Decentralised UBI with stable coin and uses — DemoKratia
Integrated decentralised Guaranteed Income (GI) of 30k (K30,000), with a full-Ampleforth scaled stable coin, face recognition based verification of unique identity + Idena (flip tests) sweep to weed out fake accounts. Demurrage and flow siphon (transaction tax) to control inflation. Automated self-lending (DeFi) service, coin/token/fiat exchange, pay per use social media. And social money for civic organisations.:
Coin — Kratia (KTA) (Power) symbol K ie (K100)
Whole system — DemoKratia (People Power)
Decentralised
The Shardus (ULT) decentralised ledger engine with Proof-of-Quorum consensus algorithm is an independent verification system that grows with the users. Expectations are 100,000+ transactions a second. Any other decentralised engine can be used provided it does not use proof -of-work (PoW) and is scalable and cheap or free to use.
Coding the entire system into a decentralised ledger means the system protocols are set in place at the start, you know it and can rely upon it. No politician or corporate raider can change the rules or grab your data for their own purposes. The code for all that on top of the Decentralised engine will be open source so if you find this system wanting you can copy and paste the code then tweak it for a new system.
Universal Income
This will be tiered based upon identification level.
The full payment is 30,000 Kratia (K30,000) per person per year paid daily.
The identification test will be done when the account is started then randomly after that. You will not need to do a facerec to log into your account but can choose to do so. A login fail is NOT a ID fail. If a player fails more than one test (2 tests in a row either facerec or Idena) they go back to newbie status. Citizens can fail more than two but if they continually fail their “stale account” instruction may be activated. This is time based and depends upon activity. A transacting account failing multiple tests will be ceased immediately ie. 100 transactions a day over a period of a week and repeated test fail = immediately. Or 1 transaction in 6 months a notification will be sent. Notifications will be sent after all failed tests.
Everyone will be sent notification of a pending Idena sweep and must attend at least one in 6 months to retain their status.
Stale Account
Citizens must:
All citizens will need to select what will happen to their money/debts/assets at death and or the cessation of their account, and how this will be determined (cessation maybe determined by failing identification test/s). This is essentially writing a will when becoming a citizen.
Another citizen/s or Notary/ies (you can apportion your assets and debts) will need to be selected to receive the account balance, debts, assets etc. The Citizen/Notary will need to accept the responsibility of a ceased account. If you cannot find someone to accept your ceased account your borrowing from the Credit system (see below) will be limited to tier 2 and any debt annulled on cessation; and post cessation the ability to open a new account other than newbie will be voided.
An Oracle (cannot be a Notary that will inherit money debt or assets) will need to determine death or permanent abandonment. If the Oracle disappears before the user does a backup system will be in place to decide death and or cessation. This will be determined by a Civic Association ruled by a liquid democracy.
Simply, citizens must choose an Oracle to determine their circumstances. And, other citizens or Notaries to receive their money, debts and assets. Akin to appointing an executor, and beneficiaries.
Stable Coin
Automatically adjusted coin based upon an index of fiat currencies compared to gold.
A quorum (the greater of 3 or 10% of active Oracles — an Oracle may switch on or off activity) will need to enter the exchange rate values they see daily using whatever external means they see fit and the median value will be taken for the daily adjustment. If a quorum cannot be reached the value remains as it was. This adjustment will occur when a new day begins at the international dateline.
The Oracles will input fiat prices for one gram of gold and the fiat prices for one Kratia.
At some point in the future Kratia will be traded for gold as much as the fiat currencies in the index. At some point after this (12 months or more), and provided it continues for this period to be traded as much as the fiat currencies the scaling can be abandoned.
Simple Scaling — Full Ampleforth
The Base Kratia is fully scaled in comparison to a weighted index of fiat currencies (USD, GBP, Euro, Yen, AUD) in reference to Gold.
There is only one currency: Kratia which is fluid and scaled to enable its parity with global currencies.
