Getting to know the mysterious organization Protocol Guild: Why are projects like Ether.Fi and LayerZero willing to donate to it?

Original title: "Exploring the Protocol Guild: 177 members, more than $100 million donated, a solid backing for the development and maintenance of Ethereum L1"

Original author: Karen, Foresight News

The donations to the Protocol Guild by projects such as ether.fi and Taiko, as well as LayerZero's mandatory donations to airdrop users, have attracted widespread attention and discussion in the community, as well as some confusion and questions.

As a solid backing for the development and maintenance of Ethereum L1, the Protocol Guild plays a vital role in the ecosystem. So, what are the membership requirements, donations, and donation release mechanisms behind this mysterious and powerful organization? This article will take you to find out.

What is the Protocol Guild?

Protocol Guild is an organization established specifically for the development and maintenance of Ethereum L1. It is committed to providing financial support to core contributors in the Ethereum ecosystem through native token incentives for Ethereum ecological projects to ensure the vigorous development and continuous innovation of the Ethereum network.

Since the beginning of 2022, Protocol Guild has completed mechanism design and started recruiting members. In May of the same year, Protocol Guild launched the pilot Protocol Guild Pilot program. After two years of careful operation and continuous improvement, at the end of January 2024, Protocol Guild disclosed its official commitment and ended the pilot project. At the same time, it launched PGv2, which aims to make Ethereum L1 R&D contributors directly identifiable on the chain, and through the use of time-weighted lists and clear membership criteria, show the people who are currently contributing to the protocol and how long they contribute.

The Protocol Guild commitment shows that it is recommended that Ethereum-based projects donate 1% of their native tokens to the Protocol Guild. The main reason is to attract and retain high-quality contributors, provide them with more substantial expected potential returns, and ensure that these tokens eventually flow into the hands of valuable contributors. It is worth mentioning that this 1% of native tokens will not be released all at once, but will be released gradually over 4 years.

Why choose 1%? Protocol Guild's consideration is that if 33% to 66% of projects can adopt this donation standard, then each member can expect to receive an average of $500,000 to $1 million in revenue each year.

Currently, the Protocol Guild has received a total of $76 million in donations (current value). In the past year, the median donation amount received by members was as high as $54,000. At the same time, the Protocol Guild's membership has grown from the original 90 to 177 today.

Who are the current members of the Protocol Guild?

The Protocol Guild has gathered 177 members so far, mainly from members of the Ethereum Foundation and Ethereum mainnet clients.

Among them, the clients include Geth, EthereumJS, Erigon, Hyperledger Besu, Lighthouse, Lodestar, Nethermind, Prysm, Reth, Nimbus, Teku, etc., and 6 to 15 contributors in each client are included in the Protocol Guild, which makes the client contributors account for nearly 60% of the entire Protocol Guild members.

In addition, the members of the Protocol Guild also include the Ethereum Foundation Application Research Group (ARG), ethPandaOps (a sub-group of the Ethereum Foundation), the Ipsilon R&D team (focused on EVM research), the Ethereum Foundation's Portal Network (committed to redefining the way resource-constrained devices participate in the Ethereum network), as well as Protocol Support, Cryptography, Consensus R&D, Robust Incentives Group, Testing and other key teams.

Among them, some well-known members include Tim Beiko and Danny Ryan from the Ethereum Foundation's Protocol Support team, and Justin Drake from the Consensus R&D team. However, it is worth noting that Vitalik Buterin is not currently listed among the members of Protocol Guild.

What donations have Protocol Guild members received?

The thriving development of Protocol Guild is inseparable from the generous donations of many projects. So which projects have donated to Protocol Guild? How much donations have Protocol Guild members received?

ether.fi, as the first project to commit to donating to Protocol Guild, pledged to donate 1% of its token supply to Protocol Guild to support the continued development of Ethereum before Protocol Guild's commitment was disclosed at the end of January this year.

Subsequently, DeFi mortgage lending protocol PWN, zkRollup-based Ethereum Layer2 project Taiko, decentralized lending pool Ethereum Credit Guild, modular decentralized storage Layer2 project EthStorage, and several other Meme projects followed suit and allocated 1% of their tokens to Protocol Guild.

