 Hello everybody. Thanks for being here so early in the morning. So my name is William George. I'm a mathematician and a researcher with the Claros Cooperative. And indeed, I'm going to be talking today about economic incentives and souls and the sense of soulbound tokens, these kinds of social layers people are trying to add to Ethereum to get beyond this kind of limited financial logic. Particularly in the context of shelling point-based oracles, which Claros is an example of. So I'll briefly begin by describing Claros, which we'll sort of like give a sense of the kind of examples we're interested in. So Claros is a blockchain-based dispute resolution platform. What that means is that, so imagine you have a small business owner who hires a freelancer, and they put the payment for the freelancer into an escrow and a smart contract. And then if the smart business owner is happy with the work of the freelancer, she'll just click a button and say, okay, great, and release the money from the escrow. But if she's not, then what happens in Claros is that there's a crowd-sourced pool of people who are willing to rule on whether the freelancer did good work, and you pick some random selection of them. And then they're incentivized to vote for who was right in a given dispute based on what we call a shelling point or a focal point. So the idea is that they're incentivized to be coherent, to vote the same way as kind of the broad community consensus that ultimately the Oracle produces. And then any given participant looks at the case, thinks, okay, I think the small business owner has the honest position here. And moreover, I think everybody else, all the other jurors, people in the community are gonna think that the small business owner was right. So I wanna vote for the small business owner because I think everybody else is going to vote for the small business owner because it's a distinguished decision and they all expect me to vote for the small business owner. And ultimately this boils down to a notion of shelling points or focal points. This is an idea introduced by Thomas Shelling in the 1970s. Shelling went on to win the Nobel Prize. That shelling points are solutions that people tend to use when trying to coordinate in the absence of communication because they seem special or natural. So here we have like a table of a coordination game where everyone wants to either vote for X or all vote for Y, but they just wanna vote for the same thing. And then what people tend to coordinate around are kind of special seeming solutions. So here in Clareaus, we think of honest resolution disputes as a shelling point or a focal point. Other blockchain oracles that use this include ideas related to this include Ogre and Uma. So Clareaus is a kind of like oracle specifically designed for dispute resolution, but more broadly you can think of it as just being designed for the subjective decisions people need to make on a blockchain. So another aspect of the title of my talk is souls and soulbound tokens. So for those of you who aren't familiar, I'll briefly introduce them. So the defining feature of soulbound tokens and these are introduced in this paper Decentralized Society, Finding Web 3 Soul that was published a few months ago by Weil, Olhever, and Buterin. So these are tokens that first of all are non-transferrable. And generally a thought of as representing some social aspect of people. Like maybe you finish a course in blockchain from some online course and you get a diploma from that course. Like it doesn't make sense to transfer that to somebody else. Like you have a diploma representing your knowledge. Maybe you win an award for your good work. So these are the things that represent some aspect of identity about you. And an interesting thing that the authors of this paper discuss is that you can have negative soulbound tokens. So like a running example that they particularly consider involves trying to enable under collateralized loans. So by adding this sort of richer notion of identity you can have kind of enough information about somebody to judge whether they're credit worthy and should be given an under collateralized loan in a kind of similar structure to how banks in the traditional world work because we have this richer notion of identity. But then if you don't pay your loan on time maybe you get a soulbound token that says late payment. And then going forward you kind of have to present people the bad with the good. You can't get rid of the negative soulbound tokens sort of burning the whole wallet and starting over with a new identity. But when you present your wallet to someone they'll be able to see okay he won this award and have this diploma but he had a late payment and they make sort of a balances kind of evaluations on your identity using all of this information together. So a related concept that has to do with sort of social layers on blockchains but is a little different is something called proof of personhood. So particularly the Claros team developed proof of humanity which is an example of a proof of personhood protocol. So this is supposed to be a civil resistant tool. It's a registered list of human beings such that no human being could get more than one identity on the list. And if there's a dispute about whether someone has a duplicate profile or doesn't meet the criteria that triggers the Claros dispute. So how this works is that you submit this video saying that I'm a real human and I'm not already on the registry. And then you provide a deposit and you go into like a pending submission challenge period where if somebody challenges you it will result in dispute but if nobody challenges you or you win your eventual dispute you eventually get on the list. But if you're not a human being or you're a duplicate then when you submit to the list then this decentralized ecosystem of challengers will say no you don't satisfy the rules and this will raise a Claros jury that rules in the same kind of subjective oracle way that I described before using Schelling Plates. Okay so now sort of an interesting thing about proof of humanity is how people remove themselves from the list. And they do that by providing another video. They provide a video that says okay I wanna remove myself and what's interesting about this is that maybe in a future version of proof of humanity if you had a soulbound wallet that has your