Kratia = to Base x scale_factor (ratio)
Transaction: If you receive a payment today a Base would be derived by dividing the Kratia by the scale factor at the time of the transaction. This new Base is added to previous Base amounts and your balance is the Base x the new scale_factor.
The scale_factor is published daily and accounts adjusted accordingly.
Scale_factor = (1/price of the base coin in relation to index)
Index = Weighted USD, EU, GBP, Yen, AUD against gold
Essentially if the price is low you get more money, if the price is high you get less.
The assumption is people will trade at 1 to 1 for ease of use as it doesn’t matter what price you buy and sell at the spendabily remains the same.
Example
1 Kratia is worth 0.5 Fiat:
Your account has 2 base Kratia therefore account balance 2 x (1/0.5) = 4
So you can buy exactly two fiat currencies. Someone holding a fiat currency (there will be arbitrage between the fiats) can buy 2 Kratia for 1.
1 Kratia is worth 2 Fiat:
Your account has 50 base Kratia therefore account balance is 50 x (1/2) = 25
So you can buy exactly 50 fiat currencies. Someone holding a fiat can buy 2 Kratia for there 1
This is a novel and incredibly simple way of doing stable cryptocurrency which never changes supply but equalises spendability. If the currency is close to worthless (say 0.01) you have a lot more, if it’s worth a lot (say 10,000) you have less. There is no point in buying or selling the currency at any price point other than 1 to 1.
The Brazilians did something similar with a virtual currency to control inflation in the 1990’s. It became the Real, their current currency. Essentially they had a pegged to USD virtual currency that all wages and prices were quoted in and the old inflationary currency that was used for spending. Daily the Govt released the ratio. People quickly stopped upping prices in advance. https://en.wikipedia.org/wiki/Plano_Real
Inflation Control
We are creating much money from nothing so to control money supply the base is adjusted with demurrage (5%), and a small (1.5%) transaction tax to control velocity.
This will stablise the amount of money in the system. If Kratia sits idle in your account it will decrease on a daily basis by the equivalent of 5%pa. Every time you transfer Kratia 1.5% will be destroyed.
In a perfect system the demurrage will occur by the second, or millisecond but we will do it as close to this as possible. The flow siphon or transaction tax will make 1.5% of all transactions disappear. So if your seller expects a 100 Kratia transfer them K101.50. If you advertise a sale for K99.00 expect to receive K97.515.
This will discourage idle money and non productive long supply chains (ie: producer — aggregator — exporter — importer — wholesaler — distributor — major retailer — micro retailer — consumer) . While controlling inflation.
*note: the transaction tax will not control High Frequency Trading (HFT) as most of this is done in separate centralised markets and will not have the transaction tax applied per transaction but only on deposit and withdrawal. This is actually a good thing as currently there isn’t a decentralised ledger system that could handle the amount of transactions done via HFT.
Verification of Unique person
To open an account you will just need an email address and phone number.
The payment is based upon identification (see above) the basis for identification of Unique Person are:
The Good dollar check:
Simple unique face recognition
They use
There is also open source facerec Open Face https://cmusatyalab.github.io/openface/
The Idena check is this:
The uniqueness of participants is proven by the fact that they must solve and provide the answers for flip-puzzles synchronously. A single person is not able to validate themselves multiple times because of the very limited timeframe for the submission of the answers.
Flip puzzles are human created narratives of images or words. Comparing two sets the human should pick what other humans pick. And that is the test, the majority rules. And everyone must create some therefore we know that humans are creating the flip-puzzles..
Example (left one)
In any sweep there will be many flip puzzles to solve and you must get 80% with the majority.
This is not to prove you are human but that you haven’t hacked the facerec system.
It’s a non-perfect double check.
In-Person check
It would be ideal if those wanting to be a Notary actually met an existing Oracle, but that may not be practical. So a Zoom or online video catch-up with enough evidence to convince the Oracle that they are who they say they are is enough. The simplest way is to have a test transaction of say 1 Kratia sent between the parties while meeting.
