---
# System prepended metadata

title: 'On UBI and MEV: Towards the Intentional Redistribution of Value'
tags: [solvers, trust, 'MEV ', 'UBI ', intents]

---

Authors: Apriori (Anoma) & Ajmaq (CirclesUBI/Entropy)

In this piece, we would like to argue how we can *solve* the problem of MEV or the Maximum Extractable Value that is structurally inherent to different consensus algorithms in blockchains (particularly POW and POS) by using Universal Basic Income as an intent-centric protocol via Anoma and CirclesUBI. Intent centric architectures are becoming the new buzzword in crypto-town, particularly in Ethereum, but few truly understand what intents really are, and the role that solvers play in matching user intents. 

What if we could redistribute the value from mining, staking and solving that is extracted back to users via a universal and unconditional basic income? 

In order to argue for this, we first have to define what we mean by all these mouthfuls. To paraphrase the great Daoist philosopher Zhuang Ze, words are useful to understand the meaning of things, but what truly matters is the meaning. Please stay with us while we dwelve on the meaning of these things.

First, some definitions.


What is MEV? 

MEV stands for "Maximal Extractable Value" and refers to the maximum amount of profit that can be extracted by miners or other participants in a blockchain network through transaction ordering and other activities. MEV is created when miners or other participants use their power to prioritize transactions in a way that benefits them financially, such as by including their own transactions or those of others who pay them higher fees.

MEV is inherent in all consensus algorithms that rely on transaction ordering, including Proof-of-Work (PoW) and Proof-of-Stake (PoS). However, it is more prevalent in PoW algorithms (what Bitcoin uses), where miners have more control over transaction ordering and can use their computational power to extract greater MEV. In contrast, PoS algorithms (what Ethereum transitioned to) typically have a more deterministic approach to transaction ordering, which can limit the amount of MEV that can be extracted relative to PoW.

What is UBI?

Unconditional Basic Income (UBI) is a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement. The Basic Income Earth Network defines UBI as "a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement." This means that every person, regardless of their income or employment status, would receive a certain amount of money regularly from the government or other institution. The purpose of UBI is to provide a basic level of financial security and freedom for all individuals, allowing them to meet their basic needs and pursue their own goals and interests.

Now, the caveat here is that, since we are talking about crypto, payment in cash is not really an option, or at least not a direct option. When we speak about crypto-powered UBI, we are generally talking about two types of systems. 

The first one, is digital-asset based UBI, where users receive an Airdrop of an asset that has a limited supply overtime. The benefit of this approach is that users receive an asset that they can convert into cash. The downside is, because of fluctuating prices and limited supply of tokens, the value of a digital asset based UBI is not constant and it largely depends on people pumping up liquidity to the token, financial speculation and the amount of users involved, as was the case with Proof of Humanity's $UBI drip and is now the case with the controversial project Worldcoin, which scans people's eyeballs in exchange for a token. This type of approach is in line with how much of crypto-assets behave, which we could also call a form of "commodity money", in the sense that there is an assumption that the tokens have somehow intrinstic value. 

The second type of system is the crypto-credit based UBI, where people receive tokens that represent promises that can be used to pay for goods and services. The benefit of this approach is that users receive tokens that that they can use to go in and out of obligations with others who are willing to accept their credit tokens in exchange for stuff of value. The added benefit here is that the credit system is stable means of settling payments, which is useful when engaging in real life trade. The downside is, because these systems rely on network level effects for bootstrapping, if you're not in a place where people are not actively using it, the credits cannot be activated. This is the case with CirclesUBI, a system where everyone who joins receives 1 crc per hour, which is mostly only being used in a larger scale in specific localities, like is the case with the ongoing Berlin pilot or the recently started Bali pilot. Similar projects in the crypto-credit space could include the Trustlines protocol, albeit they do not claim to be a UBI project.

For any of these projects, one can and should make the case of saying "Is this really UBI?". To what extent can we really claim that these projects are able make a system that allows people to "provide a basic level of financial security and freedom for all individuals, allowing them to meet their basic needs and pursue their own goals and interests". 

As it stands, it feels like both approaches are incomplete. What we need to do is to create a system that can combine the best of crypto-credit with the best of crypto-assets to bring forth a system that is better than the sum of it's parts. In the following sections we will explore how such a system could be brought into being. 

What are intents? 

According to Paradigm, intents are:

“an intent is a signed set of declarative constraints which allow a user to outsource transaction creation to a third party without relinquishing full control to the transacting party”. 

You may have noticed that in the definition above, there is the word "declarative". As the author of this piece argues, the difference between the current paradigm in blockchains and the dawn of the new era that intents bring is the difference between How and What. Transactions say How a given user wants a transaction to happen whereas in an intent-centric universe, users ask for what they want and do not care this happens. In other words, users are declaring what they wish to exchange (I want Eth for Dai), whereas in current smart contracts you have to specify how this will happen, which leads to the UX/UI nightmares that keep us awake at nights. 

Anoma is spearheading the latest innovation in blockchains by creating a whole series of systems and sub-systems that are intent centric by design. Anoma's declarative post-smart contract logic not only brings elegance in how we interact with cryptographic systems, it has the potential to revolutionize how we do trade, all while keeping user's privacy. To explain how this happens, we now have to turn to solvers. 


What are solvers?

A Solver a machine that runs a software program that uses algorithms to solve complex problems. Solvers can be used to find optimal solutions to mathematical equations, optimization problems, and other types of problems.

