Protocol Guild: Sustaining Ethereum's Future - cheeky gorilla

Transcript

[Music] can you hear me now fantastic you didn't miss much if you didn't hear me don't worry we're talking about ethereum and my question is what even is ethereum and I'm pretty sure that if I were to ask 10 of you what ethereum is I would have get at least five different responses some of you might describe it as an infinite Garden or ultrasound money some of you might describe it as a settlement layer God forbid one of you might even describe it as Bitcoin plus smart contracts but you know what you would all be right there are so many ways to describe ethereum because there are so many ways to use it and to that extent

we can kind of think of ethereum as a Commons like forests or Fisheries what are commons they are an area or shared resource that is accessible to and used by the public unfortunately like all Commons this resource can be Abus used and I'm of course talking about the tragedy of the commons which is when individuals act in their own self-interest depleting shared resources to the detriment of everyone else and that's why I have mik here who you may know we like to use in ethereum to symbolized coordination failures and mik he's uh he's holding up a tweet by Amin solomani where Amin is calling out the lack of adequate funding for ethereum's core protocol work and the issue that he

highlights is that essentially we have the situation where we have a small number of relatively underpaid core protocol contributors who are responsible for infrastructure securing billions in value and that's not great it means that it is not economically rational to work on ethereum's core protocol and so we've visualized this issue in this chart here where you can see that ethereum's core protocol work is both low risk and low reward but crucially it also shows how by just taking on a little bit more risk these cevs could significantly increase their rewards for example by going to work for a large crypto project with a token like a layer two or even an exchange why does this matter well

because ethereum is still far from being done if you are at all familiar with ethereum's core protocol development road map you know that there are a ton of really really exciting upgrades both in the short term and in the long term and of course everyone wants those upgrades sooner rather than later but the reality is that if we want to execute this development road map it is imperative that we are able to onboard and retain these talented core protocol contributors so this brings up kind of an existential question for ethereum how do we rebalance Financial incentives to make ethereum's core protocol work economically rational on a risk adjusted basis so let's brainstorm what about

altruism right can we uh rely on kind individuals to fund this work out of the goodness of their hearts well this is ethereum we're talking about so there are some examples of this uh here's a tweet from Preston vanloon of the prism client team who tweeted back in 2018 about the lack of funding for the prism team now fortunately for Preston some guy replied YOLO and sent a th000 eth which at the time was worth around $100,000 but is that something that we can rely on no it's not sustainable it also has a risk of capture because quite frankly we don't know if these kind individuals actually have ulterior motives and it's also narrowly targeted because of course not all core devs are

on Twitter asking for money and not all core devs have the reach of someone like Preston so what else can we do what about making ethereum's holders pay and you know there has been an EIP to propose doing this essentially carving out a portion of ethereum's issuance to pay for ethereum's core protocol work and and blockchains like polka dot we got from polka dot here just sponsoring not attending come on guys um polka dot does this why can't ethereum well because it's not credibly neutral right ethereum was created to give power back to the people and that does not include forcing a paycheck for every single cordev into every single block at the

same time it would also be something that would be really hard to change if we implemented it but then regretted it protocol changes cannot be made willy-nilly and ethereum and that's absolutely a feature and not a bug and also if we were to establish this precedent of diluting eth holders to pay for this kind of stuff you know there would be another group of individuals that would pop up in the future and say hey pay me in the same way so it's kind of a slippery slope okay what about building social norms here we have a tweet from uh the man the legend Danny Ryan back in October of 2021 where he said make it a social Norm for all projects building on ethereum to allocate 1.5% of their token to the individuals who are building and

designing the L1 infrastructure they rely on Danny's a pretty smart guy there's a lot of really really interesting stuff in this tweet number one it would Target individuals and not teams so you know that funding would go to the actual people who are doing the work you want to support it would also give those individuals exposure to the upside being created in the ecosystem via these tokens and it would be a cost born by the projects themselves I.E the people who have a dependency on ethereum score protocol not the users and if we actually successfully uh establish this as a social Norm it would have a low risk of capture if most of the projects are doing this and even more so it could be sustainable so great idea but we're

