Economic and Environmental Sustainability and the Blockchain Trilemma

Transcript

all right welcome back everybody i hope you had a wonderful lunch in the sun finally a little bit of sunshine here in switzerland we have a wonderful uh keynote here for you today from cardano both frederick and sandra are going to be talking about environmental sustainability and the blockchain trilemma so stage is yours thank you very much and thank you for being here in our deep dive what we wanted to touch upon today is there's really two fundamental things which is happening in blockchain right now specifically when you look at the the board level and when you look a little bit beyond crypto so the first thing is is blockchain environmentally sustainable and there's a big question

which really parts the waters the second thing is really around the economic sustainability of it a lot of the blockchains and the layer 1 protocols out there they have some embedded features where they kind of run out of incentives over time so we wanted to give you kind of a deep dive into how does it actually look with kerano is that the same you need to worry about what kind of questions do you need to kind of cover when you're looking at these layer 1 protocols but also to give you an opportunity to ask some of those tricky questions so we can get some of this discussion going because nothing is really certain but what is certain is that when you think about it when you really hardcore come down to it everywhere you go

trust is probably the only legal performance enhancing drug everywhere where there is trust good things happen if you think about a city if you are safe in the city you would do commerce if you're able to actually interact with the city and the sewage channels and there's infrastructure you know good things happen you know parks are upspring the children are playing in the streets you can build up a career you can take care of your family and so forth it's all coming back to trust now in the last couple of weeks we've seen that there's been some questions around um you know can we trust crypto can we not trust crypto and i think we need to look one step beyond that because when we actually look into it at least what we saw in the last two weeks is

you can definitely trust the underlying blockchains but some of the incentives you might need to look at so after yeah some nine ten years and working around blockchain and crypto i'm finally at a stage where i'm ready to say not just crypto is open for business but blockchain is open for business with that i would like to give the word to sandro who will lead us through the rest of the show and you know questions comments be direct let's answer some really cool stuff okay go thank you fred thanks everyone it's great being here thank you for attending the session to start off just quickly there are various different kind of layer one protocols and as you all know there is the public and the private space and depending on the projects you may go for

a permissioned private blockchain and you look at the close membership to attend what we at the cardona foundation are and what we are working for is actually the adoption of a permissionless public blockchain there's a lot of discussion when you talk about permissionless permission what does this actually mean when it starts and right ends so to us the idea here is that you have no barriers when you enter the ecosystem so when you hold a utility token you can actually participate in staking you can participate by voting and you can use your rights your utility in the ecosystem you can see a lot of proof of stake protocols where you have an entry barrier which requires a certain amount to actually run a stake pool so it's probably still kind of permissionless in a sense that you don't

have to apply for a membership but there is a certain limitation for you to run a stake pool and these are kind of things you have to consider when you choose the layer one protocol you're gonna work with so in a permissionless public blockchain like cardano we are open source we actually have our data online accessible for everyone and then the question comes what is the value proposition so our value proposition is not technology because you can actually copy our technology there are a couple of proof-of-stake they use our consensus protocol ouroboros and working with that so there is variety where you can see okay how do you actually define what is the value of a blockchain so with us we have a great community so for us it is

really who builds and who trusts into cardano what can we see with the so-called blockchain citizens which are utilizing and which are developing on the blockchain and drive blockchain adoption so when we look at it and we go through it in different use cases you will see that there is a lot of power within the ecosystem within the community to make a blockchain success successful successful and on top of this it's obviously the roadmap so what are actually the goals you follow and what are the milestones set you may all have heard about the blockchain trilemma scalability decentralization and security so how can we combine these three pillars to ensure that we have a sustainable protocol going forward not for the next couple of

years but for the next 30 40 50 years so the decades to come when you talk about decentralization we touch base before a bit so what does decentralization means these centralizations actually the fact that we allow anyone to access the protocol and that we can create a security layer by preventing an attack that someone takes over the protocol with a 51 attack or so on you will see details on this how it is being done going forward so what is the first thing to look at it's actually the proto consensus protocol consensus so as you all know there are different ways how you can actually validate or mine a block so we have the proof of work we have the proof of stake and i want to go quickly into detail