The creators will be the initial Oracles.
To prevent a ruling class of Oracles associated with the creators dominating the DemoKratia every year the lessor of 100 or 1% of citizens will be selected randomly to be made Notaries. There is a 1 year cooling off period which means that if any of their actions seem unusual as an Oracle or they approve others to be Notaries their Notary status can be revoked by a vote of all existing Notaries.
One Oracle cannot identify more than; the lesser of 100 or 10% of the number of Notaries with a maximum of 1000. Any more looks like hard work or dodgyness.
Social — Kratia: extra money for social services
You will also get free social Kratia (sK) to redirect to organisations that you support. This is the same coin but restricted in where it can be sent.
You will receive 10,000 sK social Kratia per year paid weekly.
There must be indisputable and embeddable (placed into an algorithm on the ledger) criteria for an organisation that can receive this extra social money.
- The account must not be an individual and there must be at least 3 members, the registry of members must be transparent. You can contribute sK without being a member.
- It must have a democratic (DAO or liquid democracy) system of governance. One embedded in the DemoKratia (the decentralised system) where all contributors can vote.
- It cannot send funds to its members.
- You must do due diligence on the organisation — you are the oracle that checks them.
The purpose of the social Kratia (sK) is to provide for Civic Organisations that give necessary goods and services that don’t lend themselves easily to markets. The things we need to do together also need support. Such as hospitals, roads, integrated telecommunication systems, weather information, fisheries management etc.
Liquid (Direct) Democracy
Liquid democracy should be used to write laws, but not procedures of trade, quality control and conflict resolution, rather for the rare changes to the Civic Associations management and overriding principles, practices and policies. Implementation of decisions made should be entrusted to those creators, builders, maintainers, and organisers elected and hired to do so.
Also your allocation of sK is your greatest vote. If the Civic Association is not doing what you want use your monetary votes (Monetary Democracy) to support another.
How it works
Choice 1: Monetary Democracy — moving your sK to those Civic Organisations supporting you.
Choice 2: A quadratic, proxy, direct voting and proposal system.
Choice 3: Augmented Democracy — enabling a AI voting twin to vote on your behalf (this depends upon a fully working system: see below)
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Monetary Democracy is embedded in the system by design. Liquid democracy is a way to govern those systems you support, augmented is a simple way out of being directly civic. But still valid.
Quadratic
The purpose of the quadratic voting is to prevent rule by the mob or middle of the road utilitarianism. It allows people to weight their votes so a few that care a lot can out vote many that care little.
People are allocated voting tokens, 25 per proposal, which are used to swap for votes on an increasing scale:
Votes= Voting Tokens
1 =1
2 = 4
3 = 9
4 = 16
5 = 25
Vote tokens can be saved but they only have a life of 1 year. Voting/proxying is compulsory, if you do not vote/proxy your token allocation is voided including. If non voting or proxy continues for more than a year Civic Association receipts will be ceased.
Proxy
The purpose of proxying is to speed up the voting process by concentrating power, but also to ensure everyone has had some say in each vote while freeing many people from the effort of analysing many proposals.
If a person does not want to vote on a proposal they must proxy their vote to someone else. Only one vote is proxied (the cost of 1 token). The proxy is secret so the receiver of the vote is not aware whether they are voting for themselves or another and therefore must act on their own conscience.
If the proxy also decides to proxy their vote the one (or many) that they have received will also be proxied forward.
If a person proxies to someone who has already proxied their vote to them creating a loop an error will appear and they will need to choose another proxy or vote themselves. The proxy availability will end before each vote allowing people to change their proxy if loops occur. The loops may be long.
The system is run through a smart contract which will allow the proxy to be cancelled at any time, to run unmonitored for any period of time and allow different proxies for different topics.
