# A Technical Deep Dive Into Circles

- Channel: [Dappcon](https://streameth.org/dappcon)
- Date: 2025-06-16
- Duration: 58:15
- Watch: https://streameth.org/watch/68501a064ac43bf73d8c0a9c

## Transcript

Hi guys, everybody, can you hear me? All right? Yes, very good. My name is Paul I'm with the circle team and it is my absolute pleasure to be doing this workshop together with you on a deep dive into the circles protocol So when I told when Chica our death row member about my plan She was like well You might not want to call this a technical deep dive because people would expect to be building hands-on Stuff using SDKs and everything. So I'm sorry to disappoint. This is not going to be a builder's workshop instead circles is A great protocol that we've been cooking up for a couple of years But it's not the most intuitive and simple protocol to wrap your head around So this hour is mostly about making sense of the protocol In terms of you know, why why do we think? The currency we've designed is of a reasonable currency and what what what it works towards and I'm just going to keep talking a bit until the technicians have solved the issues with my slides So maybe in terms of setup As soon as the slides go up, they're going to see a bunch of QR codes. So the first of them is Linking you to an app called an empty meter Where you can add questions that you have and then everybody else can vote on these questions so the idea so, you know, since all that this is live streams and Having a lot of Q&A in between with the mic being handed around Can be a bit of cumbersome and and then for the people watching online, you know, they might miss out on questions Plus, you know, I think it's important There's lots of questions and we want to address those questions first or prioritize those that you know, most people find find interesting So I would suggest that questions of some immediate Understanding in terms of just not getting something I said or something that is on the slides That doesn't make sense to you. I think raise your hands wait for the mic And and then we can address that immediately, but if there's bigger questions you have Or things you want us to always kind of like, you know, ask ask people from the circles team about Then use the QR code Add them there and then I'll have a look So on top of that I already added two questions that you can vote one is I think called more detail and the other is called less detail and This is basically something that serves me To give me a kind of feedback whether I'm moving too fast or whether I'm moving too slow Right, so feel free to also You know participate and so upvote If either one of these two if you feel like I'm you know moving in too much detail or not So this is the QR code in question But I've you should also see this code here at the top right one three seven three Zero two two six and you can go on menti.com and use this code So the QR code is going to disappear in a sec, but the the code isn't All right. So Removing this code thing Was the first time I'm using this right To get a hands-on experience. It really helps having a circle symmetric profile. So just to be clear that circles the protocol and The one of the circles protocol has been launched in 2020 already and last October We deployed the version two contracts of circles So the circles protocol v2 that we're representing today has been live already for for half a year or so But what is only very recently launched is metri and metri as a wallet that is of the go-to Wanted to interact with the circles protocol. We're going to see that it's not the only way of doing so there's other tools That we've built mostly, you know first and for internal use and now we're still publishing them to interact with circles, but it's kind of important conceptually to understand that there's this difference between metri the wallet and in circles of the protocol and Yeah, if you don't have a metric profile, I mean who here not changing it who has who has a radio circles or a metric profile So lots of people that's great. That's great to hear if you don't have yet have one, you know downstairs we have the booth After the stock we can we can invite you and then you can kind of get going with with networking with with people him Scope of this this this is our we now have together I'm one of the co-authors of those circles white paper So that's going to be something I want to talk about plus I was also want to present some of the tool tools we use to kind of inspect the state of Of the circles network and kind of details. You don't see when you just use the metric app What I won't be talking about is sort of the high-level motivation in terms of You know why we think why we think the world needs circles I'm going to kind of touch on that but not really make it the focus So for the foot for the purpose of this hour We're just going to assume that circles is a great addition to the world and we're just going to be interested in how it works Not not so much why why we need it And what I also not going to be talking so much about is Death tooling in the sense that if you wanted to build a gap on top of of circles How would you go about doing this? We have great talks? At talkspot about sex calm and I think one of our tech leads is going to have a workshop on this tomorrow I don't know at what time Yeah, all right, so this morning at 11 Martin who is the CEO of noses and also the kind of originator of the idea of circles was Gonna take do a talk on circles Now that got postponed so for the sake of getting everybody up to speed I'm first going to start with a simple Recap or some high-level intro to circles. So it begins by understanding that money is a technology It's the world's most ubiquitous Protocol, so we use it every day and we think of it the rules as of something that maybe sort of set in stone But that's not the case, it's a social technology and it's a technology that isn't neutral if you're in control of