various soulbound tokens in it then maybe it's tied to your proof of humanity profile address and if you remove yourself and resubmit with a new address it can just automatically point to the new profile. And this allows like a very interesting kind of social recovery like rather than just having social recovery based on your friends saying that you are who you say are now you're being verified by this like broad community. And moreover this has an interesting sort of philosophical point about how we think of identity on blockchains. Normally we think of someone's core identity as having a private key that allows them to sign some messages. But here what fundamentally defines your ability to interact with these soulbound tokens is your ability to make these videos which is a bit different. So that's something interesting. Another way that these proof of personality ideas relate to soulbound tokens is that how gets to questions about how you distribute soulbound tokens to begin with. So I imagine they'll someday be a rich ecosystem of soulbound tokens that will be distributed potentially in different ways. A sort of a natural thing to do is if there's an institution that can attest to whatever you like aspect of your identity to soulbound token represents that it would just issue to that directly. Like you come to DevCon and get a pull up and like some organizer signs some message saying, yep, she was here, pull up awarded and it appears automatically in your wallet. Maybe your blockchain based course online has some university attached to it and they sign something and give you your SPT. But like maybe you don't, the institution that's like naturally giving out the tokens that would attest your identity just isn't equipped for this they're not very blockchain friendly. Moreover, maybe there's some aspect of some soulbound token that doesn't naturally have an institution behind it. And something you could do is create a curated list similar to how proof of humanity works where you claim that you deserve a soulbound token. You say, I'm an expert in subject X. You submit a deposit, you do the same kind of thing. People can challenge you. You provide your portfolio like previous works proofs of your expertise. And if you make it onto the list you get a soulbound token saying that you're an expert. Okay, so now I'm gonna change switch gears a bit and talk about how these social layers interact with the kinds of economic security models that we traditionally have in a lot of crypto economic systems. And my two running examples here will be Claros euro selection and quadratic funding which is the sort of motivating example of a lot of the decentralized society paper. So how does your selection currently work in Claros? Well, people stake a token and then each token has an equal chance of being drawn. And you kind of are forced to do that if you don't have another form of civil resistance because if you try to get people like on equal weight say people that have tons of tokens or like weighted quadratically or something then people would have an incentive to just cut up their tokens over multiple addresses to try to pretend to be different people. So you're kind of stuck with this like linear odds of being drawn in terms of weight. And then every time you draw someone the odds of the next draw don't change. Like in any given draw that 45% person still has 45%. And then you can look, do sort of a binomial distribution calculation and look at the total odds that like a large sticker will get a majority of the votes on a given case. So that's an economic security system whose security model basically boils down to no one having more than 50% of the stake. And particularly like Claros has an appeal system without going into too much of the details you can get larger and larger panels of jurors. And particularly as you have a really large panel of jurors it is very unlikely that anyone would be able to get a majority of the votes on that panel without actually having 50% of the stake. Okay, so that's like a purely economic security model. Quadratic funding, the other motivating example. Suppose you have different participants one to K and they submit contributions C1 to CK to a project P. And then the idea here is for those of you who aren't already familiar with it is that like quadratic funding is used often to kind of give matching grants often for public goods according to this formula there. And you might look like a kind of strange formula if you're not previously familiar with it but like notice the square root in the first term it basically has the effect that if people submit a lot then their contribution tapers out because like square roots grow a lot and then kind of level off. So one individual who submits like a tremendous amount of contribution doesn't have too big an effect even though like the more they contribute the more of an effect they have. What's better to get a big matching grant is to have lots of people contribute because each person contributing gives you an extra term in this sum. And then as an example suppose on the left we have someone with an innovative Ethereum project that's a public good and wants a grant and on the right we have like a fake proposal by someone who's just like please give me a grant but I'm not going to do anything. And the person on the left they get contributions from a lot of different people and you notice they get like a pretty good total subsidy whereas the person on the right is the only person that contributes to his proposal and you notice that his total subsidy is zero. And generally if only one person contributes to a given proposal the subsidy is zero. But this depends on having a good proof of person to the scheme and you can imagine if your proof of person to the scheme was broken then the attacker can like pretend to be and different people each making a small contribution instead of one person making a large contribution and can basically steal the subsidy pool. So your security model is your proof of person to the scheme needs to be secure. Now what if I consider jury selection in Claros with a proof of person to the scheme where each person can only each person has to be on proof of humanity or proof of person to the scheme in order to be drawn and you can only be drawn once. Then the first draw I'm kind of the same as before. So maybe the 45% dude gets a draw