Protocol Guild: Funding and Incentivizing Core Protocol Work

Transcript

all right hey everyone first of all thank you to the organizers for putting on this great event thank you all for coming here today um I am cheeky gorilla and I'm here today to talk to you about the protocol Guild actually before we get started how many of you have heard of the protocol Guild before by show of hands nice good for you all right by the end of this all of you will know about it so over the next 20 or so minutes we'll talk about what is the protocol Guild why it needs to exist then we'll go into how our one-year pilot went which actually just concluded and then finally we'll give you a sneak peek into the future about what we have planned for after the future sorry after the pilot

that is but before we talk about the protocol Guild let's talk about ethereum specifically ethereum's Vision now I'm sure each of you have your own unique takes on what ethereum's vision is or should be right 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 right for ethereum to really maximize its impact what needs to happen is that 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 right and this is why the protocol Guild was created to essentially enable a funding mechanism that can be used by both ethereum's ecosystem and its Community to fund this core protocol work in a way that provides strong incentives to onboard and retain these talented core protocol contributors over the long term but why is this even needed in the first place and as you all probably know you know Financial incentives are unfortunately never aligned towards public goods and unfortunately the same thing applies for ethereum's core

protocol work which is a public good today the vast majority of funding for this core protocol Works come comes from a handful of entities ethereum Foundation consensus and others and unfortunately they only provide a fraction of the financial incentives that are otherwise available for other jobs in the ecosystem like working for projects with tokens you know apps layer twos that kind of stuff and so essentially what we have is a situation where ethereum has enabled an ecosystem of all these valuable projects to be built on top of it now in an Ideal World wouldn't it be amazing if some of that value could flow back to the core protocol work that all

these projects depend on and yet even if that were the case you know even if all these projects really did want to help fund ethereum's core protocol development how would you create a mechanism to actually distribute that funding to ethereum's core protocol contributors in a way that's reasonably fair right that remains accurate over time and that maintains ethereum's credible neutrality right to really emphasize the difficulty of Designing such a mechanism imagine that you were put in charge of Distributing this ecosystem funding to ethereum's core protocol contributors you know how would you go about doing that would you go to get coin and try to identify all

these uh the the core protocol teams there and donate to them there or would you get more involved right and go to the eth r d Discord The ethereum Magicians Forum ethereum GitHub all that kind of stuff and basically try to identify who all these contributors are and then somehow track down donation addresses for each one how would you make sure you don't miss anyone you know how would you make sure you don't mistakenly indicate someone as being an active contributor when in fact they are no longer actively contributing for example if you want to cheat and use chat gbt to tell you who the ethereum's core protocol contributors are chat GPT will tell you that Gavin wood is one and you know Gavin wood has not been active

in ethereum for some years now the point that I'm making is that it's not super straightforward right identifying and tracking these core protocol contributors is quite difficult and to really highlight this fact uh let's play a little game how many of you can name one of ethereum's core protocol contributors come on now if you've ever heard of the name Danny Ryan Justin Drake Tim Baco or vitalik buterin your hand should be up all right keep your hand up if you can name 10 of ethereum's core protocol contributors I see some hands good for you guys keep your hand up if you can name 50 5-0 of ethereum's core protocol contributors

did I lose the hands I saw a wave who can name 128 of ethereum score protocol contributors why 128 well because the protocol Guild has a list of 128 members each member represents an individual who is contributing to ethereum's core protocol development and some Superstars said that you could identify some of these individuals today which is awesome but my question to you is would you still be able to identify some of these individuals a few months from now for example in November 2023 right are you are going to be following ethereum's core protocol development closely enough to identify changes in this contributor set over time

how about a few years from oh how about a few years from now I'm going the wrong way there we go a few years from now 2030 will you still have a pulse on ethereum's core protocol development the reason why I ask these questions is not to shame you for not having this information most people don't right you really need unique context and domain expertise to be able to do this fortunately as you probably guessed by now 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 these are all their names right 128

individuals from all over the world each one of whom has been contributing to ethereum's core protocol development for at least six months now I should probably highlight the protocol Guild does not represent ethereum's entire contributor sets protocol Guild membership is voluntary it's opt-in no one is obligated to join nevertheless this list in isolation it's not super useful is it so let's give it a little bit more context these individuals are involved in all functions related to building and maintaining ethereum's core protocol right this includes research testing security implementation coordination you've probably heard of client teams