what is the difference when you talk about environmental sustainability in proof of work it's a race for the best so i do want a minor block so do you do to you so to win this race we actually have cpu power we increase so i'm buying more and more cpus to increase my uh my cpu power to actually resolve this mathematical equation so this is then when you see all these mining forms running using a lot of energy which is from our environmental point of view not sustainable sustainable we can talk about it how the electricity is being consumed it's not all bad about it we can compare to traditional finance it's not as bad as it sounds but this is where the discussion starts and that yeah so then we have the proof of stake so we have a

different consensus protocol it's actually it's not working on the cpu power but it works on the stake you hold in the ecosystem so every one of you even if you just hold a couple of the utility token you can participate you can stake and you can take a vote into the ecosystem it's actually a lottery you can choose like a lottery so if we all of us are having a dos the lottery goes through and decides now it's you you can validate this block so now it's probably not you and me who can do it or who wants to do it have the time to do it but we then can say okay we do gonna delegate to a stake pool who's doing it for us to operate a stake pool there is not much of requirement here so you need a little bit of hardware you need a

computer and you can access to the node to the node but you talk about the on a couple of hundred bucks to actually facilitate this so this is really open for everyone who wants to do it what is important is how can we and we talked about this decentralization and we're talking about attack mechanisms so the delegation how it works with cardano it's it's quite unique in a way that you actually don't have to pledge your assets to the stake pool operator but there is a so-called delegation key so the protocol recognizes your delegation key that you delegate your assets to a stake pool and adds this to a stake of the operator so the chances for the operator to get chosen by the lottery increases you remain keeping power off your assets so it means your assets can always be

transferred can always be sold you don't have any issues or you don't have the risk of the so-called slashing as you don't pledge your assets to the staple operator in case he misbehaves this is quite unique and gives a lot of benefits to any financial institutions but also the retail clients who are working with with the assets to actually prevent attacks when we talk about this 51 attack so in a state pool the more stake you have the bigger the chance you get chosen so now you can say well if i have half of the supply in my stake pool i can take over control so how is this being resolved this is being resolved with the mathematical formula with the k

level is recalled and today this k level is at 64 million ada so it says what is the optimal amount of stake pools to be operated to perform to actually support the ecosystem and this is divided to the supply so today it's 64 million that means that when you have a stake pool on the saturation land of 64 million you have the perfect saturation and the chances to get chosen is the biggest everything what exceeds 64 million will not be considered to be chosen but you will have to distribute to more delegates so that means that actually the amount the rewards for you are going down if you exceed the saturation level and so can we prevent that the staple is getting too big in course of time it's

also considered with the ecosystem to see does the saturation level needs to be adjusted or not this depends on the development then so the staking advantages is there is a secure protocol which is based on haskell within cardano it's uh actually decentralized to all these operators staple operators and it's energy efficient and this is one of the key elements we're going to look into when we then as well talk about circular economy so we can start with what do we require to actually run a protocol and then how can we offset the same and how can we help by actually create accountability to come

it's more cost efficient actually as other protocols you may know depending on the architecture this is also something i want to go into when you talk about economic sustainability and then there is this increased competition so the the entry barrier is low as i mentioned you can with a couple of hundred bucks come into and actually create a stake pool and this gives competition with each other so stake pull operator can decide how much fee he took so the more competition the cheaper it gets for the users but there's also another side when we talk about environmental sustainability and this is something which we see with the blockchain community is actually that they are very willing to actually change the world and have an impact and we have the so-called

we have we have stake pools which are purpose-driven so those stakeholders need delegate to those stake pools they're taking a higher fee but the fee they take they are actually donating to charities let's say save the children or refrigeration so there's actually a way for you to actually delegate your ada and the rewards you receive you can say i'm happy with a certain amount and the rest i do directly put into charity so with this you don't have to long to take into pocket and pay the charity but just actually waive a part of your rewards or you can even waive all of your rewards with certain mission-driven pools so a financial and social operating