deciding who gets to create money under what conditions and Kind of hand that technology to whom then you can have a lot of impact on terms of real economic development So we can think about Given the the tech stack of the blockchain and all the other great things that we now have at the at our fingertips, how Should money work in a way that we think it would be would be fair So I think Martin sort of sat down at least in this of X post Constructed thought experiments kind of sat down one morning and he thought about how can we build money? That works better in a multipolar world where we don't want to necessarily rely on you know The u.s. Dollar as the main reserve currency, but instead we want to have a currency that is unaligned That is universally accessible in the sense that everybody can go and create their account regardless of you know, their passport or anything that splits or that democratizes access to the technology, which is money creation and let everybody benefit from the technology and Where also we don't have sort of the first movers advantage in the sense that you know The first of two generations of people doing this are gonna run away with the bulk of the value and then you know So everybody else misses out so we want to somehow have fair access to the money across time meaning across generations of people and Circles is sort of the one answer to this to this design challenge So it's underlined in the sense that it's a completely unpacked fiat token It's not a stable coin and it's not representing the interests of any particular entity I mean that is to be taken with a caveat of course right now Gnosis is a big sort of stakeholder in the in the in the currency from the point of view of you know Kind of funding the development, etc But Gnosis isn't hard-coded into the protocol The the the contracts are open source out there and they could be deployed on any other chain right now, right? And we don't have as a team. We don't have any Say in what people do with this currency Yeah, it's universally accessible in the sense that everybody can create an account We don't have a KYC layer or anything like that on top It's democratized in the sense that every user can create their own personal CFC token at a fixed rate of one circle per hour and Fair access across time is ensured by making but having this funny count into the property of Demo Rush, which is a kind of daily burn. So all Circles circles balances evaporate at a rate of 7% per year on a daily basis And we can look at how you know, how this leads to this this access across time There's an additional layer of complexity to circles And I quickly want to talk about why why it is there. So circles intention is to enable Every person to create one circle per hour unconditionally not more not less And we have this problem where since we this is have a pointer. Oh, but I'm not Anyway, oh Sorry Yeah You know, we want to Allow anybody to create an account. We want every account to start creating their own money And we also want sound tokenomics, which is sort of a bit of a mouthful By this I just mean we want there to be one circle per person per hour Because how are we going to deal with civil attacks? How are we going to keep people from creating several accounts? You know and if Guinea here created secretly ten accounts He will make time time as much money every hour as I do so he could buy ten times as much Coffee as I can and so if I know that he's able to do that, then why would I use this currency? So lack of confidence in in the ability of the protocol to produce sound tokenomics in the sense I define here would of course be detrimental so to safeguard against Civil attacks or people kind of exploiting this protocol or the openness of the protocol. We have a web of trust approach What this means is people? On circles who have an account can trust each other and this is a binary relation that is simply sort of registered on chain and then there's Rule of trust and the rule of trust basically says this if Ellis trusts Bob then anyone in the network holding Circles created by Bob Bob circles can swap them at any time for any circles held by Ellis at a rate one-to-one so in this example we have Ellis here holding her own circles and Bob and it's just Bob and now Carol who happens to hold Bob circles Can go in and without Alice approving this Kind of sign a transaction that lets her take grab the five Ellis's circle from Alice and in return for five Bob circles resulting in this final state when our Carol has the five Ellis circles and Alice is left with the five Bob circles and this actually is independent of these being Ellis circles like an Ellis held Dave circles Paul circles She could still be doing that, right? And so this rule of trust is interesting in the sense that it lets Let's disconnected circles users transact While ensuring that everyone only ever receives circles they trust so in this example We have Dave who wants to send Bob five circles But Bob doesn't trust Dave So Dave cannot go and take five of his circles and hand them to Bob in exchange for a cup of coffee Because Bob's gonna say no. No, no. No, I don't know you. Who are you? I'm not gonna give you anything for your circles However, Bob knows Alice and trust her and Ellis happens to Carol and trust her and then Carol knows Dave so there's this path of trust and this Exists the existence of this path of trust together with this rule this swapping rule Let's now Dave Initiate a sequence of traits where he'll first get five Carol circles for his Dave circles He'll then use those five Carol circles to get his hands on five Ellis circles And then he'll send those five Ellis circles to Bob who now is going to say well Alice circles. That's different I'm going to give you coffee for Alice circles, right? So this is how the rule of trust enables transitive paths of exchange and The we're going to talk about how this now is Meant to solve safeguard against simple effects