# Circles-Money, Reimagined

- Channel: [Dappcon](https://streameth.org/dappcon)
- Date: 2025-06-17
- Duration: 33:51
- Watch: https://streameth.org/watch/685146124ac43bf73d35b051

## Description

by Martin Köppelmann

## Transcript

All right, yeah, another year of DEVCON, good to be here again, again talking about circles or sub-line, I guess I get the question a lot after 10 years, yeah, why are you still here, why are you still building? And I want to connect that to a person I appreciate, Rutger Bergman, who recently published a book Moral Ambition, and yeah, it's simply, yeah, tries to ask the question, what are things that are worth to put your talent and your effort into, and he obviously makes the observation that a lot of people, yeah, in a way waste their talent, go into corporate jobs, he calls it the, yeah, Bermuda, where you start as a student and then you end up in this Bermuda triangle between corporate, law, consulting, and kind of, yeah, traditional finance, and kind of in that Bermuda triangle, lots of talent and work is essentially then wasted, and people with initially ambitions, yeah, spend their day on zero-sum games and, yeah, essentially not improving the world. I tried to, before we go into circles, tried to find the bigger picture of the things that in my view, we as, yeah, a broader Web3, but kind of certainly also NOSYS, are trying to contribute and in what way we are, yeah, potentially can fill this moral ambition of, well, not wasting our time, but doing things that have an impact. So I tried to summarize the things with, the first one is, yeah, increased efficiency, so basically make things better work, and just another way to look at it is grow the pie, just don't do zero-sum things, do things that are actually productive, do things that actually, yeah, make more of something for the world. But the second thing is as important, and that is, well, if we grow the pie, if we can increase efficiency, we still also make sure that the world benefits from it, and that not only, part is, yeah, distributing ownership, and yeah, again, making sure that this hopefully larger pie is enjoyed by more people. And the third thing is also, yeah, not the perfect articulation of that idea, but I do think, well, obviously we are polarizing, we are polarizing our world, it's more polarized, we see worse and worse again, and I tried to articulate this thought that also Julian Assange at some point articulated, and he tried to make the connection between, yeah, essentially leaking data and therefore kind of revealing the truth, he made the connection to that ending wars, because in his assessment he said every war is started or based on lies, so kind of, some people believe that, but people believe different things, and those are lies, and that is required for them to be in a war. So I would say at least if one has a better shared truth or shared understanding of each other, it seems to me at least that that could be a way to reduce, yeah, wars. So now the problem is, I think we have here a lot of people who share those, yeah, I guess moral ambitions, but that's of course still not enough, because ultimately if you build stuff, if you do things, but you, yeah, you just stay in your closed circle and you can't reach the world beyond, you can't reach users, then I would still say even with the best moral ambitions and with having the right goals, if they don't result in, yeah, in concrete results, then I would still say that's not enough, and of course we want to go beyond it, and we will have a panel discussing that topic, have we actually improved the world in a way, tomorrow here on stage at, yeah, 3.10. So what have we done at Gnosis? So kind of here in the hall next to us, you see this, yeah, this wall of kind of bit history of the last 10 years of various projects, yeah, we have been working on, and I tried to put the various products here into the category, so we have things like, yeah, Gnosis Pay, or just a general concept of using blockchain to facilitate payment, stable coins, and those certainly can increase efficiency, legacy banking and financial software, certainly there's a lot of waste and things can be done cheaper, more efficient, and therefore give room to, yeah, essentially grow the pie, make more of it. Similar thing, Cowswap, we do believe, yeah, that you can do trading without leaking value to arbitrageurs, or reducing the role of market makers, and again, just making the thing more efficient, and let's say, in that sense, growing the, and yeah, and a few more, Gnosis HQ product recently joined the Gnosis ecosystem. Okay, anyhow, don't want to go all, into all of them, yeah, then the next one, ownership distribution, the concept of the DAO, the concept of the chain, where the chain, or one of the core promises of Gnosis chain is that it is actually run by the people who are using it, so it's not one company, one entity running it, we really, yeah, I think it's important that you can run your own validator, have actual, well, power, and ownership over the platforms. The third thing, that's probably least concrete, but I still believe that prediction markets, conditional token framework, and also techniques that you can use that result from this web of trust that we are creating with Circles, and we will look more into that, but they can also be used to, yeah, better spread information, and therefore, better create this shared truth. But then, going back, the reality is also, yeah, we also have not, have not, yeah, reached the reach we need to reach, so, we still, we have been building for a long time, and we still are just at a couple of thousand users, so here's GnosisPay, weekly, or those that transact weekly use the card, and it's just still, yeah, shy