 Next speaker, so I would like to introduce Francisco Cabañas, otherwise known as Artic Mein. He is on the Monero core team. He's going to be speaking with us about kind of the economic impact of COVID-19 and transaction capacity and fees in Monero. So I'm going to go ahead and pass that on over to him. Artic Mein, go ahead and take it away. Thank you. Thank you for the great introduction. So the topic that I'm going to be speaking today is about drastic external impacts on the Monero network, high response and what kind of impacts they would have. Now the initial scenario that I'm looking at, we'll grab a scenario and then we're looking at the aftermath, what happens. So you throw a disruption, aftermath, what happens if you don't change the protocol, have a proposal, implications of the proposal and there's no questions of discussion. So what actually started the scenario was an issue raised by user, UCoA HB and actually very important issue. And I'm going to quote what he said and this is quoting straight from the GitHub issue. Imagine adoption coming along and the long-term median gets really high, say a hundred times the current default penalty free zone. Certainly catastrophe hits and several major sources of transaction volume are taken offline. Short-term transaction volume clock says to five times the default penalty free zone and how many of these are practically 20 times higher. Now the scenario we're talking about is about a thousand times of the transaction activity in Monero. This came up in February just before the awareness of COVID-19. It's, and then within a few days after the issue came the start of the awareness of COVID-19 which is actually a perfect example for the issue. Pandemics was not referred in the particular issue and I have a link below to GitHub for the research project issue. And I would suggest that there we could do a lot of also discussion on some of the technical solutions. Now Monero has a long-term median and it changes every, it's 100,000 blocks. So it changes up to 50,000 blocks and that's around 69 days. It's about a couple of months in a week. And this is an important timeframe to consider because what's happening here is that at that point in time it changes and it's a scenario and it has very significant impacts. And we're gonna look at possible causes of an external disruption. Now, for example, one of the measures is a disruption of various Monero markets that believe in the issue. One of the issues that was mentioned was for example a closure of a very big DNN market. And what impact that would have on transactions. And then this category I would say is an impact that doesn't impact the traditional finance system. The second group that I'm including which impact on the international finance system will be things like COVID-19. And you're aware of that for the issue. The issue I should discuss the possibility of a limited nuclear war and the kind of consequences of that national disaster, major economic disruption. What we're talking about here is advanced external events that cause major economic disruption and how that will impact the Monero network and also in particular how will it impact the fee structure and how we can respond to it and some changes that are needed to do that. Now, an exercise really interesting because we are considering a very sizable series of scenarios. One thing I should mention in the previous slide, the numbers we're talking about will have a very high fee, I'm sorry, a very high price of Monero. So there's no recovery or very long, slow recovery. So this is where you see the collapse in transaction rates. And it just sort of dies there and nothing happens and maybe if you're used on the road starts to recover again and the DNM market is a good example of that. And so in that case, you basically have in that scenario relatively led by the network, you do have the fee impact. The next one is a recovery within the long-term median and that means that you drop and then you come back up again within the 69 day timeframe. And that means that the recovery level for transactions within the Monero network is really only five times, could be as high as five times. And then the third example is we start along to a median and it collapses completely and then we are going back, we have to recover the full 20 times in the example plus say in that issue, five times. The key to understand is this, an impact of the event on traditional finance. So if it impacts the banking system, if it impacts financial can also have a significant impact on transaction demand and this is gonna show up in the recovery phase. So when we're trying to come out of this, all of a sudden everybody wants to use Monero because there's problems in the banking system. So not only do we have to deal how we'll get the median back up again to where we were but now we have all this additional demand because the other guys are having problems. So let's look at the examples. Let's say that there's no impact on traditional finance. So in this example, this interruption of the Monero markets the likelihood result is no recovery. A price, it's just a long process. So basically you have replace marks come up even a possible negative impact. You basically have a long recovery and nothing particularly happens in the scenario. That really requires a lot of impact on the protocol except for the fee question. Look at the COVID-19 example. This is a great example of the external scenario. So what are we looking at here? Well, either it's gonna recover right within the two months of 69 timeframe in which case and then you get the demand or it may be a bit delayed and then you have the full collapse in the long-term medium and this is critical and then you have to make up not just 20 times the transaction but maybe a hundred times. So you really have a big upswing on the afterwards. You suddenly have to ramp up the whole network not just because of the impact but now because everybody else wants to use Monero because there's problems somewhere else and that's the key