system which allows you to represent actually value identity and governance all in one place this is the key element when you look at block generation what you want to try to achieve here so what is cardano for those of you who do not know so it's the first decentralized permissionless blockchain and crypto project it has been created by charles hoskinson a co-founder of ethereum and actually what what he did he looked at the first generation of blockchain the second generation of blockchain and recognized there are a few things we have to make different one of the key elements so what you can see when we talk of environmental sustainability is move from proof of work to proof of stake but then also in the architectural layer how can we be more flexible rather than having

in the first generation only the value of a financial transaction and in the second generation of a transfer of a value transaction and smart contract how can we be more flexible in the architecture by having two different layers which allow also assets direct like the native assets as our utility token which has allows metadata to put on and you don't have to write the smart contract for the same um then when you look at the road map looking at the time good when you look at the road map how it is being built or what is being done so it started actually with the base layer so we have built the base layer for cardano and that was really centralized because you have to create the value and then we

moved on with the shelley that's on this side here so with the shelley hard fork where it said okay now we roll it out to the staple operators to everyone to creating this decentralization and the treasury built in on a second hard fork you see kogan utility that has been last year what happened here is actually we implemented the technical capability to support metadata multi-currency and smart contracts so this is available and ready now many people from time to time are claiming it goes too slow but what is the key when we look in an environment you want to build trust in it needs to be stable so the way it is being built it's academic research and everything is actually put open source for everyone to look in and

to use as well so after building the technical layer which is proven we go now into this phase where we increase scalability so when you think back to trilemma we have the security layer we have the decentralization layer and now we're going into the scalability so how can we get there this will come with the bar hard fork uh in pretty soon uh the partial will then actually allow so it's intended to happen in the next weeks um so with the partial hard fork you will actually see an increase in the pro interoperability in in scalability that means that we're going to change the way the blocks are being processed there will be a pipelining there will be an asymmetric

way how it's being done and you will also see not only layer 1 applications but also layer 2 applications so everyone who builds on the blockchain are building new ways how you can actually aggregate transactions and bundle them to be more efficient on the blockchain so scalability is one of the key elements when you also talk about interoperability so there is interoperability already happening between different protocols such as ethereum and cardano with layer 2 applicators who actually just last week it has been announced that this actually uh that there is a layer 2 application allows stablecoin conversion from ethereum to cardano so interoperability is one of the key elements here which is coming at the end of the day you will see

voltaire will tear the governance so the voting the treasury the sustainability everything shall be outsourced let's call it outsourced in to the broader ecosystem so there is no centralized authority or organization building on cardana but it's it's you it's the users it's the ecosystem driving this to achieve this this is a long road to go there is a lot of open source projects being worked on but this is the ultimate goal to go so i said a bit about the blockchain architecture uh the cardona settlement layer which allows actually the settlements and the native assets and the computational layer which is required for the smart contracts and important here to say as well when you compare the first generation and the

second generation of blockchains you know you may know that bitcoin is built on a utxo model and the second generation like ethereum is built on an account based model so account based models helps you actually to implement the smart contracts and what happened with google is we have combined the best of both worlds so it's a so-called extended utxo which is a utxo model allowing actually data in the output to actually create input and output to create smart contracts so what helps a blockchain to survive we have heard it from fred into intro what is the incentive we're talking about that the staple operator and anyone who

delegates receives uh the token as a reward for for the work they do on the network so here we have to think further so how can we maintain this going forward when we talk about a limited supply of the total total supply so a society grows great when old men plant trees in whose shade they shall never sit and this we hope we can sit partially beneath it but what we do is actually look for the next financial and operating system for a generation to come so we are building the base layer for our future children the teenagers and you sitting here to actually benefit from this so to to achieve this we need to build trust layers so when

you look at the left hand side we have the digital id the kyc the kyt the know your transfer know your client the forensic tools what you need to achieve is actually that when you use blockchain when you use crypto that you can actually adopt it into the real world as we know it today because for most of the people they're saying it's a it's a sponsy scheme or there is a lot of money laundering and so on so how can you prevent this from happen it's actually we need to have this trust layer built which we are working on with our layer 2 application developers that actually we can then move on to the integration layer when it's like okay we have a decentralized exchange we have the wallet providers we have the custodians a custodian needs to get regulated so how can they access the

