How to: Unbundling a protocol from its founding team

Transcript

thank you [Music] hello all right good morning everyone uh thank you for coming um yeah I'll let people trickle in as they as they want um but yeah uh nice for everyone to be here thank you for attending um admittedly is a little there's a little bit less of a how-to but more

probably like a reflection on our journey uh in terms of unbundling the protocol with us as the founding team my name is Eric I'm a PM at Xerox focused on both governance and RFQ um yeah so here to just kind of walk you through what we've done some Reflections things we try to emphasize and uh hopefully everyone can walk away with a little bit more of like for their own protocols do they want to bundle when is the right time to do it how should they do it what is an end goal that seems reasonable so kind of recapping there the main questions that hopefully we can talk a little bit about today is you know what does it mean to unbundle um you know I think there's a wide range decentralization can kind of vary quite

a bit so figuring out what that means for you and your project is important second question when to unbundle you know what is a good time I think you know it takes a lot to decentralize governance is kind of a messy process so figuring out when that is uh and when it's appropriate is pretty key as well and the last question just like why even unbundle right like what is the purpose of it and making sure that there's a good reason for that so yeah just kind of to tackle those three questions just looking at Xerox protocol as a case study here um to set the stage for people who are not aware sex protocols facilitates the decentralized settlement uh for the

exchange of tokenized values as a mental model you can think of it as just like a system of smart contracts that serves as a pipe from one end user puts in the token that they want to sell and on the other end they get the tokens that they wanted to buy it was meant to it's designed to be super flexible very unopinionated about what the form of that tokenized value is and how it gets there and what are the transformations to do that we are on V4 now so a lot has changed it's gotten a little bit more opinionated since but that was its founding thesis and what it was used for and to date it's transferred almost 200 billion dollars in value settled almost

60 million transactions and has over 6.7 unique users using the protocol and so Xerox protocol the technology is really meant to be a community guided open source and free to use infrastructure for web3 I feel like a lot of people and a lot of projects say that and and we we say it as well we truly mean it but taking a snapshot uh just earlier this year this was I think our website xerox.org back in April it's still very much had a tie to between zurich's protocol and Xerox company if you look at this website right you have at the top uh in the banner the second one ZRX

the the governance token which would lead you to the governance portal for community members how to see proposals vote on them and whatnot but as part of the main page you see Xerox API which is our proprietary product that we've built on top of it and so this kind of leads to like okay who owns the protocol who's building it what's going on there and so kind of some like uh to really capture like why is it important from our hello okay cool uh I just kind of cherry picking this quote from will um really early on maybe this was in like 20s cool uh there he has this quote and this

Vision that this pipeline of smart contracts could facilitate trillion dollars in the future and so this upgrade process needs to be super secure and can't be sensible from government intermediation in his words you know governance over upgrades must be decent is the key of Y to one bundle so hopefully that sets the stage a little bit uh and in terms of how we decided to do this we decided to go with the gradual decentralization uh for us uh you know there's there's a lot of steps to it can't kind of go from zero to a hundred uh and there's a lot of things we can do in the meantime to prepare the people to take more ownership over the protocol

so just taking some snapshots of kind of key milestones in my opinions and also cherry picking some of the quotes or most Salient points uh in the announcements of those white paper launched in February 2017 protocol is not a decentralized exchange it's a protocol for exchange again the call to action is for other people to really coalesce around this to build on top of these protocols for interoperability a second big roadmap was uh launch kind of sharing with everyone what our governance roadmap was so really this is already back in 2018 but had a vision to really make sure that the upgrade process for protocol should be coordinated by stakeholders rather than

having any Central party another Milestone was launching the EIP very much inspired by the EIP process itself um but just just kind of letting the community know like hey we want to adopt some standards uh for everyone to kind of kind of coalesce around uh in order to discuss what are meaningful upgrades for the protocol uh in June 2020 oh sorry that should be 2020. uh Xerox Labs was founded and this was where we decided to really announce like Hey we're going to continue to initialize as a company are going to really start to transition into one of many stakeholders and not continue to be the

only developing team behind it a couple other key milestones we launched a protocol treasury in February 2021 and the idea was really to empower stakeholders defunds and to be able to do that without relying on the Xerox team earlier this year we officially kind of talked about the unbundling and really trying to separate these two identities xerx protocol and Xerox the company and really provide continue to provide the community with these tools to form and make decisions independently in May 2023 we put out a zip ourselves to push for on-chain governance to really transition

the future of the protocol into the hands of the community and in later that month as well we continue to revamp Community rules because governance is really all about the people there's no one there there's no uh governance so you really need to focus on that part so those are kind of the the key kind of Milestones that we've hit so far in our decentralized roadmap there's still a lot to achieve but we think it's been a meaningful steps and just some Reflections on you know what that's been like for us I think for me a protocol is really two parts and and both are equally important

