S4 - Ep. 18 1% for Public Goods w. Obol

Transcript

welcome to the green pill. network podcast if you're just joining us for building a coordination a network Society of thousands of hackers dreamers and doers focused on using crypto to bring positive some digital systems to the world this podcast features the people who are doing it and we publish a season of five to 10 episodes every couple months this season is lean mean Capital allocation machines in what ways will onchain Capital allocation be different from offchain Capital allocation Capital allocation is just how we decide what we want to fund now that we have The Primitives of blockchains which are transparent Incorruptible Global impr programmable what are the new ways that we're going to do Capital allocation what are the coolest experiments in doing it these are the themes of green pill season 4 lean mean Capital allocation machines my guests today on the podcast are Colin

and oen from obal Obel is a technology and community that is pushing forward the decentralization of staking at the ethereum the base layer of the ethereum network and uh I've known Colin since my days at consensus gin was incubated at consensus Colin and uh Colin got his start in the space at consensus and it's been cool to keep up with them over the years and and see what they're up to the the thing that I want to get out of this episode is learning about one of the most advanced pieces of Technology out there and how they're going to be changing the way that staking is done on the ethereum network spoiler it's for

it's by using DVT distributed validator Tech but then there's an interesting thing that obal network has done which is they're pledging 1% of their funding to public goods so they call this uh 1dx one 1% for decentralization retroactive fund and I'm really interested in this symbiosis between projects that are securing the ethereum network and public goods funding I think that this could be a sustainable source of funding for public goods to uh see more projects do 1% pledges like this and so that's what we talk about on this episode we talk about how Obel is is helping push DVT Tech and sing Tech forward and then we also talk about 1% for public goods so with respect to Capital allocation a big

high order bit for me is how do we fund it we need sustainable recurring ways of funding public goods funding if we're going to move away from just taking these giant treasuries that are denominated in a community currency and and funding public goods with it so I'm I'm interested in this idea of continuous ongoing stable funds into public goods and and that's why we are doing the episode with obal during the capital allocation season so I think you're going to enjoy this episode what's up gentlemen welcome to the podcast Hey Kevin thanks for having us on pleasure to be here why don't you do some quick intros of yourselves uh oen you go first and then Colin my name

is oen I'm C and co-founder at obal labs and I've been in the crypto and ethereum space since about 2018 when I joined consent census and on the way to building obal I also built each staking for black demon um ahead of Genesis it's my brief intro hand over to call yeah hey everybody um I'm col Myers CEO and co-founder of obal labs with oen uh historically also an ethereum maxi uh longtime employee at consensus starting in 2017 and have been working on infrastructure layer of ethereum in a variety of different capacities which we'll probably touch on today uh today working most closely on validators with OA doble yep I think Colin we overlapped at consensus back when getcoin was

incubated there yeah it was very inspirational actually to a lot of the work that we do today and uh I still have all the stickers I have this like little bucket of old consensus stickers and I have like all the I think they were hexagons maybe maybe octagons um but I have the all collection of all the gitcoin stickers yeah we had an nft back then yeah I think of the onch get PS I I wish I had more of the t-shirts uh to honest with you I I had like quite a few of the t-shirts for a while like in these old consensus grab like the gitcoin t's and I just don't know where they're at they've been lost to time unfortunately but I still have the stickers well now that we've rebranded to I think that our our brand designers will be happy that you've lost the old

t-shirts I would love to talk about obal and we're having you on the podcast today to talk about obal and uh this pledge that you're making to support public goods so maybe we'll tee off with what is obal and what are you trying to accomplish and then from there let's try to weave in how does regen public goods layer in on top of of what you're trying to do yeah yeah absolutely so Obel today is a project focused on enabling distributed validators distributed validators uh was initially a research project in 2019 that was started at the ethereum foundation and now five years later that research effort has turned into a community and a protocol and a group of people focus on the adoption of distributed validator technology which

enables an ethereum validator to be run across multiple machines or shared by a group of people so it has quite a decentralizing and Community element built behind it and oen and I have been focused on building Obel now which is an implementation of DVT for almost three years and Obel sits in this maturity cycle of ethereum where we're developing it as a middleware as we've decided over the past couple years to aify the core development the ethereum community has now opened up this middle layer and that's where we operate in today and what's most interesting is that inside of the middleware layer there really isn't like an economic Playbook right like what is the best way to manage the economics of a middle mayare which is