transactions to actually validate transactions not validate transactions the transaction itself but validate that it's not related to aml so then you have the forensic tools playing into where you can visualize the whole transaction history you can go back to to the genesis and you can see where does it go where does it sit on which address and this gives you a lot of power actually to prevent in the future crime when you talk about aml today most of it is actually being still in cache sits and not in crypto and the technology allows a lot of possibilities to prevent this but we need to have the regulator and this is where we have the international standards and governments model here we need actually the cooperation with the regulator and the regular and the

international standards that we can apply within the whole value chain and from here we are moving in to this middle sector where we have the financial services and when we look into financial services when we talk about economic sustainability as well what does it mean how can we actually be more efficient when you just think right now it's so good to be out again and be in a conference seeing people face to face not only sitting in front of the computer but how did the pandemic stored or when the pandemic stored actually we have seen a lot of issues due to the high volatility when you talk about central banks you talk about any intermediary is it a cst and icsd i've been working at the financial market infrastructure back then and we had a lot of issues with the collateral management because

the markets go crazy you have to transfer assets and you have to transfer as well the underlying currency so the currency as you know today they have a cut-off so when you want to transfer between banks you have the intermediaries and you have cutoffs so that means that you are limited in a way how you can manage your collateral with actually blockchain as it is immediate and you don't have cutoffs it's 247 allows you a much more efficient way how you can actually do your collateral management so this goes into this goes into the settlement layer this goes into the treasury collateral and to the risk management we can look back at things as well when we talk about uh issue and issuing as an example when you issue a product today how can you issue a product efficient

you have an issuing agent a paying agent a lead agent there are various different partners involved how can this be in the future be done more efficient and this is when we look at small contracts at programmable solutions when you talk about energy consumption you see here that actually on the graph on the right hand side the visa net traditional finance financial industry is very fast blockchain which is in the middle on the left-hand side it's not as fast as as as traditional finance today but we are getting there now the difference between the the protocols you see here is a lot about how it's being built so everything which is being built on a private permissionless blockchain as an example

can be pretty efficient like a hedera hashgraph because it doesn't require the key ecosystem but it's centralized again when you talk about cardona as a public permissionless blockchain you see we are somewhere in the middle a bit on the left-hand side but with the upcoming hard fork you will see that we gonna increase actually to transaction per second but one very important aspect here to mention as well it's we do not only talk about transaction per second but put through per second or per transaction so what is the value you have in a transaction is it a financial transaction or does it include metadata does it include smart contracts so you can transfer much more value than a simple financial transaction

and how are you being rewarded to validate a block we have heard it at the beginning speech from fred when he said how can you make this sustainable when you run out of your reward pool so at the cardona we have a 45 billion cap of adas there is 14 billion in the reserve and when a staple operator validates a block he's getting his rewards and the delegators are getting their rewards out of this reward pot and the reward port is actually filled by the reserve but also by transaction fees so ideally the reward pot can be filled with transaction fees only how can you achieve this how can you

actually fill a reward pot with transaction fees without having tremendous amount of transaction costs so you don't want to increase the fees right so you say we need to get somewhere where we can actually have more transactions more value in the transactions without increasing the fee as such and the answer to this is actually that you build a system where you have a predictable solution you see protocols out there which are not predictable where you don't really know what you're going to pay for and this is actually no enterpr enterprise great solution because an enterprise a financial institution needs to know how much do i pay for it so the solution we see here is actually you have a base fee

which is a you have the base fee preventing ddos attacks as you see with other protocols when they go down often it comes to ddos attacks touch wood we have never been down so far and this is for us this is actually stability which is key important for us to achieve and on top of that then you have the second component which is based on the bytes you put on so how much information you put onto the transaction is it a simple financial transaction it's a very low cost do you put on metadata do you put on a smart contract whatever you put on the more expensive get transaction but you have more value in this transaction as well which makes sense and by increasing actually the amount of transactions with metadata with smart contacts we can increase the transaction

