🎙 "Identity is The One Vulnerability Being Exploited Across All Systems. It’s the Mother of All Battles:" Santiago Siri
In this week’s podcast we interviewSantiago Siri, who has been working on improving the way democracy works for over a decade. He started from the inside, co-founding a political party in Argentina, his home country, but realized traditional politics would...
In this week’s podcast we interviewSantiago Siri, who has been working on improving the way democracy works for over a decade. He started from the inside, co-founding a political party in Argentina, his home country, but realized traditional politics would change him before he could change politics. So he started building better representation for the new world and foundedDemocracy Earth Foundation. It’s worth noting, that he’s been hacked by communists two times in the process.
The Democracy Earth Foundation is developing a project called Proof-of-Humanity. Proof of humanity wants to crack the problem of identity in the decentralized era of web3 -- how to prove who you are without relying on centralized entities. Proof of humanity has been able to create 5,000 on-chain identities in two months. What’s more, all of those in the network are getting streamed UBI token, which stands for universal basic income.
The next step would be for applications in web3 to integrate these identities. The initial use cases in DeFi are pretty obvious, for one, lenders could integrate with proof of humanity to start offering undercollateralized loans. The goal is to give anyone in the world the power to take back their identities away from the web2 world and use them in a system they control.
The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau and Dan Kahan.
🎙Listen to the interview in this week’s podcast episode here:
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Santiago Siri: So I'm from Argentina, that's where my accent comes from. I was a computer programmer since childhood, always interested in building systems. I began my career as a game developer, curious about games early on. And I found out about Bitcoin in 2011. I was already working with virtual currencies. Back then, I had a small project in 2009 that was called the Whuffie Bank and with their currency based on your social reputation in social media.
So because of that predating work to finding out about cryptocurrencies, I already had the antenna fine-tuned to be interested in the history of money. And several different aspects of that project took me to really jump into the Bitcoin bandwagon in the early days of the last decade. So I've been involved in this space for 10 years now. And it's been quite a roller coaster. I can definitely say that.
I got into politics in Argentina with a political party called Partido de la Red. And through that experience of connecting the world of politics with the world of technology, stuff like Bitcoin, and then stuff like Ethereum, became more and more relevant to the type of work that I've been doing since then. And in 2015, Y Combinator gave us a grant because of the work we've done with a political party, so we started Democracy Earth Foundation with their backing.
Throughout the last six years, we've been implementing democratic pilots around the world. I can claim that twice I’ve been hacked by communists by creating fake identities, so that's why identity is such an important problem of this puzzle. And in the last six months, it's been quite a roller coaster. We joined forces with Kleros and we launched Proof of Humanity. And here we are.
Democracies on the Blockchain
Camila Russo: Wow. Where to start that background, so interesting. I would love to hear more about this political party, what was it about and is it still alive? Are you still involved with that?
SS: I'm still involved with the former members. But politics is a very nasty environment. Partido de la Red, that was the name of the party, the Net party, was a very simple idea actually. It was just a party that would propose candidates for Congress that would vote on every bill according to the will of citizens online. So that meant we had to figure out what it means to create a political party, get signatures, run for an election in a country like Argentina, which is not a very friendly place for politics.
And at the same time we had to figure out what's the right technology. How do you build a digital democracy? How you guarantee the integrity of the vote, how you guarantee the privacy of the vote, all of these very interesting cryptographic and technical challenges. So the party ran for its first election in 2013. We got 1% of the votes, which is actually quite a lot for a new party. It's 22,000 votes in the city of Buenos Aires. We needed 3% to get someone in Congress, so it wasn't enough.
But because of the innovation that we were bringing to an environment where innovation is completely lacking, it was a really interesting project for outsiders in other countries, in other communities around the world, that took notice of what we did with Partido de la Red, and that brought us to do a global TED Talk which brought us into the international stage. And eventually, we got into Y Combinator which helped us focus on the technological side of things and start thinking about this problem in more global terms, because the status quo of politics is pretty much the same everywhere. It sucks.
“...we got into Y Combinator which helped us focus on the technological side of things and start thinking about this problem in more global terms, because the status quo of politics is pretty much the same everywhere. It sucks.”
CR: Yeah. So were you, back then, using blockchain as a means of verifying identity, and ensuring transparency in votes, or were you not there yet?
