Funding Ethereum with the Protocol Guild by Trent Van Epps | Devcon Bogotá

foreign [Music] oops can I think I left my water over there can somebody grab that thank you everybody who's uh here to listen to this talk um honored to be speaking at Devcon I never really imagined I would be doing that a couple years ago when I first got into ethereum so uh honored to be here and um happy to educate or communicate what we've been working on here with the protocol Guild so the title of the talk is funding ethereum with the protocol Guild uh like Karthik mentioned my name is Trent van apps I am a member of this Guild however I do also work for the EF on the protocol support team which is uh we we work on network upgrades and generally coordinating the ecosystem around where the protocol is going and how we can improve this coordination process so a brief intro I'm assuming most of you are aware of this but uh never hurts to step back and think about what we're what this topic is so ethereum generally is a globally distributed computer that anyone can use anyone can access um uh people can deploy contracts to it they can send transactions and interact with it anywhere around the world this means that ethereum the network so mainnet is a screenshot from etherscan there and this is a public good that users of the network um can depend on and use throughout their lives they can trust that it's going to be a resource for them nobody can stop them from using it this is stretching in the definition of public it a little bit because we have transaction fees but generally um we can we can understand it to be this and if we take a step back looking at the yellow paper this is the ethereum virtual machine this is a another public good that ethereum developers core contributors they maintain and many other chains uh besides ethereum also use the evm so these are two fundamental public goods infrastructure that people depend on they build companies on they store their finances on and they're really important for people to actually have access to and if we're thinking about the different categories these can include you know the research about where the protocol is going uh the client developers who are implementing the protocol as it currently is the coordination like I mentioned the work that I do along with many others to shape Network coordination and then there's tooling so what developers actually use to interact with the chain and then that brings us to the question of how are these uh these areas of public goods funded a big one is the ethereum foundation um you're probably aware of what the ethereum foundation is and what it does it funds a huge number of initiatives in the space sometimes through direct contributions sometimes delegating funding to specific ecosystem groups or things like the client incentive program where it it gives eth directly to client teams to run validators and it unlocks over a specific period of time and then outside of the ethereum foundation there's groups like optimism giveth git coin CLR fund who run matching rounds quadratic matching rounds where the community can participate in actually funding these important public goods things that people depend on and then another smaller project which you may not be aware of is called open grants which does vested eth to specific groups there's a some projects that are using this to fund public goods so yeah there's quite a diversity and I think this is um uh one of the strengths of ethereum is that it has a diversity of approaches Kevin owaki uh formerly the founder of git coin uh had a talk earlier that I was on about uh practical pluralism and how important it is that we have these many overlapping approaches to how to fund these important initiatives how to get funding to people who are working on infrastructure and this is a great visualization of I'm sure I'm leaving out some projects so I apologize but there are these projects on the on the slide and many more who do the important work of getting money to public goods infrastructure the developers who are actually building the things that we depend on and I'll Echo that by by saying uh many Community funding mechanisms are good it decentralizes power and influence away from uh single entities it celebrates pluralism like I mentioned um prevents influence from being siled with individual allocators and it strengths strengthens the intra-community relationships however uh especially the quadratic funding mechanisms they often use similar curation techniques for example it weights the matching pool division according to how many people donate to a specific Grant and this is not to say that's a bad thing it just um it's it can have a challenge when it comes to delegating funding or getting funding to areas of the protocol that may not be a fit for quadratic funding so this is the question is how can we curate better specifically related to the core protocol and then even more broadly how can we incentivize long-term core protocol contributions so this is a a big question that's you know been around as long as open source software has has been worked on and it's not a new problem for ethereum uh people have talked about it over the years you know people join core development they leave core development it's something that will be with us as long as we're producing software and modifying the protocol so these are these are the big questions um that came to mind um over the years they've been a recurring set of concerns and especially last year November the discussion in the community began again about how can we properly incentivize contributors to stick around while also making sure that they're financially compensated so uh when this discussion came up last year there were um my perspective of being around core development for a few years now and then working with core developers directly some researchers we started to think about what sort of challenges uh were most important to address when thinking about what sort of mechanism would be best to design and if I'll go through the first through here just an overview and then the next slides detail out what these challenges are so the first challenge curation is hard the second the incentives are imbalanced and the third contributor churn is bad so the first challenge about curation the ecosystem is very interested in sponsoring this guy The Princess and the magician the ecosystem of broader individuals Dows protocols l2s they're interested in funding the core protocol but they don't have a single mechanism to send funds to there's uh sometimes projects will publicize their you know ethereum address that you can send donations to but it's not necessarily easy to find all of them in a single location um similarly protocol contributors are interested in receiving funding some of them may not be directly working for a team but they're doing important infrastructure work they're interested in receiving some form of financial compensation for the work that they're doing but there's no single mechanism for them to plug into and be recognized for their work and then on top of that some of the existing Solutions favor teams due to the difficulty of curation like I mentioned the solutions favor teams and it's really hard for them to surface many individual contributors for example in a grants round um and we can't expect a single organization to uh that's outside of this core development or this core infrastructure to effectively