ETHWarsaw 2023: Julian Zawistowski, Octant - What's at Stake: ETH & Public Goods Funding

uh hello everyone um happy to stand in front of you to tell you about the project that we are just starting right now so the octant went live um 3 weeks ago and we are in the middle of the first Epoch for the octant public goods funding but before I come into details of like what exactly octant is and what we do I have to figure out how to change sides okay now so public goods is like a really louded term and I don't want to spend much time into digging on the exact definition of a public goods especially as there is like a no like a pure public goods in a in a real life but in our space I think we are accustomed to using that term for the parts of the digital infrastructure that are critical for the functioning of our ecosystem but which do not have like a very straightforward um model to generate revenue and if you think about that like the the lower you go into the stock the the more often it is the case and sometimes you can see examples of the like a wildly successful projects that do not really have any intrinsic funding mechanism and I would say even ethereum is an example of of of such a project because what we see with the ethereum development right now and since the very beginning is just using the the the huge pile of gold mostly by the ethereum foundation but also by other parties to finance the the groundbreaking very important research and development that does not bring any further profits for the creators other than increase of the value of e so what is needed to fund public goods I think there are like a two basic things first you need funds obviously uh and then you you need like an allocation mechanism to um to decide like what's get funded um and of course it is good if the funds are sustainable and for allocation it is good to have like a decision mechanism that would ensure that you spend the limited funds you have in the resonable way this is by the way like what economics is um about among other things like how do you utilized resources like limited resources so as for sustainable fund in like the source of funding like you can you could think about like a many things going a little bit outside of the web three space you could have like what many projects have in the space What ethereum does what goem does since 2016 so you have you can have like a huge huge huge pile of gold and you sit on that pile of gold and you just use that gold to build um then you have can have like a taxation or self-imposed taxation so the taxation is what states do like a self-imposed taxation is what ngos do like this is like a charity basically uh but you can also like create mechanism to create some Surplus and capture that Surplus or you can have like a capital income that is uh then uh channeled into public goods funding in a way this is also what some like the uh Charities do like a foundations with a big capital income so maybe like a word about ourselves at that point I represent goldm Foundation we are a spinoff of the goldm project that was crowdfunded in 2016 we like a did one of the very first crowd fundings on ethereum blockchain in November 2016 um that was back before I were like aess scam you think we considered back then actually like token sale of the way of funding public goods and we consider it ourselves like kind of like a public good so we did it quite early and we we we still have some e left um like the the Golem network is still built by The Entity called golum Factory well colum Foundation is a spin-off dedicated to building glm so our talking use cases and generally support the the ecosystem and um yeah and that's it and we also have like 100 uh th000 ye that we decided we could try to use for that case so basically glm use cases and support of the ecosystem and here is the idea so we we decided that we can generate some sose through staking we can capture part of that for public goods and we can create incentives for participation and for self-imposed taxation um and here comes octant the project I would like to describe you today so what is octant basically what we do we St our e and you do that against glm tokens that are locked by the users by by the holders and we have linear relationship between glm locked and rewards from the e staking that goes to the users that means that if you lock for example 1% of glm Supply then you are entitled to 1% of the staking reward from that 100,000 e um staked which sounds like a fair deal basically um at the same time you have to time lock your glm and you have like to take actions on a Time basis which I will described in a second um to participate in the system and the trick is that we use like a square root magic to like decide about the amounts because obviously not all the supply of glm will be locked even not all the supply of the East is locked for E taking so that would not be a case for octant as well in uh our opinion but what we do we we we transfer to octant uh the square root of the percentage of glm locked which means that we create a surplus which we call like a matcher word that can be allocated to projects to public goods projects and the trick is like the and here is this allocation mechanism that we decide not we user decides who gets funded how much will their own money so they can keep this staking reward attributed to them for themselves or they can self tax themselves to pass that um money to the project and if they do that that project gets also part of the matching fund this is all time based like a pasted in the like the 90 days EPO uh with a two weeks decision window and the there are some uh tiny details that make it uh well maybe before we go to the tiny details I will just show you the picture with the how it goes exactly just to make sure you you got it so we stake eth in E theorum proof of steak we've got accumulation of staking rewards then with the square root some of it goes to octant some goes back to the Golem foundation and actually come back to the pool so we increase the amount of e Stak Epoch to Epoch and then out of this Total Rewards that goes to octant we have user rewards and this is this lar entitlement to your reward if you lock 1% of glm you got like 1% of the user rewards of the of the tot of the all the rewards accumulated in staking and the rest go to match rewards and the user can either claim the rewards for themselves but they can also do the donation or like a self-imposed taxation to the projects and this is like a supplemented with the match funds funding and um and if user takes no decision the then user rewards go to back to the pool and also if the users donate to the project that does not cross the minimum funding threshold then also that funds come back to the go and this is end to the pool this is basically designed to promote activity so even if you are interested in your rewards only you don't want to support any any public goods projects you still have to come once in a while to