fees which are feeding into the reward pot and here it's a small graph where you can see how it developed for cordano so on the left-hand side you can see that the majority have been simple transactions a financial transaction it does not really include a lot of data and in course of time this has changed so we have a lot of metadata there we have a lot of smart contracts and this to get more and more and this is how we can actually ensure that we have an economic sustainability and that the protocol works for the next 20 30 40 years without increasing the supply so cardona is a trade tax solution platform we're looking for interoperability

accessibility that's important when you talk about inclusion so who can access your your platform when we talk about 2.5 billion people without a birth certificate if you don't have a birth certificate you don't have a bank account you don't have access to health insurance you don't have access to education how can people without a birth certificate of a passport get onto a financial system blockchain offers a solution to this by actually having this non-custodial wallets where anyone who has internet access can access the network and by accessing the network on the layer 2 going further in the future accessing other tools such as education and

healthcare auditability it's a big question how can we make sure that the data which is entered is correct at the end of the day there's always a human who makes the initial entering or the initial coding and auditability is something which is guaranteed due to open source data so data is accessible for everyone and can be validated but it's also working with all those auditor from speed the known big four or b smaller ones helping to actually trust and build this trust layer on top of it sustainable governance when you talk about circular economy i'm coming back on this it's about creating accountability and this is something very important when we really want to have an impact and change the world going forward so the circular economy as i mentioned is how can we actually have

a working circular economy to those of you who heard about that it's actually about not only doing this esg site so not only offsetting carbon but changing the industry in a way that less pollution less waste is being produced and to do so we have to create accountability because if you don't can tell who is responsible for it people want change it's a sad but it's a pure fact and we have to learn as well so we need to get transparency what does manufacturing mean and what is being actually was what are the resources used for it i learned it myself and i bought a jacket a couple months ago i think last year someone i saw there is a jacket made of 20 or 26 bottles so pet bottles and i thought wow

that is recycled that's great it's good i'm going to buy this and i have a good feeling that i've done something good for the environment later i started doing some research and i learned actually that to manufacture such a jacket out of plastic to actually the way to get to this final product uses a lot of energy and this includes a lot of waste so now you have to compare well what is the better solution synthetic or pet i cannot tell you right now but i need the data to know this and this is why accountability and transparency is so important for us to create this change and have a sustainable economy here so programmable transparency is our answer to this and how have we done this there was an example or there was a use

case we have done last year that we partnered up with very tree row tree is a canadian based refrigeration agency so they do plant trees to offset carbon as we all know here in switzerland you can buy clothes you can drink a beer you can do a lot of things and they promise you they're gonna plant a tree but you never have know what's actually gonna happen or you will get a certificate by email or even physically saying this is the tree planted there it is but this can be actually been multiplied so someone can take a copy and i gave it to you and i gave it to you and i gave it to you and you all have the same tree but you have a certificate as yours so there is actually no proof that this tree has been planted or that you are the the unique owner of the

the sole owner of the same so what we have done with veritry is we put actually the record on the blockchain and we challenged our community because the blockchain community is claiming to be environmentally sustainable and then they they want to have a positive impact so we asked our community to actually donate 1 million aidas to plant 1 million trees and with this we'd want to fight green washing double counting build traceability and follow-ups so how does it work you're donating in this example you have donated 15 ada to actually plant 15 trees for this you got a coin which confirmed you have done your donation once the

the tree has been planted you can exchange your coin for an nft so a non-fungible token which cannot be copied so there is no double counting and this nft contains the exact gps coordination the type of tree who planted it and a lot of information about what is the impact of this tree at this geolocation over time when we talk about the offset of the carbon so what is the impact of this tree and this is a for you extremely good to know because you know this is my tree which is immutable on the blockchain cannot be copied to anyone so you know what happened and you can use it when you talk about industries and enterprise you can use it for esg it gives you the first time

actually a reliable esg report which gives you an exact number what is the impact of your tree so in our example we planted the mangrove trees in kenya so mangrove trees not only offset carbon but their roots go into the sea and provide nutrition to fish so we can bring the fish industry back so when you look at villages which do not have axes or which actually have to leave their their houses due to rotting of of these mangrove trees they lost fishing that is their food that's their industry they haven't had anything less so they have to leave their homes by reforest rate refrustration there you can bring back the people to their original home you can give them food and you can give them an industry to live off so you can really start building something and this is only possible when you can have this