distinction when you're impacting traditional finance. So I'm good. The other two examples, the limited nuclear war or the, to parallel this in a similar way or can parallel it as it will be say a very disoperable kind of corruption this kind of things can actually have a similar impact economically and the parameters are comparable. I will focus primarily on COVID-19 simply because we're living right through it. This is a perfect example of the type of scenario. So we step back for a moment and ask the question what exactly did COVID-19 do to the Monero network? Well, why did the selling Monero stop functioning? Well, no, that the box top be mine. No, the mine has shut down. No, the developer's shut down that the functionality of the community shut down to most extent, no. The only thing basically we've seen a significant impact is the fact that I'm delivering these talks virtually. We did have to cancel from Franco and Berlin. So we had sounded some impacts, but relatively minor the core components of the community, of the network, the clearance of transactions, all of this happened. No problem. Now, compare that with the banking system. Bank hours were changed. Bank branches were closed. Lineups outside people wearing masks, vexing glass screens on the tellers. We look at the impacts are way more significant. We take a look at the payments. Well, the biggest one actually is that we've been in card payments, it increased from in card tab and a drastic fall in chip and pin. So there's been this movement in the type of credit card transaction. There's been some drop in cash. Part of the idea being there's a certain types of payments were perceived to be propagating the COVID-19. And obviously, if you're sitting on a pin pad and inserting a card and fiddling with the terminal and touching all the tips of your fingers, your chances of spreading the virus are much higher than if you just bring the card to the terminal and don't touch anything. And this is a so-called contactless card tab. The reality, however, is in a lot of card tabs is still a lot of fiddling. And merchants expect you to touch buttons. And I have actually refused to do that. It was quite interesting. So that's one element. There's this cash, there's this kind of in-between, obviously better, the worst in a totally contactless card tab are far better than chip and pin. And in this picture, you consider a cryptocurrency payment. Now, cryptocurrency payment, in order to use it, you have to be contactless because basically what you're doing is you're aligning QR codes. So you cut your phone, you're gonna align the QR code, you're gonna do it at a distance. It does not work if you touch it. So this is really interesting. If you wanna pay with Monero, you can't probably get the virus. You have to go out of your way to do it with the other payments you can. So you're not on the main vessel. Well, make your unemployment. Business failures. You all go down the city. This is all these businesses are closing. Massive increase in government debt. Governments have responded to the problem by going into debt and trying to mitigate the impact. And a massive intervention by the central banks are increasing the money supply. This is mitigating, it's fine. It's mitigated to some degree, but it also has long-term implications. One major impact, obviously, is if you increase the number of unemployed people, you're gonna disrupt card payments. And the reason you're gonna do that is because people are gonna suddenly lose their credit scores and they're not gonna be able to have credit cards or they're gonna be afraid that their debit account in the bank is going to be seized. So there's gonna be a push towards cryptocurrency just from this element. I don't even wanna consider what could possibly happen if it's a major disruption in the banking system and we still haven't got to that stage. Everything is kind of okay and maybe the Federal Reserve and European Central Bank and the Bank of England, the Bank of Canada and all that. They're trying a very delicate job between hyperinflation on one side and collapse of financial institutions and the other. And it's a delicate position. I honestly would not wanna be in the issues for what they're doing. It's a lot easier dealing with the Monero side of this. So one possible impact is a significant shift towards the use of cryptocurrency and payments. And this will be way greater in the original scenario but could even occur in the current situation. So what you could see is that there's a demand on the Monero network even as it is right now. And in many ways, this is a bit of a warning and if something were to happen with the Federal Reserve and the banking system, something were to happen even in a smaller country, we could suddenly face ourselves with significant demand on transaction. I wish the stories not be ended on this. So we still have the possibility of the risk of having to deal. And that means at every level. Everything will helping newbies will have to set up their wallets to make sure your notes are up to snuff, to cleaning, upgrading your internet connection. I mean, the reality is we could find ourselves having to roll up our sleeves at every level in the community. Just as the result is, just because of these disruptions, if they suddenly have big demand on the network. So now let's take a look at what happens. No changes, no problem. So we look at the protocol right now. First of all, in this scenario, in this very important, we're doing a thousand times increase in the Monero transaction volume because basically we are running right now about a 10th of the penalty free zone. So we're talking about basically 30 megabytes versus 30 kilobytes that we have today in transaction volume. One of the implications of this is if you look at the equation of exchange and you make some reasonable assumptions and no change in velocity at a constant, then we're talking about a potential price for Monero of around 100,000 US dollars. This sounds significant, but if you're gonna increase the