SS: No. At the beginning of the party, our original attempt was, well, let's make an open source technology so anyone can audit the code and see how it works. Obviously, it was a very naive approach, but it was the first step for us. Very soon, we found out that whoever controls the server, whoever controls the database, might delay certain people from registering and accelerate other people registering. And that fact alone can tumble an election. And we've seen that kind of behavior.
So with server-based architecture, right from the early pilots, it was clear that it is a huge risk on every election. Whoever controls the server, whoever controls the database, can control the outcome of an election.That's why you really cannot trust surveys on social media. Everything is very easy to manipulate if you have the backdoor keys to the technology.
“Whoever controls the server, whoever controls the database, can control the outcome of an election. That's why you really cannot trust surveys on social media. Everything is very easy to manipulate if you have the backdoor keys to the technology. ”
So I was interested in Bitcoin very early on. I tried to do some stuff with it. We actually did a very big pilot in Hong Kong that persisted the votes using Bitcoin transactions. And we used a Merkle Tree, we stored the Merkle root of the Merkle Tree in a Bitcoin transaction. It was a very nice implementation from a cryptographic angle. But in that shadow referendum, we did this in Hong Kong with the Umbrella Movement to elect a city measure, we got 800,000 participants on Telegram voting, and 600,000 of those came from a Chinese IP. So that was the second time the communist hacked me. And again, it was identity, a civil attack of sorts, right? A single identity pretending to be multiple identities. And it was one of those experiences where you start really understanding the nature of the problem that you're facing.
CR: That's so interesting. So what happened there was a hacker from China was able to create 600,000 different addresses on the Bitcoin network and vote?
SS: Bots, and fake addresses that flooded the Telegram account that we were using to make this referendum. We were using Telegram as an interface. This is back in 2016, 2017, so it's already some years ago, and it rendered the whole process irrelevant. But for us, it was technical research at the end of the day. We were trying to figure out if it is possible to use something like Bitcoin for stuff like this. Then we learned more and more about the Ethereum. And it's obvious that if you really want to get serious about governance in cyberspace, it needs to happen with some kind of smart contract technology. And Ethereum really grew on me.
“...it's obvious that if you really want to get serious about governance in cyberspace, it needs to happen with some kind of smart contract technology. And Ethereum really grew on me.”
I think that what did the trick with me was meeting the community. Actually, in 2018, I went to my first Devcon. I was already in the community online, but when I met the real people behind this technology, where their values are, the diversity of people, the capacity of the community to include people from multiple origins. I've seen that on Ethereum. I haven't seen that in other crypto-tribes out there. And actually, in that Devcon in 2018, I met all of the Kleros team, and we became friends really quickly. It was a really interesting way of the community finding environments and people you might want to be able to collaborate with and to learn from and for that I'm incredibly grateful to Ethereum because since 2017 pretty much everything we've been doing has been done using Ethereum one way or another.
CR: That was the Prague Devcon, right?
CR: I was there too. That was also my first time. We probably met at some point.
SS: I was probably drunk.
CR: I went to some of those parties too.
SS: Yeah, conversations until 6, 7am about sharding and whatever.
CR: There were also some ravers, so it wasn't 100% tech. Okay, so before I forget to ask you this, you mentioned the Hong Kong vote was the second time you were hacked by communists. So what was the first time?
SS: The first time was in Buenos Aires. The Workers Party, that was a simple open source implementation of our original software. And all 14 parties in Congress contributed one bill that would get voted by citizens, and the top bill would be treated on the floor. That was the pilot.
And we worked with all of the parties. Every party introduced a bill to be debated on the online platform. And the Workers Party, which is a left wing party from Argentina, introduced 6,000 fake accounts, all coming from the same IP with weird names, and it was obvious that they were trying to just push the building to the floor. Whatever it takes to hack these kids doing this digital democracy thing, we will do it. So kudos to them for trying to find the vulnerabilities on what we were building.
But here's the thing about democracy. Democracy is something that happens. It's for the tough choices. It's not for easy choices. You get rough consensus on an easy choice any given day. You go to a vote when something is really, really hard for a community to come to a consensus. So democracies are always facing hostile environments. And the higher the stakes, the more likely people will go to very weird places to try to hijack and take over your system. And it happens in every election. It happens in every real context we're in.
“You get rough consensus on an easy choice any given day. You go to a vote when something is really, really hard for a community to come to a consensus. So democracies are always facing hostile environments. And the higher the stakes, the more likely people will go to very weird places to try to hijack and take over your system.”
