Alain Brenzikofer -How Proof-of-Personhood Through In-Person Gatherings Can Enable UBI and Democracy

Transcript

audience now um so um I'm going to talk about en cointer which is a proof of personhood protocol um a little bit about myself my background is uh engineering I'm in crypto since quite a long time around a decade um and um so the the this project basically emerged through frustration which with what was going on in crypto so uh on a kind of on a social level on a governance level I I was just not like happy with um the accumulation

of power uh through Capital so the idea was how how can we make that different and um so this talk will be about that but also a bit about our field experiment here in Zurich so there is a local community currency here in Zurich and I will share a few results from that community over the last two years um what what's the the the current situation we're in uh with respect to that project we have one and a half billion adults who are unbanked in the world I I guess this is not exactly news but still this is uh a

significant uh fact about about financial inclusion about possibilities of humans to participate in online and financial life um and over 800 million don't even have an official ID so the the problem with that is if you don't have an ID it will be very hard to participate in the online society very often um and still those people may have skills which are just not used because of those facts so

we we would benefit if we could include more people we will be able to develop more interesting stuff um and so crypto comes to the rescue uh we could think um well I at at at today's status I very much doubt that because if you look at the last time uh like ethereum uh transaction fees actually soared because there was a shortage of of resources uh if if you if you compare that to the Daily income of the world's population um you see that

about 80% earn less per day than you paid for an earc uh 20 token transfer well now you can say Okay um well this is main net uh we now have those nice uh side chains well apart from the fact that they have issues of their own I think the problem if you don't have an ID how how are you getting hold of crypto in the first place because nowadays it's well it's still basically centralized exchanges which make you do um kyc and how do you do kyc if you don't have a an identity document um so we need a different way to onboard

humans to the crypto space and we will there there is kind of so much of the world's population who just cannot because of all those properties participate now um so here is what en cointer aims to do and cointer uh lets you create local communities where the fact that you are a human is sufficient to get a basic income in that Community currency um and that income will be distributed regularly and it will for one give you access to the crypto the world and two it will even give you

purchasing power inside your community and through that reduce inequality how does it work um we leverage the fact that one person can only be in one place at one time now you may have heard the talk of uh idena before um where they use reverse touring tests uh to to uh achieve the same we ask people to actually gather physically in person every 10 days um so the way it works is you download the app you register for the next cycle and

then you get assigned randomly so you say uh I want to join the Zurich Loy community and there are uh defined public Meetup places and you will be assigned randomly to one and then you will meet up to 15 people who mutually attest each other's personhood all at the same time so you cannot attend two of those meetups um and if you pass those cycle Gatherings you will be issued 44 Loy in that case so in Zurich the buying power of ly is at par with Swiss Franks so it is I'm not saying it's a lot of money

but it's it's still kind of in in in a way significant uh so you can actually purchase something um and I will get more into like uh how that worked in Zurich later now um there's a fundamental problem with what I told you until now if if we just issue fresh money every 10 days uh it will never end you you you will you will just inflate money supply and the more you inflate the more the more money that's already issued the lower the percentage of the basic income which is so uh which is issued so actually you reduce the relevance of the

basic income over time uh and we don't want to do that so we have a balancing force buil in and that's de Mirage that's not um A New Concept it was introduced by Sylvio gazelle you can also understand it as a negative interest um so the idea is we have exponential decay on your balance so if you check your balance today and tomorrow tomorrow the number will be smaller um and the idea is we take away the money where it isn't used so where it is lying around in your wallet and we inject it again into to the community on

a on a on an egalitarian uh basis so it's kind of an issue and burn which will find an equilibrium over time so if you have a steady so we we have a simulation here of a of a steady uh Community uh of 10,000 people and you issue money and at at some point the amount burned will equal the amount issued and so you you have a money supply which is more or less breathing with with the size of the population um now why why is that cool for web 3 um it's I mean local communities are nothing so new um they

have been around and tested uh since multiple decades um more or less successfully so one fundamental problem in in web 3 is Cil Cil resilience so if you if you want to find some kind of Dem democracy in uh in web 3 then civil resilience is what you're looking after um and uh I will I will go a bit into the detail how how we imagine democracy to happen uh actually um and also for web 3 that's the story of the beginning it will be more inclusive so we can actually onboard people into web

