 Okay, so I'm going to be giving a little bit of an introduction for Peter, who's going to be talking about staking rewards to encourage user ownership within platforms. I think this work is pretty broadly applicable to a bunch of different use cases and, yeah, you know, Ethereum systems of Ethereum smart contracts on Ethereum. I'm just going to quickly give a little bit of like motivation for what went in, you know, why we focused on this work and how it, you know, how we came to focus on it in the context of Xerox specifically. Okay, so Xerox, which is, you know, we're not really focused on Xerox protocol as much as like the governance aspects of it in this presentation, but a little bit of background. So Xerox protocol is basically a system of Ethereum smart contracts for peer-to-peer exchange of digital assets on the Ethereum blockchain. And about three years ago, when we were initially designing the smart contracts, we realized that we were building on top of a rapidly evolving technology stack and that the smart contracts that we built, you know, built three years ago will probably need to be changing pretty frequently every six months or so. And so if we were to have like a single monolithic smart contract that was not upgradeable, we run into these problems where every time we have to upgrade, we have to ask our users to withdraw their assets from the first smart contract, deposit them to the next, and this leads to fragmentation and churn among users. So some people just like won't upgrade at all. They'll just like stop using the system period. And then we'll also run into the situation where some users will upgrade, but others just won't. And so specifically for exchange and marketplaces where liquidity network effects are so important, it's really important that we allow everyone to upgrade in a seamless process without disrupting markets. And so the Xerox protocol architecture is designed in an upgradeable way where we can basically plug in support for new types of token standards. We can upgrade, swap out pieces of this kind of pipeline of smart contracts. And we can kind of do it in a seamless way where users, traders can just kind of gradually shift to the newest version and you can deprecate the older versions and retain these network effects around liquidity. And you know, people ask like why do you need to have upgrades that introduces all this complexity? I think like actually just recently there was a perfect example of why upgradeability is important with the repricing of the S-load opcode in Ethereum, which is going to be going to the next hard fork and will probably be breaking a lot of contracts that are currently live today. And no one could foresee that happening, so you have to have a way to upgrade. And specifically in the case of Xerox, you know, Xerox protocol isn't supposed to be like a for-profit generator for like a private company. It's supposed to be public infrastructure that anyone can plug into. And when you have public infrastructure, okay. When you have public infrastructure, it's really challenging to figure out how do we upgrade these systems of smart contracts because the stakes are high. You know, today Xerox is moving approximately a million dollars every day. And you know, ideally this number will increase many times over in the next years. And so this public infrastructure is like pretty security critical. Many people are building businesses on top of it. So how can we decide on upgrades? So when we first released version one of Xerox two years ago, you know, we released Xerox with a governance token, the ZRX token. And the idea is that instead of having like a single group or private entity decide on upgrades, there would be a token that allows people to vote on these upgrades and, you know, make sure upgrades are representing the needs of the ecosystem. And we pretty quickly realized after launching version one with the ZRX token that the design was not working out as we intended it to. So the system was designed such that these marketplaces built on Xerox could receive fees in the form of ZRX tokens for people that are accessing their liquidity. And what this would do in effect if, you know, ideally is it would push the token distribution into the hands of people that are actually using the protocol. We want the protocol to be owned by its users. But this was the early days. There weren't many dapps that existed back then. And we learned very quickly that, you know, end users don't want to fuss with tokens. They just want to like do a trade and be done with it. And these, you know, having a usage token adds a lot of friction. And so a couple years later we looked at the numbers and kind of compared, you know, are the addresses that owns ZRX actually trading on the protocol? And are the addresses that are trading on the protocol actually owning ZRX? And the answer is absolutely not. Like we saw that there was very little overlap between these groups. And so at that point we brought on Peter to, you know, research this problem. How can we increase this overlap? And what this overlap represents is incentive alignment between the protocol's users and the people that are making governance decisions over the protocol. And so Peter's going to be talking about how we can create incentives that maximize this overlap. Thank you, Will. So you can see this Venn diagram here. And this is going to relate to kind of a Venn diagram in the next