ETHKL24 | Cheeky Gorilla, Contributor at Protocol Guild | Funding Core Protocol Stewardship

okay so continuing on that line about the um let's say uh slightly slow time for ethereum um lack of funding for ethereum's core protocol is an existential crisis so here to talk about one of the solutions called the protocol Guild please welcome um a contributor for the protocol Guild cheeky Gorilla by Night known just as cheeky to talk about funding core protocols through [Music] ship all right hey thank you so much for that awesome introduction I don't think I've ever been introduced as a rock star before that's pretty cool um thank you to the uh Danny the eth kale team for inviting me thank you to the uh eth kale Community for for welcoming me so warmly I am cheeky and I'm here to talk to you about protocol Guild but before we talk about protocol Guild let's talk about something else specifically ethereum what even is ethereum now there's a lot of debate right now in the ecosystem and you know if I asked 10 of you what ethereum is I'm pretty sure I would get at least five different responses some of you might describe it as an infinite Garden or ultrasound money others might describe it as a settlement layer God forbid one of you might even describe it as Bitcoin plus smart contracts but you know what you would all be right there are so many ways to describe ethereum because there are so many ways to use it and to that extent we can kind of think of ethereum as a Commons like forests or Fisheries what are commons they are an area or shared resource that is accessible to and used by the public now unfortunately like all Commons this resource can be abused and I'm of course talking about the tragedy of the commons which is when individuals act in their own self-interest depleting shared resources to the detriment of everyone else and so that's why I have an image of mik there who you may know we like to use to represent coordination failures in ethereum and mik is holding up a tweet by Amin solomani where Amin is calling out the lack of adequate funding for ethereum's core protocol development and this is a serious issue existing funding mechanisms for ethereum's core protocol work only provide a fraction of the financial incentives that are otherwise available in the ecosystem so this puts us pretty much in a sticky situation where we have a small number of relatively underpaid core protocol contributors who are responsible for infrastructure securing billions in value and that's not great what it means is it is not economically rational to work on ethereum's core protocol itself and to really visualize this issue we've created this chart which shows you that ethereum's L1 R&D work is both low risk and accordingly low rewards but crucially it also shows us how by just taking on a little bit more career risk for example by going to work for a large crypto project like a layer two or an exchange these core protocol contributors could earn significantly higher rewards and you know you're probably not surprised to hear that there is a ton of money in the crypto space and of course there's not a lot of money in ethereum's core protocol development and given the unbelievable amount of specialized knowledge that ethereum's core protocol contributors have they can quite easily command low seven fig packages almost anywhere in the ecosystem and of course they earn nowhere close to that working on the court protocol itself so how can we really be surprised when every once in a while the core devs decide to go on and do something else but why does this matter because ethereum is still very far from being done you've seen this chart in a couple presentations today right um if you're at all familiar with ethereum's core protocol development road map you know that there are a ton of super exciting upgrades planned but of course to be able to execute that development road map it is imperative that ethereum is able to both on board and retain its talented core protocol contributors so this raises kind of an existential question for ethereum how do we rebalance these Financial incentives for ethereum's core protocol work to make it economically rational on a risk adjusted basis well let's brainstorm what about altruism right can we rely on kind individuals to fund ethereum's core protocol work out of the goodness of their hearts well this is ethereum so we do have some examples of that so here's a tweet from Preston back in 2018 where Preston called out the lack of funding for the prism client team now fortunately for Preston some guy replied YOLO and sent a th000 eth which was worth around $100,000 at the time now is that something we can rely on no it's not sustainable it also has a risk of capture because quite frankly we don't know if these kind individuals actually have ulterior motives and of course it's also narrowly targeted not all core devs are on Twitter asking for money and not all core devs have the reach of someone like Preston so what else can we do well okay what about making ethereum's holders pay and this is kind of a spicy one and it has been discussed a lot in the past here was a proposal to basically carve out a portion of ethereum's issuance to pay for ethereum's core protocol work and you know blockchains like polka do do this so why can't ethereum because it's simply not credibly neutral ethereum was created to give power back to the people and that does not include forcing a paycheck for cordev into every single block at the same time given ethereum's governance process if we ever wanted to undo this change it would be really hard because you cannot make protocol changes in ethereum willy-nilly which is absolutely a feature and not a bug and last if we were to establish this precedent of diluting eth holders to pay for this kind of stuff well then who's to say