Augmented Democracy
Augmented Democracy (AD) is the idea of using digital twins to expand the ability of people to participate directly in a large volume of democratic decisions. A digital twin, software agent, or avatar is loosely defined as a personalized virtual representation of a human. It can be used to augment the ability of a person to make decisions by either providing information to support a decision or making decisions on behalf of that person. Many of us interact with simple versions of digital twins every day. For instance, movie and music sites, such as Netflix, Hulu, Pandora, or Spotify, have virtual representations of their users that they use to choose the next song they will listen to or watch the movies they are recommended. The idea of Augmented Democracy is the idea of empowering citizens with the ability to create personalized AI representatives to augment their ability to participate directly in many democratic decisions.
https://www.peopledemocracy.com/
Monetary Democracy
Where you send your sK is important. You can fund something you need now or in the future., and if they don’t do what you expect you can move your fund to another Civic Organisation that may. You can fund those you trust, and remove stop funding those you don’t. Instantly you can take that money away. That may make budgeting difficult for some Civic Organisations but if you think that an issue you should use liquid democracy to put people in place that will not worry about short term liquidity problems but rather the purpose of the organisation. Don’t forget all have a livable income whatever they do!
Proposals
Each proposal is broadcast for debate and improvement. Only the proposer can amend the proposal. Once it has been accepted by at least 2 sponsors who must forfeit their own vote (with any proxied votes) and 100 Kratia — to prevent many unvetted proposals being put to the vote. It must then be packaged with an Implementation and Compliance protocol which will be broadcast before voting starts.
Implementation and Compliance
Decisions are useless if they are not complied with. As part of each proposal a system of checks and penalties will need to be packaged with them. Most should be embedded in new smart contracts and attached to the payments for building/implementing/maintaining each rule/law.
Imbedded uses to create demand
There are three obvious early uses of the currency to give it value.
An exchange charging a fee that must be paid in Kratia.
The purpose of the exchange is to allow instant or near instant transfer from Kratia to fiat currencies allowing people to use the universal payment with the current tap-and-go payment network. This will encourage quick adoption.
It will also exchange fiat and non-fiat currencies, coins and tokens. Deregulated and national bias free.
Cloning an existing open source currency exchange such as Stellar or XRP with a modification to allow any organisation to be a counterparty and hold funds.
A 0.5% fee in Kratia will be burnt for each exchange which will create a demand for Kratia.The counterparties may have their own fee on top.
A credit system — Lenderless borrowing.
There is no reason to have a lender when you borrow money, you can just borrow from yourself (the DemoKratia) at zero interest.
If we can just electronically create money why do we need the depositor, or the bank — the lender?
The argument for banks is they are needed to decide who to lend to, to credit assess people and organisations to ensure most of the money is paid back (actually destroyed ensuring there isn’t an oversupply of money). The past has shown that they aren’t particularly good at this and essentially they just follow a set of rules which could be easily embedded in an algorithm.
Lenders look at previous borrowing and repayment history, income, security, and assets (often used as security). It would actually be easier for an algorithm to do this as we wouldn’t have to worry about privacy issues involved in sharing our private finance information with the bank. Also credit ratings agencies which many banks use have incomplete and often inaccurate data because we don’t share with them directly. Their ratings can be falsified for money as happened during the GFC.
Borrowing and default algorithm
Loan approval works on a tier basis with reference to the money going into the customers Guaranteed Income account. (See above)
And the whole thing can work without using (and losing) assets as security.
Borrow up to 30% of Guaranteed Income (GI) [30,000pa] per term.
Plus 20% of average extra funds through the account (other income) over the last year. Average daily extra balance x 365. This is to prevent one off large deposits used to bump up income.
The maximum term is the lessor of 30 years or 90 — (the age of the person).
The borrower moves up the tiers on successful repayment of a loan. Or if someone only ever wants one or a few loans they can move up the tiers by years of active Notary (see above) service. One year = to one tier.