it's the technology behind it it's the smart contracts themselves that have been deployed but it's also the community of token holders of you know people who are in the Discord who follow on Twitter who vote they are just as important again without the people there's nothing there's no one to govern and you know the protocol might as well kind of just yeah it's it's not a great uh based in being in terms of things that we really wanted to emphasize uh when we were talking about our decentralized roadmap uh the first thing we always wanted to emphasize was safety um you know there's nothing governed and so for us safety is always the the first and most

topmost priority uh and enough that there's a trade-off between safety and full decentralization we tend to lean a little bit more towards safety from a technology standpoint what that's meant in terms of just like the governance contracts just making sure we're OC compatible uh you know leveraging what everyone else has developed uh having very open source practices you know the GitHub PR was open uh since day one and very publicly you know shared it with people so that they could know what was going on our design decision and whatnot and obviously making sure it's thoroughly audited as I'm sure everyone does and then from the community perspective we launched the idea of azurex protocol Security Council uh I don't think it's really super

groundbreaking in many ways you know the idea is that there's some group that holds a kill switch or a pause switch to really make sure that hey if things really go wrong that there's some way to minimize the damage that can be done what I think is really cool here introduce the Security Council is that it can only take actions that pause the protocol but can't change anything proactively so it's a pure reactive position action they're removed from that position and a new Security Council needs to be elected all of this is really to kind of minimize what a bad actor can do in these positions of power and lastly we refresh our delegates um because again Community governance is

all about people uh and you know we want more ideas more diversity and so that was super important for us another thing that we wanted to emphasize which is around communication uh I think in this async world communication is hard but we need to do it frequently and to be as early as possible and I think one of the lessons I've learned personally is just uh yeah how to be extra careful with words when things are published online and read by other people it's hard to unders like kind of read the nuances make sure that people read it the way I intended it to be read so it's the Nota make sure you're thinking about what

your Forum post or Discord messages uh or look like and so from a technology standpoint I think is pretty standard just having all these different venues for people to interact with the protocol and then from the community side really trying to elevate early community members those who are expressed a lot of interest and put a lot of work uh for the community and giving them Physicians to be able to lead experiments let them kind of take the reins Champion them um I think you know as a founding team it's it's often easy to kind of see the protocol as you know your your baby and you know be afraid of giving up some of that control and some of that power but if we want to decentralize the

governance we have to do that otherwise no one's going to step up and so yeah just giving people elevated roles within platforms and letting them take the space so what is the future of zerox protocol governance look like what does uh you know unbundling mean for us uh put up this graphic in one of our Forum posts about you know what is that end State and to us it really is that there is a huge uh hopefully a bigger ecosystem of contributors in the middle you see there is 0x uh you know we have our products API and matcha but hopefully we have a slew of other companies who have built on top of their protocol itself have ecosystem Partners like optimism or polygon or cello to kind of

co-contribute funds to get more developer interest in it and just continue to build it but again the idea is for us is that 0x is just one of many stakeholders going from the main one to just uh one amongst the broader community so here's my calls to action for people here today or watching the recording um they're interested please do join the community on any of the forums just you know get familiar with uh you know who we are what the community is trying to do and again this is meant to be a protocol for exchange and so if you need some exchange this is a protocol that hopefully people can coalesce around to

use uh and so I think that's kind of the main things just to recap what are those kind of our three questions that I started off with that I think are important what does it mean to unbundle to you and your project when is the right time to unbundle uh and why on bundle I realize I probably didn't save myself enough time to actually reflect on these but uh I'll leave this as a exercise for the for the reader then um yeah that is all I have and uh thanks for coming to the talk uh those are how you can reach me I think that's email and Twitter slash uh Discord so thanks [Applause] uh were there any legal considerations

um that you had to make in terms of like your community in a sense taking over ownership or other people taking up these ownership type of pieces in place for like an official kind of like Foundation that you're on bundling on yeah um I think in terms of like that legal consideration I think to me it comes back all the way sorry for the whole Whiplash there back to this quote from will right the idea is really to make sure that the protocol as a technology itself can't be censorable and so if you know control over upgrades really lies within one company then it's very easy for it to be stopped and so I think from our perspective that is really like the legal consideration was for embarking on

this really long journey to decentralized governance um I think it's you know TD of what uh regulation decides is okay and not okay obviously we see like the ukidao case uh in terms of like oh what are the liabilities for governance uh participants and token holders but this really I think encapsulates like why we feel like this is important to do and in light of like you know no real Clarity from the legal perspective I think we're just taking the best steps that we think are possible but I'll also direct you if I may to Ashley over there who's our head of legal so you have more legal questions he would have the actual

answers thank you yeah thanks [Applause] [Music]