Turn Any Community into an Economy with Circles

Transcript

[music] >> Ah, yeah. True. Exactly. So, I have one message. So, so first of all, who here knows about Circles? Who's on Circles? So, quite a handful of people. That's cool. This is probably going to be the least technical talk, and hopefully also the least confusing talk about Circles that you've seen ever. And I'm also trying out a new narrative, a new way of presenting Circles. So, even if you know Circles, you might be in for a for a change. And I have one big message that I want to convey today, which is that if any of you is part of a

community, um, uh, you should consider onboarding this community onto Circles. Here, a community might be, you know, a sports club that you're part of. It might be a workers collective. It might be a chapter that is part of a global organization that that you're working on. Um, might be all kinds of things. And I want to convince you, uh, to entertain kind of moving this uh, community onto Circles. What is Circles? So, for the purpose of this talk, I'm going to say that Circles is a way to let your communities organize around their own currencies. So, basically, introduce a community currency into any

community. And what's special about this currency is that the currency is issued by the members of [snorts] the of the community sort of in a in a sovereign way. Uh, and this is unlike many of the other community currencies, uh, that, you know, are around. And effectively, it's a way to organize the economic activity, meaning exchange, credit, collaboration, within that community without the need for a kind of quote unquote real money and the institutions behind that real money. So, that is the kind of value proposition I want to convey in this talk.

And it's quite different from the kind of introductions to circles you might have seen before. So, what are the kind of what are the kind of communities that this would work best for? I think from kind of extensively talking to a lot of community leads, the communities that are most attracted to this kind of value proposition are those that suffer from lack of resources. So, of course, if you don't have a lot of, you know, pockets full of cash yourself, then having a way of kind of organizing your community without needing to have a lot of cash up front is a great value proposition.

The second property of communities that this works pretty well for is communities that are highly social where there's a lot of volunteer work, where doing things sort of transactionally doesn't feel right. Um, where people know each other for years maybe and kind of keep bouncing into each other. I hope this flickering isn't isn't too bad. For me it works. Then there are communities that seek monetary sovereignty. So, you know, communities that might not um Yeah, communities that might not need an extra currency. They would have the money, but they just don't want it, right? They want to do their own thing.

They want to operate on their own currency and be in control of the issuance. and then finally, if you bring back the slides. Can I Then it would be communities that have a strong identity, a strong sense of identity, right? Where maybe they're having introducing a community currency is brings in a sort of your brand with you and you're bullish. So, communities with a strong identity particularly keen on on introducing that. Thanks.

Thank you. All right. So, what are the value propositions? Why would you want to do that? Um if you're one of these one of you know, if you fit into any one of these categories, I'm going to go through four different value propositions. They're not exhaustive, but I want to go through them by means of examples. So, one value proposition is you want to boost the resilience of your community. So, here we have Mietshäuser Syndikat, which is a tenants union in Berlin, around 800 members, and the members support each other through evictions, deposits, legal fees. I mean, as you may know, gentrification uh is crazy in Berlin right now. Rents are going up.

And um PayPal, which is the the kind of payment system they they used for internal transactions, happens to have taken them sort of offline and frozen their accounts twice with the claim that they violate their T&Cs. And what Mietshäuser Syndikat And what Mietshäuser Syndikat is looking for is a way to have an infrastructure for to allow that community to continue operating. Um and by introducing circles, she can have that, right? So, members of the community can keep um paying each other um regardless of any private company's T&Cs. Cuz this is not an exclusive value proposition to circles, um but it is one of them.

Another one is reduced coordination failure. So, here we have Sam. Sam runs a Telegram group, roughly 600 people, and this is kind of like a mini version of Craigslist. So, people are on this group and they exchange It's kind of like a marketplace, right? You exchange furniture, but they have a bit of a coincidence of wants problems. So, lots of items on there, but very little volume. Again, by introducing circles, you can overcome this problem, um and you can sort of sell these circles as sell these items for currency um and making the market more liquid.

Then, we have the value proposition proposition of increasing economic activity within that community. So, Maria runs a co-working space in Lisbon. 15 freelancers share the building. Um you know, there's a lot of volunteering-based work. They all kind of chip in together. Of course, none of it gets really tracked. And as it is typically, 20% of the volunteers carry out 80% of the work. Um meaning that those few kind of power volunteers typically burn out pretty quickly. Again, by introducing Circles, you can um start off effectively accounting this, and you can create incentives for people. Uh rewarding daily and weekly duties in your community's currency makes the volunteers feel rewarded. And

it can even have sort of secondary downstream effects such as, you know, the downstairs shop at the corner might start accepting this currency as a sign of um kind of showing loyalty with that with that with that um co-working space, attracting these uh these users. And maybe even sort of boosting that as its own advertising campaign, kind of strengthening local local um communities. Final value proposition, retain value. Here, we have Hugo, who chairs the community foundation in a small town of 12,000 people.