in a second or in a couple of minutes actually but just to kind of close this brief overview, there's an additional feature that We probably want to talk about as well Which is groups so groups was well when the thing in the v1 Protocol and groups are essentially accounts that don't Create their own circles at a fixed rate of one circle per hour but they have members so they can make other circles accounts members and Then there's a mechanism for how these members or people who hold those members circles Can exchange them can kind of turn them into group circles and we think groups are a really interesting mechanism and vehicle But I'll talk about them in depth later All right eight questions already I'm gonna check the you know, the Can somebody tell me whether there's a lot of votes for move faster move slower? so I don't have to mess with a Okay, I'll take your time I mean if anybody maybe Sean you can tell me if people are screaming I should be speeding up or something All right. So this is the beginning of the deep dive right now. We just off We're just off swimming at the top learning learning how to swim now. We're kind of going deep So And to do so I kind of want to structure this in Two sub stages and by the way, I plan to talk in total like 35 minutes So I want to leave 25 minutes or so for Q&A and discussion, right? I'm not going to be talking like this for an hour By six votes, okay, right. Let me just create some extra slides. I Was I was expecting the opposite but yeah okay, then I'll take my time and Yeah, I don't really have an actionable I'm just gonna talk more talk a little bit more But oh, yeah, here's more detail. There's the macro level and there's the micro level. It really helps me to think about This apparent complexity of circles and break it down so the macro level is the level at which we assume that all People that have a circle to count honest, there's no symbols, right and We're interested in the kind of macro economics of circles circles have kind of counterintuitive rules, right? There's demurrage this concept issuance. It looks very different from money as we know it So how would a world look like in which there was this circles currency? And we don't want to deal with the web of trust. We don't know want to deal with symbols We just ignore all of that So that's the macro level and here we kind of just see users who have different circles balances and we assume that that's a fully liquid with each other and then the micro level is the one way where we kind of drop that assumption and We now start Differentiating between the different kind of kinds of circles they hold and who created them and we also drop the assumption that all accounts Kind of honest or you know kind of use the protocol as intended And this is going to be sort of the micro level where we deal with the web of trust and path finding and so on so right, let's start with a Macro level so assumption no malicious parties or fake accounts And the first thing we can think about is well How would the balance of a single account look like over time, right? Because there's two forces in circles. That's the force of me creating one circle every hour And then there's the force of seven percent of these circles evaporating over time So the way this looks like is that if I started creating circles On day day week day zero and I just did this every day every hour. I kind of you know use my metric account Or in fact, we didn't talk about metric fees, but if there were no metric fees I would use metric to create circles and then over time Initially my one circle per hour rate dominates these 7% so I kind of quickly increase my circles And then over time those 7% kick in because I have more so, you know, I lose more so because those 7% of More is more I guess and so There's this magical number of one hundred and twenty thousand eight hundred and four Where these two forces exactly cancel out and so if after 80 years I was to die and to stop Pushing that button. This is how the total supply of circles I created would look like right and Well, why is that why is that interesting Well, first of all Super simplistic base monetary policy, which is that the total supply of CFC in a group? Always converges to that magic number times the number of people in the economy, right? So we kind of naturally scale the supply of the currency with a number of people We don't have an interest rate. We don't have you know, a lot of the sophistication of the Fed, but we have this Another way to look at this is that I guess the vote now deals with this but there's an effective tax rate so if You have exactly a hundred and twenty K and eight hundred and four circles then, you know, your balance just remains unchanged whereas if you held more then Your circles balance would reduce like in the absence of transaction and economic activity, right? And so this is so if you're paying that tax Although I mean, I don't really like calling it a tax because it's not nobody receives that tax It's not like metriocinosis gets the circles you burn They're just literally burned whereas if you just start out then you have this negative tax because well you get a lot more then then you started out with and Here's why We think that the combination of this steady issuance rate together with The 7% demurrage leads to fair access to money supply. So there are two types of taxes, right? There's the taxes at any given time which is just to say that there's no nobody has a monopoly over money creation like the creation of the new supply of money is completely Distributed uniformly across the whole user base, right? So it's so fair in that sense. I guess depending on your notion of fairness, but I think That sounds pretty pretty fair to me. And then there's this more interesting fairness over time and to appreciate that consider a user that joins an existing group of n people like, you know, we we now have a circles economy and We all start creating our circles