In addition to the 1% token commitment, Protocol Guild also received a variety of donations during the pilot period, including 500,000 UNI, 200,000 ENS, 2 million LDO, 3 million ARB, etc.

Source: Dune https://dune.com/protocolguild/protocol-guild

Even Bitwise, the issuer of the US spot Bitcoin ETF, recently donated 50% of the proceeds of its Ethereum advertising NFT to Protocol Guild. Coincidentally, in September last year, another ETF issuer VanEck announced plans to donate 10% of the profits of its Ethereum futures ETF to Protocol Guild to thank Ethereum contributors for their efforts over the past decade.

A few days ago, the LayerZero Foundation also implemented mandatory donations during the token airdrop claiming process, requiring airdrop users to donate $0.1 USDC, USDT or native ETH for each ZRO, and the donation will be directly used for Protocol Guild. This will result in a donation of approximately $18.5 million to Protocol Guild. In addition, the LayerZero Foundation will match all donations up to $10 million.

According to Dune data, the total donations received by Protocol Guild are currently worth more than $76 million, of which ether.fi and Taiko's donations account for 66%. If LayerZero's mandatory donation is added, the amount of donations received by Protocol Guild will exceed $100 million.

As of this month, the median donation amount per Protocol Guild member in the past 12 months is $54,000, and is expected to grow to $81,000 in the next 12 months. Over the next four years, $57 million in donations will be vested and released to Protocol Guild members, and this is only limited to the donations received so far.

What are the qualifications to become a Protocol Guild member?

The Protocol Guild can be seen as a donation and fund distribution mechanism for Ethereum R&D maintainers. So, what are the qualifications to become one of them? According to the Protocol Guild official document, here are some basic requirements:

1. The project/organization is completely open source;

2. Regularly active in the Ethereum specification repository, research forum, functional prototyping, regular Ethereum protocol calls, etc.;

3. Focus on researching protocol specifications, Ethereum core protocol maintenance and development (such as contributing to Ethereum mainnet client implementations such as Erigon, EthereumJS, Geth, Hyperledger Besu, Lighthouse, Lodestar, Nethermind, Nimbus, Prysm, Teku and Reth, etc.), research and implementation experiments related to potential protocol changes, or Protocol Guild research, etc.

However, meeting the above conditions is only the basis and is not enough to ensure membership in the Protocol Guild. Applicants must also work continuously in the relevant organization/project for at least 6 months, and expect that this work will continue, and the contribution interruption period must not exceed one quarter. For non-full-time members, their income weight will be reduced accordingly according to actual conditions.

The Protocol Guild members' share of income is proportional to the square root of their contribution time to Ethereum (in months), ensuring a fair correspondence between contribution and return.

Currently, in the Protocol Guild, the joining of new members seems to require invitation and nomination by existing members, and then all existing members will review and discuss. If there is a conflict of interest between the nominator and the nominee, it must be disclosed in advance to ensure the fairness and transparency of the process.

How are Protocol Guild donations released?

When it comes to Protocol Guild’s mechanism for releasing donated funds, its core lies in its smart contract architecture. Protocol Guild uses smart contracts created by Splits to manage the attribution, allocation, and flow of donated funds. All donations are made through a 4-year vesting contract on the mainnet, which attributes funds to a designated wallet (Pass-Through Wallet), which then sends the funds to the split contract to be distributed according to the members’ contribution shares.

Among them, the split contract contains the addresses of all Protocol Guild members and their respective vested funds shares, and is updated quarterly to reflect changes in membership, increases and decreases in members, and adjustments to the weights of each member.

In addition, Protocol Guild uses DAOhaus’s Moloch V3 contract for on-chain governance, giving each member equal voting rights to approve or veto changes to on-chain membership. Once a decision is made, Protocol Guild's multi-signature will be responsible for processing these changes and updating the split contract to reflect the latest membership list and funding allocation.

In the vast universe of Ethereum, Protocol Guild has attracted core contributors dedicated to Ethereum R&D and maintenance with its unique donation and funding allocation mechanism. As a bridge connecting funds and contributors, Protocol Guild not only ensures the reasonable allocation of funds, but also injects a steady stream of power into the prosperity and development of the Ethereum ecosystem.

Reference: https://protocol-guild.readthedocs.io/

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