Protocol Guild: Funding Core Protocol Stewardship | Cheeky Gorilla - Protocol Guild

[Music] all right oh no where' the presentation go one minute for technical issues let's try this again better but not quite not better perfect here we go all right let's do this hey everyone thank you very very much for being here today thank you to the organizers from for having me uh I am cheeky and I'm here to talk about the protocol Guild but before we talk about that let's kick things off by looking at this beautiful image here I've got it from the ethereum.org website it's very pretty right do you think that it represents ethereum well do you think that if you showed this picture to your non- crypto family and friends that they would be able to understand what ethereum is all about probably not right but I bet that if I were to ask 10 of you what ethereum is I would get at least least five different answers don't worry I'm not going to actually going to ask you but I bet that some of you might describe it as an infinite Garden others might call it ultrasound money some might say it's a settlement layer and God forbid one of you might even say it's Bitcoin plus smart contracts but you know what you wouldn't even be wrong and that kind of raises the question is it really possible for ethereum to be all those things at the same time I would say yes it's absolutely possible for it to be all those things at the same time ethereum can be described in so many different ways because it can be used in so many different ways and to that extent we can kind of think of ethereum as a Commons like forests or Fisheries what is a Commons it's a shared resource an area that is accessible to and used by the public to quote Trent van EPS ethereum as a Commons is such a useful frame anyone can contribute anyone can see the constraints directing labor anyone can use or produce the shared resources unfortunately as with all Commons this resource can be abused and of course I'm talking about the tragedy of the commons and so that's why I got a picture of mik here the god of sacrifice there he is sacrificing some children we like to use mik to represent coordination failures of which of course the tragedy of the commons is one now in ether case the tragedy that we have is that there's a relatively small set of core protocol contributors who are relatively underpaid yet they're responsible for securing billions in values via the resour via the infrastructure that they maintain and that's exactly what Amin is tweeting about here when he says that one of the most important coordination problems facing ethereum today is the tragedy of the commons that exists around funding core protocol development said another way existing funding mechanisms for ethereum's core protocol development only provide a fraction of the financial incentives that are otherwise available in the ecosystem for similar work and to visualize this we have this beautiful chart here you can see ethereum's core protocol development at the bottom left low risk low reward but perhaps more importantly you can see how by just moving a little bit up the risk Spectrum you can dramatically increase your rewards for example working for a large crypto project like an exchange or a layer two and this is really bad guys because it essentially means that ethereum's core protocol development is not economically rational on a risk adjusted basis and if you think about it it kind of makes sense because quite frankly some of ethereum's cordev are absolutely the smartest people in the world they're working on some of the hardest problems in the world and they have unbelievably specialized knowledge that so many crypto projects would love to pay a ton for why does this matter well because ethereum is very very far from being done over the next 5 to 10 years there's a slew of unbelievably exciting upgrades planned for the protocol and obviously the community expects these upgrades sooner rather than later so to get through the surge The Scourge The Verge The Purge and the Splurge it is imperative that we're able to onboard and retain ethereum's talented core protocol contributors for the long term so this brings us to this big question how can we rebalance Financial incentives to make ethereum's Corp protocol work economically rational on a risk adjusted basis so let's brainstorm what about relying on altruism people donating out of the goodness of their hearts and sure there there's a lot of examples of that in in in ethereum if you follow italic on Twitter you may know that up until recently his Twitter bio used to say I will not send you eth but that did not always used to be the case here's a tweet thread from back in 2018 where Preston vanloon of the prison client team is bemoaning the lack of funding for his client vitalic replied YOLO and sent him a th000 eth which at the time was worth $100,000 today it's worth like $3 million or more three and a half who who's keeping track but of course can we rely on that absolutely not it is not sustainable over the long term we also don't know if we can trust all these donors they might have ulterior motives might ask for something in return and of course it's also very narrowly targeted not our not all core contributors are on Twitter bemoaning the lack of funding so it's hard for donors to surface that need okay what about making ethereum's holders pay for ethereum's core protocol development well that was actually proposed that this EIP from 2020 to give a portion of block rewards to these core protocol developers of course it was rejected by the community for not being value aligned ethereum is about giving power back to the people it is not about devs inserting a paycheck for themselves into every single block it's also really hard to change if we implement this and then regret it it's hard to change we need to be very thoughtful about the kind of changes we Implement into the protocol and of course it's a slippery slope if we set a precedent that we're happy to fund a certain group of people