You know, they have everything they have, but of course, they are subject to kind of effective globalization, Amazon, the big shopping mall outside of town. And as many other communities uh globally, he's wondering about how can we keep what's so precious about this place running. And a local currency can can can contribute to that. Um here in this particular example, they introduce a little exit tax, which, you know, we we we we might think of as a 2% swap fee whenever you want to exit off-ramp from this community currency. And that encourages keeping keeping that currency within within the within the thing.

Uh within, you know, the town. So, none of these individual value propositions is unique to Circles. Um and uh but you know, as a as a total they're pretty much exclusive to community currencies. So, the idea of community currencies because state currencies of state-issued money um often feels awkward uh in communal and social contexts, right? So, a lot of these examples wouldn't really work if they started insisting on being paid in in euros or kronas. Um uh there's a typo. It cannot be issued within the currency. Of course, you know, we don't have the right to issue a current to issue euros uh within that community. So, that's that's of a non-starter.

And also something quite important is the community knowledge, right? That kind of grassroots knowledge cannot really be is not isn't priced in at the national level. So, what this what this um diagram here is meant to show is that we have national currencies of being top-down into these communities. And you know, I mean, the um central bank bankers, they might be doing a great job with keeping doing the right monetary policy decisions, but of course, they need to operate in aggregate. They need to make cause decisions that are and kind of you know, kind of informed by macro-level economics.

And this means necessarily that not all communities might see the upsides of these decisions. The hope is that community currencies like Circles being of bottom-up can can you know, take um advantage of local knowledge um and kind of come up with better monetary effective monetary systems for these individual communities. So, I've basically made a case for community currencies, but I'm here to represent Circles. So, what What special about Circles and different from other community currencies? Because uh as some of you may know, community currencies also have a track record of not being around for very long, right?

There's they're kind of this utopian thing, many experiments, but they all seem to somehow fail. So, we of course don't want that to happen to Circles. And this is why we think actually Circles might be a a sort of great contender for an exception to that rule. So, one thing is that we have solid infra, right? We're on chain, which doesn't only mean sort of uptime, it also means that the business model is different, right? You don't have to A lot of these community currencies, when they don't keep being active, there's a there's a there's a bill for the server, doesn't get paid, well, they're just going to shut down. Here we have the protocol waiting for you, right? And of course whenever you want to run something,

running experiment with Circles, introduce a community currency on Circles, you can go there. Of course, you have to pay the fees, but, you know, the protocol is there waiting for you. We have a solid promise. So, Circles is a protocol that's permissionless, there's no hidden fees, there's no kind of company baked into this protocol, there's nobody making money, right? It's it's purely a public good at this point, and um that is also unlike many other community currencies where you [snorts] have sort of a committee making decisions about it.

It's connected to, you know, kind of the real money world immediately, right? Because of course for a local community to set up a currency and then kind of allowing on-ramping and off-ramping is incredibly difficult. Here we have DeFi, we have, you know, Curve pools for example, where you have these these community currencies sitting, and there's no problem. We can connect you to on-ramping and off-ramping these community currencies immediately. It's fun anchored in humans. So, what I didn't tell you um is that while I talk a lot about community currencies, fundamentally the issuers of the currency are always people.

And while communities, experiments might die out, people might change places, we as people are here to stay. At least for the next 200 years or so, I would hope, right? So, that's also pretty unique about Circles being fundamentally bottom-up and anchored in humans as the source of this currency. And then, I think one of the biggest issues that community currency experiments usually have faced is scalability. Right? If you're a small community, by construction, you face problems with scaling up, with like keeping the activity up.

And here we have a global protocol that is sort of immediately available everywhere. And if we have these different experiments running on the same rails, we can kind of connect them, right? And there's a lot of value-aligned communities out there that would be happy to collaborate and join forces. And this is something that is much easier to do if you're already on the same infrastructure. So, that's another thing that's unique. Of course, and so the my my claim is that these properties address many of the common failure modes of other community currencies. So, let's quickly talk about Circles.

Um and conceived in 2012 by the Gnosis co-founder, Martin Köppelmann. Uh he first publishes about it. First launched in 2020 um as Circles UBI. So, the narrative was centered around universal basic income. Um went viral, pretty much, uh you could say, within within uh a couple of days at several tens of thousands of accounts, uh 120k sign-ups within a month, and two extensive pilots around UBI in Berlin and Bali. And then, in 2024, version two of the protocol got got re-launched re-launched now under the umbrella under the stewardship of Gnosis. So, we're in the Circles team right now. We're all part of of the

Gnosis family. And also this introduced the notion of And since then, basically for a year now, we've had an app uh up and running, a wallet for you to interface with Circles, and we're kind of, you know, we're basically in growth mode. We're piloting different use cases, and we're really interested in piloting with uh communities out there. So, numbers, we now have 16,000 accounts. Oh, sorry, there's there's a pretty severe lag. Yes.