transaction capacity demand of the Monero network by a factor of 1,000 and it's fair to realize that assuming the velocity that doesn't change, that it hasn't come from somewhere and the distribution doesn't change. So obviously the only thing you can move is the price. So now if you increase Q by a factor of 1,000, you've got to decrease P by a factor of 1,000, which is the inverse. So effectively what we say is sort of $100 or $100,000. Now this variability could be 10,000, it could be a million, but there is definitely a factor here. And quite honestly, I mean, if a whole bunch of people are transacting the Monero network to that level, then there's also be a lot of investors are suddenly gonna be interested in this currency that's actually working and that you can actually use. To put it in another way, you have a practical use scenario in case. The thing to understand is the fee in current terms will not change significantly. So our fees would be roughly bit higher. And this is mainly due to the fact that we still have the 10 for the increase until we get to the penalty free zone, which doesn't impact on fees. And it's kind of balanced by things such as a drop in the emission come to tail emission. And we're going down to also some of the improvements such as CL sag and so on. So that's kind of what, so a little bit about this first sense USD for two into our transaction. Even though the price has gone up by a factor of 1,000. That's one of the beauties of the Monero protocol. As you increase the block size, the fee of a transaction goes down. So if you have this assumption, you have essentially a constant fee, goes to a constant fee in terms of a sort of fixed USD. And by the way, I'm talking about a USD as of today. So you sort of factor in any changes in the inflation rate. So what happens if you don't change the protocol? Well, okay. So the 20 increase in fee, this goes from say four cents or 80 cents, you'll see. And the interest in there is, in the issue, it can be really disruptive if you have multi-signature transactions that are created ahead of workers. So for example, you create a transaction, you have multiple signatures, you engage in some business arrangements, and then like three weeks later, five weeks later, something you wanna broadcast that transaction and now the fees have changed on you. And that was one of the main factors in the protocol question. I mean, how do we deal with these situations? And that's the fee impact question. So there's a real need for minimum fee predictability for a given period of time. And as I said, the fee impact applies to all three recovery scenarios. Okay. So the one economy, where you have first number one, no recovery, where it's low recovery, no recovery fine. I mean, there's no real stress on the protocol, but the fee assurance, we're just dropping it and we're not really suddenly putting more demands on the network. Now, in the second case, it starts to get a bit more interesting because what happens there is, you suddenly have a five times increase in demand scenario. So, and it's all you're pushing your product. So you can kind of manage it, but it's far from ideal. You're pushing the limits of the growth rate of the long term medium, depending on the rate. So that's a bit tight and you still have the fee issue. It's kind of possible, not ideal, but manageable. But the serious problem is this one. What happens with the third example? Now you drop the long term medium by a factor of 20. So you drop down and now to recover back again, you have to go into this two to three year period just to get back to where you were and then also to then allow for the addition. It's just too slow to recover. So you don't have a recovery protocol. You drop, you can think of it as a big bang attack in reverse where you actually suddenly drop the transaction and it has some real consequences. And this is actually a real serious problem that was identified in this issue indirectly, but definitely very good. So what are we gonna do in the proposal? Well, number one, we increase the growth of a long term medium, 1.2X to 2X, that alone will address these kind of recovery issues to significant degree. It's about 30 times versus five times in a year. So there's a real increase in the rate of growth and that's important and gives you that flexibility, that ability. Now, there is a 50 plus factor in there for searching, but that's a great. B, and this is the critical part, you limit the decay of the long term medium to half. So what we say is at the end of that 20 time drop, we don't drop the whole thing all that to 24, we just drop it to four. And then we wait another 69 days and drop it to four again and so on. And then the third proposal was to set the penalty free zone to the maximum, sorry, minimum appeal to the maximum of the current 300,000 bytes and a quarter of the long term medium. Now, I have seen discussion of proposals where we can go higher than that and they're quite interesting. In fact, one of the proposals, I think has a similar implication to that. This should be discussed and looked at because they're quite interesting, but this proposal basically involves a quarter of the long term medium. The next thing we do is we change the minimum fee for no relay. This is more of an anti-spam measure. The thing to bear in mind here is that if you have a series of transactions that are not minable, you can literally launch a DDI attack against the network. So basically what you do is you have flood the network with a mass of transactions which are under the, they're not gonna get mined. And this is one of the reasons where you have a minimum fee. So that's the danger there. There is a potential attack in that. And that's the reason why you do that. You basically wanna set that relay fee for the node so that there's a really good chance that transaction gets mined. Now, obviously if you're sitting in one-tenth of the penalty free zone, which we are right now, well, a fee of 20% of the reference transaction is fine. It's gonna get mined. So the