with a block subsidy then who's to say that another group of people don't pop up and say hey unfair fundme too so there's got to be a better way what about establishing social norms around funding ethereum's core protocol work here we have a tweet from Danny Ryan back in October of 2021 and he called to make it a social Norm for all Dows and other network tokens building on ethereum to allocate 1.5% of their tokens to the individuals building and designing the L1 infrastructure they rely on now this is a great idea for many reasons first of all it gives exposure to the individuals not to teams it gives those individuals access to the ecosystem upside I'm talking about the financials of course it has a relatively low risk of capture assuming that this really is a social Norm that's adopted by the ecosystem similarly it can thus be sustainable it would be a cost borne by projects not the holders or the users and depending on how it's distributed it could be credibly neutral but of course we're missing a piece of the puzzle how would you distribute that funding imagine all these projects were willing to donate their tokens to support ethereum's core protocol development how would you distribute it can we rely on existing public goods funding mechanisms to distribute this I'm sure you're all aware of these amazing public goods um um funding programs and they all do a lot of different things in their own great way for example the fact that they're uh accessible to different types of grantees they have regular schedules that grantees can rely on uh and of course they take on the operational overhead of running these kind of programs but even they have all wildly different ways of Distributing quadratic voting badge holder voting whatever else and none of those are necessarily tailored to the complexities of Distributing to ethereum's core protocol developers so let's take a step back what we want to do is establish a social Norm that projects built on ethereum help to fund the core protocol work that they depend on something needs to happen in between which will result in we rebalance incentives for this work what's missing a distribution mechanism which distributes that funding in a way that's sufficiently fair in a way that remains accurate over time and keeps ethereum's credible neutrality what am I talking about I'm talking about the protocol Guild and to understand the protocol Guild you need to understand its two components a list and a funding mechanism now what is this list quite simply it's a membership registry of ethereum's active core protocol contributors who are these contributors well those are all their names there's 167 of them today in fact one of them is sitting over there shout out to Puja but their names aren't super aren't super helpful are they so let's talk about what they actually do broadly speaking their work is targeted at three uh three groups either client development research and imp implementation experiments and then spec work testing security infra and coordination essentially support work that supports the other two here are some examples of teams that do this work you've probably heard of client teams like gu argon NE nethermind and Basu you've probably heard of coordination teams like ethereum cat herders you've probably heard of the robust incentive group but protocol Guild's membership is centered around individuals not teams so if you're working on for example BISD in the nethermind client you would not be eligible now I also said that it's a list of active core protocol contributors so let's quantify what I mean by active to be eligible for membership you have to have contributed for at least 6 months continuous sleep but on average with the 167 members that we have today they have contributed an average of 3.4 years of their lives to ethereum's core protocol work the oldest member has been around for over 9 years which means yes he's been there from the start as a collective protocol Guild members have contributed 560 years which is why we can sa safely say that the protocol Guild is a collective of the individuals who are stewarding ethereum's core protocol but you might be wondering how is this list maintained who updates it well it's actually the protocol Guild members themselves and if you think about it this makes the most sense because the vast majority of people don't have the necessary context or expertise to both track who these contributors are and see if they're still contributing or not um they don't have the necessary context but ethereum's core protocol contributors I.E these protocol Guild members they have all the necessary domain expertise they know their peers so by them being responsible for curation we have the highest insurances that this list remains accurate both now and in the future and in a couple weeks we'll be launching our V2 contracts so we'll have a MOG V3 Dow to instantiate these membership decisions on chain for greater transparency what is the net result of this well we've essentially made the entire set of ethereum's core protocol contributors directly legible on chain but you might be wondering how does that rebalance incentives well because we've built of course a funding mechanism around this list so let's talk about the funding mechanism there's three unique properties to this funding mechanism the first is how donations are handled we provided a single ethereum address that anyone can use to donate directly to all 167 members so we've taken away all the complexity associated with having to figure out who to donate to if you want to support this work of course by being on chain it's completely transparent you can see who has donated and who is receiving these funds but what happens to funds that are donated well the donation address is actually a immutable vesting contract that trustless vests funds over four years by default why four years it obviously provides long-term incentives to keep these contributors hanging around why did I say four years by default well if you want to make