of, or a little bit over 4,000 after roughly one and a half years, and okay, with Circles, it's now launched, yeah, a couple of weeks ago, and well, now we are also in similar numbers, still tiny, so, absolutely, the goal needs to be that, yeah, I don't want to be on stage of another DevCon, talk about moral ambitions, and what, 10,000 users, so those things, yeah, that is absolutely, or will be a priority for us. Maybe one more thought on that, so, on the previous slide, yeah, this conflict between, yeah, trying to do, yeah, important or the right things, but then, yeah, not having users, not reaching users, so one thing, even here about DevCon is, people say, and I think they as marketing, and so on, and yeah, to some extent, that is the positive, but to some extent, yeah, I definitely also see the risk of just building, yeah, building stuff, and then not, well, not having it used, and not having, yeah, not doing enough in that sense than marketing to get it out, because again, I do think if we want to make a difference, we will need to, yeah, get the things used, or get the things out that we are building. All right, now, with that kind of introduction, or maybe, yeah, high-level thoughts on why we are doing what we are doing, again, quickly, or, well, going, talking about circuits again, so it's probably not the first time you have, or for many, not the first time you have yeah, hear me talk about circuits, but yeah, we made significant, well, progress, again, last year, I was also here stage, talked about circuits, but now, finally, yeah, a couple of weeks ago, we launched Metri, hopefully many of you had already the chance to try it, there are more, yeah, experiences here, or things you can try it out, but again, now, quickly going through the why, money is a technology, and it's probably the most widespread and most, the technology that defines our lives the most, so again, if you go to another country, you don't speak the language, you don't speak the culture, but almost everyone in the world understands money, and in that sense, the rule of kind of how money works is, yeah, it's defining our society like hardly anything else, and there is one element of money that is easy to understand for everyone, so you somehow, for the individual, you somehow get money by earning it in some form, and then you can spend it, that's easy, and on the surface, it seems like there's not much to decide here, but if you go one step deeper, and if you try to understand where does the money initially come from, how does it get into circulation, who can decide when it gets into circulation, then you do understand that money is absolutely, yeah, not neutral, and that those decisions of exactly how this money creation process works play a huge role in shaping, yeah, and let's apply the, yeah, I guess those principles of making sure that the power is distributed, and the benefit of it is distributed, so money circles fundamentally puts the human, the individual at the center of that very critical process, or very critical role of where does the money initially come from, how is it created, so, yeah, and we have the technology to rewire this, the stack, so again, probably you also have seen that a couple of times, so in circles, all money is created on a personal level, people are, can, who join the system are allowed to issue one unit per hour, and that is how it comes initially into circulation, after that it behaves just like money, you can spend it, you can buy it, you can earn it, you can trade it, you can convert it into other currencies, but this initial, how does it come into, yeah, into the world, that happens time-based per person, the second thing is, there is a constant, if we continuously issue new money, the total supply would always grow, and over a long period of time, then this right to issue just one more unit would essentially, its value would diminish if the total supply would go towards infinity, if we just would keep issuing money, therefore the second rule is important, because that makes sure that in a way old money, or money is also, old money is also constantly, yeah, we call it demoraged, burned in the app, so it basically disappears, and that leads to a situation where this right to issue new money will have a fixed value, and the third one, selective trust system, yeah, just means there is no central gatekeeper, no one who can say who can join the system, but to protect against sybils, or decide with whom you want to interact, we have this web of trust, and we will look into that in more detail. Here is just again the curve that follows from rule one and two, so it's just a hypothetical one person that is issuing money for 80 years, and in the beginning, it increases more or less linear, and then the 7% kicks in, essentially it leads to a stable supply of, or eventually it will lead to a stable supply of 120,000 units per person, and here hypothetically, if they stop issuing, because they die after 80 years, then essentially the money they have issued will still stay around for a while, but over time it will disappear from the system, and that's again because of the 7% demorage. Yeah, so long term, Bitcoin has this magic number of 21 million, in circuits the magic number is 120,000 units times the people, number of people in the system. If it's only 10, it would just be yeah, 1.2 million, if it's a million people, then it would be a million times 120,000. Yeah, quickly here, just another perspective is all balances are continuously converging towards this larger number, or at least all balances of humans. If you have less than this 120,000 in your account right now, then the right of issuance is larger, or that will produce a larger amount than those 7% demorage, and if your