# Circles - resilient money by koeppelmann | Devcon SEA

- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2025-10-09
- Duration: 13:50
- Topics: Science & Technology
- Watch: https://streameth.org/watch/yt-u257H6Plt-k
- YouTube: https://www.youtube.com/watch?v=u257H6Plt-k

## Description

Circles is an attempt to design money while maximizing decentralization and resilience. Furthermore it tries to find a balance between "newcomers", joining the social contract that any form of money represents, and those already in it.

Speaker(s): koeppelmann
Skill level: Intermediate
Track: [CLS] d/acc Discovery Day: Building Towards a Resilient Utopia
Keywords: macro/micro economics, Public good, Solarpunk

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## Transcript

[Music] yeah all right so I will um give the graph-based uh approach um to to Identity but actually uh circles um didn't um yeah didn't start as a as a identity uh project with a goal to create an identity standard but instead it started or it is a project about money uh and about creating a fair and resilient form of money and essentially it creates this identity graph-based identity as yeah almost a byproduct um so therefore I will quickly do the money part and then uh connect it to the um decentralized identity part and here kind of just this quote uh from yeah Professor Lear kind of just thinking about what money actually is and realizing it is um a social construct and therefore uh it is a choice and it's not a god-given thing uh and it is absolutely something that well we can modify and we can essentially modify it any way we want and we can have other um choices so let's quickly do this exercise and just pretend uh we want to design money right now um and reasons for that I mean uh in the crypto world it's I think it's not unheard of that the dollar or existing currencies might fail so just from a resilience perspective it might be good uh to have an alternative but but just again let's let's just pretend okay we are on an island now we are 100 people uh we somehow stranded there we don't have money and kind of we we think well would be good idea to have money how would we uh do it so the very first approach could be to say okay let's just give everyone um thousand units um but then uh after a couple of days a group of other people come uh comes they also get a th unit but then they spend that and the next day or the day after that group uh left so they kind of just got the money spend it all H and left so was that really a good um approach so maybe idea two Let's uh let's distribute the money instead um over time um meaning per person you get one unit uh one unit of money um over time so let's quickly look at that uh so here we see the um the uh uh money growing um growing linearly um and now let's let's say after after some years we are on this island money grows linearly storm hits uh and unfortunately 80% of the people die so therefore uh kind of now you have much more money per person um in the system and it goes on and goes on and the money per person in the system grows and grows so then uh in consequence um the amount that is newly issued per person essentially um uh goes towards zero and then after some time new people arrive and they are offered to join the system but they there are already millions of of of of units of money in the system um and now we offer them to join our system and say yeah you also get one unit uh per hour but essentially in relation to the existing money it's it's it's essentially nothing so the conclusion might be old money must somehow uh disappear over time and that's how we come up with with the third uh uh idea to say okay there is constant issuance but there's also constant reduction what we call um demage and there you get not going into details but essentially you get a constant or you always stabilize the ratio between new Supply and old Supply that will always converge towards 7% uh in this approach and this is kind of just the balance if you look at one individual U so it goes constant to those it approaches those 120,000 roughly um and here theoretically if after 80 years they die or stop issuing then that would disappear that money so conclusion uh supply of circles is converges to 120,000 okay and one one last thing and then we finally go to the identity part uh so one one way to look at it is also to say there's kind of a tax on money um and if you hold this magic number of 20 20,000 then your marginal tax rate is exactly zero because the new issuance exactly equals out the 7% demage if you have less than that you have negative tax so you kind of get more from the system then you pay into and if your wealth approaches Infinity then at least the the tax on money uh uh converges against those uh 7% because then the new issuance doesn't matter the issuance per person doesn't matter just the um the 7% now finally the identity part um who can create money in this system um and yeah who who can be let in and in circles the radical answer is everyone and that also means fake accounts so you can create uh fake accounts and or basically just anyone can create immediately an account that can issue circles but they are distinct so of course you could not say they issue they I mean if they could all issue the same circuit then of course that currency would be completely destroyed because just anyone could create but of fake accounts and so everyone creates their own distinct version of circles and now um we form this web of trust so here person a has 300 a circles and kind of they are issuing circles at this rate of one per hour circles person B issues B circles and now they can trust each other and trusting each other means they are willing to exchange their circles um one to one uh meaning B is is accepting a circles and is willing to exchange either accept them or exchange them against any other Circle they hold in this case um also B circles so here let's say a wants to do a a