone's personal circle have a price my circles have a price but we trust each other then essentially we are also not we we not only have liquidity against um an external asset but we have also liquidity against the other circle and that has again liquidity uh against um external assets. So what I'm trying to say is uh circles can have individual

prices and they can differ but through the web of trust they are all in network uh within a network that is highly connected um circles will have um uh the same price. Um yeah I I I'll skip that. Ask me if you uh want to know that in detail. Uh lots of options to create groups. So there are all those um yeah identity solutions out there. So groups can be like here DevCon group kind of based on physical events but they can also of course be based on uh stuff like ZK passport or even biometrics or or whatnot. Um and then they can create

those larger clusters of trust I would say. Okay. Finally, a bunch of uh a bunch of links, but maybe even more important um yeah, here there's a a circle boost around the corner. Um and there are a bunch of things how you can just very practically uh try circles and often that uh helps you understand all the things I try to say much better than those um yeah theoretical um concepts. Thank you. We can take some questions, I think. So, so um yeah, we um let's let's see. Um raise your hands if you have any

questions. Hi, thank you for the presentation. Uh my question to you is that um played out you know 10 years circles is successful how does the world look like and or what's your hope about it? Yeah well I mean um yeah if uh if it is successful it would mean that uh I would say there are two elements to it. So one is the pure economic impact um and and the pure

uh fact that then in that world a decent percentage of the value of money creation would would just be distributed on a on a per per person level. So we have in the past I I mean we can give a rough estimation of what that value could look like. Um in in in in the Euro zone for example or or you can also yeah Euro zone. Um if you if you look at how much money is comes each year freshly in circulation. Um and if you would just divide that uh amount of money that is yeah each year is is is kind of in a way printed um if you would distribute that per person you

would get something like €350 per person. So that is I would say not quite uh UBI uh in in in in Europe but still a substantial uh a substantial amount of money and it would certainly be uh an amount of money that uh yeah would could eradicate uh global poverty or yeah or or absolute poverty um globally. So I would say best case, yeah, circles can be a tool to eradicate absolute poverty and maybe more be a basis of of something like um a global UBI. That's I would say the pure economic thing. The other thing is uh

that I do believe and I tried to hint at that at a very early slide um that this having a web of trust or yeah as as a as a as a core mechanism that that can also be used for other things beyond kind of this well this crypto UBI uh and and things like yeah information or making it better to make well sense of the world finding this uh shared shared truth but I I just leave it here at the side of all right.

Hi. Yeah, thank you for your talk, Martin. Uh I'm the founder of Green Wallet and we like to support circles. Do you have a program for that or something like that? No, for sure. For sure. So, there is uh there is an SDK um and we absolutely yeah, absolutely want to make it as as easy as possible. Uh come come talk to us. Great. All right. Uh suppose in the future circles is everywhere and I end up working for a

serial killer. How do I ensure I'm not left holding the bag? Uh say say again you are working for a serial presumably if I get all my um my salary in in boss CRC and my boss turns out to be a serial killer. Yeah. How do I ensure I don't end up holding the bag? Yeah. Yeah. Okay. I mean I mean in in a way you can you can always decide what circles you hold. So uh so um by by deciding who who you trust uh either which individuals or what groups you

decide so then it doesn't matter who is paying you uh and in what what they are paying you kind of this this past transfer will always ensure that you uh have um have uh hold holds the group the circuits you trust. Now um holding individual circles will always I guess or is is in a way um or I I I do think groups will play an important role. So so here um we have we will need to have this abstraction to have um yeah currency that is more funible and more in a way reliable than those very very individual um circles. But I still do

believe that uh this core promise that all money creation in the system is done on in an individual level and then just on a higher level kind of that is then aggregated into more funible and in a way more uh yeah abstract uh things um that then are are supported or carried by larger groups that I I think brings the stability that you are then not exposed to very individual um uh people in their trustment