balance would be larger than 120,000, or is larger than 120,000, then this demorage would be more significant, that your total amount will every day slightly decrease, and kind of the effective tax rate that you pay, kind of the burn offset by the issuance, converges towards 7% if you would hold an infinite amount of circuit. All right, again, core idea of circuits, it is completely open and permissionless, everyone can issue currency, everyone who is in some form part of this web of trust, and now, this of course always triggers the question of civil attacks, so the idea of how do we prevent that a person can create multiple accounts, and the key thing here is that circuits are not fungible, or are by default, everyone again has their own personal circuits, and they are only made fungible through this web of trust, so here A, B, C, A and B are trusting each other, B and C is trusting each other, and A wants to pay to C, then C would not accept the A circuits that A holds, because they don't know them, they don't trust those circuits, they don't want to hold those circuits, but it is possible that, and this can happen without person B being involved in this, it can happen, so A will send 100 circuits there, and without B being involved, 100 of B's circuits can be forwarded by the smart contract to person C, and person C is happy, they receive B tokens, or circuits from a person they trust, that they know, and person B now has, yeah, kind of, after the transaction has more of the A tokens, less of the B tokens, but their total balance doesn't have changed. Here is how that looks today in the Metri app, this is my account, today in the morning, I hold 37,000 circuits, and high level, that's all I care about, but if I click on the circuit balance, I kind of get a breakdown of the individual circuits I hold, so I hold 2,000 of my very own, and then I hold, the list is a bit longer, but I hold circuits of those people I trust in the time, so if someone right now is doing circuits transfer, it's possible that it will go through my account, so if, for example, they pay someone who accepts margin tokens, and they, the person that is sending doesn't have margin tokens, it's very possible that just in this very moment, someone is sending me more, let's say, Ella tokens, a thousand, and then I would have a thousand of that more, and a thousand less of the margin tokens, but for me that's fine, because my overall balance stays the same. To, so, the funds are built, or that pure web of trust system creates, yeah, creates a system where if the graph is densely enough connected, then there should always be a connection from anyone to anyone, and kind of essentially the circuit should be spendable. In practice, that already right now is sometimes not the case, so sometimes you will hold circuits that, where you can't find a path to the person or to the thing you want to interact with, and here, and here groups are or will play an important role, and groups essentially, yeah, gives a way to delegate trust, to say, okay, I not only trust those couple of people individually, there is a group mechanism that, and for example, for DEPCON we have a group, that everyone who visits DEPCON can join the DEPCON group, and then you can basically just say, okay, I trust this DEPCON group, and implicitly that means I trust everyone who is in the group, so it's just a way to scale the web of trust. Fundamentally, by doing that, we are giving up a little bit of the extreme resilience that circuits have, because if such a group is, or those groups, of course, can, well, can, could develop into, yeah, very large groups, and therefore, then also kind of into PowerPoints, or into choke points, let's say, but it is possible for the user to, yeah, kind of to pick whether they only kind of are very local, trust people directly, or, yeah, or even trust groups, and you can have groups of groups, and in theory, you can have, yeah, then very large groups. Here's how that looks concrete again in the app, so we have a bunch of groups right now, and that also means it is possible to also hold group circuits, so a group means, or group circuits means those are all backed, or, yeah, if I hold right now 11,000, or 5,200 DEPCON circuits, then it means those are all circuits that have been backed by members of the DEPCON group, so, yeah, so if you hold an individual as part of a group, you can convert this individual circuit to the group circuit. If you go back from the group to the individual, you have no guarantee that you will get back this individual that you put in, you will just get any individual circuit from, yeah, just any, or it can happen that you get any who's a member. Yeah, here's just a visual representation of the DEPCON group as it, yeah, looks today in the morning. Yeah, this is kind of the web of trust of, yeah, many people here in the room. Last quick two remarks. We do think that for a long time, I think the ethos in the Web3 community was always, yeah, no fees, no rent extraction and so on. In Circles, we right now have introduced quite a bit of fees, and very deliberately, because in my view, if something is offered for free, then usually the playbook is that, okay, there's a lot of VC money going in, you offer something for free, you kind of create network effects, and then years later, once you have kind of those network effects, then usually the model goes that then you can start to extract value. In Circles, Circles is a protocol at its core without any fees, without any owner, without any admin, without anyone who has, yeah, a privileged role, and in that sense, it's also, to some extent, a problem, because, yeah, there is no large investor who can push Circles. So, what we did is that we do think it is important