So the systems, democratic systems, need to be extremely anti-fragile, and the higher the risk of a decision, the higher the need for legitimacy. It's very important that we understand that democracy you know, it's very useful when you have a big conflict of interests, you cannot come to a decision easily, so you need to find a mechanism that breeds in legitimacy and onboards everyone into moving forward with the decision being made.
One Node, One Person, One Vote
CR: So you, why do you think it's important to come up with a blockchain based system? Your initial thought was all about having communities more easily participate, right?
CR: And so that path led us into implementing blockchain in this process somehow. So why do you think this is important? What's wrong with the way democracy currently works?
SS: So you know, that the information systems put in place in institutions we have today are consequences of information and technologies from 300, 400 years ago, mainly the printing press, the Constitution, and everything that has glued together communities is a consequence. And we'll have the Spanish living in Spain because books were being printed in the vernacular languages of the Spanish or the Italians or of the English. And it was the information technologies from 300 years ago that broke the connection of power with Latin or the church and started creating the communities that we were born with, our nationalities and our countries which are an important part of our identity, even more so in a globalized society.
More often than not living abroad, you introduce yourself with your name, your surname, and your nationality probably. But today, we live in cyberspace, to me it makes no sense that 0.00001% of the population have the rights to represent everyone else, and you have 700 people in Washington representing 300 million, seems a little bit absurd. And as a child of the internet, of Wikipedia, of open source, of free software, and all of these new technologies, why shouldn't we try to rethink the way our politics or politicians and our representative system work.
And with Bitcoin, it's really interesting back in the early 2010s, it was really interesting just, wow, suddenly you have a technology daring to disrupt the very concept of money. Fast forward 10 years later, it has disrupted that very effectively. And there's way more than that that can be done. And I think that probably, the computing revolution is just getting started. It's not like it began and is now ending, it's just getting started.
And it was first the personal computer, then the internet, and that was a “cultural revolution”, but now it's an institutional revolution. We're able to create institutions in cyberspace using nothing but bits and cryptography. And we can create organizations that are far more transparent, far more accountable, far more efficient in their governance methods than anything that we have seen before.
“...it was first the personal computer, then the internet, and that was a “cultural revolution”, but now it's an institutional revolution. We're able to create institutions in cyberspace using nothing but bits and cryptography.”
My experience trying to change politics from the inside in Argentina was like, if I want to be successful in that system, I have to play by the rules of that system. So it will be the system changing me before I can change anything. So let's build a new system that makes this obsolete. And to me that looks a lot like Ethereum. Now, when I pay attention to how governance looks on Ethereum, 100% of the protocols, well now, 99% of the protocols out there are plutocratic: you vote with your shares, you vote with your tokens.
The reality of that is that the only real decision makers are the “whales”, everyone is everyone else is just pretending. So with the plutocratic situation in Ethereum, I think governance can get far more interesting if we do one node, one person, one vote. And around that we start doing quadratic voting or we start doing liquid democracy.
“...the reality of that is that the only real decision makers are the ‘whales,’ everyone is everyone else is just pretending. So with the plutocratic situation in Ethereum, I think governance can get far more interesting if we do one node, one person, one vote.”
You know, Satoshi in his original paper, he said one CPU, one vote. He literally says that: one CPU, one vote. That's fine. Okay, I get it: power to the machines. But it turns out that we need to build technology that it's not only facing capital, we also need to build technology that faces society, that faces people, that impacts lives, that tries to really include everyone, that tries to bring human rights. And that's one person, one vote, or one person, one node, and you build with that. And that's also actually real decentralization, if you can achieve something like that, far more decentralized than anything we've seen before. So if we care about that, then I think one person, one node is a relevant way forward.
CR: I love it. There's so much to unpack there. I think, first piece is to understand that what you're doing is not about bringing a new voting system to nations, you're not about okay, let's change the US voting system with a blockchain-based voting system. This is about bringing governance to this new kind of Metaverse that we are creating with Web3, with DeFi, with distributed networks, with cryptocurrency. And so as we are building this new digital world, we will need a new way of governing. And so that's what you're building now, setting the pace for how communities will organize themselves and decide on things and vote on things.
SS: We're clearly in a very early part of the history of this technology. We're not probably even reaching 5% of the population around the world right now. So it's not like we can do a national election around it soon like this year, maybe in 5-10 years from now. It took Facebook a decade to reach over a billion users. And probably the pace of adoption of new technologies is even faster today.