the best way for a middleware to sustain itself and ultimately what is the funding model of the Slayer right below obal sits the core clients so your you know your prisms and your lighthouses and your tikus the E2 side Etc and that is you know a open- source free forever Main access point of the network now we're building right above that and we've decided for our economic model to choose retroactive funding as that flywheel to help keep Innovation up at the consensus layer and hopefully sustain a lot of other public good and open source projects at the ethereum validator infrastructure oen anything to add yeah I think the main thing that I wanted to mention is that this isn't the

first time that people have looked at something like this in the space and having miners or validators try and fund public goods I know I was actually quite moved by the post you made in about 2019 with um Greg and laye around using like well setting the ability for certain amount of the block reward to go to validators and I kind of agreed or I wasn't really sure where we'd land there was a lot of you know push back at the time I'm sure you remember and I kind of agreed with the resolution at the end that it was maybe too difficult to put into the core protocol for ethereum it wouldn't really be neutral but that it would be fair game to do on levels kind of above ethereum or like above the core protocol and what I see about like

distributed validators in this idea and commitment of retroactive funding is in some manners a bit of a successor to you know the idea of putting it in the core protocol is it's like let's put it in the protocol for stake sharing and and you know you with the ability to stake share will take a percentage rewards and use that to fund the software that is brought out you know brought about this stack that they're all using for the listeners who are uninitiated I think that was EIP 1890 it was designed to try to figure out how do we fund public goods using block rewards I was an EIP author with a couple other people on that I no longer think it's a good idea I think the layer one should be capture resistant um but we can with layer ones and layer twos or sorry with layer twos

and D5 projects and any any any project that's generating yield or generating revenues it'd be possible for them to take a percentage of of their capital and put it towards not only their ecosystems public goods but Upstream to ethereum and then eventually all open source public goods so that's how the thought the the origination of that controversial EIP and then how it's evolved since then to sort of transcend and include the feedback and and the the controversy that it created absolutely I think it's done a great well I'd love to get into um obal and what y'all are doing with respect to to this and tell us about about your commitment to public goods and and what yall are going to be rolling out as the

network rolls out yeah so today our kind of maturation cycle and our goto Market has left us working with a variety of different types of validators so we put the world's first distributed validator on mainnet in 2022 and since then we've spent all of 2023 working and enabling different types of validators to get on mainnet and and to run obal software it's very similar to how like optimism launched and went to Market they picked a partner for us that partner was Lio and at the end uh of the last cycle when we were coming to Market there was a big need and push for Lio to decentralize and to get that entity decentralized and that community decentralized over time

they took on DVT as a software um so we kind of initiated our go to market and the value capture of the protocol by working with Lio and then now most recently ethery and we have a collection of at home validators and Squad stakers and and all these different people who are running the software today we've started to ACR Revenue as a result of this for the first time now that that the main net adoption has matured over the past six to nine months and we'll continue to collect Revenue uh as a means of our main net adoption that is where the funding comes from and that's ultimately you know the source is taking rewards and the different projects and individuals who are implementing obile software into their validators all of those funds will be collected and then

distri contributed retroactively to the community to a variety of different projects uh today that have helped us get to where we're at and tomorrow projects that help fuel the ecosystem that the community decides on yeah so I think as we roll it out I think we'll be relying a bit on the rounds side of like these things you I was admiring as what round 24 with gcoin recently or something very close to it um so we'll be kind of rolling out hopefully our first round this summer and generally the goal is that the people that are contributing to public goods they're benefiting from distributed validators will be you know choosing the projects that will be you know benefiting from their rewards um our current plan is

actually to use Easy retro pgf as I understand to be called which is a project one out of optimism or yourself more directly maybe you can tell me um which has been a very easy way to bootstrap a public good funding round we've been kind of practicing with it internally um getting a bit of a feel for it but it looks like how we'll kind of kind of bootstrap this and keep it simple and start with kind of you know small rounds and get the hang of things as we hopefully kind of get this W flywheel going do you want maybe for the people that aren't familiar want to explain what easy retro PG pgf is yeah happy to I think I'm known as the founder of gitcoin and gitcoin has traditionally been known for quadratic funding in the past but we just announced gitcoin 2.0 and the idea is to