like crazy and then in two years Somebody comes and they consider joining this group just like lots of people might today consider buying their first Bitcoin and We want to give them a good reason to join right? and With Bitcoin, I mean, you know, I'm not gonna hate on Bitcoin whatever but like the idea It's not very attractive to start to join now if you look at the distribution of the existing supply when there's so few people that hold hold so much of the supply of Bitcoin that's ever going to be around then They are in a position to go into any shop and pay whatever they want for, you know, this cup of coffee So do I want to be part of a society where? My ability to buy coffee is basically dependent on other people's desires Well, okay. Okay. No, it's the answer. Of course, I Don't I won't let them do that to me instead. I'm going to use circles because the combination of demurrage of his burn and constant issuance says that if somebody joins later then the share of The circles that they have created that they contributed as a function like as the share in the total supply is Going to look like this Where capital N here is the size of the group? so maybe like 50 and the example of this room and this gamma constant is a constant that kind of Goes to zero exponentially quickly in in the number of years that they participated And so 1 over n is obviously their share in the in the group, right? So this means if I start whenever I thought if circus was to come become the next global currency if it's just a tiny experiment It doesn't matter at all If I start joining I have the guarantee that I will start building up a significant Share of the total supply like a significant share of the total supply of circus is going to be under my name It's going to be once I have created and there of course go into my pocket and I can invest them I can spend them but nobody else can decide what the purchasing power of Me is going to be in that society. So that's something that's what we mean by faxes to money supply over time. Oh Yeah, I have a slide on this All right, and there's of course in the white paper. We talk about time-varying populations And of course that doesn't change the gist of the statement Another thing I want to talk about at the I think I need to speed up At the macro level is the value of Senyorage And what does that mean? Circus V1 was kind of marketed as a UBI and lots of people think of Circus as a kind of UBI which of course makes sense because we would kind of airdrop money into everybody's pockets but the fact truth is that The value of the circles that you're going to be creating over a month is Probably not going to pay what you'd want the UBI to cover in terms of your monthly expenses It's going to be a much smaller share of this So Senyorage here is basically defined as I mean typically defined as the revenue that the government makes from the issuance of currency It's this this sort of value creation of thin air example Where if you if you print a dollar note, but you only paid one cent for it Then you have sort of 99 99 99 percent profits or 99 cents profit And that's the Senyorage and of course you can have Senyorage also when you Hand out credits, so this isn't really about Cash only and In Circus of course the Senyorage is with everybody and we democratize access to money creation technology, so we also democratize and distribute the benefits of that So the question is well What do we expect the value of the Circus created by an individual to be? And there are two approaches to answering this question One has been conducted by by Martin on in a blog post where he basically Looked at you know different economies And he looked at the current total money supply the M2 supply. He looked at the population and The GDP and he basically said well If we have so and so many million people and we have take this times 120 804 right this magic number and then we look at the total money supply, then we can kind of like take the ratio and Then depending on stuff like velocity we can cook up a Hypothetical value of one circle in equilibrium like if circles was to take over the world And completely replace the USD What would kind of the circle like what would have one circle have to be valued at to kind of cover the same? GDP So this is like, you know, these numbers here range Widely, so they're like 30 cents like 50 cents 50 cents So this is off gives you roughly an intuition right where where you would expect Circles to land at if it was to become really successful and with this is not take 100k All right, the circle this is clearly very low but much higher than it is now I think today circles trade that like one and a half to two cents and There's another approach Which basically well looks at looks at the the fraction of the value of circles created at a time T divided by the demand And so it kind of just looks at you know, kind of what if this Currency was at equilibrium. What if there was enough circles to cover the demand? Blah blah blah you can look up at the Appendix and then you get to this number here where this is the velocity of money which we can set to one And if we look at like the euro for example, and so what basically this says If I if I translate it is that we would expect the total value of the circles You create per month to constitute roughly seven to ten percent of your demand for money every every month right, so if you have monthly expenses of 2,000 euros that that on average, you know, it takes seven percent of that and that should be roughly the Value so these these two approaches they kind of Roughly align they they're not completely don't give you completely different numbers So maybe the value to put like in today's prices, you'd be looking at two two hundred to four hundred dollars of purchasing power In over the course of a month. So circles is not a fully-fledged UBI right because for UBI we'd want maybe 50% 40% of Your expenses to be covered or even more. I'm