accountability that what we are doing is being done and it's being done right so uh it's it's for me as well a great achievement that we have seen that very tree attracted samsung as an example which has started planting a tree of two i think it was with two million trees to start off in january uh and there are many more to comes and all these things are on the blockchain are on the cardano blockchain and this is where you see in it in the chart before this is where a transaction gets more metadata in it and increases in value so for us to get carbon neutral you can see what what we actually produce today it's 2.7 000 tons of co2 per year which is equals off 218 beaches of

trees it's required actually to offset i said we have asked our community it took us three months to get the donated 1 million trees so this is big hand for our community that they actually participated and it's not two or three big donors but it was really small donations from 15 to a couple of uh hundreds and some few thousands of trees we have received to actually get to this one million three and with this win one million three we can guarantee that cardano will be uh carbon neutral in the future why do i say will be and why do i say we do not claim ourselves uh on our page in our carbon neutral yet because those trees have to grow those trees

have actually to to work like we all do and then there is another aspect that we are working closely with universities to actually elaborate right now the energy consumption to keep the to keep the protocol up and running so what is the energy consumption of the staple operators and i really hope that we are soon there we can give you a trusted source to actually prove that uh blockchain is not an enemy of the environment but a friend of the environment and can help us to be much more efficient in many processes and actually helps the economy and the environment to be better in the future yeah it doesn't work good so as said one of the key elements with

rarity we had was the double spending the lack of transparency lack of community involvement lack of data feedback loop that's another point you never know what happens once the tree is planted these days this we can change on the blockchain as well and you haven't had a standard in the past this is important when you talk about esg reporting so how can you work with that good perfect so with this i think we can open a q a session uh cardano is open for business and i really hope that uh i see many of you or hear many of you in a call or in a physical meeting to actually build as a layer 2 developer or as a industry leader on our blockchain to change the

world for a better thank you [Applause] all right don't be shy there's a lot of information out there there's a lot of questions to be had and asked so what's yes thank you for the question so rarity project was a great success what's next uh crashing from the audience thank you so much so what's next uh what we are taking as an outcome of the routine project is as an example we are talking to many impact investors impact investors see with the rarity

project that they can get transparency and traceability into the outcome so now when you look at an impact investor going into renewable energy as an example what does it exactly mean when you invest into a company which is doing beats solar or be it water whatever it is to create energy so what we are looking right now is a couple of in impact investors to actually measure the data from those renewable energy providers measure the data output so what is being produced what is the output what is the leftover and then go back to these actually providers to say how they can be more efficient so this is our accountability towards the producer but also it's for the investor to have a tamper-proof solution what is actually

my investment invested for and what is the outcome so this is one of the examples i think the main problem you want to solve on the blockchain is to lower the cost of transparency in many ngos and in many large businesses the cost of transparency is simply just too expensive so if you are the main contributor the principal behind an investment in africa you will get your answers but the 10 000 followers there's just no resources for that so what we really wanted to do with with veritry was yes it was really nice to plant the million trees and to see all those things it was a really good use case we really wanted to show that the costs of transparency can go you know incrementally down

and that we think will change the way people interact and act when they commit to the global society on planet earth yep uh here we go

so the correct yeah the question is on the trust layer side so on the trust layer if those boxes we have on the trust layer if they are being can you repeat the question there no no it's not our own processes these are the these these are the fields we have detected to to being touched on so if you think about it from the other perspective the question goes around so how much kyca ml and standards is built into the blockchain from start if i understand it correctly so what we've been doing a lot in crypto valley has been building a value proposition around cryptocurrencies and d5 and other existing models which works

you know we know them very well from banking we're now just using a different infrastructure for it and we're now fighting a little bit about you know where is the standards and how far can we go and what is decentralization what we're really speaking about here is if blockchain is going to go out to the masses and become the new infrastructure of the internet a new you know a new cyber security layer on top of it and change these behaviors what you really need to think about is that there is a value capture layer where people is going to monetize it and there's a value creation layer which is an infrastructure layer like i opened up today speaking about the city with the sewerage system and with the internet and safety now in between that there's a wide open gap and that wide open gap is covered by