3 who couldn't afford an investment who don't have spare money that they can just speculatively invest um so where are we in with the en cointer ecosystem um we have three live communities right now the one in Zurich uh ly which I will tell more about one in Tanzania uh theota and one in Green Bay Wisconsin uh and a couple more which are uh in the concep ual phase um so let me tell you a bit more about Loy itself so we have now two years experience uh with that field experience and I just want to share a

few uh well achievements but also a few a few very uh skeptical uh remarks about it so what you what you see here is the the number of reputa bles and reputable are people who attended at least once during the last 50 days so on on a rolling window basis this is just a measure of how many people have attested personhood at least once out of five Cycles um so we started pretty well in the beginning that's more or less the

friends and family effect they couldn't say no because they they know me and they do me a favor and they come and try it out right so the the start is no is no big surprise um then very early on we we were featured in the in the mostre local uh newspaper in uh Zurich and unfortunately we couldn't really um translate that to the growth of the community because we had a few technical issues that's kind of yeah early early days um but still we we were like people people started to to ask and know oh lawy I've heard about that and then we had a phase of continuous growth uh we even had a billboard

campaign um where yeah we we tried to reach a broad audience um and then something seems to have happened here uh April last year uh the participation went down and so first of all let me let me let let's look at the numbers that that we have so in at Peak we had 155 uh reputa bles and we had 400 people which have at least five ly so the I would say the community size is 500 here in in um uh 400 sorry in here in syk um

and uh but once we reached that Peak um we we we couldn't turn that uh downturn and interestingly here um well I will bear with me for two more slides I will um disclose the riddle or or the our our interpretation of it so first the success so what what what have we actually achieved here we have what when we started people told us well you know people will never take the time to come and attend to the those physical uh in-person events uh they don't have the

time for that they don't care um and well actually now we can say no that's not true if if the incentive is right if the story is right not only the financial incentive if the story is right people will come they will show up and not only once so this is the the the the attendance frequency so the more so on the left you have the ones who attend more often on the left the ones who attend less and we have 50% of the people on average over two years attended at least one of five cycles and this I would say is quite a success so far um because we can say hey um maybe

20% attended only once um another 40% well they Loosely try it every now and then but it is possible to to build a community with with this system um so now look let's look at the at the economical side which will give which will give us a hint on why the numbers went down so this is the total turnover of ly during two years so the numbers in the crypto space will not be super impressive so that's really 43,000 Swiss Franks worth of of uh ret turn over here um retail

is people who we don't identify as businesses offering services and products um CII is community issued income that's the basic income um and B2B obviously is one acceptance point that uh pays another acceptance point and now you you quickly see the problem uh the two sides are not balanced so on the left is the money coming in on the right is the money going out so half of the L were stuck on the balance sheet of the acceptance points um and you see there is very little B2B so B2B would be what closes the economic circles and makes makes the

money turn constantly which would actually make the story work economically for the businesses um because it would it would increase their revenue and so on it would be POS positive for their business um you see de Mirage is actually an effect that also is a cost for for the acceptance points when the money lies around that's uh to be expected um and this led to the early adopter acceptance points to change their policy so um let me first tell you how many acceptance points we had we started with one that was fair was a popular Cafe here in Zurich

uh then came a uh a gour grocery store uh beral um and then it grew so we we we were able to to find over 30 acceptance points where you could come and pay with L um but the difference here is there were two the ones that I mentioned were the were the two most popular ones and the others were more or less negligible um and in April so where where you see the numbers go down and where our Trend was downwards they decided to no longer accept ly for 100% of their offering but you had to pay 50% in Swiss Franks or you could only uh pay

drinks and not food with it um and that seems to be the effect which just led to a decrease in partic participation so this is no I mean it's if if you look at it in hindsight this is no surprise um it's just less attractive to participate so part participation goes down so we need a different narrative now either we find more popular acceptance points or there must be a different reason why you participate so just having more acceptance points will not help it was two acceptance points deciding the story here in Zurich and the other 28 were more or less I mean they were important

for the community I don't want to discount on their importance it's just for for the economy it was it was not it it was not really significant so luckily we have a a different Dynamic right now in Africa um in Tanzania a community has started it's still very small but they have different narratives so uh with mobile money there uh they pay excessive fees to just move money around it's very easy very convenient but it's quite quite expensive it's up to like 5% in fees um so they have a different narrative why a local community currency can be very interesting and we are very keen to see

how that moves on and we will support them as well as we can but now to the Democracy um considerations so web web 3 so far is basically a plutocracy so you have you have token voting who has more money has more say so that's uh um I I think we we need to more or less accept that now is there a way how we can balance um money wealth with personhood don't get me wrong here I'm not saying one person one vote is a sound choice for web three governance I

think it isn't doesn't make sense because who who should be in the set and and and what what are the what are the the requirements to join that set of Voters in in in web 3 it's it kind of doesn't really make sense you need to have some kind of either reputation or kind of um skin in the game of some kind or you need you need to have some attachment to what you are governing um and I mean you might have heard the talk uh from edena where um those problems have been have been very nicely described cribed so what what do we have in mind here first of all we let's start on the