The borrower is limited to a percentage of the max borrowing amount and term
Tier % Max Term
1 10 1yr
2 20 1yr
3 30 3yr
4 40 3yr
5 50 5yr
6 60 5yr
7 70 5yr
8 80 10yr
9 90 10yr
10 100 Max
Only one loan at a time.
Examples:
Starter
30,000 GI = 1000 loan over 1 year tier 1 (no extra income)
MAX with extra
30 year loan = 30,000 GI x 30% x 30 = 270,000
Plus
Extra income of 30,000pa x 20% x 30 = 180,000
Total loan 450,000
Payment options
For loan terms over 2 months the borrower must make regular payments at a minimum of one per month. The payment must be set up to come automatically from the Guaranteed Income account (GIa). A new loan cannot be used to refinance an old one (roll it over). The loan must be paid out before a new loan can be drawn.
The repayments must be pro-rata over the life of the loan to ensure full repayment.
Default
If default occurs the GI is garnished by 40% until the loan is repaid (you can repay the loan with other income if you can) and you (the borrower) return to tier 1, you cannot borrow again until the loan is repaid + 1 year. If default occurs more than 10/tier (n) you will not be able to borrow for 7 years after the loan is repaid. Starting at Tier 1.
If a person misses one of their scheduled payments they can reschedule payments to ensure the loan is paid, but 3 times only (by new smart contract). If the loan was to be paid in full with one payment and this is missed automatic default.
Time limit on moving up tiers
The first 5 tiers have a 3 month time limit per tier, the borrower cannot move to the next tier until this time has elapsed although they can borrow again at the same tier provided they have paid off their loan. The next 5 tiers have a 6 month time limit. Meaning a borrower cannot reach the 10th tier until they have been operating for at least 3.75 years. This ensures someone doesn’t just draw down loans and pay them off to move up quickly and then not pay back a large sum.
Fee (investment coin)
There is a 1% fee payable on all new loans at drawdown (this can be funded by the loan provided it is within the lending criteria). This is to discourage fast turnover of loans to move up the tiers and to pay for the construction and maintenance of the system.
This is also the way investors can fund the system. A limited supply of 100 million coins (INV) will be issued and be based upon an Ethereum protocol. This is the funding mechanism for the whole project.
Investment — How it works
Investors will purchase an Ethereum based coin. Once the Demokratia is up and running those coins will be exchangeable for the equivalent Kratia (100 million) + 1% of the lending (less administration fees). The equivalent Kratia will be created from nothing and the 1% fee added to a pool held in an account controlled by the DAO (investors and creators) of the lending system. The value of each Ethereum based coin can be easily calculated by dividing the amount of outstanding coins by the pool of Kratia. Once the Ethereum coin (INV) is exchanged for Kratia it is destroyed. The trade will occur on a coin/token exchange system. For the purposes of destroying the Ethereum based coins the DAO will also need an Ethereum wallet.
The Ethereum coins (INV) can also be traded with others — not forfeited for Kratia — in any exchange that will accept them.
There will be a limited life for the Ethereum coins (INV) of 20 years. After that a small administration charge of 0.1% will be charged for new loans if necessary.
A social media system
A messaging and sharing platform that costs Kratia per action may discourage trolls and fake news. You will of course get funds through the BI but you will need to pay to post, share, and up and down vote.
If people really want to be active they will buy more Kratia which creates value for the currency while creating a more regulated social environment.
An example we could follow is Voice: https://www.voice.com/
Funding the project
As the Kratia is a stable coin the investment coin (and Ethereum coin or equivalent) can be swapped directly for newly created Kratia at a premium of 10 to 1.
A second funding round can be issued for the creation of the lending system which will have a return on investment coming from the 0.5% fee on all loans.
Fin
It is a beginning. Not an end. A simple system that does not rely upon centralised people and engrained hierarchies to provide the things we are used to. It is Democracy — true people power.