like Geth and Aragon prism Lighthouse you may have heard of coordination teams like ethereum cat herders you may have heard of research group like the robust incentive group but the fact that some of these members are part of a team is actually irrelevant right protocol Guild membership is centered around individuals not teams because we want our members to have the flexibility to work independently if they so choose now what makes this list special this list of ethereum's core protocol contributors what makes it special is that it combines specific assurances and capabilities that ultimately make it an ideal funding mechanism for ethereum's

core protocol contributors 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 presence and the future so let's talk about what some of those assurances are the first one as you can probably imagine this list this membership registry is on chain right and that enables the funding mechanism because this list is tied to a single ethereum address that anyone can donate funds to so think about how much complexity has been removed here right we're providing a single ethereum address that anyone can use to donate directly to 128 of ethereum's core protocol contributors

but you might be wondering how are those funds distributed well they're distributed via a retroactive time waiting mechanism which is a very fancy way of saying that the longer a member has been contributing to ethereum's core protocol developments the higher their share of the donated funds so this time waiting formula is actually a square root function of the number of months a member has been actively contributing multiplied by either one or 0.5 depending on if they've been working full-time or part-time retroactive time waiting is very important here because we want to be able to recognize past contributions by these members and reward them accordingly

but this list is not only retroactive it's also forward-looking and it's forward-looking because it uses a vesting module to trustlessly distribute These funds over time right during our pilot the vesting period was one year after the pilot all donations will vest over four years this is important because it gives donors assurances that their entire donation won't all just be spent all at once right rather it'll slowly be distributed over time which creates long-term incentives for these contributors to continue contributing right this facilitates knowledge Handover and reduces contributor churn so now you know how this list can be

used to receive funding and how that funding is distributed but one important thing who creates this list who maintains it the list is self-curated and by that I mean it is the existing membership who coordinates to add or remove members now if you think about it this makes the most sense because the reality is most people don't have the necessary context to both curate and maintain this list over time right even me I spend almost every day thinking about the protocol Guild and I cannot name all contributors on the other hand or and that's why you can't expect like an external entity or organization to basically create this list and maintain it over time

on the other hand protocol guilds members who again are ethereum's core protocol contributors due to the very nature of their day-to-day work they have all the necessary context all the necessary domain expertise to be able to curate this list and so essentially by delegating the responsibility of curation to the membership we again have the highest assurances that this list will remain accurate both now and in the future another interesting aspect of the protocol Guild is that it is inclusive the protocol Guild is not an eth maxi and by that I mean eat the token please donate ecosystem tokens by donating different tokens you basically enable ethereum's core protocol contributors to benefit from the financial upside of

these tokens in ethereum's ecosystem essentially allowing everyone to benefit from each other's success the last attribute that I'll highlight today is that the protocol Guild is a neutral funding mechanism right 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 function features related to core protocol development related to building and maintaining the core protocol but nothing beyond that and also why all these functions are weighted equally we need to maintain ethereum's credible neutrality we do not want to get into a situation where a wealthy entity can fund specific features of the core

protocol that they benefit from at the expense of protocol functions so for all those reasons we consider the protocol Guild to be 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 we encourage ethereum's ecosystem and Community to use the protocol Guild as a sort of a open API for funding this work but maybe oh my how do we jump so far let's go back a bit but maybe you still need some reasons to

donate let me give you some number one are you building on ethereum then you have a dependency on ethereum right it might be for I don't know data availability uptime whatever else by donating to the protocol Guild you are helping to rebalance incentives towards core protocol work to ensure that the protocol will always have maintainers to maintain the platform that you depend on donating to the protocol Guild is also a great way to Signal your support of ethereum's values right inclusivity transparency decentralization all of these are inherited by the protocol Guild we also think it's a great channel for retroactive public goods funding right given these uh protocol contributors foundational impact on ethereum's ecosystem and of course public goods are

good right ethereum's core protocol work is a public good by donating to the protocol Guild you are helping to support public goods let's talk about our one-year pilot it was inspired by a tweet in Danny from Diana Ryan in October of 2021 calling on the community to establish the social Norm that all projects built on ethereum donate a portion of their tokens towards core protocol development the protocol Guild was launched a few months later in May of 2022 2022 and here we are today 12 months later what happened during that time the membership Grew From 19 members to 128 it's actually 130 today and that happened by the addition of 53 members and the removal of 15 members and during this time the ecosystem and