go multi mechanism so getcoin 1.0 was a screwdriver getcoin 2.0 is a multi-tool multiple different Tools in one and now next to quadratic funding we've got retroactive public goods funding as an offering side by side there's there's other mechanisms but I'll just focus on retr pgf here and um basically we've been working with optimism in order to help build the voting interfaces for retroactive funding rounds over there it's now called retroactive funding not retroactive public goods funding that's a whole another other rabbit hole but basically kind of our strategy is to help optimism build the best possible voting interfaces and protocols for doing retro funding and uh optimism are the innovators on retro pgf we're just

kind of taking the tools that we've built with them and democratizing them so that it makes it any easy for any da to do retr funding so that's why it's called easy retrop pgf doxyz and it's been a lot of fun to I mean quadratic funding is great in in some ways but it's also very narrow in others and uh it's been it's been fun to explore the design space of a different mechanism and to support other people who are putting it in place in their ecosystems so I think that's kind of like the niche that getcoin settling in is democratizing mechanisms that other people have invented and um yeah really excited to support uh y'all's Community with retroactive rewards awesome yeah super compelling the amount of mechanisms that have spawned from what I

think of as like kind of one paper in 2019 but uh I was wondering even just coming on to this there's like Macy and Community voting and conviction voting and there's uh a hell of a lot of stuff in this NE of the words and I think that's what this podcast is for so yeah I think that's you kudos to you on that one you know I think that one of the things that's I'm feeling like there's a symbiosis here between the public goods funding Community which needs ongoing sources of funding for its public goods and projects like obal that are generating sustainable cash flows and token economic flows but also need to support the builders in their community and so the symbiosis that I see here is that y'all are giving 1% to this decentralization retroactive fund and in return the public goods funding

Community is giving you software uh to to support your community and that's a symbiosis that I think that a lot of projects we hope to see implementing into their ecosystems and um you know I'm I'm really excited that y'all are leading from the front by doing this can you take us into the details of it's it says the 1% decentralization retroactive fund on my notes and the short as 1dx take us into the details of 1dx so work shopping our like hashtags and our memes um you know suggestions welcome when it comes to kind of you know populating this but generally speaking the idea is that we use immutable solidity smart contract Splitters to take 1% of the validated rewards and the goal is to more oress

put that into a kind of a quadratic funding pool or an easy retro pgf distribution to get uh things going so everybody that's been running on alpha or beta oall we're coming up to a an announcement hopefully starting with the one soon so that'll be fun and ahead of that we're kind of launching this like funding model and and mechanism and trying to like communicate to people how this ecosystem will self- sustain and the goal is that you know everyone we I I kind of describe it as like a fighting Moc problem it's if we can convince everybody to get comfortable with the 1% contribution to the software that they all kind of use and we can get it kind of Lindy and generally accepted we'll have built one of these kind of infinite games that we all hope to kind of mostly

create in this Niche Colin any details said no I think it's I think it's really well said how is this retroactive fund different than other funding programs we've seen in the past so today what what we've noticed is the majority of the retroactive funding campaigns and efforts have mostly been focused on the execution side of the network we we view things kind of most simply as like supply and demand the supply side is the execution side sorry the demand side is the execution side and the supply side is the consensus side and most of the retroactive funding has been focused on the effort that we've all been a part of for the past six to seven years which is faster cheaper let's get to billions of users so the existing retroactive

funding campaigns have been mostly focused on the top half of the network there have been you know good Capital flows into protocol guilds and other efforts which do support more of the consensus core development infrastructure side of the equation um but we've found a need for consensus stability and validator infrastructure as being the prim area where we will begin to add these incentives and to start building this flywheel so we we want to stay like focused on our area and our area is the sustainability of consensus and the long-term funding of Open Source validator infrastructure one of the things that I think is really cool about this I'm a smart contract engineer at at best I have a computer