a lot of industries today because what's happening today already is that you have a company and they're accessing a centralized database and to do that whether they're regulated or not they're using intermediaries and that can be sap it can be oracle it can be temenos it can be abacus it can be a lot of those systems and to get to a real utility adoption of the blockchain not just the crypto what you need to do is you need to cover those fields now some blockchains cannot do that because there's not sufficient data which are available to be stored on the blockchain so you need to work with with centralized servers around that and you need to build bridges other blockchains have a better functionality to do that but what is this between every single

box there is a billion dollar legacy business who today lives from connecting a business model to a database layer and what we're trying to say is that this is the ones where we see the adoption coming from next time this is the ones where we either from the blockchain industry need to kind of build enough scratch your own back to get rich kind of thing the startups or the existing ones we need to show them how do you mitigate that trust layer because it's not a blockchain problem actually in there there's a societal system problem which we use to work on can that be

taken into so what's really interesting about that is that most of us how many is familiar with a non-funchable token today it's like in the old days when you ask how many of us buying crypto right so what's interesting is that an unfunctional token doesn't really have a standard there is one standard we list on ethereum which is really solid it's very well defined and most people say oh that's the global standard so there's a few things around nfts and the use cases around nfts you need to be aware of so what we wanted to show from a technical perspective here with these nfts is that they're actually not a real nft

so they have non-fungible features built into it but compared to a normal nft on the erc standard it doesn't point to a centralized database so we actually put the regulatory information inside the actual native token so compared to ethereum where it has to be living in a smart contract who then points to a centralized database or a decentralized one unfortunately today is mainly a centralized one this is actually a native token where the metadata lives on the blockchain with the regulatory information but also the guild tracking information so if you move that into another world where we can think about title systems and homes and so on it actually gives you an

incredible advantage not just in terms of the transaction cost but in terms of how you maintain that data and the immutability of the non-functionable part of it so yes you can absolutely do that and we encourage people to play around with that because i think the real nft standard and use case has not really been proven yet but what we see is that there's a huge growth in terms of how to do it and i think the how is really important because that's where the trust lies there's a great article for moxie if you haven't read it we can put it into the notes which really talks about you know the current nfts today and how they actually work so if you're moving from one wallet to another wallet what you actually see is the nft is changing so if you have if you think you're buying a

jpeg right and you're now the the proud owner of a jpeg file right what actually happens if you're moving from meter mask to another wallet the whole thing changes and you have to ask yourself so what do i own right and there's a difference between how cadano nfcs but also other third layer blockchain nfcs are working compared to the esc standard there and that particularity is extremely important to understand it is clear that the highest distribution is still with ethereum but your housing case doesn't really work that well in an esc format but it works very well in a cadance or nft but that actually also works very well in a tesla's nft and another couple of those blockchains um

so can i yeah sure so yeah it's actually it's it's an easy way to point finger right when you look at bitcoin which solves the issue that you have intermediaries in between so you have a peer-to-peer so it's you and i we transfer money there is the bitcoin network so we can easily measure you can point finger on one single network when you compare a cross-border transaction this day when you want to transfer if i transfer uh us dollar to the to the to the us i mean that's a very simple and common transaction but it's not my house bank transferring to another house bank quite a swift network it's my house bank going to a correspondent bank the corresponding there's a clear in between i have another corresponding so it's not that easy to actually point finger on what is the actual energy consumption in

today's world versus bitcoin is quite simple to do so so i think that the the impact or when you look at bitcoin to store value is still it's it's a great value proposition you have at bitcoin and the the way it is being done yes it's it's like when you look at gold right it's how sustainable is gold when you look at how it's being mined and so on it's it's a simple way to point fingers on in the media and uh that's really my personal opinion so not the cardona but my personal opinion here is as well that the industry today doesn't want to see this fast development in blockchain as it does reduce their power when you go from this centralized into this decentralized world and hence there is a lot of counterfeit coming from from the