Community banded together to donate 10 million dollars in value to the protocol Guild which is worth 12 million dollars today that was from almost 5 000 donations but actually the vast majority of that came from Lido UNS UNS uni swap ens nasdale and malikdao so shout out to them for seeding the pilot in its infancy of course the protocol Guild is not just about receiving funding it's also about Distributing it accordingly the protocol Guild has distributed no has distributed 11 million dollars in value to ethereum score protocol contributors which is approximately 72 thousand dollars per member depending on where you live that's a nice bonus or it's a full-time salary what have they been up to you may have

heard of the merge withdrawals they've been pretty busy they're working on scaling layer twos by an order of magnitude but they're working on all these amazing really exciting things but here I need to clarify the protocol Guild is not in any way responsible for the planning or execution of ethereum's development roadmap it is a funding mechanism to support the work that those individuals are doing during the 12 months we've learned a lot let's start with the positives given the amount of donations it's fair to say that we received buy-in from the ecosystem and Community we've gotten great feedback from members that today already the financial incentives are significant enough to be relevant in conversations to join or leave core protocol work and we think the membership registry today represents an accurate snapshot of ethereum's core

protocol contributors set so self-curation is working there are things we can do better if we want to scale funding and spoiler we do we need to make changes to our smart contract architecture to remove trusted components right we need to move our governance on chain it's off chain right now and of course if we want to multiply our impact we need to multiply our funding so from our perspective the pilot was a successful proof of concept and now I'm very excited to tell you about what we have planned next protocol Guild V2 we've been working on it for a few months already and there's three parts to protocol Guild V2 number one remove trusted elements right we have some multi-sig dependencies that we need to get rid of number two we need to automate registry updates and number

three we need to expand the mechanism to layer twos we have planned to basically modularize our smart contract architecture the first module will handle all finances which will be done via Smart contracts written by the team at Xerox splits shout out to them they have vesting and distribution contracts that we use to manage all donations and to distribute those vested funds the second module will be a Malik V3 Dao shout out to Deacon and the Dow House crew for helping us with this that will obviously be used for governing the membership registry and lastly we will have the actual on-chain membership registry itself which lives separately from the Dow and so very high level the way it will work is existing members can join this can join the Dow the the protocol Dao

one Member One vote members can create proposals to change the the registry there will be a voting period once passed and executed it will update the on-chain membership registry at which point a separate function can be triggered to mirror the registry into the vesting contracts such that the recipients are accurate we're also looking into how to how to expand this mechanism to layer twos do we consolidate all funds from layer twos onto mainnet or let them live there we're still trying to explore the best way to do this if you have ideas please reach out the second part of protocol Guild V2 we need to build this Norm right we want to get to a place where every single project that builds on ethereum donates one percent of their tokens their profits their revenue to the protocol

Guild to support core protocol development why because this is the only way that this mechanism will become self-sustaining we cannot rely on fundraisers we cannot rely on one-off governance grants right let's get the ecosystem together to fund these things intuitively shout out to some of the Trailblazers already doing that and lastly nope lastly come on you can do it go back go back two slides that worked oh too far we're going to raise 100 million dollars over four years at least we hope so right that represents more or less a two and a half old increase for what we raise during the pilot which was 10

million dollars over one year we think 100 million dollars will put us a step in the right direction towards rebalancing incentives towards core protocol work what we ultimately want to create is a situation where compensation for core protocol work is comparable on a risk-adjusted basis to work on for example apps or layer twos the four-year investing period will obviously help us retain these talented contributors over a longer time Horizon now 100 million that's a a Target not a limit as long as we think this is a a impactful funding mechanism for ethereum's core protocol development we will try to raise as much as we can with the help from ethereum's community and

ecosystem when protocol Guild V2 or here we go when soon right sorry in true core protocol development fashion it'll be ready when it's ready which is soon though so uh I guess follow us on Twitter and that's it again thank you so much for being here today thank you for everyone who contributed to the Pilot We it means so much to us if you want to contribute in non-financial ways please join our Discord we have a channel called contribute we have a task list there of stuff that we're working on there's not a ton of detail but check it out there may be something that interests you you can get involved we would love to have you thank you all again [Applause]

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