science degree I can do smart contracts but the protocol engineering to me is just deep Wizardry so that's cool but another thing I think is cool here is how there's a source of yield or a source of tokens that's sustainable here there's this idea nature of things that are exothermic which is that they give off heat are where organisms begin to form so around ocean vents that's an exothermic part of nature in the surface of planet Earth the Sun is exothermic it gives off heat and and that can create life and one of the things that I think that we're looking at in as we're designing Capital allocation systems is where are the places that are economically exothermic in the ecosystem if you just create a bunch of tokens in a treasury and they rely on Traders

coming in going to trade them then that's not reliably exothermic but the yield of the ethereum network and the the tools that are being used in the ethereum network to secure it is economically exothermic in a stable way and so you know first off like Kudos on building a project that's going to have sustainable cash flows that's great I I've not done that and I think that lots of people in crypto aspire to do that but I I just want to call out for the listener as we're talking about Capital allocation ecosystems that there's going to be sustainable source of funding flowing into these systems in the future and and that's something we want to build build on as we're building momentum for for public goods funding in the future I don't know if y'all have any reactions to that yeah lots actually so most of the

effort here is based upon the like the known fact that the ethereum validator creates Perpetual Revenue so it's a perpetual Revenue stream that's with a that's created with a relationship between the validator and the network and with a Perpetual Revenue stream you can do so many things it's almost just like a you know imagine finding the first body of water and then just building waterfalls off of it is really what like you can do with a Perpetual yielding asset class so when we built the project we knew that that was like the source of life for the project and that it was Perpetual in nature and now it really just comes down to like what are you to use it for but I think people

today are underscoring the value of the Perpetual revenue of an ethereum validator and we hope to like incentivize people to use ethereum validators for larger use cases than just you know liquid staking for example which the majority of ethereum validators have been used for to date there are other use cases for validators it has a Perpetual Revenue stream and you can build entire economies on top of these things and now we're just at like chapter one of them R anything to add there no no nothing too major Beyond how we kind of yeah how we do this Capital allocation I think you rightfully call out something that we've kind of noticed and a lot of people have noticed is yeah this exothermic reaction to to use your words

that is yet the ethereum issuance and the real question is if you can build you know software to it there's you know hundreds of thousands of developers that have contributed to the ethereum network and this you know exothermic issuance and you know we can direct all of it to the validator running the software or we can direct you know some of it into the you know actual back into itself and you know sustaining all the software that's you know created in the first place and that's kind of ultimately the goal and the mission and why we're kind of here for many years working on the decentralization of the ethereum network and you know trying to retain it as a public good and not you know a private or common good or Club good I'd love to for you all to react to the the theme of

this season's green pill episodes is capital allocation in what ways will onchain Capital allocation be different from offchain Capital allocation how can we Leverage The Primitives of blockchains to create more permissionless transparent programmable Global Capital allocation and you know another way that I could I could say it is that web 1 and web two gave us massively multiplayer online communication networks or or role playing games can web 3 give us massively multiplayer online funding games and you know I'd just like to create some space for you all to react to the the thesis of that episode and I I'm curious what that brings up for either of you since you're your uh protocol on chain gigle brains uh any reactions to that hypothesis I I

certainly I think like yourself was fascinated by the original paper called liberal radicalism and using kind of people's votes to you know decide outcomes I really think as you said you know programmable funding you know is at the future can we build these like massively multiplayer like funding games there's you know a well understood science of the wisdom of crowds that you know people will allocate stuff effectively if they're given the choice and given the chance and that's what kind of excites me you know broadly about ethereum blockchain programmable smart contracts is you can massively lower the cost to taking more votes in and taking like more people's you know opinions into account you can play with it with quadratic voting with conviction voting Community voting and you know all

these other ones private voting and so on and yeah from just like an academic kind of nerdy side I think that's going to be super fun and you know this within validator is just one such piece of it it's you know here's the Perpetual source of capital allocation and now what's the like correct mechanism to like distribute it and that's hopefully what we're going to hopefully find out in the next while from a macro perspective what we're trying to create is a community of people who want to give back instead of a community of people who want to take and in our observations if you're spending time around with people who are just focused on like Capital hoarding most of those people are unhappy quite honestly if you're hanging out and