slide describing the evolution of the ZRX token, you know, where we're trying to go in order to address this problem of getting our users a voice in the process of smart contract upgrades. So so far we have this governance token, which allows these ZRX holders to vote on whether we make upgrades go live in the blockchain. So that's been achieved. Right. But in order to have this process work as intended, that people with voting power need to be the users of the software and not third parties who, you know, are purchasing it for speculative motives or other reasons. And so our plan to address this in version three of the software, which is going to go live in coming months, is to introduce incentives that update our ZRX token mechanics and that provide a new reason for people to hold and use ZRX. And components of this will be the addition of user fees so that takers, when they see a standing offer to buy and sell an asset and they want to take advantage of that, currently they pay no fees whatsoever to the ZRX software. There's no sort of revenue generation aspect. With this modification they will need to pay a fee that's proportional to the gas price that they pay when they submit a trade to the blockchain so that the ZRX will collect some revenue that it can use to create incentives. So these fees are then going to go into liquidity incentives that encourage people to create these standing offers to buy and sell assets. So market makers who get their offers on ZRX relayers and get them taken will be receiving a share of this income that's generated through user fees. And there's also going to be staking rewards so that token holders holding the ZRX token will be able to receive a share of the revenue generated through these fees. And our philosophy here is related to the vendor diagram you saw previously where we want governance, our governance objectives to be achieved and to do this we recognize we need to have incentives for people to hold the ZRX token. And specifically we need to encourage the people who we think have an interest in voting. We need to encourage this group who's actively using their protocol who has an economic interest or a stake in the decisions we make. We need to encourage them to be the people who hold ZRX tokens. So that rather than say like okay we have these token holders, they are amotivated, they didn't interact much with the protocol, how do we make them vote? We think instead we have these users and they're very interested and they engage with us regularly. How do we encourage that group to hold more tokens and buy them from this group of speculators? The philosophy. So why is this important to us? This gets back to our vision for the organization and so what we're trying to work together to set out to achieve which is to create a tokenized world where all value can flow freely. And we can sort of think of that as summarizing this concept of open access, open and low cost access to the ability to do online exchange of tokenized assets. As we achieve this mission so that everyone can sort of go online and use a DEX to trade into and out of whatever asset they want, we want to measure the progress we're making in terms of the volume of tokens that are exchanged, in terms of the prices that are available to users, so that the larger quantity of a specific asset is available, the better job we're doing, the better price you can get when you're moving back and forth between tokens, the more effectively we achieve our goal, and the wider variety of assets that are available on our relayers, the better job we're doing. And then in order to commit to this mission of ensuring that exchange is low cost and open to everyone and there's no sort of rent extraction or profit taking that is going to create barriers to exchange happening, we want to create a governance mechanism that commits us to our mission. We want to use token voting mechanisms to ensure that the people who benefit from open access to online exchange are the same people who determine the choices we make. We want them to have accountability to the users that are benefiting from our software, so that they will vote for upgrades that are in their interests rather than the interests of some sort of speculator or investor who might want to profit off of the exchange process. Okay, so we can see though from the Venn diagram at the beginning that we don't have a structure that really enables that accountability right now. We have tokens, very few of which are actually held by active users of the protocol who would then vote for things that are in their interests, for things that align with our organization's mission. So we have to have some means of persuading these users of the protocol to become ZRX owners, right? And it's not just going to work through exhortation. We could say, in order to preserve the centralized future, do your duty and buy some ZRX tokens and vote, participate in the voting process, right? But if a user is happy with the way the software works and he thinks that we're making good decisions or that other people are voting, then he doesn't really have any incentive personally to sort of bear this cost and responsibility. You can say, well, some other one else should vote. They'll vote for me. I'm happy. Why should I bother? It's too much trouble. The next person will say the same thing. Because of this free writing problem, this is not going to happen without some intervention