This document discusses Circles, a proposed universal basic income system implemented on the Ethereum blockchain. It would provide each person with a basic income by generating a small amount of currency each week for every account. Accounts can trust each other to share in reserve funds. Groups can also be formed where members convert their private currencies to group currencies. The value of the currency depends on economic factors like growth rate and how widely it is used in networks and groups. Circles aims to provide basic income without debt obligations and in a decentralized peer-to-peer manner on the blockchain.

1. Circles Universal Basic Income

2. What is money?
„Money can be defined as an agreement, within a
community, to use something as a medium of exchange.
As an agreement, money lives in the same space as other social
constructs like marriage or lease agreements. These constructs
are real, even if they only exist in people’s minds. The money
agreement can be made formally or informally, freely or by
coercion, consciously or unconsciously.“
„Our money and monetary system are, therefore, not de facto
realities like air or water, but are choices, like social contracts or
business agreements.“
Prof. Bernard Lietaer

3. Why a Basic Income?
• The most unbureaucratic way to establish social
welfare
• Automation dividend
• we should not conserve work (places) - we should get
work done
• Maximize the cake vs. maximize AND make sure
everyone participates
• Trickle up vs. trickle down

4. Why Circles?
• Implementing the basic income on the most basic
level
• A fair currency
• Creating value on the (Ethereum) blockchain

5. Problems to solve
• Giving the currency value
• Solving the Sybil attack problem

6. Circles at its core (1/4)
1. Everyone can create a new account
2. An account will constantly generate an income (about 1,000.00 units per week)
3. The rate at which the income is generated will increase by g=2% per year
4. A new account starts with the income that will be generated in the next 3 months
5. One month of income is for the account owner – the other two are reserved for people
who trust this account, it is called the trustee reward.

7. Circles at its core (2/4)
6. Accounts can trust another. This will allow both
accounts holders to exchange their coins 1:1
7. Trust can be revoked by both parties.
8. If an account trusts another account it is credited with
10% of the remaining trustee reward.

8. Circles at its core (3/4)

9. Circles at its core (4/4)
9. Arbitrary groups can be created.
10. Groups can add accounts as members.
11. Groups can exclude accounts as members.
12. All members can convert their private money into group money
(1:1 exchange rate). This exchange is irreversible.

10. Regular transactions - Transitivity
A B C
A Circles: 300
B Circles: 100
A Circles: 50
B Circles: 350 B Circles: 350
C Circles: 600

11. Regular transactions - Transitivity
A B C
A Circles: 300 -100
B Circles: 100
A Circles: 50 + 100
B Circles: 350 - 100 B Circles: 350 + 100
C Circles: 600

12. Sybil attack
A B C
Sybil 1
Sybil 2

13. Regular transactions - Groups
A B C
Silicon Valley Ethereum meetup
group
Ethereum early adopters

14. Regular transactions - Groups
Palo Alto Residents
Bay Area Residents
United States Residents
World Residents

15. Value of Money
• Personal Money
• max(val(group1), val(group2), … groupN,
val(liquid_connection1), … val(liquid_connection1))
• Group Money
• min(all members: persons and groups)

16. Groups
• Web of trust rules
• At least connected to x%
• Maximum distance = y
• Mean shortest distance
• Any kind of voting mechanism
• >50%, 66%, …
• Centralized with regular passport
• Employee of a business
• ….

17. The growth rate g

18. The growth rate g

19. The growth rate g
• market cap = f(g) (and a lot of other parameters)
• maximize g*f(g)

20. What is Circles
• Ripple + UBI = Circles
• Money (creation) that serves the people
• The debt doesn’t need to be payed back
• Credit is not approved based on rating of banks but
fixed per person
• No (forced) debt union – more resilience
• A steady growth rate of money – more stable
economy

21. Debt is not repaid

22. Elinor Ostroms design principles for Common Pool
Resource
• Clearly defined boundaries (clear definition of the contents of the common pool
resource and effective exclusion of external un-entitled parties)
• Rules regarding the appropriation and provision of common resources that are adapted
to local conditions;
• Collective-choice arrangements that allow most resource appropriators to participate
in the decision-making process;
• Effective monitoring by monitors who are part of or accountable to the appropriators;
• A scale of graduated sanctions for resource appropriators who violate community rules;
• Mechanisms of conflict resolution that are cheap and of easy access;
• Self-determination of the community recognized by higher-level authorities;
• In the case of larger common-pool resources, organization in the form of multiple layers
of nested enterprises, with small local CPRs at the base level.

23. Don’t donate - invest!

24. The „Berlin BGE Späti“ (UBI - shop)