Uh we have 16,000 accounts, around 4,000 active users. We have around 300,000 trust connections. So, I didn't talk about trusting, but it's one of the important things you do as a user to signal that you buy sort of you're in believe in the integrity of other people on the on the protocol. And we have around 500 groups, although not all of these by far are are active communities, kind of like in my examples. We would say have a couple of like a handful of of them. And I was going to have one technical slide, and it's still less technical than almost every slide in other Circles talks, but it goes like this.

Right? I kind of talked a lot about the value proposition of Circles, but how does it actually work? And I actually think that a very um productive way to think about Circles is as a mutual credit system. So, I'm going to tell you about how mutual credit systems typically work. So, here we have Bob and Alice. Alice wants to get a coffee from a a coffee from Bob because Bob runs the coffee shop, for example, but she doesn't have money. And Bob knows Alice. So, in the olden world, he might have just sort of given her the coffee for free, come back tomorrow, no problem, right? And that works because they know each other pretty well. But that's not something you can build a whole currency on, right? You want to build currencies

that work for whole villages, for whole towns, for like hundreds of thousands of people. if they if these people start So, mutual credit systems are basically a technology to allow scaling this kind of trust mechanism. So, what would happen is that Alice would issue two kind of IOU coins to Bob in exchange for this coffee, and he would carry this around. And he could then redeem these coins later with other people that are accepting Alice's IOUs.

Um but of course, if she kept going to him and be like, "Hey, can I have like another coffee? Can I have another coffee?" At some point, he'd stop and be like, "No, like at some point, I don't I lose confidence in you paying back, contributing back, right?" And so, we can think of this as basically a simple ledger, where here's Bob's page in that ledger, and there's Alice's page in that ledger, and they both keep track of these virtual tokens that they've exchanged, right? So, Bob now holds two of Alice's tokens as of on the asset side, and she holds two of them on the liability side. But what's important is the third column, it's the limit column.

It basically says everybody constantly runs around and asks themselves, "What's the maximum amount of debt I'm willing to hold by this person or by that person, right?" And so, uh my mother, I would have a very high limit. You, pretty low because seem kind of dodgy, you know. No, like I don't know you very well. So, everybody basically in these mutual credit systems constantly walks around and updates these limits based on their past interaction, based on their knowledge of the other people, and then they just exchange stuff, and there's no money needed, right? They just stopped exchanging goods, services, and the total amount and so basically there's a clearance logic as well

where of course if Bob holds Alice coins Alice's promises to pay and then Alice holds Bob's ones they could kind of cancel each other out, right? So if if you've gone through this clearing then at the end the total amount of these coins in circulation represents just the value of goods and services that are being owed. That is of outstanding, right? And everybody is sort of paid back and Alice of did something for Bob like mowing the lawn or something all of these tokens will be gone and the books will be empty.

But it's just basically a technology for allowing people to exchange goods and services in the absence of money um while making sure that everybody can kind of like decide whose debts they accept to what extent when. And Circles is just a piece of technology to make this easy for you. Where you don't have to run around, look through data, and kind of like update limits in a book. It's basically boiling down to you walk around trusting people, right? Which is an acknowledgement of you thinking of they will honor their debt. And there's a public public record of this and this is how Circles operates under the hood, but I won't go into it.

So I started this talk trying to convince you to consider taking any community that you have onto Circles. I hope I've made a good job and you're now thinking how can I do that? Let me tell you how you can get started. So the first thing is so I need to kind of deal with this latency. First thing is to go and download the Gnosis app. So the Gnosis app is an app built by by Gnosis. It's the future money app. And because Circles represents of the future of money, we're in it. So you can create your Circles profile and you can create and spend CLC from the app.

You can join different communities and you can be part of them. You can so if you have the best of both worlds because we also support or the app supports stable coin GNO tokens and Circles all in one wallet. And finally, it integrates with Gnosis' card product, which is called Gnosis Pay, which is really cool because you can it means you can effectively you can buy these Circles as part of your community experiment, but you can off-ramp and you can top up your credit credit card or Visa cards with your Circles and then spend it elsewhere. So it's a really smooth experience and I encourage you to create an account.

But of course, if you're a community lead, this might not satisfy your actual use case, something you want to build. So on top of the Gnosis app, we have extensive support for building apps and tools on top of this. So think of your community as everybody running around with the Gnosis app to kind of like, you know, do their daily stuff, but then there would be custom mini apps built to service any use case that you have and you can actually use the passkey from the Gnosis app to sign off of them. So none of the the members of this community needs to know anything about blockchain, they don't need to know what a free seed phrase is, any of that, right? They don't need to know about xDAI transaction fees. They just have a phone, they have a passkey and they interact with your community. So it's

really, really nice UX-wise. So I encourage you to go and check out the kind of hub we have for this, world.gnosis.io. We have a referral program, we have resources to get you started. And I also encourage you to talk to us and find us at the Gnosis booth. We're here the whole weekend. You can create an account now. Oh, it's still not but it'll get there. And we can get you on board. We can we can get you an account right here or also when you come and join talk to us at booth. Where where are we? I think we're at the right when you come up the stairs, like in the sponsors area.

This direction. And this is it. Thank you guys. >> [music]