on Nov 14, 2024
by Gnosis
in Native
At Devcon 2024, we're sharing a preview of a big update that’s coming for Circles:
Money, as Professor Bernard Lietaer reminds us, is fundamentally an agreement between people. Just like marriage or a lease agreement, it's a human construct – one we can reshape and redesign to better serve our needs.
Traditional financial systems concentrate power via the centralized issuance of money supply. While the invention of cryptocurrency promised to democratize the system, its token distribution models have largely replicated these same patterns of inequality. In fact, switching to a Bitcoin standard today would lead to even greater wealth concentration than our current system.
Circles responds to unimaginative money systems with ‘credibly neutral money.’ This is achieved via a decentralized issuance mechanism that puts power in the hands of all system participants.
Reimagining Money
The system underlying Circles is radically elegant: Every participant mints 1 CRC per hour. All CRC gradually decreases in value at 7% annually, preventing excessive accumulation. Trust relationships between users make currencies interchangeable, creating a web of economic connections that mirrors real social relationships. These "trust chains" enable a fluid economy while maintaining security through social validation. The money supply for a system underpinned by Circles doesn't come from a Federal Reserve, or a centralized token model. It comes from the ground up via all participants.Early Days and Experiments
The October 2020 launch of Circles ignited a wave of grassroots adoption. Within weeks, thousands of users across Europe forged trust connections, creating vibrant local economic networks. In Berlin, Cafe Grundeinkommen became a hub where people could purchase their morning coffee with CRC, while local farmers' markets integrated Circles into their weekly trade. A particularly notable experiment unfolded in Bali, where roughly a thousand people put the system to the test.
But like any pioneering venture, Circles faced its challenges. The blockchain technology of 2020 wasn't quite ready for the demands of everyday transactions. The system needed better ways to handle group and community connections. And perhaps most crucially, people needed easier ways to use Circles alongside their existing payment systems.
These lessons weren't setbacks – they are stepping stones to Circles 2.0.
Circles 2.0 Preview
Circles 2.0 introduces Circles Groups – a new protocol improvement that allows communities to create and manage their own group currencies. Members of a Group can mint a group currency by providing their personal CRC as collateral, which gets locked in the Group's vault. These Group Circles are fungible across the group and can be freely traded and later redeemed for any CRC in the vault. This mechanism maintains a stable total supply while enabling new forms of community organization. This innovation enables:
Local communities to launch their own complementary currencies
Organizations to create internal economies
Groups to pool and manage shared resources
Communities to establish collective economic spaces
The upgrade also brings significant technical improvements. Personal Circles are ERC1155 tokens. Group Circles are ERC20 tokens. Circles 2.0 delivers improved interoperability and an optimized transaction pathfinder for better scalability.
The Road Ahead
As we look to the future, Circles represents more than just another cryptocurrency or payment system. It's an attempt to answer a fundamental question: can we create a form of money that's both credibly neutral and practically useful? Can we design a currency system that's fair by default, rather than requiring constant intervention to maintain equity?
The public launch of Circles 2.0 is approaching rapidly, bringing with it the Metri wallet and seamless integration with Gnosis Pay. It's a bold challenge to the dominance of traditional currencies, but more than that, it's an invitation to reimagine what money can be in a digital age.
The experiment continues, and its success will ultimately be measured not just in transactions and trust connections, but in its ability to create a more equitable and accessible financial system for everyone. As this new chapter unfolds, the question isn't just whether Circles can succeed as a currency, but whether it can help us build a fairer financial future.
How to Get Involved:
If you’d like to be part of the crazy 10,000 first users, please join the waitlist at aboutcircles.com
If you’d like to create a Circles Group, pleased get in touch via typeform: https://3ppmglr0p9c.typeform.com/circlesgroups?typeform-source=t.co
If you’d like to dig into the protocol already, explore the developer documentation here: docs.aboutcircles.com/
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