ConsenSys on growing the Ethereum Ecosystemby Henry Chan | 12/03/2019
Interview with Charles D'Haussy, Director of strategic initiatives at ConsenSys
ConsenSys is a living ecosystem that builds on the principles of decentralization, where the value of self-autonomy, flexibility and transparency form the very foundation of the ConsenSys work culture. ConsenSys is the largest venture studio that supports projects wanting to build on Ethereum. Through the interview, Charles spoke about the process of how companies can integrate different business models into the Ethereum network and the future prospects of Ethereum.
What are your criteria for selecting potential start-up to be your spoke?
The spokes should be a very focused team which identify a very meaningful and painful problem. I think the team should be mostly a technology team who can demonstrate very strong technicals and have expertise in the Ethereum blockchain. ConsenSys mostly develops solutions on the Ethereum blockchain. ConsenSys was founded in 2014 by Joseph Lubin, one of the Co-Founders of Ethereum, and his focus and expertise are on Ethereum. Today, if you use Ethereum, you probably use some sort of ConsenSys product, whether it be MetaMask, Infura, PegaSys, or Meridio, as these are all tools used on the Ethereum platform.
What are some of the obstacles most companies encounter when they choose to implement their business model on Ethereum?
I think that the technology is not so much the problem. If you look at the blockchain technology, it’s a coordination technology. The use case of blockchain is to coordinate things in a more efficient and trustless manner. It is sometimes difficult for the customer to understand which part of the business should be trustless and coordinated and where a blockchain solution makes sense. Some use cases can only exist if there is a blockchain. This is a kind of a journey for some customers, which can take some time. Some customers are very creative and find that blockchain is something that is right for them. Others are starting to discover the potential of the technology and are in an ideation phase where they are trying to create new business models in their industry by using blockchain. The technology is available, and it’s all about how people make efficient use of it. It takes a lot of work to build a consortium, or a group of people who are focused on performing some sort of activity and use case. Building a consortium takes time and it is one of the most underestimated aspects of enterprise blockchains.
What is your advice for companies out there looking to enter blockchain?
Talk to the customers, identify the problem, and then build a solution for the problem. Don't just build the product without talking to the customers first. Launch your product as soon as you can and continue to improve the product in future updates by collecting feedback on regular basis. But you start with the customer. You identify the people who you want to talk to and ask them lots of questions. You identify and confirm what the issue is and whether it is a big problem. From this problem, you start building something. The reverse would not work, you should not be building a solution and trying to find people to buy the solution.
ConsenSys has partnered up with many global organizations such as Microsoft. Is there any strategic difference between working with large global institutions compared to start-ups?
There are some global partnerships for ConsenSys as a group and Microsoft is one of them. These partnerships are created to deploy solutions for the customer. The reason we form these partnerships are to provide better solutions for our customers. In the case of Microsoft, they required a solution that would be easy to deploy and on an infrastructure that they were familiar with. This is a way for us to provide value to our customers through our partners, who is already in place to provide customers with a specific value, which is not our core business, and was helping us work with the customers. It is very different from start-ups, which are also very important to us, but work very differently. We will try to make sure the product iterative process is fast enough to get a proper solution which can be integrated into the blockchain to deliver a comprehensive solution to the customer. We usually try not to stretch these companies too much and keep them focused on what they are trying to deliver. This is a very important focus for our company.
There has recently been a lot of news about the evolution and improvements being made on the Ethereum technology. Do you have any advice for people who are using Ethereum right now to adapt to these changes?
I think blockchain will need to change at some point since the market is growing, the technology is improving, and the demands of customer are quite different. Customers are now looking into things like scalability and privacy, and you need to understand the infrastructure and deployment considering the foundations.
Another piece of advice I would share for companies building on the Ethereum network is to make sure you have a product market that fits. Many companies don't necessarily consider this. Some companies may have a good market fit for some period of time, but then the market moves, and the product is not so relevant anymore. This is a big challenge for the company because it must rebuild everything. I think this is really the cause of the problem. At the end of the day, the blockchain industry is not so much different from the internet industry. In the early days, we saw many people launching businesses on the internet. Some of them have success, and some of them disappear. Others have a period of success and then suddenly disappear. We are probably going to see something similar in the blockchain space. It is a similar kind of curve of engagement from the market. The market starts with a strong appetite for solutions from the space, then the market gets pressurized.
The most important thing for companies is to choose platforms where there is lot of talent building upon it. If we were to look at the future of blockchain and which projects might be a primary blockchain in the future, the Ethereum project is very committed. There is lot of talent, including engineers and researchers who are working on developing Ethereum. I think it is a very safe bet. Ethereum is a very “lively organism” right now and many people build on Ethereum. People don’t need to ask for permission to build Ethereum, they just build. I think it is a very strong advantage to have such an inclusive community around the technology. Using the technology, people from all parts of the world can build on Ethereum in any way they wish, but they all share same backbone and infrastructure.
I think this capacity of reaching people is also a very strong value proposition. Ethereum is not a European project, an American project, nor a Chinese project, but a global project. There are already 300,000 developers on Ethereum from all different areas such as companies and universities. It is really an organic ecosystem and I think this type of ecosystem would be the winner in the long run. If you look at the web server industry, 90% of web servers today are operating on Linux. If you want to build something on Linux, you just build something, and you don't need to ask for permission from anyone. You can see that this concept is proven in the history of open source technology. The inclusive community and constant innovation have delivered value for a long time. This will also be a very strong component of the industries that follow, and I think it will be the same for Ethereum.
What are your comments on the future developments of Ethereum in terms of scalability?
Right now, Ethereum is at a stage which we would call “Ethereum 1.x,” and this means that there will be different stages and different teams working on different parts of the technology to prepare for “Ethereum 2.0.” This is happening in 2019 and we are going to see different projects starting to deliver results throughout this period of time. Recently, there was already a project using the plasma chain where you can get high output and basically a side chain connecting back to the core chain. We must be patient and we need to support and understand this goal. There are so many people working on these solutions with ideas coming from all around the world and different components coming into play.
One thing to remember is that we should not focus solely on the speed of transactions. Transaction speeds are important, but it is sometimes a friction point for some projects. The most important thing to focus on is the product market fit of the app and the services you are going to build on. There is an example relating to a certain project doing about 7,000 transactions per month. The quantity of information in each transaction was very large. The total value of the transactions on this blockchain, which is a hybrid private/public blockchain, was about USD 7 million. The total number of transactions were very small, however the value for the users was very high. Not every use case requires transaction speeds like 100,000tps. If you think of a bank, or some other financial service use cases, you will find that there are many financial service use cases where you wait a few more seconds to get some extra value. The value might depend on how you package or redesign the information for the end user. It is not all about speed, but rather how you can also bring value to the users in other ways as well.
What are some of the goals of ConsenSys for this year?
I can only speak on behalf of ConsenSys Hong Kong. ConsenSys Hong Kong is focused on building a platform for our clients and spokes. We have teams all over the world working to ensure that institutions such as governments, financial companies, and logistics companies make the best use of blockchain. ConsenSys is really a community and we like to teach and share all the knowledge that we have within ConsenSys to our companies. We work to connect with all the different communities to ensure that they are aware of all the things that Ethereum is doing by sharing with them the tools and ideas from the Ethereum community.