the app and click that yeah I'm not I'm donating zero to all the projects I'm taking everything to myself so you are at least exposed to the possibility of funding cool projects so yeah but those tiny details once again user has to lock glm or gets nothing user has to take action or gets nothing and this is like a I think important design deta detail you not only like a lock and then accumulate your rewards and don't give a don't don't care about U what's going on you have like a once in a while check what's going on and um consciously say yeah I'm not giving anything of my money to all those great projects and then we have like a square root magic so the less glm locked are in total the bigger is the leverage of the matching fund I think I have yeah I have like the the chart for that so the low levels of the total glm locked like the the Matched rewards fund is like a really huge compared to user rewards and and and also of course like what goes to back back to staking is also pretty significant so um I think this is like the mechanism designed that creates like a really great incentives because if people are not really interested in the project which may happen then like the the individual impact of the person that actually comes in is really huge and also the amount of funding that comes back to the pool and increase the the funds for the next rounds is also quite substant so making like the all the future runs more interesting the other part of that is that uh the less people allocate to projects the bigger the leverage of the matching fund obviously so imagine the situation that no one wants to fund anything and then you donate just one way and that way one way gets like the Matched fund of like I say uh 200 e which is like a real IC scenario with the numbers we are operating on so all of the sudden you you got like a incredible leverage so with one your one way you're are able to really fund something substantial but then other May notice and donate not one way about 10 DS and 10 GS or or or or one eth and then the game starts like who gives more and as the allocation window has two weeks you can OB serve the other people decisions and like a compete into like which projects get funded how so yeah this is the the the chart that shows you like the that the match reward as a percentage of the user reward gives like a really huge leverage especially at the smaller amounts of small percentage of GM locked in octant so that is like the how it is designed uh where we are at the moment uh we have finalized EPO zero in July that was basically like Community strapping event we have distributed $1 million to the 10 great projects like a I would say gitcoin did best but also others get substantial funding so we had gitcoin we get giveet we have eaker kernel Dow drops clear fund protocol guilds ethereum C herders super modular and and drips and those projects are also like the first projects that were obviously like a cure this this list is curated by us at the moment so they made it to ook one uh going forward we plan that this Leist will be in fact curated by the users in cons consecutive EPO we also plan to expand that to like um two or three dozens of projects so we are still willing to add more projects into what get funded OC one started on 8th of August and since that time you can time lock your glms to have like the voting rights to start accumulated accumulating your individual reward um this is by the way like a Time average so you can join at any time and if you join later then for the given EPO just like the average will be will be smaller and the and the Locking of glm is like totally non costal so the only thing we we do we we check the average of the dlm locked in the given Epoch and we don't have any any custody on the on the people's tokens and well uh of course like this is like the only claim right now that we are staking 100,000 e but our 300 3,125 validators are becoming active right now and should be all active by tomorrow so this is happening you you can take it live on the B contain and we have already like a 28 28.6 million glm locked which is almost like a 3% of the total glm Supply or like a it comes from almost like a 500 uh unique uh addresses Epoch and Epoch one will end on the 19th of October and then the first allocation window will start so then uh users will be able to claim their rewards allocate to projects and it will last until the 2nd of November as you can see that first Epoch is a little bit shorter than uh all the next EO that will be like a 90day days each yes um we have also some like a plans uh short and medium term um first we we are thinking about the ways how we could curate the projects that the list of projects that octant is to support in a more inclusive way in a in a in a way that would involve community and we plan like a snapshot votes on the which projects should be white listed as for uh the listing projects we plan to do that on the basis of the maximum number of projects in the epoch based on the forecast of of of funding so so basically if the projects will do not cross the minimum funding threshold in the round or in the in the epoch or in the two consecutive epochs we haven't decided yet then then we'll be removed from the list because it means probably that the users is not really interested in funding them and that will open the places for the other projects to be voted on by the community and added to the list um we also see the alent as the great platform for experiments with the uh allocation mechanism voting mechanism so what we have at the moment is like a pretty straightforward I will perhaps show you like a yeah this is one thing you can say about octant that sometimes people notice and don't really like um so so octant is the plutocracy by Design at the moment so basically the morm you lock the more voting power you have and and of course in in in a way that's the result of the whole design uh and that design at least in part has to be like that because after all octant is glm use case but we believe there are um ways around that because uh with the proof of uniqueness we can we can experiment with the uh more fancy uh decision mechanism namely like quadratic voting or quadratic funding I will not like come into details why I use both terms although this is like a funding actually but anyway that would make the like a plutocratic dimension of octant much smaller but also like uh we can think about like other implementations that are not glm um oriented that would not be uh that uh plutocratic and I'm not saying about ourselves at the moment but other potential Futures po potential uses of that idea where you the source of the voting power is not the TR tradable token but something else like the usage or like a social credit okay I started to Jumping among slides but I will F myself uh yes we are also thinking about like a having like a much more sophisticated funding mechanism because like the at the moment um this is like a pretty basic so