a sizable donation and you think it should vest for longer than four years go ahead deploy a 10year vesting contract and have it Point uh the vesting the vested funds to this membership registry but that points us that brings us to how these funds are actually distributed does every protocol guild member get an equal share no we thought long and hard about this how can we distribute in the most neutral way and we ultimately landed on time time as the measurement of impact and so broadly speaking the longer you've been contributing the higher your share of donated funds this mechanism is also neutral because whatever to tokens are donated they are vested and distributed in kind they are never swapped to eth or Stables or anything else so for all these different reasons we think it's fair to say that the protocol Guild's funding mechanism is simple and transparent while creating strong incentives to on board and retain these contributors over the long term and thus enables ethereum's ecosystem to fund its dependencies and that last part is really important because it brings us to the protocol Guild pledge has anyone heard about the protocol Guild pledge I expect to see more next year but it's okay this was announced very recently here is Tim B announcing the protocol Guild pledge I highly suggest you check out his mirror post for all the juicy details that I will not have time to cover but very high level the protocol Guild is a commitment by projects building on ethereum to donate 1% of their native tokens to the protocol Guild now you might have some questions why native tokens why 1% why take the pledge at all so let's run through it why native Tok tokens well because we want to give these core protocol contributors a basket that represents the Diversified exposure to the value being created in ethereum's ecosystem that is supported by the infrastructure that they're building of course some of these tokens also Grant rights such as governance so it's a potentially a good way to get these contributors involved in your project but of course please don't expect anything in return when you donate to the protocol Guild why 1% well because not everyone can make a $10 million donation right small projects cannot maybe but they can make a 1% donation it it's also very easy to pledge you don't need to know what your market cap is what your the value of your token is you can make this pledge before you even have a token it abstracts volatility if you were to make a donation in a bull market it's probably going to be worth less in a bare Market but a 1% donation is always worth 1% and perhaps most importantly we believe that 1% is more or less sufficient if we can get approximately 1/3 to 2/3 of the projects building on ethereum to take the pledge but why would they take the pledge well number one to fund their dependency if you are building on ethereum in any way you have a dependency on it it might be for data availability it might be for uptime whatever else by taking the protocol Guild pledge you were helping to rebalance incentives to ensure that these talented core protocol contributors stick around to keep maintaining and upgrading the protocol that you depend on it's also a great way to make ethereum more resilient by providing another Diversified funding stream that is more capture resistant and of course it also scales ethereum's values public goods are good we love public goods in ethereum taking the protocol Guild pledge is a great way to embody that remember this graph here um not super nice when it's not economically rational obviously we believe that if we can get projects building in ethereum to take the pledge that we can change that and make ethereum's core protocol development economically rational and thus slaying mik in the process and would you believe it we've already had some projects that have taken the pledge shout out to Ether Ponda Tao credit Guild and member for being the first five people or five projects to take the pledge how did they take the pledge it was very simple they tweeted about it also forecaster here are some examples of their tweets and casts but of course giving credit to these projects is really important so that's why we've updated the protocol Guild's June dashboard to track these pledge takers and we plan on releasing an nft that we can give to projects who have donated 1% of their token Supply what if you don't have a token what if you're not a project well not a problem because if you're not aware the protocol Guild has actually been around for 2 years already and the protocol Guild pledge has only been around for like 3 weeks and so in the last 2 years we've actually received almost 5,000 donations totaling million in value which is actually worth around $30 million today and so on the left you can see our donor leader board it's composed of an amazing array of different projects in the ecosystem and you can see how the bottom half of that table is actually projects and individuals donating eth because they don't have a token and yes individuals there's two individuals on this list shout out to tetron Noe and Anthony ano for being unbelievable supporters of ethereum's core protocol development and if you're wondering where is optimism on this list wasn't the protocol Guild the top recipient in the last two rpgfan finished kyc yet so we haven't we haven't gotten those funds yet the last thing on this slide as you can see there to date in the last two years because of all the fundraising we have been able to distribute approximately $115,000 on average to every single protocol guild member now that's an unbelievable start it's a fantastic proof of concept but it's clearly not enough to rebalance Financial incentives and that's exactly why we've launched the protocol Guild pledge to encourage projects building on ethereum to take the pledge to help make ethereum's core protocol work economically rational on a risk adjusted basis and thus help secure the future of ethereum's core protocol development thank you very much