that motivates people to do this. It has to be personally beneficial for individuals before we can expect that to happen. So what we see right now is that under our current system, the incentive structure encourages tokens to be owned by speculators. And does not really motivate users to buy the tokens. Voting rights are not enough. There's the free writing problem. They're not going to cause a transition in the ownership distribution. What we need is some way in which ZRX users can realize the material benefit from holding the token so that they can get something as a user from owning the token that's not available to anyone else. So Alice uses the protocol and holds a token and she can get a really nice benefit from that. Whereas Bob holds the token and because he's not a user, it's not beneficial to him. It doesn't have the same economic benefit attached to it, right? So we need to create that dynamic so as to encourage the Bob's of the world to sell their tokens to the Alice's who will be owner users, okay? And this is like, I think this is a critical part of governance that is kind of under recognized. That is, it's not just about the mechanisms we create that allow owners to influence or have voice in decisions. It's also about the identity of owners. The identity of owners matters quite a bit for what an organization will set out to achieve. It will set out to sort of represent the interest of its owners. So if we want to target a particular long term goal, we need to pick people as owners or encourage people to be owners whose interests align with what we want to do. We can't just sort of blindly assume that they will. We need to sort of introduce incentives that encourage that. So the first sort of part of this chain is token incentives. And we want to introduce systems that ZRX ownership provide specific benefits that are available to ZRX users, but not to someone who's simply a speculator or a third party who doesn't engage with the software, right? And then we expect that to influence the ownership distribution so that the non-users sell tokens to users who can derive a greater benefit from them, right? And then this feeds into our voting process. Whereas users come to hold a larger proportion of the tokens, they will vote for decisions and policies that are in their interest. And in particular, if we think go back to this, the users will prefer systems that offer specific benefits for them rather than for other outside groups. So this is self-sustaining. Once an organization sort of set on this path, the people, the incumbents who hold the tokens tend to vote for policies that sustain it because they benefit from them, right? So in thinking about the long-term trajectory of the organization, we want to sort of lay a foundation right now of owners whose interests align with our vision. Okay, so that leads to that, what do we mean by users, right? Who is a user of the protocol? Do we want everyone who ever interacted with the ZRX mark contracts to own? Does that make sense? Or do we need to be more specific about what is sort of a rational structure of ownership and voter participation? So the ZRX protocol has three main classes of users who might target for these types of incentives. The first are relayers, sort of host order book data. They host these offers to buy and sell assets. And the next is market makers. So market makers create these standing offers to buy and sell tokens. And then finally, at the bottom of the period, pyramid, there are retail traders who sort of are the final end customers. The customers who take advantage of the offers of market makers and the sort of data availability platforms of relayers. In looking at these three groups, they're not all necessarily equally sensible as people who might own and participate in voting. We need someone who, a group that has a strong enough interest, a strong enough economic interest in the protocol, that decision making is decisive for them. That decision can influence their welfare. That they feel powerfully impacted upon it enough with sufficient motivation to become well informed and then go through the hurdles of the voting process. We also need, besides that, a group whose interests align with the organization's mission to sort of enable online exchange in the public interest, rather than the interest of sort of maximizing private benefit. And so looking through these groups, relayers, they're building businesses in the protocol. But there's a little bit of ambiguity in their incentives or goals because these are mostly for-profit businesses and they might prefer that the protocol be run in a manner that maximizes their business income, rather than provides this public good of free and open access to online exchange. At the bottom, we have retail traders. They're certainly beneficiaries of free and open access to exchange, but at the same time, they're not likely to be motivated to sort of become informed or participate in governance because they're so large in number and because they can't sort of reap a personal benefit. And in the middle, we have market makers. And this is the group that we sort of identified as the most logical candidate owners. So why do we think that among our users, we should target market makers with incentives to own the token and vote with the token, as opposed to anyone else? Well, we believe that market makers, because of their line of business, they benefit from free