on the top level our goal is subsidiary uh governance subsidiary democracy um but we are a parach chain on kusama which is the canary net of padot which is a plutocratic system basically with with a few counter measures um but we are granted free coretime so we don't pay gas you know that's also why we couldn't build that on ethereum uh circles Ubi tried that but they had to subsidize gas in order to do so um so we have a slot on Kosama always for a year and then we we

get it for another year and then we have free execution time but that comes with a cost now we are subject for protocol governance to a token voting system so if we want to change the protocol we need to go through kusama governance so that's just to get that out of the of the picture um and uh then we go to the intermediate uh level which is protocol parameters someone has to say uh it's every 10 days that people have to meet concurrently um or uh yeah other rules of of of the protocol um and this currently is a council of seven people but the goal obviously is subsidiary

democracy that we can say all communities together will govern those um parameters and to get more practical here is what we have built where we have a prototype which we are trying on our test net now and that's Community level governance so here the idea is the following it's only an approximation of one person one vote to be hon honest um what we do is every cycle attendance is one vote so if every cycle attendance within the last five Cycles so if you took the time to attend five times you have five votes um and anyway here you can for

example vote on how high should the basic income be is it 44 Loy is it 88 is it 88,000 uh the de Mirage is the halfing time one year seven years whatever um so we intend to uh roll that out uh and and test it in the field with real people possibly with liid democracy in the sense of delegating your vote um because we we can simply not assume that people have the necessary knowledge uh about those parameters so but at least they should have a say in who they trust to understand those

parameters um I don't have the time to go too deep because democracy is also about this like debate talking to each other social social media so our proof of personhood can also give you a personhood batch here on Noster we demonstrated that uh that this this batch you can only have this batch on one account so you cannot maintain many accounts with this batch but you can you can look it up if uh if that's of interest to you but I'd like to leave to some some time for questions at least thank you wow let's give a round of [Applause] applause thank you so much I enjoy that that I can delegate my vote for example

that's a liquid voting and also the more I participate the more voting power I get I love it limited limited limited of course of course but still you know I'm very active lovely but please the questions from the audience wonderful we have there one thanks for the presentation um very interesting I know the system a bit I also participated um a few times but uh I also saw the presentation from idena before and I was just wondering whether you because they they showed as far as I understood that the some pools were forming um some maybe undermining the

this concept of digital personhood did you see anything similar for example that people gave their phones to other people to bring it to these gatherings or something like this in the system um no no we didn't um and I would expect that we for a long time will not see that but I I I may be wrong the the difference here is the reward that you get in idena is something which you can trade globally and speculate on it so it's a reward which as which cannot account for for uh purchasing power or wage levels

of different of different countries however we might see the same if you have very high inequality within your community because if I mean if if some people work for $100 per hour and other people work for $1 an hour then you have exactly the same problem uh and you will see puppeteering also in in encounter I'm sure yes we have one more question wonderful yeah thank you um so I was just wondering like these Community Driven projects it's very interesting to see that unfold as well for this subject

um and like you say I can imagine as well that many of the people directly affected by what you want to do are not knowledgeable enough um so I'm just wondering I I work a lot on sort of the election process in the real world like com with uh our Democratic rights of electing and so on and I I guess we see that even that often um goes a little bit in the wrong direction in terms of what you said like I want to give my vote to someone I trust to know better but that trust is often based on maybe a loud shouting person um and these are people who don't know so they don't know exactly what they're looking for so I'm wondering if you are also spending a substantial amount of of time and and sort of maybe the community in this to

figure out other ways of empowering people without letting them have to build that trust on something they don't know and avoiding the risk of falling for the shouting uh individual that might have like individual interests well I'm I'm not sure if I entirely get your question but I I if I find so what what how I understand it is are there Al alternatives to token voting or or or uh kind of delegating your personhood vote yeah other characteristics other mechanisms that you can use to choose other than I give you my valuable vote because I trust you because that that

trust is not defined yes so I mean right now the trust is in us right now it's in that in that sense autocratic to the team who builds the system because people just trust us because it's an experiment right now this is not how we want to do it um and then we could weigh in how many Loy someone has because that is skin in the game that would be especially interesting for acceptance points because the the problem of businesses is they they are not persons they don't get a vote even if they don't send someone to participate that's a

problem um or or you really yeah do kind of the Lick Lick democracy thing where maybe some V some votes will be delegated to the acceptance points or to a Consortium of of acceptance points but if you ask can we avoid that delegation or I mean how I I don't know I mean I I'd be very curious to learn uh more options what we did in practice is just we held meetups where we explained as well so education I think is key so that people might delegate less and and execute

their voting power rather themselves because they have been educated so I think it's yeah it's yeah I'm I'm open to uh suggestions if you have concrete I like it a lot less delegate more take action responsibility for your own voting I like this one thank you so much this was a wonderful ending so let's create more systems that each and every person can W themselves thank you so much and we're open to coffee break and then