Now with crypto, there are some learning curves. It's like we have to learn how to use this blockchain thing for real, it's like learning a computer for the first time. What's gas? What's a wallet? What's an exchange? And it still surprises me that even though it's 2021, there's far more newbies out there than I would have expected by now. It’s still a very early day. But at the end of the day, the potential of these technologies is that they operate in cyberspace. They don't recognize any national frontiers. They are censorship resistant. They can be deployed anywhere there's an internet connection.
So it's a little bit of a meteor that will hit traditional institutions hard. The GDP of Ethereum is bigger than the GDP of my own country. So this is new financial reality to a new generation, and now we're living this transition. So today probably, it's crypto for crypto, we will use technology to bootstrap the networks that we're building that are composable and smart.
“So it's a little bit of a meteor that will hit traditional institutions hard. The GDP of Ethereum is bigger than the GDP of my own country. So this is the new financial reality of a new generation, and now we're living this transition.”
Like, I'm fascinated with Proof of Humanity. Everything we've done so far would not be impossible if MakerDAO didn't exist, if Uniswap didn't exist, if Yearn Finance didn't exist. Because all of that exists, we can build Kleros, we can build Democracy Earth, we can build Proof of Humanity today. So right now, it's a bootstrapping phase of the network. But facing forward, the economic and political story or history of the 21st century is driven by these technologies, maybe the same way that industrialist capitalism, and Marxism were the experiments of the 20th century, the great experiments of the 21st century very likely will be these networks that we're talking about.
The Hard Problem of Decentralized Identity
CR: Really interesting. And then the other piece I wanted to unpack was the idea of a plutocracy in crypto right now. And just breaking that down further, what that means is that right now, Decentralized Autonomous Organizations, DAOs, which are what govern crypto right now, so MakerDAO is a good example. And I guess, the first or one of the first in DeFi, it is being governed by this Decentralized Autonomous Organization, which right now is actually becoming further decentralized, with the foundation of MakerDAO dissolving so that only the DAO could control this protocol.
And what happens is that token holders of MakerDAO, holders of Maker, the Maker token can vote in different decisions, like the interest rate, for example, which is already pretty crazy. Imagine having a system where anyone, if I'm a Maker holder, I can participate in an interest rate decision, something that's usually been closed to like a small group of central bankers. Well, that's pretty crazy. But it's true that if you have a bunch of Maker tokens, you can effectively decide on all the governance decisions. So people with the most resources have the most power. And that's not a system that I think most of us would want to aspire to. So what's your work been? How have you developed that? How can we change that?
SS: So from our experience doing digital democracy pilots around the world, very early on, we realized the mother of all battles is identity. Actually, Edward Snowden in Web3 in Berlin a couple of years ago, he said, the one vulnerability being exploited across all systems is identity. It’s such an Achilles heel for everything we're talking about.
“...very early on, we realized the mother of all battles is identity. Actually, Edward Snowden in Web3 in Berlin a couple of years ago, he said, the one vulnerability being exploited across all systems is identity. It’s such an Achilles heel for everything we're talking about.”
So in 2017, Democracy Earth Foundation authored a paper called The Social Smart Contract. Back then we figured, if you can do some kind of registry where you have verification of identities using video in a decentralized way, then you could have a mechanism that could then potentially even drip to these identities, Universal Basic Income tokens. We have the rough sketches of that, and that paper is out there somewhere. It was a collaborative effort done on GitHub.
And we started looking into every project that was around in the space trying to figure it out decentralized identity. In 2020, we published a paper, this time in a scientific journal with peer review, coauthored with Democracy Earth, RadicalxChange, Perm University. And we looked at different efforts being made in the space. Most of the efforts can be categorized into two things. One is Web of Trust, I vouch for some for someone else, and you build a graph around that. And the other approach is using Turing tests, some kind of tests that help the system understand if it's interacting with a human or a robot.
So with Kleros, which I mentioned, we met in 2018, we became good friends with Frederico Ast, he’s Argentine and we've been good friends for over 10 years now, so we’ve known each other for a while. And with Kleros, we started the research group on Telegram called Proof of Humanity. Kleros began working on an adaptation of their smart contracts to create a registry of humans and we started chiming into that project and starting to share it with other researchers in the space. Vitalik was actually among those early researchers.
And in 2020, we started becoming the Proof of Humanity project. We did a meetup in Devcon in Osaka, Kleros, Democracy Earth, Gnosis and some other projects were hanging out, Bright ID, Idina, some of the projects that were looking into this. And late 2020, the development of Proof of Humanity really sped up. I focused on working on the UBI token, which is this Universal Basic Income token that automatically gets streamed to every verified identity and Proof of Humanity.