and but then he can't be drawn again. So everybody else's odds go up and you necessarily draw three different people and the overall odds of anyone getting more than two spots is zero. What happens if I have an insecure proof of person to the scheme? Like take the pessimistic case I'm just completely breaks proof of person and the attacker has tons of profiles. Then the first draw, well, nothing happens and the attacker can be drawn more than once because he has all these profiles and he probably cut up a stake into different profiles. So the attacker is still in this pool. Somebody else gets drawn and now she can't be drawn again because she only had one profile. And so the attacker's odds and everybody else's odds go up a little bit and then on the last draw the attacker has a slightly higher chance than he did before of getting more than half of the votes. But what's interesting here is that it didn't like, he completely broke the proof of person to the scheme but still doesn't completely break this security. It's not like he has an overwhelming chance of getting all the votes. So the security model here is that either your proof of person needs to be secure or no one controls more than X% of the stake. Well, what's X? It depends exactly on how many jury spots there are in the distribution of the other stickers. If you have like a handful of whales in your staking pool then when you remove one of them the attacker's odds go up a lot. But if your staking pool is really well distributed and it has lots of people with small stakes then X can approach 50% where the attacker needs as much resources as he did under the model without proof of personhood. So these like economic and social layers layer together and don't like only slightly kind of dilute the security of one another and add multiple layers of different kinds of security without having to choose and by going to like have a social security or economic security. So that's really nice. So now like an extension of this that we're interested in doing research on is what if you try to weight people by SBTs? Can you do something that's kind of like this pulling in social information but in an even more rich way? So here people have different kinds of SBTs. Some people have a diploma from there that blockchain course. Other people got their pop from Devcons and people wanna contest, wanna hackathon or something. And then an idea that's introduced in the decentralized society paper. So they consider various ways that you can weight people's contributions to quadratic funding. And one of them in particular is very general. So that's what I'm going to focus on and it's called the offset match. And the idea here is that you assign correlation scores between the participants. You say, okay, like participant I has so many sold out tokens and she shares so many of them with participant K. So I'm going to give credits like a correlation score out of that. And then I'm going to solve for these weights alpha that solve this like weird system of equations. So that looks kind of abstract but I'll show some examples and give some of my how I think about this. So here the woman in the blue shirt has two SBTs and she shares one of them with the green shirt. So the correlation score is a half and if you solve for the alphas you get these alphas. And notice that like the idea here is to kind of give weights to anti-correlated groups. If like there's one group that has an SBT that's like really common and they're all kind of aligned with each other because as sort of evidenced by having the same SBTs they should get less weight. So here like tons of people have the diploma so each one of them kind of gets less weight. Whereas the two people that have other PO ops collectively they get more weight. However, there's this like weird quirk where the women with the blue shirt got no weight and the dude with the green shirt got like more weight. So I'll come back to that quirk. But so then what's the kind of philosophy behind this? So you have these like systems of equations. You have this like big matrix of all the correlation coefficients. And then you're trying to solve for this row matrix of the alphas. And if you squint and you take like a really extreme case and you're like, okay, like all of the participants probably fall into like a handful of clusters and the clusters are really highly correlated with each other, but not very correlated with the other clusters. Then you get a kind of matrix equation looks like this. So like in each of the blocks with the ones those are clusters of people that are very similar between each other. But then the zeroes show that they're not very correlated with the others. And then if you solve this matrix equation it basically gives you one equation per block. And it says that each of the blocks gets roughly equal weight. And that weight is shared over the people in the block. So if you have tons of people in your group in your cluster as characterized by the cellbound tokens they have they don't get as much weight as like a smaller block that has like different experiences and different cellbound tokens that each one of them will get more weight. So this has some issues and the people the authors of the decentralized society paper already point out some of these points and they sort of proposes as a place to start to think about these issues. So for first of all the alphas may not be exist and they may not be unique if they do exist. Moreover you can produce negative alphas. There are ways that you can sort of like patch this and could say okay I got a negative alpha I'm just gonna round to zero that might mess a little bit with your linear algebra of philosophy. Generally this handles how much weight you give it to groups pretty well but it doesn't necessarily distribute that weight naturally to individuals. So like there's a tendency based on how the linear algebra works to give participants with a sub superset of SPTs compared to somebody else zero weight. And this was that quirk that happened with the woman in the blue shirt. She had strictly more SPTs than somebody else. And so the motivation for the centralized society authors was to modify this formula for matching in quadratic funding to put alphas under the square root. So now in order to get a big matching grant you not only wanna have lots of contributions from lots of different people you