curate the work that these people are doing you know it's very deep technically uh it requires you to sort of be embedded within that work and it's it's not reasonable to expect a single organization like Bitcoin to really effectively curate who's doing the work at the core protocol and and how they should receive the funding uh so the response to how to address this question is um we should uh designate a contract on on chain that is regularly updated by the the members themselves so people who are doing core contributor work uh they're updating this membership registry the second problem is that the incentives are unbalanced uh so this is maybe a little self-explanatory but I'll go into it l2s D5 projects token projects things that have Equity there's a stronger incentive for uh people to go work on them rather than the core protocol and this is completely rational you know if you're weighing your options here ethereum just doesn't have token incentives or Equity or anything that can similarly be offered by applications or l2s however it still needs to attract and retain talent to evolve the protocol you know ethereum is uh an infrastructure influx there's a lot of changes that we'd like to make to better scale to become more secure and we need we need really smart people working on these problems but we should be compensating them fairly it's totally rational to pursue something with um you know greater Financial upside and I don't follow people for that or for other protocols leveraging these these incentives however as the broader ecosystem continues to grow competition for these talented individuals is really going to only increase of course Financial motivations aren't the only or best motivator for people we just want to recognize that it's just one tool in our tool set that's being under leverage so the problem of imbalance we can address this by tapping into the the financial value that all of these amazing projects are building on top of ethereum and getting them to contribute some of them back to the people who are working on the core protocol the third challenge uh exclu excuse my rushed Graphics here but the contributor churn is a challenge when it comes to the core protocol it can take you know six to 12 months for somebody joining a client team to really start to understand how that they can contribute to the client effectively and start making a meaningful impact on the work so there's a steep learning curve for new contributors to to deliver value however the contributor value does grow over time if you stick around but there's less incentives to stick around if you're once you're an expert you you sort of reach a certain level of expertise with a client code base for example so one of the things we thought about how to address this contributor churn is that membership eligibility to any sort of public goods funding mechanism it should only be after six months of regular contributions and that assets should invest over time in order to incentivize this to incentivize this knowledge transfer between different cohorts different uh generations of people working on the core protocol you know there are some amazing people doing work today that maintain clients and make ethereum infrastructure in the protocol possible but eventually they're going to move on or retire if we're still around in so many years and we need to make sure that the next generation of people that are going to be maintaining this software are ready and incentivized to stick around similarly so as you may have guessed I'm describing the protocol Guild which started as an idea last November and we've been building it since then we worked with a team called Xerox splits to design well they already had a split contract but we worked with them to design a vesting contract and it's a collective of today 119 ethereum contributors and we're working to rebalance the incentive address all those challenges like I laid out in those previous slides and here's a very simple diagram the sponsors these can be anybody in the ecosystem individuals projects large scale small doesn't matter anybody who's interested in giving back to a really highly curated set of core protocol contributors they send funds in whatever form they are to investing contract over a certain amount of time and then it goes to this weighted registry which is regularly updated by the the membership itself and that's the key that it's self-curated because you know you have a really high signal for the membership and the fact that you know that these are people who are doing really crucial work I'll dive in a little bit into eligibility and self-curation like I mentioned to be part of the protocol Guild it it has to be you know something Beyond a typo in a client code base or something and Beyond six months we want to make sure there's a there's a high threshold for people who are actually really committed to this infrastructure work and touching on self-curation again the the reason this is super important is because it avoids intermediation between external curating entities which may or may not be really close to the work that people are doing so like I said you get a really high signal curation and you can be assured that this is going to be consistently updated over time with a membership that's really contributing to the core protocol and it's incentive compatible because adding new members dilutes existing ones so you don't have to worry about new members just adding anybody in the ecosystem there's a cost to properly curating however if eligible contributors are not being added then it removes any legitimacy that's built up over time and external funders won't continue funding this mechanism so we hope that these are sufficiently balanced against each other but this this next year is sort of a learning period uh over yeah it's a learning period so we've launched a one-year pilot to test out the assumptions about the challenges that we wanted to address as well as the assumptions about what the best ways to approach them are how long should vesting be things like this so we're working on that we we launched the the protocol itself in May of this year and it'll run until May of next year and so far we've raised 11 million in sponsoring assets and like I said these will vest for one year overtime again to incentivize long-term contributions knowledge transfer between different cohorts of core contributors and it's it's been very awesome to plug into existing funding infrastructure to touch on this idea of pluralism in funding there's a git coin Grant we've tapped into some Dow treasuries who fund back in their native token so shout out to the people that have funded including uniswap Lido ens noun style to name a few as well as this Norm that we want to pursue of one way to scale the incentive uh the treasury sorry uh to build the norm around allocating a percent of the initial Supply or annual revenue so again another shout out to True Freeze gnosis safe and texture punks and nft project uh they've committed to contributing some some of their revenue and over time we we want to build this more and more um we're not saying that this is the only or best way to fund uh through you know initial token allocation but we're very excited to explore this with the broader ecosystem we're already starting some discussions with l2s about how they can directly fund um this this incentive mechanism and one thing we really want to be intentional about is