not an expert on UBI actually, but They should constitute a significant source of income and Those circles that you create you could of course spend them on stuff, right? But you can also start investing them because there's going to be financial products built on circles and so the idea hope is that you know, this this this democratization of money creation technology could lead to sort of allow mass access to interest-bearing products with the hope of Distributing the benefits of participating in a kind of a growing economy Among sort of more More of the population and of course it could also kill sort of extreme poverty, right? Where if people that were living on the street or something, I mean two hundred dollars a month of things they could buy That's a very significant amount All right. There's a bunch more things that we cover in the in the macro level But I guess you all you're all here for the graphs so you don't really care so let's move let's move on to the micro level So, yeah now we kind of turn into Switch on paranoia mode and we don't trust anybody here unless they Sell me an ice cream or something. I don't know and Yeah, let's maybe look at this Yeah, so first things first, the possible flow of circles in this graph depends on both the trust graph and the current balances. So when we usually introduce circles, we always make it seem as if there's just this path of trust and then everybody can page along the path. But that's a simplified depiction of reality. It's really what matters is who holds which circles. And only then, only if you give me the trust graph and the current balances, can I calculate what's the possible movement, the flow of circles in the economy. And that is simply because of this word any here, right? So I told you that it doesn't matter whether Alice holds Alice circles or Dave circles or Paul circles. The rule of trust lets Carol take any circle she might hold. So we need to know exactly which circle she holds to calculate the implications of this rule of trust. Yeah, so usually we say the state consists of the trust graph and the matrix of balances, if you will. And then we can think about the state transitions that are possible. And these state transitions you always have to think of relative to the signer, right? So clearly I can initiate or trigger state transitions that others cannot because I can send my circles to Sean, but Sean cannot send my circles to him, right? So state transitions are always relative to the party that initiates them. But I'm not going to go into a lot of the technical setup and the formalization. What is important is that transacting in circles boils down to the following problem. What is the maximum amount of circles that the sender can pull together by applying this rule of trust, right? That are trusted by the receiver. That's the sort of transferable trusted balance. So I might hold 10,000 circles if I can only use this rule of trust to get 10 circles that Sandeepan trusts. Then I can only pay him 10 circles, doesn't matter how many circles I hold. And we can actually map this problem to a well-known combinatorial optimization problem, which is called the max flow problem. And so, you know, Hugo is our internal, you know, maestro of max flow problems. And whenever you pull out your Metri account and you send circles around, Hugo's algorithms are crunching the numbers for you. The max flow problem is actually, it's a complicated problem, but it's not an NP-hard problem. So I think it's kind of famously polynomial in the sense that it scales, the complexity scales quadratically in the size of the instance. I think two years ago, Google published something where they actually have sort of a quasi-linear time algorithm for max flow. So max flow is not, I mean, if it was an NP-hard problem, we should just throw circles out of the window, because then, you know, we couldn't scale just from the combinatorial nature of it. So luckily, it isn't, and we have that. And let's talk about more of this if you're interested. Yeah, okay. So now we're at the point where we can talk about how this web of trust leads to Sibyl resistance. And so now, using this mapping of the extending circles around to a max flow problem, and then using the famous max flow min-cut theorem, which you can look up on Wikipedia, we can basically make the following kind of statement, which we call relative Sibyl resistance. So let there be some set of accounts that are controlled by a malicious party, and let there be a set of non-black accounts that are fooled into trusting these malicious accounts. So they're fooled to trust people that they shouldn't have trusted, and that we shouldn't let into the economy. And then let R be the remainder of the network. Then if these malicious accounts initially hold only their own funds, right, which is always going to be the case initially, because they can only create their own funds, then the transferable trusted balance, like the amount of circles that the malicious accounts can transfer into the remainder, is limited by the amount of circles that are trusted by accounts in R that are held by accounts in F, whatever. Like if you look at the white paper, I'm not going to introduce a notation here, but basically what we're saying is that this is the thing we want to have very small. This is the amount of circles that malicious people can pull together and spend in the honest part of the economy. So ideally we want this to be zero. And we can bound this by this thing, which is independent, I mean all you have to know is that M isn't in this formula. This is now the amount of circles that the fooled people hold that are trusted by R, by the rest. So what that means graphically is that here we have the malicious people, here we have the fooled people, and here we have the remainder. And the remainder is exposed to the malicious accounts only to the extent that these accounts, who have been fooled, hold circles that they trust. And