transfer to C and the important part is C doesn't need to know a or trust a but as long as there's a pass between the two then a can send 100 a circles to B and B because they are willing to um yeah exchange a circles for B circles can forward uh 100 B circles and that's very important that they forward B circles uh to C so C is person C is just receiving B circles so circles from a person they trust so whether a exists or not is not relevant to C because from their perspective they just got paid circles from a person they trust so whether a is the is a fake account or not is is is not um um affecting C and we will see those those those things uh even in a larger graph summary three real three rules of circles that's all what circles defines issuance one per hour 7% demage and this um trust system that I just described now um circles is a system that was launched in October uh um 2020 and here is how it looked like after uh a couple of hours so this is how the trust graph formed after some hours that was after um a day and that was that's how the trust graph looked after um uh a couple of weeks so we have that amazing trust graph already with um over 100,000 um well hopefully mostly people um and here just just a real world example so then circles went into a period of of of trying to to make that form of money work here is the a basket on a on a farmers market that sold for 450 um circles and here is an actual transaction of on the left side me um transacting to that um yeah Power direct this is Farmers Market and because they didn't know me they didn't trust me but they trusted those uh entities and there is essentially this trust pass so that that that's how how a trust pass or concretely a circle section looked um uh in in in in practice so now um yeah essentially circles creates as a byproduct uh a digital identity system and we would argue that it does that well because it's not the primary objective or more so speaking so we are creating this um web of trust but in previous approaches let's say pgp um trusting someone didn't NE necessarily had an economic meaning in circles it does have an economic meaning because it says yeah I'm I'm willing to exchange um I'm willing to uh accept the circles from that person that that person's issues and I'm willing to exchange it against any Circle I hold and if I do that too Loosely so let's say a random telegram uh Channel someone says yeah can you please trust me and I if I then do that essentially what it will what will happen is that I will lose all my circles because sooner or later Bots will come and and um and um yeah generate circles if I trust them then I end up with their circles that no one else uh in the network um uh once so essentially I end up with unspin circles which is equivalent to I I lose all my circles so long story short um trust has economic meaning in circles um but yeah of course the important part is uh circus doesn't create an absolute identity it always creates a relative identity so relative to that group that initial set you can say those accounts are likely human are likely human but my take would be that I think there are very very few uh use cases for absolute identity and in absolutely most cases you want relative identity but probably we can discuss that uh also more on the panel later last part uh we are um upgrading circles slightly to circles uh 2.0 and adding another layer what we call groups and from an identity perspective that would probably be attestations uh here just one more so circles is or there is this tradeoff between resilience and efficiency and I think circuit in its core version goes maximal resilience so you have all those different currencies and the idea is okay if just we three trust each other and we we are just connected uh kind of the rest of the world uh cannot harm us and regardless what the rest of the world does we are not affected that's maximum resilient but not very efficient to have all those uh so we are introducing groups which allows you to pick any um any uh sweet spot you want on this resiliency um efficiency trade-off so groups essentially just allow you to say okay you give some attestations to some of those personal circles and kind of bch them together and create a fungible um circles uh um for that group so you can have here on the lowest layer those individual circles and then you can try to say okay it's let's do some city city cir or some some Regional circles you can go higher Europe and you could go all the way up here and that could be let's say even World coin or World ID so where you try to have this this this largest group which would be most um which would be most efficient to just have one group but I would argue also least resilient uh so yeah just here uh if you if you trusted by a group you can turn your personal circles into a kind of Vault contract and issue the equivalent amount um of group circles and you can even do that so here person B is not trusted but they hold Circles of person a uh and as long as a is member of this group they can still use that to Mint um that group currency uh here just um yeah we will uh expect to have all kind of groups so just to mention a few things that are here so we could have a group based on Zupas and World ID on poops on local groups manual groups um those those kind of things so last thing uh here looking at uh where is circle so again showed you some pictures from the October 2020 launch then we did a bunch of experiments a small scale trying to make circles work and balloon and barley um but recently yeah a couple of weeks ago we released circuit 2.0 at least the developer release and for early um yeah 2020 we are uh sorry 20 next year uh we are planning the um circuit St o launch and yeah we are looking for people that are crazy enough to try to uh use this uh new form um uh of money and if you want uh to join us um there is a um yeah there there is a sign up list behind this QR code well thank you thank you Martin