missing something how would you actually distribute those tokens so let's take a step back what we want to do is we want to build new social norms around around projects building on ethereum donating a a portion of their supply to support ethereum's core protocol development to help rebalance Financial incentives what we're missing is a mechanism which distributes those ecosystem tokens to ethereum's core protocol contributors in a way that's sufficiently fair remains accurate over time and crucially maintains ethereum's credible neutrality now you might be able to guess what I'm getting at because I've just described protocol Guild and to understand how protocol Guild can be

used to rebalance these Financial incentives for ethereum score protocol work you need to understand its two core components a membership registry and a funding mechanism so let's talk about the registry first and foremost protocol Guild is a membership registry of ethereum's active core protocol contributors today we have 187 of these individuals in this list you can see all their names in the back around there and these are people from all over the world what are they working on well broadly speaking their work targets three area of the core protocol which includes client development research and implementation experiments as well as work that supports those first two which includes spec work testing security

infra and coordination here are some examples of teams that you may have heard of you may have heard of clients like geff Aragon Basu nethermind you may have heard like research groups like The robust incentive group and you may have heard of coordination teams like ethereum cat herders but protocol Guild membership is centered around individuals not teams so if you're hired by one of these teams and you do good work but you quit but you continue doing good work you would remain a protocol guild member now I did also say it was a list of active core protocol contributors so let's quantify that to be eligible for membership you need to have contributed for at least 6 months continuously but on average protocol Guild members have contributed

over 3 years to ethereum's core protocol work the longest serving member has been there from the start over 10 years now as a collective protocol Guild members have contributed over 600 years to ethereum's core protocol work which is why we can confidently say that these individuals are stewarding ethereum's core protocol you might be wondering how is this list updated how was it curated and well it is actually protocol Guild members themselves who coordinate to add and remove members and if you think about it this makes the most sense because the reality is most individuals they don't have the necessary domain expertise or context to be able to both identify who these individuals are and

even and then also track their contributions over time on the other hand protocol Guild members due to the very nature of their day-to-day work as cord devs they have all the necessary context they have all the necessary domain expertise to both create this list and update it over time so what is the net result of all this well we've made the entire set of ethereum's core protocol contributors directly legible on chain all right well how does that rebalance incentives well we've built a funding mechanism around this list so let's talk a little bit more about how this funding mechanism works and there's three parts um that are kind of unique in the way that donations are received in the way

that they're vested and then distributed and so first and foremost we've created a single ethere address that anyone can use to send tokens directly to everyone in this membership registry so think about how much complexity we've removed associated with trying to figure out who to donate to if you want to support this work and of course because this is on chain anyone can verify uh who has donated anyone can verify that in fact donations are going to everyone in this list but what actually happens when you make a donation our donation address is actually an immutable vest contract which trustless vests funds over four years from the point of donation the contract cannot do anything

else why four-year vesting well because four-year vesting is the norm when it comes to token grants or employee stock options but more importantly four years provide strong incentives for these uh contributors to stick around for the long term and finally how are the funds actually distributed to this membership registry and you know ask anyone who's building a public goods funding program it's really hard to do so in a fair way and so at protocol Guild we sidestep that complexity by using the most neutral impact measurement that we know which is time and so the longer you've been contributing the higher your share of donated funds but we also don't want the longest serving members to run away

with all the funding so we do also introduce a square root function into our formula to basically compress that variance and it has the effect of uh new new members their share is actually increasing at a much more rapid Pace compared to more long-term members and in fact as new members are brought in or on boarded the older members their share is getting diluted over time so for all these different reasons we think it's fair to say that protocol guilds funding mechanism is simple and transparent while creating strong incentives to onboard and retain ethereum's core protocol contributors over the long term thus enabling ethereum's ecosystem to fund its dependencies and that last part is really important because it brings us back to this idea