so this is the damage, it's independent of how many circles the malicious people hold, it's only limited by the size of the leak. And importantly, this leak will kind of close itself, because if these people hold significant resources like circles that they trust, then they can kind of use that, but that will reduce, the damage is bound by what they initially hold and it sort of leaks closed themselves. So that's our relative civil resistance property. I guess if we had a perfect proof of personhood and we wouldn't need the web of trust, then we might be even safer, but of course it's also difficult to build. We know that there's a lot of other protocols that are also trying to build sort of a proof of personhood that are struggling, and I guess this is sort of the ecclesial of the protocol, is if people fall prey for malicious accounts, then we have a problem with circles, and that's why we trust in the wisdom of the crowd to not fall prey, that's sort of an important point. Okay, before I finish, emergence of global fungibility. Fundamentally, we not only want to exclude civils, we also want the honest part of the network to be liquid with each other, right? So I mean, we're going to want two things. We want the honest people not to have exposure to the bad people, and we want the good people to be able to pay each other, right? I have a super civil resistant network, but every time I want to buy coffee, I cannot because there's no path, then I also haven't built a very successful currency protocol. So we can measure this by the average spendable fraction, like if we have this honest part of the network, you know, how much are people going to be able to pay each other relative to their current circles balances? And so we can look at different graphs and the kind of average, like average spendable fraction that we get here. And so if we had, for example, a complete graph where everybody trusted everybody else, then it's easy to see and kind of intuitive that independent of the balances of these people, they can all pay each other, right? If any one of them is offering services for anybody else, they can kind of interact like they do with euros, right? Like always 100% of the circles they hold, they can spend with others because there's always going to be paths. But importantly, like crucially for circles, the same holds true, albeit less robustly so, in a setup where everybody's connected with everybody else and there's always a path. And in this case, you can also have complete average spendability, but it might sort of die down. So you might be able to do this once, but you might not be able to keep it up. And so, yeah, I'm kind of speeding up a bit because I want to leave time for questions, but the end goal or one goal is, of course, the circles to become sort of a big global currency where there'll just be one price per circle and we can all forget about this micro-level detail of who created what because we trust in the web of trust doing its thing with respect to keeping the symbols out and we just sort of enjoy the ice cream we can buy and we don't really have to deal with the complexity. And that will depend on people's behavior and the connectivity properties of the trust graph. And so whether that will happen will depend on user behavior, but the hope is that kind of the trust network inherits the small world properties of social networks, right, which kind of famously connect, have high connectivity despite being sort of pretty sparse. And that is to be seen. That depends and I don't want to spend too much time here. There is one slide I have here on exchange rates and arbitrage that people find arbitrage for some reason always very exciting. I don't really know why. But of course, all these circles, everybody creates their own circles and you can create a market for them. Nobody can stop you from doing that. So there's an obvious question. All of us have different circles. What do we know about the equilibrium, like the fair prices of these different tokens that we now have on the DEXs? And I think there's a simple statement here to kind of develop an intuition for this, which is that for any state in which every account holds some of their own currency, right, and that's pretty likely because, well, you create one every hour, or you can, then exchange rate in the absence of arbitrage reflect the trust connections between users. So if n trusts n prime, then the price of n prime, the one that's being trusted, has to be at least as high as the one that you trust, right? So trusting everybody, I mean, this is a bit of a sad statement, but trusting other people can never increase your equilibrium exchange rate. But being trusted can also never decrease it, right? If it was different, then we'd be also talking about sort of a rubbish currency because I could build a bot that trusts everybody and then just lift my price, right? That obviously can't work. So we at the Circles team, we build arbitrage bots that are constantly looking out for these opportunities and try to keep all the prices in check. And if we have time, we can look into that. Oh man, I don't have, yeah, I'm just, so we have this really exciting feature called Groups, and this is a depiction of the trust mechanism. But let me just finish here, and then if you really want to talk about Groups, we can talk about them, and I kind of really want to start looking at the tools. I've already talked way longer than I wanted. So there's of course Metri, which is the app we are building that I think many of you are using to interface with the protocol. But there are a bunch of other tools, and I want to kind of highlight some of these here. So the Circles Explorer is kind of the Explorer, kind of like you know it from Gnosis Scan or Ether Scan. The Circles Core App is an app that we built for admins of groups and organizations to deal with members, it lets you create new groups. And the Circles Tools is a bunch of informal tools that