that another group of individuals wouldn't pop up in the future and say hey pay me in the same way so it's kind of a slippery slope there's got to be a better option well what about building social norms so here we have a very interesting tweet from Danny Ryan back in 2021 where he said make it a social Norm for all projects building on ethereum to allocate 1.5 % of their tokens to the individuals who are building and designing the L1 infrastructure they rely on now this this is a very interesting idea it gives exposure or sorry it targets individuals and not teams so you know that the funding is going towards the actual people who are going who are doing the work that you want to support it also gives those individuals access to the upside being created in the ecosystem via tokens it would be a cost borne by the project projects themselves and not their users or ethereum holders and if this is actually a social Norm meaning projects are doing this then it would have a low risk of C capture and could even be long-term sustainable but we're missing a piece of the puzzle how would you distribute that funding so let's take a step back what we want to do is we want to build social norms around projects building on ethereum to donate a portion of their token Supply to help fund ethereum's core protocol work what we need is a mechanism to distribute that funding to ethereum's core protocol contributors in a way that's sufficiently fair remains accurate over time and crucially maintains ethereum's credible neutrality how do we do this maybe you can guess what I'm getting at because I've just described protocol Guild and to really understand how protocol Guild can be used to rebalance Financial incentives for ethereum's core protocol work you need to understand it two core components a membership registry and a funding mechanism so let's talk about the registry first and foremost protocol Guild is a membership registry of ethereum's active core protocol contributors today this membership registry includes a list of 181 individuals these are people from all over the world you can see all their names in the background there but you're probably wondering how do we Define cor protocol contributor well we're not broadly speaking your work needs to be open source and involve building or maintaining ethereum's core protocol directly and so there's three categories of work that could make you eligible for protocol Guild membership that includes client development research and implementation experiments and also work that supports those first two like spec workk testing security infra and coordination here's some examples of teams who have protocol Guild members um who who have hired protocol Guild members you've probably heard of client teams like gu Aragon nethermind you may have heard of research groups like The robust incentive group and you may have heard of coordination teams like ethereum cat herders but I should clarify protocol guilds membership is centered around individuals not teams meaning if you are hired by one of these teams to do this work but you quit but you keep doing the work you would still be eligible for protocol Guild membership now I did also say that it was a list of active cor protocol contributors so let's quantify what I mean by active to be eligible for membership you need to have contributed at least half a year continuously but on average protocol Guild members have contributed over three years of their lives to ethereum's core protocol development the oldest member well they've been there basically from the start 10 years now as a collective protocol Guild members have contributed over 600 years to ethereum's core protocol work which is why we can confidently say that protocol guilds membership registry is a list of the individuals who are stewarding ethereum's core protocol now you might be wondering well who Updates this list and the membership registry is actually self-curated and by that I mean it is the existing members who coordinate to add and remove members and if you think about this this makes the most sense because for protocol Guild to have any legitimacy this list needs to be accurate and the reality is most external individuals or entities they do not have the necessary context or expertise to both identify who these contributors are and also track their contributions over time on the other hand protocol Guild members due to the very nature of their day-to-day work as core devs they have all the necessary context they have all the necessary expertise to curate this list in a way that gives us the highest assurances that it'll be active sorry active that it'll be accurate it both now and in the future so what is the net result of all this well with this membership registry we've made the entire set of ethereum's core protocol contributors directly legible on chain and that's what allows us to rebalance incentives because we've built a funding mechanism around this membership registry so let's talk a little bit more about how the funding mechanism works for starters we've created a single ethereum address that any anyone can use to send tokens directly to everyone in this list so think about how much complexity we've removed associated with trying to figure out who to donate to if you want to support this work and of course since it's onchain it's completely transparent anyone can see who has donated anyone can verify where donations are going our donation address is an immutable vesting contract which trustless vests funds over four years from the point of donation why fouryear vesting because this is pretty standard for employee stock options and of course creates really strong incentives to retain these contributors over the long term how is funding distributed well ask anyone who designed a grant program it's hard to do so in