And the interesting thing is that so far, with Proof of Humanity, we've been able to create a registry that's almost reaching 5,000 humans now in almost two months. It's growing. It has a nice rate of virality, where people have to generate this proof about themselves with a video where you display your Ethereum address. And other previously verified addresses have to vouch for you. And if no one challenges your proof, and you have to follow the guidelines, otherwise, you might get challenged, then you get back the deposit you originally paid. If you get challenged, your deposit goes into our Kleros Arbitration Court and there you have to go through several rounds if you go through that to defend your profile against someone that considers that your profile might not be suitable for the Proof of Humanity list.
It sounds more complicated than it is. It's not a simple system also, but it's been on mainnet since March 10th. And a whole community mushroomed around it. And it's fascinating to see this attempt at trying to decentralize identity and trying to figure it out what human rights look like in a network like Ethereum.
CR: Okay, so how does this register work? Like is each identity registered in the Ethereum network?
Vouching for Humans
CR: So, in theory, once I am confirmed as part of the Proof of Humanity registry, is that ID linked to an Ethereum address? How does it work?
SS: Yes. We put all kinds of warnings in the user interface to let you know that whatever address you're going to be using is going to be linked to this Proof of Humanity video that you're going to be generating for the proof. Now, we don't require you to give us your legal or real name, you can use your fake name, there's no personal information required. But we do require a video where you have to say, “I certify that I'm a human, this is only for humans, not for robots, or for aliens; I certify that I'm a human, and I do not have a register in this registry.”
“from a smart contract perspective, that's great, because any smart contract out there now can ask the Proof of Humanity smart contract, ‘does this address belong to a unique human or not?’ And you will get either a true or false for that. So anyone can build democracies or more democratic forms of governance, for example, more social-like systems or reputation systems, all kinds of things.”
So it's an affidavit and you have to display a paper or a phone or something showing your Ethereum address so the community can look at that proof and verify that the address that you're using on the blockchain coincides with what you're using as a video proof. Once you do the transaction with your video proof, that gets you into the registry, and someone has to vouch for you. And this is the thing about vouches, which is really important. When I give a vouch to someone, I can give as many vouches as I want, but my vouches get processed sequentially, everyone's vouches gets processed sequentially, one vouch after the next one. And each vouch, each identity takes three days and a half to be processed.
So vouches are processed sequentially to prevent a network of spam bots from hijacking the registry, because I could potentially create a fake account that vouches for another fake accoun. And if vouches get processed in real time, then you get hijack attacks happening very easily. But because you have this sequential processing of the vouches, my vouches are actually not that useful. People are asking me to vouch for them, and I tell them I have already given 30 vouchers, it will take two months for my vouches to be processed. Even though I'm an influencer in the network, I do not have influence and capabilities that might help centralize my power in the network.
So, effectively, the more influential I become, the less influential I become, because the more vouches I give, the longer it takes. So once you receive a vouch for your proof, you have three days and a half where someone can challenge your profile. Because maybe you look like a deep fake and it’s like no, this person is not a real human, or you're not showing the right address that you used for the transaction, or you're not saying what you're required to say on the video. So if you get challenged, your deposit goes into our Kleros court, and through the arbitration mechanism of Kleros, a jury ofKleros stakers will decide whether the challenger or your profile is well done.
“So, effectively, the more influential I become, the less influential I become, because the more vouches I give, the longer it takes.”
And because we are able to build this on top of Kleros, then we can guarantee that the quality of the list will be there. Now, of course, we have issues, some people complain that he means the number on the board or little details that get challenged. And it's interesting to see all of the conversations that community is having around how the mechanism of the Proof of Humanity registry works.
CR: How many vouches do you need to be registered?
SS: Right now it's only one vouch. So, if you get a vouch from someone already verified, then you have three days and a half. If no one challenges you, you become a verified human. And from a smart contract perspective, that's great, because any smart contract out there now can ask the Proof of Humanity smart contract, ‘does these address belong to a unique human or not?’ And you will get either a true or false for that. So anyone can build democracies or more democratic forms of governance, for example, more social-like systems or reputation systems, all kinds of things.
CR: Okay. And then just one more detail, how much is the deposit that you have to kind of stake?