we use the most internally, but that all of you are also kind of invited to check out. This is a QR code for the Circles Tools. And yeah, I mean my plan was to kind of like accompany a lot of my talking with real exploration, but I think now is a good time to actually just start looking at the questions. More detail, why would you get your Circles, yeah, very good. Can I order them by questions? Okay, I think these are already ordered. So let's take a deep breath and go through them. So do all of you know what backing your Circles means? Okay, who doesn't know what backing your Circles means? Okay, okay, good. So backing your Circles is not part of the core protocol, but it's something that we offer people to do on Metri. And it basically means investing $100 and, okay, and now, so workshop dummy Alice is not a backer yet, but I, for example, am. So it lets you back your individual Circles with 100 USD, and what we do is we create a pool on Balancer with 48 of your Circles against $100. Well, I mean, I think the main reason for backing your Circles is, I guess, ideologically, right? I mean, so it's a way of signaling that you support the protocol and you buy into the idea of Circles. When you back, you get a nice backer's badge, and there's a group of backers that is exclusively available to you. Also, on the Metri app, only when you back will you be able to swap your Circles. So for example, here, this Circles don't show here, but if I sort of log out and I log in with my main account, so all of these Circles accounts, they're clearly marked as test accounts or dummy accounts if they're not. Maybe, see, I have this backer's badge here. So you now, because I'm a backer here, when I go on the wallet, I can swap Circles. It shows them here. And that's, I mean, there might be some economical reasons for doing it, but primarily right now, we think that just like a central bank has a reserve, we now kind of democratize the central bank and we split it up, and some of the people sort of constitute the reserve, and by backing, you contribute to the reserve of Circles. And of course, the more people contribute, the more of an argument we have when we go out to people. So if I was to go somewhere and say, please accept my Circles, then being able to tell them that they can now, if they wanted to sell those Circles and turn them into cents or euros on the market, that's a great argument to give somebody. Right. So, results. Yeah. What's to stop flights of capital when people get nearer to that amount where someone might prefer to have a currency which is even more fungible but decays at a slower rate like regular fiat? I don't understand the question. No. No, I mean, you mean another Circles currency or USD? Yeah. Mm-hmm, mm-hmm. But how would that keep you from suffering from demurrage? Yeah. Ah, sorry, I get it, the microphone. I forgot about the microphones. Well, I mean, so all that demurrage is, is that all these Circles nominally disappear. And so, of course, the total supply of these Circles affects the price. But I don't think by, I mean, so the prices of Circles on the market reflect that supply. So I don't see how, I just don't see a specific strategy for how you would be able to deal with demurrage or like trick it. But maybe I'm missing something. Actually, I think it would be reasonable. Sorry. It would be reasonable once you reach the plateau to keep your Circle level below. That's the idea behind this question. So that you never lose more Circles than your daily amount you gain. Mm-hmm, mm-hmm. We are 80 years in the future now. But once we get there, I think many people will do that. Sure. So you're saying that we're in this world, everybody has 120, 804 Circles. And now they sell their Circles. Change for something else. And then they get them back. And then they buy them again. I mean, if you have a very specific, I don't see how this would let you gain an advantage. I don't see this arbitrage opportunity in doing that. Because, of course, the demurrage, the prices factor in the existence of demurrage. So I would be curious to see a specific strategy to do that. I don't see it off the top of my head. There's a question down here. And is the balance in the liquidity pool of Circles also demurraged? Or just in the wallet? Yes and no. So what happens, I mean, the Circles you create, they're all ESP-1155 tokens. And the contracts apply the demurrage. In the sense that if you check somebody's balance, they factor in the number of days that have passed. And then they subtract that. On the market, we have ESP-20 tokens. So you first wrap your ESP-1155 into ESP-20 tokens. And then those are the ones that you buy and sell. And that exchange, like when you wrap them, that's not a one-to-one exchange. And of course, the ESP-20 tokens, the balance is they are static. So in the pool, your tokens don't suffer from demurrage. But the way it works is that if I have 100 Circles and I wrap them into ESP-20, and then a year later I would unwrap them, then they would only turn out to be 93 ESP-1155 Circles. So I quickly, I mean, I'm going to look at the questions, but sorry for talking so much. I wanted to quickly also make sure we at least show you these tools because we only have 10 minutes left. So this is the first of the three links I showed you. And these are these informal Circles tools. So you can, for example, have a group checker where if you type in, you can look for any group. You can put it in here. And let's look at, for example, at the Dapkon group. So maybe let's kind of get rid of the other complexity. And so this, every group has an address, an owner, a fee collection. This group, yeah, probably a price should pop up in a second. But I can kind of check the price of this token right now, and I can see the address. And I see a bunch of helpful organizations that are also helpful. And in particular, this group actually has a membership condition. So there's sort of a module that checks that people