A solver network uses algorithms to match user intents with the appropriate solution. It works by analyzing user input, identifying the intent behind it, and then matching that intent with the appropriate solution. This type of solver network is commonly used in chatbots and other conversational interfaces to provide accurate and relevant responses to user queries.


Redistribution of MEV using CirclesUBI

One possible method for distributing MEV-generated funds back to Ethereum or any blockchain users could involve the use of smart contracts that automatically distribute a percentage of the funds to all Ethereum wallet addresses on a regular basis. This could be achieved by creating a smart contract that calculates the total amount of MEV generated over a certain period (e.g. a day, a week, or a month) and then distributes a portion of that amount to each wallet address based on its proportionate share of the total number of Ethereum tokens held.

For example, if the total amount of MEV generated in a week was 100 ETH and there were 1 million Ethereum wallet addresses holding a total of 100 million ETH, each wallet address would receive 0.001 ETH (i.e. 0.1% of the total amount generated) as an unconditional basic income. At current prices, that would be 1.82 USD for 1 million people in one week. 

This method could be used with the CirclesUBI protocol by integrating it into the existing Circles network. Circles is a social payment protocol that allows users to create and exchange their own digital currencies. By integrating MEV-generated funds into the Circles network, users could receive an additional stream of income in addition to their existing Circles currency. 

In addition to providing an unconditional basic income for Ethereum users, MEV-generated funds could also serve as a liquidity injection for businesses within the CirclesUBI network. By integrating MEV-generated funds into the existing Circles network, businesses could receive a steady stream of income that could be used to fund operations, expand their offerings, and attract new customers.

For example, businesses could receive MEV-generated funds as a separate token within the Circles network, which could then be used to purchase goods and services from other Circles users or exchanged for other currencies. This would provide businesses with a reliable source of income that could help them weather economic downturns and grow their operations over time.

Moreover, the integration of MEV-generated funds into the CirclesUBI protocol could also encourage businesses to adopt more sustainable and socially responsible practices. By receiving a portion of their income from MEV-generated funds, businesses would have an added incentive to prioritize environmental sustainability, social responsibility, and ethical business practices. The use of MEV-generated funds as a liquidity injection for businesses within the CirclesUBI network could help promote economic autonomy at the local level where Circles communities thrive while also fostering a more equitable and sustainable economic system.

## New Public Goods Funding Mechanism
Let's think through a new design for funding public goods on Ethereum. Today the majority of MEV in a given block is sent by the builder to an Ethereum block proposer of the current slot. The builder bids a portion of the MEV in their block in order to have their block accepted by the proposer over those of competing builders.

![](https://hackmd.io/_uploads/rJEcggy3h.png)




Instead of MEV going to the proposer or being burned, MEV could be sent to a contract on Ethereum which would accumulate realized MEV to be redistributed at a later time, for the purpose of funding public goods. Thereafter a public goods developer would submit a request for public goods funding by submiting proof of a minimum viable public good. This proof would act as an oracle update to the contract such that if the contract's conditions are satisfied, it releases a portion of the accumulated MEV to the developer. The goal of funding that developer would be to build an application or infrastructure for the Ethereum protocol. 


![](https://hackmd.io/_uploads/ByPnge1h3.png)


To further enhance this redistribution mechanism, there could also be a requirement that a particular public good MVP must first be funded by an existing DAO grant. The DAO would in turn vote to determine if the MVP meets the criteria set out in the grant funding round. If satisfactory, the DAO vote would trigger an Oracle update to the MEV contract on Ethereum which then sends funds to the developer's wallet. If the DAO rejects the MVP proof as sufficient for funding then the portion of MEV going to the developer could either be burned or continue to accumulate for future redistribution allocations.


![](https://hackmd.io/_uploads/rJ0ygekhh.png)

In such a design, the accountability and filtering logisitics are determined by individual DAOs who are incentivized to fund initial grants. It is not unlikely that developers would build public goods that compliment a particular DAO's goals. 

### Weaknesses 

There are a several weaknesses to this approach. 
- DAO governance is easily corrupted
- Funding biases 
- DAOs do a poor job in advertising/managing the program
- No privacy, could force developerss to dox or reveal more information about themselves than necessary 
- Adversarial MVPs that fool DAOs (either AI or malicious actor) 
- [Dark DAOs](https://hackingdistributed.com/2018/07/02/on-chain-vote-buying/) who collude to influence grants results 

### Advantages

The primary advantage to this design is that Ethereum governance can remain credibly neutral; in the sense that base layer governance only needs to agree to redistribute MEV but not decide what to fund. 

The advantage to the proposed funding mechanism is that it encourages the emergence of public goods funding DAOs whom compete for talent with compelling grants programs. Indeed these DAOs could also specialize in building relationships with existing developers in the ecosystem who could facilitate team creation. 

The proposed redistribution mechanism would have the added benefit of bringing legitimate value to governance tokens as ownership of such would grant funding power to token holders. If there is an incentive to form DAOs then the tooling and infrastructure will also improve. This program could also incentivize young developers not to work in Web2/tradefi and reduce pressure on existing developers to seek venture funding as a means of survival. 

### Conclusion

This strawman funding mechanism could remove the need for outsized venture capital funding in the Ethereum ecosystem. The protocol itself could capture MEV and use it to grow Ethereum's [infinite garden](https://ethereum.foundation/infinitegarden). 