focused with a group of people who are focused on giving capital and reimbursing Capital that's a real virtue and those are great people to be able to innovate with and spend time with and the majority of those people are like truthfully happy so at the end of the day the concept of the model of the firm which we've used for however many decades now of earnings per share and capital that you keep inside of the company uh well what if the actual source of value was how much you gave away and I think that's what we're all actually trying to enable is we're changing people's mind about like what is the definition of valuable today the theory of the firm States you keep all your money and that makes you valuable

what if the theory of the firm tomorrow is that you didn't and you gave it away uh what are the ramifications on economics and funding and human interaction and we're so lucky to get to wake up every day and do this when when oen and I start started obal it was a hard pitch for for me to get him on board because of just the the technical difficulty of it and just honestly the meat on the bone and then after a while he finally came around and he's like wow we get to wake up every day and decentralize ethereum and I was like yeah honestly what what more could you ask for I love that well uh let's get into our final question since we're running towards the bottom of the episode if Obel is massively successful what does the world look like in 10

years paint us a picture all validators are highly available and more than 60% the validators on mainnet are Squad staked with a good healthy amount of at home validators participating for me I'd probably just say that the ethereum project is still like alive and thriving and not being funded out of the EF or Joe like it may have been in times past and that these funding models work and we can actually get them established and Lindy and you know self daining yep well that resonates with me because gitcoin was fun by Joe Luben uh in the beginning in consensus and now it's progressively decentralized I don't think it's all the way there but uh you know I think that mirrors is the trajectory of a lot of

people in the space last question is there anything I didn't ask that you want to say the power of distributed validators is it enables a group of people to to share in the rights of a validator this is a concept which we've been promoting called Squad staking um today like a lot of people think there's just it's either atome validator or participate in a liquid staking pool there's there's actually like an in between element where you know if you have the means to run resources AKA a machine and you want to and you have a few eth with DVT you can find a group of like-minded people to come together and build a shared Community Based validator we're only just at the beginning of of what we can enable so as like the DVT

Community element matures I hope that people understand the power of community run validators and we some great examples that that we can share with people in the community today where there's 10 different people running a validator alt together and that's never been able to be done before yeah on a similar vein of something that I wanted to highlight is for a lot of people ethereum validation prohibitive because of the 32e kind of headline number or even in like kind of Rocket pill or something with 8 it's still a huge amount of money with distributed validators be able to share stake the risk of any kind of extra person coming into share stake is much more marginal and much more reduced so a lot of these Protocols are starting to like bring on solo operators and home

staking operators that you know never would have been able to stick before and if that's kind of you know someone listening being like hey I'm super into ethereum I love the mission I have machines and Technical ability to keep a server online but I don't have the E for it we're doing kind of what we'd call kind of a credentialing program where you kind of run these validators on test Nets with others and get kind of a a Soul band token to you know prove it and then ultimately that's kind of the pipeline we hope to do to allow people to run on Main net and currently we've kind of programs running with home stakers running in like I think one is in a village in Kenya with a starlink and is able to get you know a portion of the rewards for the distributed

validator and the keys they're running on Main net so yeah I know for a lot of people that are into it but have never been able to partake um you know there's probably a route for you to go and kind of get yourself accredited and you know get yourself into a feature of Li wave or E ethery kind of node operator on board or the likes um if they're interested and dedicated all right gentlemen thanks so much for coming on the green pill podcast to talk about what you've been up to I think it's exciting I think there's a beautiful symbiosis between the technology community and the regen community that we're just teasing here where should people go to find out more about what y'all are up to uh we have in the link links in the show notes ob. te and then we've got a link to the blog post which

is all about the 1dx program anything else that you want to shout out that people can check out to to learn more I think on Twitter and foraster we're both Obel Network so you can go there for the day-to-day updates great well thanks so much for coming on the podcast thanks so much for having us thanks everyone see you soon you just heard from the obal founding team I'm excited about 1dx I think it's a cool experiment in doing sustainable recurring funding for public goods thanks again for listening to the green pill. network podcast again we are featuring the people who are building a coordination a network Society of thousands of hackers dreamers and doers using crypto to bring positive sum digital systems to the world like Colin like oen like the obal networking Community if you value our work you can

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