Group currencies

In the original description of Circles we already described “group currencies”.

I still believe group currencies are an important addition to Circles core concept.

The simplest implementation would define another Ethereum address as a “group owner”. This addess does not need to be a single owner (EOA) but could be a multsi-sig a DAO or really any other possible set of rules. The rules could be even based on the Circles trust graph and thus implement rules similar to Duniter.

The right of the owner would be to add or remove Circles account to a “member list”.

Now anyone that holds Circles from someone on the member list could call a minting function of the group contract that takes personal Circles (possibly also via transitive transfers), puts them into the group contract and mints an equivalent amount of group Circles.

In contrast to what was written in rule 12 I would today advocate to give holders of the group currency the option to redeem it against personal tokens that contract holds.

Practical advantages
Market price
If wanted it would be much easier to establish a market price or a minimum value for those group currencies as they could easily be traded e.g. on a DEX (like Uniswap, bonding curve) or other rules that would allow to exchange those tokens against other assets including tokens that represent fiat currency. Theoretically that would already be possible with individual Circles but practically each individual Circles has to little value to establish a market price for it with current DEX tools.

Vendor acceptance/accounting
For business it would also dramatically increase the practicability to accept Circles if they accept one kind of token that even might have a clear defined value (market price) compared to fiat currency/ the currency they need to pay taxes. Besides accounting considerations accepting individual Circles is generally more risky as they are more likely to become unspendable.

Examples for groups

  • Everyone with a verified Twitter account
  • Everyone in Berlin, voted in by existing members
  • Everyone run trough a identification (KYC) process with something like Fractal
  • A group of people that commit to use Circles in a specific way
  • People that have contributed to Circles as a project…
  • Busnisses (the people involved in those) in Berlin/…

This seems like a powerful idea. The case that I have in mind involves building worker solidarity between sectors. Here’s an example:

Imagine a group of candlestick makers that are paid in fiat currency. But the candle shop is closed because they’re striking for better working conditions. I’m a baker, so I don’t have the complaints that they have–but as a fellow worker I want their strike to succeed. I also need some candlesticks. The problem is, I don’t know any candlestick makers personally–so I don’t know whose circles to trust in order to support the candlestick makers. And, since their store is closed, I don’t have the social connections to get candlesticks directly from the workers (let’s suppose that they have the means to produce candlesticks without their bosses in the loop).

If the candlestick maker’s union formed a group currency, and I trusted that currency, I would be signaling my willingness to provide them with bread in exchange for their circles–which would make me feel good about supporting my fellow workers. Also, once I sold some bread, I would then have some candlestick-circles and I would have met some people who make candlesticks. I could later use those circles and those social connections to circumvent the candlestick-bosses and get the candlesticks that I need.

Having the option to fire your boss and work for circles instead would be a useful tool in any union’s belt–and it would be especially sharpened if it was known that a stable market price could exist for group-circles. The mere possibility of such a thing would create an incentive for bosses to treat their workers better. This only kind of works right now, because there’s no way of knowing whether you have sufficient community support for that kind of action.

Another angle on this (and one that seems especially relevant in light of the recent GME situation on WallStreet), is that people from far away, people who have no direct means of supporting these workers, could buy and hold candlestick-circles as a way of driving up their price and supporting the workers. They might even exchange these among themselves as some kind of virtue signaling. This would be a more powerful means of “voting with your wallet” than we currently have. I’m not sure if it would be a good thing in all cases–maybe the collective opinion of people with only an abstract connection to an issue should be somewhat limited in its ability influence outcomes–I don’t know. But it would definitely be an interesting thing to explore.

I agree with your amendment re: rule 12. If I buy candlestick-circles because I want to support their strike in general, and then later I meet a candlestick maker who sells homebrew as a side-gig, I want to trade candlestick-circles for homebrew without limiting his ability to spend them. With rule 12 in place, he could only spend them with people who trust candlestick-circles, not his personal circles.

Do you think that groups will want some way to express a monetary policy that deviates from normal Circles dynamics? Like maybe the group wants one candlestick-circle to be redeemable for one candlestick–but only a few months after it was minted. To achieve this, they might want to burn tokens or fiddle with conversion rates in order to ensure that candlestick production can accommodate the number of candlestick tokens in circulation. I guess I’m imagining a sort of rolling ICO–but I imagine that other models might be desirable.

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That’s a really nice extension which could make a difference. Having only User accounts does not make sense as eg. a merchant has completely different goals and ideas than a customer or average Joe. The concept of Groups is very powerful, it could be also somethings like Guilds, which take care of their group image and therefore keep the “currency” stable and/or implement own rules of money creation later on. Grouping same properties, like having a verified Twitter account, having done KYC, belonging to some real life group and (looking at POAP) having attended some events is great for finally getting “value” for Tokens which individual Tokens never might be able to get.

Is it possible to try it? I saw that the contracts have the concept already implemented, but cannot read enough to see if this is implemented in the “edge” components like pathfinder, garden UI etc.

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How will groups be differentiated?

The bundling of trust undoes the trust graph limitations; there must be another type of control, or scam groups will form and ruin the reputation (if any) of other groups.

Hm… I think it will be similar to Circles accounts.
Having a group/ being in a group means really nothing since everyone can create groups. There are already thousands of fake Circles accounts but I would not say that they ruin the trust of real Circles accounts. We just need to be very explicit that both (having a Circles account or a group) means initially nothing.

Groups would seek to establish trust. E.g. the goal of a group would be that specific vendors would accept group Circles. For this the group needs to make it credible that the group currency will have value. Having strict rules to not let fake people join will certainly be a prerequisite for this.

In addition the group might give the vendor some guarantees as described here or simply create liquidity on an exchange for the group currency.

For a user joining a group should be risk free - since it does not come with obligations - only options. (you are allowed to exchange your Circles for group Circles - but you don’t have to). My expectation would be that people will want to join “attractive” groups and do whatever is necessary to join those groups. Furthermore I would expect users (and the default) software to still keep their personal Circles and only exchange them for group currency if demanded (e.g. the vendor only accepting group currency).

Similar to the transitive transfer all of that can be hidden from the user and the conversion is simply done as part of the pathfinding. In that sense joining a group is equivalent to receiving a trust connection which is risk free (in contrast to giving trust).

By the way - here is a relevant remark from the very first longer Circles description:

It basically just says that the value of your personal Circles should be equivalent to the most valuable group currency your are in or the most valuable (liquid) trust connection you have.

Yeah, that’s the kind of limitation I was thinking of.

It (group value) can’t be higher than your highest personal connection - though quantifying that would be helpful.

Otherwise, 100 fake accounts just band together & issue themselves a group currency, and list & trade for some stablecoin, etc. There has to be a way for DEXs to evaluate quality, though this is an industry problem, not just Cirlces.