who are added to this group are actually human avatars only. So no group or organization could be added to the group. And we enforce this with this membership condition. And now I can kind of swap. I don't know. I mean, this is not a very liquid group, unfortunately. But if I was to, for example, go back and we have this metric core group, for example, here. Where is it? The metric core group. Then this is more liquid, and I can kind of like see what I could get. So this is the group checker. There's a group creator. There's a tool for group management. There's a profile checker. Some things that are really quite nice. For example, this Pathfinder Pro app here, which is a way to look at these paths. So let's see if ‑‑ sorry. So this is Martin's account. I'm going to look for my main circles account here. So if Martin wanted to send me a million circles or something, then ‑‑ oh, well. We can look at the graph here, right? So this is why I consider Hugo a magician, because he kind of like, while standing there, immediately tells me what the graph, what the path should be like between us. And then I can actually say, look, I actually want to be paid only in my tokens. And this is going to reduce the graph. And so this is a very helpful tool to let you deal with these paths. And actually, you can then execute them directly. So this app is going to give you also the copy to call data. And I can kind of like go and execute this transaction directly. And Hugo has added a bunch of very, very fancy stuff in terms of path statistics. So this is a really, really interesting app as well. We have an equilibration analysis, which is kind of like a tool that looks at how well the arbitrage bots that we're running are at equilibrating the prices. And so this is not a good sign. I mean, we don't use red for good. We use red for bad. But I always can just kind of like make a bunch of things green, but not that green. So, right, there's a bunch of interesting tools here to help people. Also, if you have a group and you want to start putting liquidity against it, this is one thing you could do. Then, of course, there's the Explorer, which I can kind of like give it my circles account. And then it lets me inspect my trust relations and what I've been doing in my trust graph. And app.aboutcircles is interesting because if I have groups or organizations, I can manage them from here. So, for example, we have the Dapcom group. I happen to be one of the admins for the group. So I could now kind of add people to the Dapcom group. If any of you is keen on being added, let me know. We can talk about it. No, you're all qualified. And, yeah, so, sorry, I just quickly wanted to tell you about these things because I wanted to make an interactive workshop where we constantly use these tools to like explore the beauty of circles, and I ended up just talking a lot. Let's move back to the questions. All right. We've seen some cases where circles get stuck along the trust graph. Why does this happen, and how can you avoid it? So this is a real problem. We have had, I mean, I guess, we've suffered from this as well. I think the mental model I have of this process is if you have a circles network where there's very, where there's points of high demand, then they kind of suck in circles into that direction. And this might lead to a situation where you genuinely don't, you know, people have your circles and you can't get them back. And so people have been shocked to find out, you know, where have my circles gone? I mean, all of a sudden, they're very, very, they care a lot about their circles when two days ago they didn't care about, you know, creating a Metri account for months. But all of a sudden, it's very important to them to have their circles back. And this is to be expected. I mean, this is the implication of the rule of trust, right? We go around, and if we trust everybody, then lots of people can take our circles from us. And if that is not a bilateral decision, then, you know, we won't get our circles back. So think twice before you trust somebody. Only trust people who you'd be happy to kind of like have a lot of their circles in your wallet. But that said, it's not just an implication of the protocol, because we've only had a bunch of small groups that we sell offers for in circles, and only very few people in the network have been members of this group, right? We have like a couple of thousand members, but only a couple of hundred of them have been in this group. So the members of this group suffered disproportionately from loss of their own circles, because their circles were in a lot of demand. So we have a job as a team to kind of be mindful about how we distribute demand for different kind of circles across the network. But this is the effect that you've seen. Two minutes. I mean, I would probably suggest that those of you who... Because we don't have... Right, I think we... I feel like me going through this is not going to be the right thing to do. So let me just kind of basically stop here. And those of you who still want to discuss questions with me, let's find a spot where there's oxygen and, you know, discuss them. I'm really happy to. I don't want to shy away from any tough questions in there. But I think it's important that we finish in time and give everybody the chance to check out all the other cool stuff that's happening. So please create a Metri account if you haven't yet. Please run around. Look for trustworthy people to trust. Get in touch with me or anybody from the Circles team if you have questions still. Martin is going to give a talk tomorrow. Daniel, raise your hand maybe. Daniel, he's our tech lead. He's going to give a workshop on the sponsor, where all the booths are in the corner, I think, tomorrow, on all the things I didn't touch on, like SDK, building stuff. There's going to be a civil hunt. So that's really exciting. I'm going to give a talk on the Web of Trust on Wednesday, on the main event.