so so so so you are a project you ask for money and you either make it above the minimum threshold or not and then you get the money and of course like in a system like that you it is asking for um more um individual approach so that you can fund like the one of project with the maximum funding so you can cap the funding or that you have like a Perpetual funding but this is which is somehow connected to the fulfilling Milestones or the that out of the um pile of money generated to the project by octant the project can throw but under like a certain circumstances so I think this is all that we can explore um uh along the path of uh expanding um what we build uh with the of course like a great community that we want to create like the around that uh with uh this like a regenerative approach to building like a great web three ecosystem and and I think once we are there um we can generate like a more and more ideas of of of how that approach can be used for um building great things um as for the long-term plans I don't really have a slide about that but um I think that octant is one of the signs that this governance and public goods funding movement in in web 3 is getting momentum and if you think about all the useful things that then we can as the space invent and give to the world this has a huge potential and this can be used outside of the web 3 funding as well we already have submissions from like a great projects from outside of the web 3 that are really interested in that kind of funding and I believe that going forward especially once the crypto winter is over we can have as a web three space as a ethereum space more impact on what's going on not only in web 3 but also in our immediate and further surrounding so if you think about for example like a great software projects that are not necessarily related to web 3 but are still about preserving Freedom um privacy and other values that we share that's something that we can build with them also like a web three space is great in creating Val you out of the thin air which is sometimes like a very bad thing if you do that in a degenerative way but I think that also like a huge potential of like building like a great things with a huge potential also outside of the web 3 if we only think about that as the finding mechanism to coordinate our actions to do great things so just to summarize octant what is good about it I think this design even if we limit it to what I already presented as what is happening is pretty sustainable so actually we have like a minimal staking risk and apart from that we can go forward with that for a while I believe um also like we did what we could and we will continue to to think about things that will force users into being at least somehow active so so so so so this is not like there's just the passive yield machine but rather a way of throwing people into what's the most valuable in our space um also I think that uh uh in at least in theory this method mechanism promote some kind of equilibrium with nonzero contributions for users this is this explaining this example when I when I showed you that with at the beginning with the minimal contribution from the user you can get get like a huge leverage on your funds so so I even believe that we can find some like a natural self taxation rates with that design and I'm really curious to see at the end of the EP qu all location like what was the self taxation uh in the in the first Epoch um but even if that self impos taxation level is not very high still this is sustainable thanks to like matched fund design and as I said uh we see Octan as a platform for experiments with the allocation mechanism with voting mechanism and with like a building like like a public goods so if you want to learn more I invite you to Docs oant app or you can jump directly to octant do app see the list of the project that you are supporting in the in the first Epoch um perhaps L some glm um yeah and I guess that's it uh thank you very much and I made it in a way that we will still have like a 5 minutes for questions I leave thank you I'm flattered but I would prefer some questions any questions you have that question comment yeah sure here let me give you the it's for the recording in the in that design you have linked um user activity with user reward yeah I don't recall I have seen such a solution before yeah does it I well yeah I I don't think so like uh like usually you have to take take the action in the beginning but then you can just huddle and that's it um in in that design you you have like the at least at the moment you every every 90 days you have take an action uh during like the like a two weeks window and you will of course you will not Lo lose your locked glm if you do not take the action but you will do not take get any any rewards so so yeah I I I think that's that's that's a pretty nasty idea yeah yeah very nice very tricky and very nice it solve uh so-called governance apathy problem well you know like as I said like people can just opt out from from the governance and take everything for themselves but then at least you know they take that decision so they This Not That you not go to the referendum you go you go to the referendum and you say I'm not participating yeah there you are uh so my question is could you please open source and pckage the amazing Cubo stock for like the validator thing that you did like for that amount of validators just you know Priceless for people out there that are running like more validators it would be awesome if that would be accessible for everyone yes we we we definitely plan to do that so so there was a presentation about that yesterday yesterday um on the workshop you can you can contact us also if you if you have any questions on that specific regard and we will do whatever we can to have but that was always planned but you know as always with that kind of project our Focus so far was on getting all those validators working not get slashed not get any like a penalties for missing attestation so so that's our focus at the moment we may want to experiment with other clients also uh in in in the coming weeks but this is on our road map definitely to to to to have that all published and and of course this is like I I believe if you you have like a convenience versus security slider we are a little bit on the security rather than convenience uh side with that setup we we figure that that's like the the only proper approach with that kind of money but seems it is really working all right so far as I said like the validators like we we started running validators um uh first valers were active at the end of July but the majority of them is coming online only now so so so so we are still like in the in a process of hardening everything and and checking if if that's working or right yeah thank you this question was like meant as my vult as yeah please do that like it's important thank you yeah that's that's for sure okay I guess that's it thank you very much