SS: Right now the deposit is 0.18ETH. So, we know that for example, in developing nations, this is a significant amount of money; not all people can afford that. So you can do a profile with crowdfunding. You can apply without paying the deposit, but then you have to crowdfund from the community. And that deposit guarantees that you take real care on making your proof because you can risk losing that. If you do it well, you will get it back. And it helps pay the gas and the fees that, if it goes to a Kleros court, puts the incentive for challengers to try to find human obligations that are not well done.
CR: Got it. And then what's the incentive for vouchers?
SS: So vouching right now is gasless. There is no cost to vouching. Originally, it was on chain, but one of the brilliant coders behind Proof of Humanity figured out the way to do it in a gasless way. So there's not a cost in that.
CR: Okay. So incentive is basically a friend wants to get registered, and they know someone in Proof of Humanity, so they'll just ask someone they know, ‘hey, can you vouch for me?’ and that's a simple process to do?
SS: What I'm seeing, and you can actually look at this in the Proof of Humanity register, you will find a lot of grandparents that clearly there's a family member helping them out to do their Proof of Humanity, children, we're finding entire families being registered. Economic systems, they're good to make money, but it's even better if they can address society. And we're seeing that with Proof of Humanity.
CR: Okay. So just to get this clear, what's the relationship between Democracy Earth and Proof of Humanity?
SS: Democracy Earth is like Kleros, we could say that Proof of Humanity is pretty much a joint venture of Kleros and Democracy Earth. Both teams, both communities, joined forces to help make this happen. And we've been talking about this for at least five years.
CR: Cool. And what's Kleros, like a DAO system, governance system?
SS: Kleros is an arbitration system. It's an on-chain arbitration system for conflict resolution. And it's kind of like technology that helps create oracles of any kind. It builds lists and it has a whole system of incentives, where if you lose, if the juror] gives a sentence that's against your interest, you can appeal, but the cost of appealing increases with every successive round. So it has a series of crypto economic incentives that helps a community to make decisions about something that might be a little bit blurry for the general life. It's a conflict resolution system, and has been working very well. Uniswap uses it to create their list of tokens. And there are some other interesting uses with Proof of Humanity, they found a really interesting project, because ultimately, it's about giving citizenship rights to people that participate on this network.
CR: Very cool. And then how does UBI, this Universal Basic Income token, play a part into all this?
SS: So UBI, it's an ERC-20 token, swappable with anything, so that was really important to make it work like ERC-20 money. It has one particular aspect. It's connected to Proof of Humanity. And the second you become verified, this token has a streaming feature. So you will start seeing on your wallet, without any cost of gas and without any special add-on or whatever on MetaMask or in any standard Ethereum wallet, you will see that every second you start getting UBI tokens dripped into your wallet. That's why we use the teardrop emoji on Twitter, because you see it live dripping into your wallet. It drips at the rate of 0.00028 per second, so that's one UBI per hour.
“That's why we use the teardrop emoji on Twitter, because you see it live dripping into your wallet.”
It's been 50 days. Like any small cap token it had wild fluctuations in price. But what I can tell you is that this rate of 720 per month or one per hour, so far, has always been able to deliver the Universal Basic Income of at least $100 or $200 per month. So it's been really interesting to see the dynamic of the token play out. And now we're building a lot of very interesting features around the token to sustain its value over the long term, working with other communities in the DeFi ecosystem.
CR: That's so cool. So I guess that's a big incentive to join Proof of Humanity, you automatically get this UBI token streamed to your MetaMask or to whatever Web 3 wallet you're using?
SS: It's an important incentive to a lot of the people joining the system. And it's really interesting, because it's probably the most fair airdrop you can imagine. It's given to every human throughout time, as long as they've been verified in Proof of Humanity.
UBI in the Developing World
CR: So in crypto, how would you envision UBI to work?
SS: Ultimately, the challenge is to, on one hand, understand if this technology can reach the last mile. Right now the gas costs alone exclude a lot of people from participating in something like this. So we certainly hope that with Ethereum 2.0, Proof of Stake and a lot of the innovations, if we look into the movie instead of the photograph of the present, I’m optimistic that we will be able to make this technology far more inclusive. And Proof of Humanity being on the rocket that Ethereum is, I think we are in the right place to reach that kind of scalability in the long term.
There's an incredible amount of wealth in crypto being made. But sooner or later, the conversation around wealth distribution in crypto will become a relevant topic. And if we don't have systems in place that are able to face society, then it's a risky environment over the long term. We need to understand how these technologies can impact everyone, and especially those that need the most.