and open access to venues to do business. Their business is to buy and sell token inventories and charge us small margins so that when they sell, they sell a slight premium. When they buy, they buy a slight discount. And the more volume they can do, the more easily they can make these offers, the more money they can earn. So from this perspective, market makers share our goal of ensuring that there's no sort of rent seeking intermediaries who extract fees in the exchange process so that they can have, say, peer to peer connections, make an offer to an end user directly rather than have to go through a platform which will levy a large fee on the exchange. So this market maker ownership addresses a problem that the market structure of exchanges. Exchanges have significant network economies that mean that as an exchange grows, as it hosts more and more liquidity, as it does more and more volume, the prices that exchange is able to offer to people fall. The market becomes more efficient, the more co-located liquidity you have in one place. And that gives these exchanges bargaining power. If they're big enough, they can offer these much better prices than anyone else. And they can begin to charge fees. They can begin to levy substantial fees in every single trade such that even though they're sort of extracting this cut, users are still better off going to the largest exchange rather than going to a much smaller one that doesn't demand any fees at all. So there's this sort of tendency towards monopoly or oligopoly market structure. And ownership matters a great deal here. So third party owners who have created the exchange for profit maximization without a direct participation, they prefer to set high fees that will maximize fee revenue, that will maximize the income for the exchange owner. Market maker owners, on the other hand, they're running a business on top of the process where the income they generate from this business is proportional to the amount of trade volume. The more trade volume is done, the more they can earn through this activity that's enabled by the exchange. So this group has an interest in much lower fees that maximize the revenue they get or the profit they get from this kind of business that's built on the platform. And that aligns with our goal of keeping fees low, keeping access to the exchange process free and open. And this is a powerful motivator. This isn't just one of the things that is very important to me in deciding upon this system as opposed to alternatives, is that there's a large, a very impressive historical precedent for this ownership form. So for the past 100 years, most equity exchange exchanges for most of this time, in say, Japan or New York or in London, most major equity exchanges have been organized as non-profits owned by market makers as sort of mutual organizations. So they don't sort of, the market makers vote on rules for trading and the exchange itself does not distribute profit to market makers, but instead just supports their business activity. And another thing that's really important is, okay, so it's thinking about whether market makers have a stake in this process, whether it's important enough for them to have a voice that they would be motivated to purchase XRX tokens and go through the hassle of voting. And our experience in market makers interact with us extensively, giving advice or recommending changes or making demands for how they want the software to operate to make it easier to do their business. And these market makers, they're making a bet on the protocol's long-term success and in order to learn how to market make on a dex, they're paying us a substantial upfront cost, and so they have a strong interest in ensuring this bet pays off by participating and working with us to build this kind of decentralized future. Okay, so, and I'm going to then, that sort of wraps up this discussion of what is our motivation, what is our vision for governance of the protocol? And I wanna talk about sort of the mechanics very briefly of staking and market maker incentives. So first we have like a maker, he creates an order, and then takers, whenever they take an order that is listed on a real error, they're gonna have to submit a fee in Ethereum, which is proportional or equal to the gas fee they're paying to the miner. So if you pay 15 cents to the miner, when you submit a transaction, you'll now be paying an additional 15 cents of Ethereum as a protocol fee, which is accumulated here, and ultimately these fees are gonna be distributed back to market makers, and then once we've collected all this revenue, we have to distribute it somehow, and this is where the staking process comes in. Here we have a market maker who's gonna receive a portion of the collected revenue, and the amount that he received is gonna be influenced by two things. One is the amount of trades that he does. So the more fees he collects by posting liquidity on order books, the more revenue he'll get, and the other is stake, the more stake that he owns or rents from a Xerox token holder, the more money he will collect, right? So he has this incentive then to either buy Xerox himself or rent it from a third party in order to maximize his rebate income, and then finally, this motivation of market makers to acquire stake that they don't own is going to mean that they'll have to pay an income stream to Xerox holders. Okay, so out of time, so I should stop there.