for those who are building around Circles, let's say wallets, and yeah, right now, to a large degree, Gnosis is doing that, and that on those levels, fees are taken, so that it is, yeah, that is essentially then sustainable or worth it to put in significant resources that are needed to bring, yeah, something to the world, and to some extent, it's also then an invitation for other wallets to build also wallets that can also charge a fee, because if we would build a wallet and it wouldn't charge a fee, then, yeah, it would be very hard to build another Circles wallet, which we certainly hope. That being said, no fees on the protocol level. If you want to avoid the fees, you can absolutely do that. Yeah, just as a side note. Liquidity, I think I don't have time for that, but also here, liquidity is distributed, so Circles are tradable. We have this concept of Circles backers, people who individually put some liquidity behind their Circles, but most liquidity is in groups, but then all of that is somehow connected through the trust network, because the trust network is also a form of liquidity, so if some Circles have, or someone's personal Circle has a price, my Circles have a price, but we trust each other, then essentially we are also not, we not only have liquidity against an external asset, but we have also liquidity against the other Circle, and that has, again, liquidity against an external asset. So, what I'm trying to say is, Circles can have individual prices and they can differ, but through the web of trust, they are all interconnected, within a network that is highly connected, Circles will have the same price. Yeah, I'll skip that, ask me if you want to know that in detail. Lots of options to create groups, so there are all those, yeah, identity solutions out there, so groups can be, like here, a DEF CON group, kind of based on physical events, but they can of course be based on stuff like ZK Passport, or even biometrics, or whatnot, and they can create those larger clusters of trust, I would say. Okay, finally, a bunch of links, but maybe even more important, yeah, here, there is a Circle booth around the corner, and there are a bunch of things, how you can just very practically try Circles, and often that helps you understand all the things I try to say, much better than those, yeah, theoretical concepts. Thank you. We can take some questions, I think so. So, yeah, let's see, raise your hands if you have any questions. Hi, thank you for the presentation. My question to you is that, played out, you know, 10 years, Circles is successful. How does the world look like, or what's your hope about it? Yeah, well, I mean, yeah, if it is successful, it would mean that, I would say there are two elements to it. So, one is the pure economic impact, and the pure fact that then, in that world, a decent percentage of the value of money creation would just be distributed on a per-person level. So, we have in the past, I mean, we can give a rough estimation of what that value could look like. In the Eurozone, for example, or you can also, yeah, Eurozone, if you look at how much money comes each year freshly in circulation, and if you would just divide that amount of money that is, yeah, each year is kind of, in a way, printed, if you would distribute that per person, you would get something like €350 per person. So, that is, I would say, not quite a UBI in Europe, but still a substantial amount of money, and it would certainly be an amount of money that, yeah, could eradicate global poverty, yeah, or absolute poverty globally. So, I would say, best case, yeah, circles can be a tool to eradicate absolute poverty and maybe more be a global UBI. That's, I would say, the pure economic thing. The other thing is that I do believe, and I tried to hint at that at a very early slide, that is having a web of trust or, yeah, as a core mechanism, that that can also be used for other things beyond kind of this, well, this crypto UBI, and things like, yeah, information or making it better to make, well, sense of the world, finding this shared truth, but I'll just leave it here at the side. All right. I see one. Hi, thank you for your talk, Martin. I'm the founder of Greenroot Wallet, and we like to have a program for that, or something like that. No, for sure, for sure. So, there is an SDK, and we absolutely, yeah, absolutely want to make it as easy as possible. Come talk to us. Great. I suppose in the future, circles is everywhere, and I end up working for a serial killer. How do I ensure I'm not left holding the bag? Say again, you are working for a serial killer? Yeah. Presumably, if I get all my salary in boss, CRC, and my boss turns out to be a serial killer, how do I ensure I don't end up holding the bag? Yeah, okay. I mean, in a way, you can always decide what circles you hold. So, by deciding who you trust, either with individuals or what groups, you decide. So, then it doesn't matter who is paying you, and what they are paying you, kind of this pass transfer will always ensure that you hold the group, the circles you trust. Now, holding individual circles will always, I guess, or is in a way, or I do think groups will play an important role. So, here, we will need to have this abstraction to have a currency that is more fungible and more, in a way, reliable than those very, very individual circles. But I still do believe that this core promise that all money creation in the system is done on an individual level, and then just on a higher level, kind of that is then aggregated into more fungible and, in a way, more abstract things that then are supported or carried by larger groups. That, I think, brings the stability that you are then not exposed to very individual people in their trust network.