We are in a century that automation, robotics, artificial intelligence, machine learning, everything will displace us from our jobs, blue collar jobs and white collar jobs. So looking into this future, the reality of something that can provide some safe ground for everyone, a safety net for everyone makes a lot of sense. We've seen that last year with COVID and the government printing money. UBI tries to do this in the most possible fair way.
Definitely a lot of challenges looking forward, but so far, we've been able to deliver this UBI. To me, it's impressive to see a lot of people from Argentina, from my own country, obviously, that are joining this with real hopes to see this project succeed. And to me in crypto, if you are building a technology that is not impacting the developing world, your technology is probably broken. It's not interesting to me. We have to understand that this incredible wealth being made, we need to understand how we can impact the greater community and the greater society we all belong to.
“There's an incredible amount of wealth in crypto being made. But sooner or later, the conversation around wealth distribution in crypto will become a relevant topic. And if we don't have systems in place that are able to face society, then it's a risky environment over the long term.”
And one of the salient aspects to me about Proof of Humanity is that it doesn't require you to present any credentials of anything, it's just built for every human and potentially, a kid in Bangalore, or in Mumbai will get the same amount of UBI that a kid in Connecticut or in Oslo, or in a developed nation. It’s a level playing field technology, everyone gets the same. Only requirement is that you're able to prove that you're human. As long as we can demonstrate that this system prevents any kind of centralization with its crypto economic incentives and its dynamics, then we have a very promising technology.
So far, I've seen myself decentralized from the system. I was actually expelled from the Proof of Humanity registry. I was challenged myself, because I was not showing my full address. And I didn't realize that when I made my video. It was just hey, this is my video, this is my address. And I didn't realize that in this screenshot of my address, I was using, the last six, seven characters were not showing. And I got challenged and kicked out for one week of Proof of Humanity. And I have to create a new video, beg for a vouch to the community, everyone is begging for vouches, and once I got my vouch, wait three days and a half, and now I got my UBI dripping again on my wallet.
Moving forward, there's a lot of challenges: how to sustain the value of UBI, how to reduce the barriers of entry to Proof of Humanity. We started with the right foot, in 50 days getting 1,000 users every 10 days. It's really very promising. And looking forward, what would it mean to have more than 10,000 users, potential human nodes on a decentralized network? What would it mean to have 100,000 users? No one really knows how many users are on video or in DeFi, because it's all accounts, right? And everyone has multiple accounts. But with this, we can start getting a real sense of who's who behind Ethereum.
Maintaining Value Through Vaults
CR: Very, very cool. So what are some of the plans to make sure that UBI has value?
SS: To me it has been quite a switch to go from a coder alone in my home, shipping smart contract code and getting audited by my friends of Kleros, to suddenly discovering an incredible community with a lot of ideas. And what is even stranger to me is that when there's a cool idea, two weeks later, that idea is finished and done by other members of the community there who simply had the time to build it. The pace of innovation I've seen so far is incredible.
And a project that has me very interested these days is that we're working with the Yearn.Finance, great project by the way, Andre Cronje’s pet project that suddenly took over the world of DeFi last year. You have these vaults that generate an interest on stablecoins or in other crypto assets. And what we're doing with our Yearn.Finance is you generate an interest, say 10% APY or 20% APY, and with a fraction, let's say 20%, or 30%, or 50% of the interest you generated, a fraction of that goes to buying and burning UBI.
“If we're able to reach a certain amount of money there that can consistently buy and burn UBI every day, we can potentially keep the supply of UBI in control, in spite of getting more and more people joining the registry.”
We already deployed this on mainnet on Saturday, two days ago. And we're testing right now, so it's a little bit of money. But we already had the first few UBIs getting burned by the interest generated by the vault, piggybacking on the work of Yearn Finance. So we're doing these humanitarian vaults. And if we're able to reach a certain amount of money there that can consistently buy and burn UBI every day, we can potentially keep the supply of UBI in control, in spite of getting more and more people joining the registry.
So these two forces can really generate a sustainable inflation rate that keeps the price of the token over the long term. And, to me, it's mind blowing that thanks to Uniswap, MakerDAO, Yearn Finance, Kleros, all of these smart contracts, we were able to compose a leverage on them, and ship something that can potentially deliver Universal Basic Income on a global scale. To me, that's mind blowing. And I know it's very early on into the project. But the start has been so surprising to everyone involved in this project that we have a responsibility now to make sure it keeps growing in the right direction.