of social norms and that brings me to the protocol Guild pledge how many of you have heard of the protocol Guild pledge not bad maybe a third keep your hand up if you are a project that might be planning on taking the protocol Guild pledge woo that's awesome if if you're thinking about it catch me afterwards uh what is the protocol Guild pledge I'm pretty sure you can guess it is a commitment by projects building on ethereum to donate 1% of their native tokens to support ethereum's core protocol to work via the protocol guilt so let's let's unpack this why are we asking for Native tokens right why are we not asking for eth or Stables well because think about it what

you do by donating tokens is you're giving ethereum's core protocol contributors access to a diversified basket of funds that represents the value being created in the ecosystem but most importantly you are enabling them to benefit from that while staying focused on their core protocol work basically everyone's in the same boat why are we asking for 1% why not a fixed dollar amount well because denominating the pledge in a percentage helps to normalize contributions not all projects can make say a $10 million donation but every project no matter how big or how small could make a 1% donation it's also pretty easy to pledge you could take this pledge

before you even have a token before you even know the value of your token it also abstracts volatility because of course a 1% donation will always be worth 1% even in a bare market and lastly why 1% why not 1.5% like Danny Ryan suggested well because Danny was wrong no I'm just kidding uh because we did the math and we figured that if we can establish this pledge or rather this Norm around taking the pledge then 1% is more or less sufficient why take the pledge at all well you guys came to this conference so hopefully you already know this but fund your dependency if you're building on ethereum you have a dependency on ethereum's core protocol development might be for data availability might be for uptime by taking the pledge you are

helping to rebalance these Financial incentives to make sure these talented core protocol contributors stick around to keep building and maintaining the protocol that you depend on it also contributes to a more resilient ethereum by providing a new Diversified funding stream for that work and it scales ethereum's values public goods are good ethereum's core protocol development is a foundational public good how to take the pledge it's very simple you just tweet or cast about it and so here are the first three projects that took the pledge shout out to ethery Tao and Ponda Ponda is a sponsor here so go check out their Booth um and that's all you need to do just announce it publicly and when you have your token follow up and make the

donation all right so now you know all about protocol Guild you know about the pledge so you might be wondering is ethereum's core protocol development economically rational yet has protocol Guild actually done something and the answer is we're getting there so since being launched in May of 2022 we have received over 8,000 donations and we have raised almost $180 million but that was at the time of donation the current value of that is $10 million and I should also clarify that the vast majority of that came from three projects that took the pledge Igan layer ethery and tyo Labs shout out to them but as you can see in our donor leaderboard we have received substantial donations from many different projects

in the ecosystem but I know what you're thinking almost $180 million or almost $120 million that's a that's a lot of money protocol Guild does not need any money need any more money and it's not quite the case because remember we have 187 members today every quarter we are onboarding new core prot call contributors and also remember that this funding is being vested over four years and so what that means is that actually the median protocol guild member is expected to receive approximately 100,000 no $110,000 from protocol Guild over the next 12 months and look $110,000 is a lot of money but for these individuals

it is not enough to replace a full-time salary and that's why they have full-time jobs that pay them in addition to what they get here but more importantly it is not enough to compete with the type of job offers that they are getting in the ecosystem which are frequently low seven figure job offers and so if we want to get to a place where the financial incentives associated with protocol Guild membership alone are enough to onboard and retain ethereum core protocol contributors so they can finish executing the road map we need to significantly scale our fundraising so no ethereum's core protocol development is still not not economically rational work here's a tweet from a very prominent cordev at the start of last year who announced that he was moving on

to go work for a layer to and he did in his farewell tweet say that protocol Guild almost made him stay so we still have some work to do but you know what the initial results are incredibly promising and we believe that if we can establish this social Norm that projects building on ethereum donate a portion of their token Supply to help fund ethereum's corpor protocol work to help make these contributors stick around for the long term to execute the the road map then I think we can make it economically rational and so my call out to you if you know a project that is planning a token launch please let them know that you would like them to take the protocol Guild pledge together that way we can all help secure the future of

ethereum together thank you very much [Music]