want those people to have big alphas. And how do they get big alphas? Well by representing groups that like don't have so many people in them and generally in order to get a big matching grant you're going to need a lot of people from different groups contributing to your project. From Claire's perspective so this is what brings me to this. You could imagine re-weighting the stakes people have by the alphas. So you could use these like formulas over here for people's drawing odds. So we have this example from before we get the same weights that we had before and now like the woman that has 40% stake she doesn't have very, she has very common SPTs so that kind of dilutes her influence a bit whereas like other people with less stake but uncommon SPTs get more of a chance of being drawn. And this is a potentially natural thing to do. Using SPTs at all in Claire's to sort of like interface with your selection will allow us to have an explicit procedure where in some courts and some decisions in order to be drawn you need to have expertise in relevant cases by having an SPT that says that you were an expert in that case. So currently Claire's has like a game theoretic mechanism to discourage people from staking where they're not experts but this would allow us to have like an explicit mechanism that's an extra layer of security. More generally by having people that come from the anti-correlated groups as have different SPTs attested different experiences you get this tying into like wisdom of the crowds ideas there's been a lot of research that shows that groups of diverse problem solvers or groups with different experiences can often produce better results than more monolithic groups. So potentially we could produce better decisions by having this social layer in Claire's. But you have to ask okay what's the security model here? What happens particularly if an attacker breaks the distribution of an SPT? If there are lots of SPTs being ordered by lots of different entities maybe some of them will be more secure than others. And then you have other questions like are the participants incentivized to keep the SPTs all in the same address or split them up? Like you want people to sort of take their identity, well you want people to have at least certain aspects of their identity all in the same wallet rather than having like different SPTs on each like one SPT per wallet or something. And so imagine this for the first point what happens if an SPT is broken. A simple example, so imagine that like the attacker can break the distribution of this like diploma. He hacks into Coursera or whatever and like can produce tons of profiles with the diploma. If you have a group as evidenced by this that sort of pulled out of this like clustering algorithm anti-correlation mechanism that has basically just characterized by having the diploma then the attacker can perfectly copy them. He can make an infinite number of profiles or a large number of profiles that exactly mimic people in the group. So he can steal all of their weight and that's inevitable, you know, no matter what weighting you use. What's a more interesting question is what happens if the attacker, well what happens if the group is characterized by having KSPTs? So I have a group of people like most of whom have the same KSPTs, maybe they share a few KSPTs with other people but mostly like they have those KSPTs and other groups don't. And the attacker just breaks one of the SPTs, the diploma. Well then now you get this like back to the block matrix. You have something that looks like this. Now the correlation between the attacker and the victims is like one over K because he has one of their SPTs and you can solve for this and under the offset match or the offset weighting, the attacker still takes the muscle of the weight because of this quirk with people of supersets and subsets where people with supersets of SPTs don't get any weight. So that's not great but like you could imagine adapting this somehow to try to be resistant to this kind of attack. Ultimately, you would want something that kind of looks like what we had with proof of personal being matched with the economic sticking where adding this social layer kind of adds security and mesh as well with the existing economic security. So there are other potential weighting schemes one could imagine. So this idea is related to eigenvector centrality. It's similar to the idea used in the PageRank algorithm. So in the original version of eigenvector centrality there's not this like one over in the equation and conveniently simply enough you can kind of turn into a measure of anti-correlation or anti-centrality just by putting one over. So this still doesn't fully work. It's a little more resistant than the offset match to the question of what happens if the attacker breaks one of the tokens. So more research can be done here. I know Glenn Wilde at least is also thinking about some of these things. He had some similar ideas about eigenvector centrality and uses a different formula. So we can continue to think about like what one could put here that will be attack resistance in the most robust way. And just to conclude, so proof of person in protocols can provide a natural base layer for certain types of social recovery. In some cases distributions of SPTs. Ideas developed around weighting quadratic funding contributions by SPTs are also relevant in other applications like your selection. Maybe you have some airdrop and you want to give your airdrop to a diverse member. People contribute to your community in a lot of different ways. Who've interacted with your protocol in different ways and maybe that could be expressed by having different SPTs. But as we move from a purely economic model to economic plus proof of personhood, proof of personhood plus economic plus SPTs, this can have effects on our security model and like the ideal thing to have is to layer security. So that as we add these things like the system gets more and more secure rather than having to have to make sacrifices or dilute the economic security. But there are questions about various security models. What happens if an SPT gets broken and do users have an incentive to support their SPTs? So, thank you. If there's time for questions, I'd be happy to take some questions. Thank you very much, William. We have a space for questions. If someone have any questions.