documenting the outcomes to see you know does this really work does this increase the incentive to contribute to the core protocol we hope it will but we want to make sure that the community hold us accountable and we really iterate and improve the mechanism over time uh one of the cool things is because this is all on chain anybody can track it so if you go to Dune analytics and search protocol all Guild or something monkey sorry I can't remember the name of the contributor but we've been working with someone to put together this dashboard and anybody can track the finances of this on-chain protocol incentivization mechanism which is pretty amazing you can see the membership uh the the total weighting of their share of the the proceeds who has contributed uh really great data source and um awesome for transparency if anybody's interested in tracking that so I'm ending a little early if there are any questions I'd love to talk with anybody who wants to learn more about the mechanism if you're part of a D5 project or something that's planning to launch a token please do come talk to me or any of the members there's a ton of core developers here who are part of this project that QR code I think takes you to the docs or somewhere else relevant so yeah and then there's some bitly links if anybody's curious to explore more that's my handle and then you can follow the the organization itself at protocol Guild on Twitter yeah so thank you for the time again to the Defcon organizers for giving me space to talk about this public goods funding is incredibly important and uh it's it's important to have also a variety of approaches different curators different uh mechanisms so that we can make sure that the incentives to contributing back to the ethereum protocol in the context of amazing application layer projects is maintained over time so thank you and I'm happy to take questions if there are any we have a question here we'll give the mic to the gentleman over there if you have more questions please just raise your hand or get to the end of the line so we can quickly give you the mic and I'll let's begin with the question Adrian thanks um amazing initiative thank you for giving the speech I had a question about the recent acquisition of uh prison um I'm curious if you could comment on that like obviously on one hand that means that there's I guess less pressure on the protocol Guild to fund those developers on the other hand is that the kind of outcome that we strive for now obviously arbitrum they're a they're a good actor I think they have a great reputation um but one could think of some potential downsides so I'm just wondering how does a protocol Guild feel about those kind of outcomes what sort of downsides do you see undue influence I mean obviously we have like nine teams in total who are contributing to this if I'm not mistaken um and so you know We Trust arbitrum if um if they start doing some weird stuff you know there's other options for people to choose different clients um and obviously if we have many more clients their influence uh you know they won't really have an influence um but nevertheless you know they have certain interests um they might like they're probably going to launch a token tokenomics how do they pump their token you know these kind of questions yeah you definitely uh pick the hardest question um it's given they announced yesterday so yeah this is this is really interesting and digs into it touches a lot of different areas about protocol governance incentivization um funding the core protocol work and like you said I don't I know them all personally um so I do have a bias here but I do expect that they will maintain their neutrality um I can't comment super deeply on it again because it just happened and I'm still digesting still understanding the the mechanics of it but I don't expect that there would be any uh undue influence exerted by the L2 and like you said if there were red flags starting to appear I'm pretty sure the community would call it out pretty fast and either arbitrim or the Prismatic team would adjust course pretty quickly but yeah that's the short answer I saw on the other hand do we have more questions um what's the like let's let's say someone's leaving the protocol Guild what's like the process for the off-boarding like do they have an amount of time or has that been thought through much uh leaving or joining leaving um if they're leaving so they can they can claim any assets from vesting at any point but there are windows in the contract so once they leave contributing core protocol work they can they won't receive future vesting but they they can claim at any time it's permissionless like that does that answer yes anybody else I have one sure how do you think about deciding what should be funded and how do you sort of in a way prevent or get ahead of not having favoritism kind of come into play yeah um this is something that we've been trying to iterate on through the pilot and one of the reasons we wanted to start really small I mean 10 million is uh it may seem like a large number but split between 120 different core contributors it's not not that massive but we were very intentional about the amount of money that we're raising and and that's one of the main reasons is because the eligibility framework isn't going to be exactly right the first time and we're going to need to iterate on it and so that's part of this pilot is figuring out um what sort of scope we want to take on and I think what we've learned over the past six months since May is that it's probably better for a more narrow scope and to be as explicit as possible so if you're working on a research team if you're contributing to a client code base or doing coordination we want to make sure that it's it's very clear that these are people who are contributing value because if you aren't explicit or don't maintain rigor in the eligibility process again the mechanism will lose its value it'll become a lossy signal for people who are interested in contributing to something that's that's uh going to get their money to go to the right place so um make sure that we're iterating and starting small is how we've approached it that's great and just out of curiosity did you kind of compare this thing with the retroactive funding model and sort of what was kind of the the pros and cons list that you made made you kind of pick this model sure so resurrective funding is great in that we can also plug into that however uh these individual teams they don't have to apply on their own or the the because protocol protocol Guild is biased towards the individual um it's you can imagine it's sort of like a collective or a union that represents them and makes it very very straightforward for people interested in funding like like optimisms retroactive funding program they can just point it to a single address and scale it accordingly however much they'd like to give back rather than uh possibly missing somebody who did crucial work over the past two years they can rest assured that this is this is a mechanism that's going to be very very tightly curated but yeah I'm super excited to plug into retroactive funding continue to have a good coin Grant things like that is uh all possible and I'm sure there will be even more mechanisms in the future that are a good fit for these types of things awesome to any other last questions great well please give Trent a big round of applause thank you [Applause]