Proof of Stake is the hot topic of 2020, with the transition into “Ethereum 2.0” coming soon. DeFi has been very inefficient recently, with long wait times and expensive gas fees as the vast majority of DeFi projects are built on Ethereum.
Even after the highly anticipated network upgrade, the capacity on Ethereum will still only be around 100 transactions per second, which makes layer 2 solutions (built on top of Ethereum) a necessity moving forward.
ConsenSys Codefi Activate is a platform and an initiative that focuses on research into user trends, whilst enabling a more seamless way to bridge network users and network providers in their decentralized ecosystem.
With the goal of becoming the “network glue”, All network participants are connected in a way that creates network transparency, providing unique benefits for both users and validators.
For users in the network, ConsenSys Activate allows a straightforward user experience when receiving tokens and clear education around how to utilize them for either staking or voting.
For Validators, they are given an easy interface to work from, so there is no friction when offering decentralized financial services and ensuring network security by allowing users to stake through them (Delegated Proof of Stake).
The first project partner that was launched on the ConsenSys Activate platform is SKALE, with more projects to be announced in the near future.
Today we have the pleasure of being accompanied by Mara Schmiedt, Strategy Lead at ConsenSys:
We first spoke when the SKALE token sale was on and the sheer demand broke the system. How was the experience and how has it impacted future launches?
“We had initially decided on running an auction-based allocation. In an ideal world, auctions can be a great mechanism to achieve broad participation and open price discovery, but in a heated market frontrunning bots and load constraints can lead to the opposite outcome.
The issues with auctions in the market are well known and we’ve seen this with other providers such as Coinlist, who have recently experienced similar pains.
Thankfully we recognized this issue ahead of time, and course-corrected to avoid a situation where only a handful of the thousands of registered users would have bought up the entire allocation. That would have gotten the job done of selling out all tokens, but would have been neither good for the network nor our product.
SKALE has a strong community and the heavy oversubscription for the launch put us in the fortunate position of being able optimize for our target outcome – a broad distribution with an actively engaged user base.
We decided to grant all users who had passed our registration process a guaranteed fixed allocation and distribute any leftover tokens during a second round.
In the end, we were able to get SKALE into the hands of almost 4,000 users in over 90 countries, which makes this one of the most distributed sales in our industry to date and a result I’m very proud of.
What does this mean for future launches? Ultimately, there is no one-size-fits-all-model and designing initial token distribution strategies will always depend on a variety of factors including the type of network participants, token mechanism and project funding needs.
However, as our current staking participation rates indicate, Proof of Use is and will continue to be an innovative and effective mechanism to optimize for active and long-term network participation and success.”
What brought you into becoming the Strategy Lead for ConsenSys?
“In an industry that is as fast-paced as ours, this question really got me thinking about the past few years I have worked in it and how I got there in the first place.
As a youngster, I was already tinkering on BitTorrent before I even knew what a peer-to-peer protocol was. Looking back on it, it makes sense that I ended up in blockchain.
I made the leap from crypto ‘enthusiast’ to ‘junkie’ in early 2017. I worked at an accelerator at the time and met different entrepreneurs developing blockchain products.
If there was a particular AHA-moment that convinced me of the potential of Ethereum, it was probably the conversation I had with DemocracyEarth Founder Santiago Siri at a New York diner who was at the time and still is building the railways for new governance and institutional models based on open-source blockchain technology.
I ended up working as a Consultant at PwC where I supported our blockchain efforts and corporate Ethereum hackathons before joining ConsenSys about ~2.5 years ago (when the markets were still rosy).
I initially supported our enterprise engagements in the financial services and supply chain sector, but eventually made the switch to focus on public Ethereum (because that’s where the magic is at).
In my current role I lead the strategy, discovery and delivery of blockchain products, tools and platforms for Codefi that facilitate open-source economies and decentralized finance.”
The acquisition of Quorum® from JP Morgan is an interesting strategy. What were the thoughts behind this move?
“ConsenSys has a ‘compounding value’ business model and enterprise adoption is undoubtedly key in that equation. We enable businesses to build market-ready blockchain solutions through an end-to-end technology stack and Quorum (now GoQuorum under the ConsenSys brand) is an important addition to this.
Quorum is a robust open-source protocol that ensures compatibility with private permissioned and public mainnet networks. In the near future, the objective is to enable interoperability with Hyperledger Besu to develop a unified protocol layer for enterprises building on Ethereum.
As part of the acquisition we will be providing a number of modular products, tooling and services on top of Quorum that are provided by the Codefi product suite including digital asset tooling, document management, KYC etc. In combination this technology stack allows businesses across a broad range of industries to create modular and highly customizable blockchain solutions catered to their needs.”
What is your involvement in Ethereum 2.0?
Phase 0 comes with its own risks, rewards and conditions so the opportunity space i’ve been focused on has been on how we can improve the level and reduce the risk of early participation in eth2.
Since DevCon V my team, our colleagues at DeepWork and the EF have been collaborating on an effort to make the deposit process for at-home validators easier, more secure and educational.
The result of this has been the eth2 Launch Pad, which will serve as the official EF-hosted deposit app designed to guide validators through generating their key pairs, depositing their ETH and registering their validator in the most secure way possible.
Dankrad at the EF got the PoC live and the next step is to get spec ready and implemention so that at-home validators, staking providers and third-party stakers can stake more securely.
Last but not least, tokenized staking positions are a hotly debated topic within and beyond the Ethereum community.
In the context of Phase 0, the unknown duration of having your staked ETH in a non-withdrawable state presents a whole different set of financial risks and illiquidity costs to stakers on the retail and especially on the institutional side.
These properties warrant the exploration of a new type of interest-bearing instrument that takes into account both the deferred interest and variable perpetual rate properties of staked ETH across the different stages of its rollout.
Stay tuned for the release of the ‘Internet Bond’ a design proposal for tokenized eth2 staking positions in Phase 0 and beyond.”
How do you see yourselves participating within the DeFi ecosystem?
“I’m pretty involved in space both as an active user (aka lender, liquidity provider and occasional farmer) and enabler as we support a range of protocols and products in the space.
DeFi is thrilling and where a lot of financial innovation and open-source experimentation is happening today. Ultimately, money serves as a means of organizing and incentivizing human activities.
Blockchain enables us to shift the locus and level at which money and financial services are created and coordinated – within this context, the long-term opportunity space for DeFi is near infinite.
Stablecoins have probably been the key catalyst to DeFi adoption and utility in recent times but the usefulness of money does rest in our ability to exchange it for goods or services.
Today, what can be bought through digital currencies is limited and getting in and out of the cryptocurrency economy is still costly and restrictive based on where you live.
I’d say it is exactly this distinction between the ‘real’ economy and the ‘crypto’ economy that needs to be bridged to transform this technology for a select few into a public good. This is probably an area I’ll be dedicating most of my time to in the coming year(s).”