a neutral way we sidestep that complexity by using the most neutral impact measurement that we know which is time so essentially the longer you've been contributing the higher your share of donated funds for all these reasons we think it's fair to say that protocol guilds membership reg registry and funding mechanism are simple and transparent creating strong incentives to onboard and retain ethereum's core protocal contributors over the long term thus enabling ethereum's ecosystem to fund its dependencies and that last point is crucial because it brings us back to this notion of building social norms which brings us to the protocol Guild pledge how many people have heard of the protocol Guild pledge like a few of you are there there any projects in here that are thinking about taking the protocol Guild pledge oh fantastic let's talk afterwards what is the protocol Guild pledge you can probably guess it's a commitment by projects building on ethereum to donate 1% of their token supply to the protocol guilt but let's take a step back and unpack that why are we asking for Native tokens well by donating native tokens you are giving ethereum's core protocol contributors access to a diversified basket of funds that repres presents the value being created in the ecosystem and crucially it gives them access to the upside of those tokens while staying focused on their core protocol work why are we asking for 1% why not a dollar amount well because not all project projects can donate say 10 million but regardless how big or how small you are any project can donate 1% of their supply it's also easy to pledge you can take the pledge before you even have a token it also abstracts volatility a $10 million will probably be worth less in a bare market and also why 1% and not 1.5% as Daniel Ryan suggestions sued well because we did the math and we figure 1% will be more or less sufficient if we can actually build social norms around this and projects are actually doing this why take the pledge at all well you guys came to this conference so I assume I don't need to preach to you but to fund your dependency by taking the pledge you are helping to ensure that these talented core protocol contrib contributors stick around to continue maintaining and upgrading the protocol that you depend on it also contributes to a more resilient ethereum by providing another Diversified funding stream and it helps scale ethereum's values public goods are good ethereum's core protocol development is a foundational public good so for the people in the back who are thinking about taking the pledge how it's very simple just tweet about it right so here are the uh the forecaster posts by the first three projects that took the pledge shout out to ethery Tao and pondal we also have a June dashboard where we're tracking all donors all pledge takers and we hope to launch an nftd soon to commemorate uh these donations so now you know everything there is need to need to know about protocol Guild you know about the protocol Guild pledge you might be wondering well is ethereum's core protocol work economically rational yet did protocol Guild do something and the answer is we're getting there we've been around for two and a half years we've received almost 8,000 donations we've which total approximately $100 million um in value at the time of donation unfortunately that's worth around $65 million today but I should clarify that the vast majority of that funding came from two projects that took the pledge so again shout out to ethery and Tao but as you can see in our donor leader board we have received substantial donations from many different projects in the ecosystem which we are unbelievably grateful for but you're you're probably thinking that's a lot of money does protocol guilds really need more money and remember we need to quantify how that funding is being distributed for starters there's 181 recipients of this funding today we are onboarding new members every single quarter and of course it's also being vested over four years so what that means is the median protocol guild member is expected to receive approximately $65,000 from protocol Guild over the next 12 months $65,000 is a lot of money but it is not enough to replace a full-time salary for these individuals and it is not enough to stop them from being poached so if we want to make sure that the financial incentives associated with protocol Guild membership are sufficient to retain these core protocol contributors over the long term and in the worst case be a funer of Last Resort we will need to scale our fundraising by orders of magnitude so no ethereum's core protocol development is still not economically rational here's a tweet from a highly respected cordev at the start of the Year where he basically announced his departure to go work for a lay or two now in his farewell tweet he did give a shout out to protocol Guild and he said that it almost persuaded him to stay an L1 Dev so clearly we still have some work to do but you know what everything that we've seen over the last two and a half years we've seen buyin from ethereum's ecosystem we we've seen Buy in from projects built on ethereum and so if we can establish this social Norm that projects building on ethereum take the pledge to donate a portion of their token Supply to support ethereum's core protocol work well then you know what we can make this work economically rational on risk adjusted basis and we can slay mik in the process so my ask to you if you know a project that is planning a token launch please let them know that you would like them to take the protocol Guild pledge that way together we can all help secure the future of ethereum thank you very much woo thank you cheeki for that very interesting proposition funding your dependency I think that makes a lot of sense don't you