CR: Very cool. So you're basically doing monetary policy through Yearn Finance, like through these vaults? I mean, you as Proof of Humanity.
SS: Yeah the community.
CR: Yeah. Can you just break down a little bit further how that works? By vaults, for listeners who don't get that jargon, it's basically deposits of tokens, right? And so, in these deposits, you have UBI tokens on one hand, and ETH on the other hand?
SS: We are actually leveraging on the existing vaults that are already deployed on Yearn Finance. You can check those on their website. But you deposit DAI, the first one we've done it's called UBI-DAI. So you deposit DAI, you earn an interest in DAI 10%, let's say 10% a year, and with two or three points of those 10 points, you use that part of the interest to buy UBI on Uniswap and burn it, just send it to a 000 address.
So you are not earning the full interest, 10%, you're earning 8%. But those additional two points, you are contributing to the long term success of UBI. So that helps to reduce the supply of UBI. That's one of the mechanisms we have in place. We also have staking pools that you're allowed to do liquidity farming on the UBI. We have a staking pool for DAI and another one for ETH. So if you're providing liquidity on Uniswap, we will give you a reward throughout the year on additional UBI. And right now, the liquidity is sitting around $700,000 on Uniswap. And yeah, the token has been relatively stable over the last two, three weeks.
The Web3 Future
CR: Very cool. Okay, and then in the future, once the system is more mature and more people have their identities registered, how do you see this integrating with the broader Web 3.0 DeFi systems?
SS: The craziest thing about smart contracts, and I've been a programmer for more than 20 years, so to me it's mind-blowing what you can do with this stuff. But how easy it is to actually integrate with this is crazy. Like in just one week after we launched Proof of Humanity, someone integrated with a credit network, a system for providing loans. They want to provide under-collateralized loans or loans without collateral and they integrated with Proof of Humanity to start building that credit score around unique identity seen on Proof of Humanity.
And the integration is five lines of code, you're just asking to the Proof of Humanity contract is this address human or not? And Proof of Humanity will say true or false based on the registry. So integration is really fast. Bitcoin actually is now integrating Proof of Humanity for their next round of grants. So they are using it for civil resistance in their quadratic funding mechanism.
“The craziest thing about smart contracts, and I've been a programmer for more than 20 years, so to me it's mind-blowing what you can do with this stuff. But how easy it is to actually integrate with this is crazy.”
So we're seeing a lot of projects already that want to have some kind of civil resistance that they want to do some kind of democratic governance, just using Proof of Humanity is a very nice solution. And we're even seeing people implementing human login stuff where you can authenticate with your Proof of Humanity address. And by authenticating with others, you're telling the system, it's like a CAPTCHA: you're definitely telling the system that you're a unique human and you're not a robot.
So the use cases built on top of UBI, democracy, credit score are just three applications that can be built on top of something like Proof of Humanity.
CR: So exciting. I can definitely see something like the different lenders in DeFi, it's like an obvious first step. They can start implementing this. And so if I logged in to maybe Aave with my registered address, I would be able to take out an under-collateralized loan, for example.
SS: Right. That will be really interesting. I should talk to the guy about it…
CR: Definitely. Okay, so we're coming down to the last of the hour. But this is fascinating. Thank you so much for explaining all of this. I had heard so much about it, but didn't really get how UBI connected with Proof of Humanity with Democracy Earth, like, what you guys were up to. And it's really exciting. So can't wait to see how this continues to grow.
SS: Oh, thank you so much, Camila, it means a lot coming from you. And I always remember that in your book, you began talking about Argentina, and the financial crisis. And I guess we're all trying to figure it out. Those of us that come from a country like that, we're trying to figure it out like that because we know that what we have in place does not work. We live in a day and age where democracy is broken, Facebook had a big role in reducing the trust in traditional democracy.
What is Facebook? It’s just a gigantic centralized collection of identities. So what could we do if we decentralize that? If we bring Facebook a Linux moment, something that breaks apart what we understand and something that gives power to the people back and our identities back to be something that we control, self-sovereign way, and Proof of Humanity's waiting to do something like that. And so far what we've seen with the community has far surpassed our expectations.
CR: It's really inspiring. I think, to me, it just makes sense that this should take off. Like we're already seeing it with money, like money is becoming decentralized, it's not a theory anymore. Identity should be the next big step towards making a truly democratic decentralized system. Because right now, the current decentralized system isn't very democratic. So I think this is the next big push towards an improved internet. So thanks again, Santi, see you in the Metaverse.
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