attacker has a big risk. Once you go above it, it starts to get dicey and you could get scenarios where this could actually happen. I should point out these attacks have actually occurred on Bitcoin. And if you run a full Bitcoin node, which I do, with the port open, and you suddenly see this massive search in bandwidth, well, wait a minute, the Bitcoin protocol is running at capacity. So why is this happening? Well, this massive transaction sort of being transmitted and distributed by the nodes, which are not being mined because the fees are too small. And this type of attack could be done in Bitcoin to actually push up the fees. But it's exactly a similar type of problem. So you do have, and it really has an impact on the node. So the bandwidth could increase by a factor of 10 or something, just as a result of these type of attacks. And I have seen, I've experienced it myself, I wash my bandwidth, I have a limited bandwidth in there and it can get away, but stop. I mean, this isn't, this is not true. So that's one of the reasons for this type of protection. A few technical changes with respect to the wallet fees. One of the things that's not well known about the wallet fees in Monero is that there is an adjustment where we try to shift the median by 10 blocks and the idea is to assume the worst possible scenario so that if you create a transaction, it doesn't change fast enough that you can't send it because the short-term menu has changed and the fees are gone up. And so this is one of the ideas. And basically we have a series of fee schedules in there where we would have each level of fee is protected against change in the median. So the principle here is you keep paying a higher fee, you get more blocks, if you go all the way, you get like 200,000 blocks of protection, essentially by paying a higher fee. And the concept is that, for example, you simply say, okay, if I want my, just to send my transaction right away within 10 minutes, okay, fine, I go with the normal fee, the lowest possible fee. If I'm near the hand, I want it to be good for at least the balance of the short-term median, sorry, long-term median, then I would pay the next one and then if I want another 100,000 blocks and I keep going up the line. So implications are fees that are highly predictable for example, a fee of four times, will ensure the minimum fee is meant until the drop not to median. And then you can examine the long-term median, actually predict the worst-case scenario. Or you can choose a fee all the way, but in reality, there's no free lunch. I mean, the longer you want to protect this, the more fee you pay. And that's your point on even increasing this, penalty free stones, say it's as high as the long-term median, which I suspect is one of the ideas we have the proposals, will mitigate this even further, but you still have this principle that the longer you go, you wanna go the higher the fee. So if you want your fee to be mind-able, like say three months on the road, you're gonna pay a four months on the road, you're gonna pay a much higher fee than if you just wanna create the transaction and just send it right to the network. This is the critical impact of the project. You remove this risk of a sudden collapse of the long-term median. And this is the biggest issue that I identified. And that is what happens is, if you let it collapse, then bingo. You have this massive recovery, because if you drop all the way down, it could take like two to three years to get up there and all of a sudden, in a couple of months it collapses. And this is why having this graduated decline in the long-term median is very critical. And it does allow, this is probably the most critical approach. You do not want that long-term median to suddenly drop all the way from the top to the bottom, you want it to go down in steps the same way it grew up in steps. There's minimal action in the absence of a sudden drop in transaction. And of course, the reason for this is that the dynamic penalty free zone, essentially does it even come into pay. And another interesting thing, and I'm gonna, is that you could actually increase the rate to look at transaction growth. And I have a link here, this should work, I'm gonna link it here and I'm gonna show you the site. And you should see. Yeah, there we go. Okay, so if we go on the link here and I'll see the site. And you should see the site here on the screen. And basically, if you look at transactions, you're gonna see that there is a, a very significant trend on the screen here. And again, we will see what we're seeing in this scenario. So I will close this out right now. This is a come up. Yes, it comes up here. And we will then go out again. Okay. And we will close these out there. And we should see the proposed looking. So again, if you click on the link, you will see the transaction rates. And this is actually a way to see what happens if you actually, you can actually look at the transactions and you can see basically what the trends are. And what you'll find is that some of the recent trends are very close to the maximum rate of the long-term medium. Okay. So now we are going to look at some implications again. If we increase the minimum low relay fee, this mitigates against flood x and y types of facts. Now, I'll start in a second here and I will say that flood x and y is potentially the bigger threat than big bang simply because it's a motivation. Now, also flood x and y is easiest to mitigate because what you do is you simply increase the, if you increase the ring size, then you turn around and you increase the cost to the attacker and you essentially relative to the defense. And that's a factor of that. But we've got to bear in mind that this minimum relay fee also mitigates the stack of attacks. I've included a link to the proposal specification here. And again, you can go to the, and take a look at it there. And I'll be looking for some questions in discussion. So I will turn it back to the moderator and if there's any questions that I need to answer or any discussion.