industry which exists education i mean yeah the the numbers just came out for the joe biden administration right so it's about 13 of all adults in the u.s they either own a cryptocurrency been interacting with the cryptocurrency or is has been holding one right and how many of those actually know what they've been holding how many of those actually interact with the blockchain how many of those actually does something with this beneficiary for the ecosystem we built up here in crypto valley well probably very few so i think if we really believe in blockchain and we really believe in crypto

we need to start talking more about what use cases can it solve how does it actually work why is it better and is it really better instead of talking about oh that one goes up with 10 then here i have a 50x return because in what other industry do you have an opportunity to buy something for one dollar and lean back and think you'd be a billionaire but it doesn't work like that right and very few people has had the opportunity to do that in crypto but very few people actually takes that fight out there and engages with the journalists and starts speaking about the carbon footprint who actually understand isometric encryption and sufficiently that we can speak about state channels and i think most of us who's been in the crypto valley for a

long time we are you know we're kind of naturally interested in that but we need to open up and start interacting around utility and not just crypto so yeah the finger goes a little bit back to us i have to say more of you are needed out there to take that fight out there energy consumption is not really bad per se right and if you look into the numbers and the statistics you know you know you know as an economist you can look at both sides right i mean it's very interesting actually you will probably get a lower energy consumption faster by feeding the world's population than you would do by actually banning carbon emissions and

so and we know this for a fact but it's not very popular to write about and specifically not in a global you know food crisis and a global energy crisis we're in right now i mean that sells a lot more newspaper articles but if we have the ability to feed the people around the world we have much more brains we have much more people who actually can you know take care of themselves from an economic perspective which means they get education when they get education they start asking those questions and start coming with solutions right so from an economics perspective it is a little bit odd what's going on in the media but unfortunately you know it is what it is so

we're looking at a whole set of different use cases and digital identity and digital identity is a difficult one so one thing is that the technology can do it the other part is who's going to accept the identity and that's the harder one so we started out a little bit in the in the easy equation so for instance with university records and student records so we've seen that a couple of countries and specifically around africa and southeast asia they have a lot of turmoil which is obviously from a business perspective not very nice to to deal with but that also means that it's very hard to understand and to verify student credentials so if somebody says oh i have a university degree from you know university of uganda or somebody

says i have from itae in switzerland we are not blinking twice we trust etihad but we don't necessarily understand are able to verify uganda so the whole idea there was if we can give students a way to verify that they went to school and they actually graduated we will be able to port the labor over the borders which gives you know portability of labor force which also allows them to move away from a crisis zone but obviously it's really hard if you work in an environment where there is a civil war going on and you know interchanging regimes right but if you go into switzerland we don't really care right we have a you know we have a stabilized way of identification we you know it's universally accepted in scandinavia

where from the government basically says this is what we use and everybody is now using that so we have a 99 adoption on it but when you flip that upside down and say you know in the western world we base everything on a birth certificate according to the united nations and the sustainable development goals that might not be the best way of doing it because if we wanted to give the two billion people who don't have a birth certificate a birth certificate we would probably have done it and and that seems to not be the case it's not really shrinking that population part and that basically hinders them from interacting with global markets including the internet right so they can basically read write share but they cannot do any

commerce and they cannot be a consumer for us so the other use case we're looking at is specifically kenya and kenya has some really good regulation and it's fairly stable and the idea is that you can build a self-sovereign identity to get a micro financing out get a mini mortgage so 100 mortgage a hundred dollars mortgage normally in kenya is about 600 to 700 basis points which for most of us is ridiculous right but if we here from our world can sit with our crypto assets through an initial stake pool offering right and we can give a micro mortgage to a population of let's say 10 000 people in kenya that means that the risk is spread out fairly evenly so if a couple of them you know don't pay back

that's okay but we can track every single time they do pay back and every time they do pay back we actually see them like your ebay account right and they get a different credit rating and that credit rating can be used through an nft right because their nfts can be used as an access so this basically is a it's like an identity online right it's a non-fungible token who acts as an identifier right and that gives us then the ability to say okay then we can lower the rate from let's say 10 basis points or maybe 50 basis points or whatever that number is and then lower that down because we can see that they actually are paying right now that doesn't mean that they will always keep paying but it means that we can actually get distribution through a different kind of identity system which is very close to

being self-sovereign in that case so that's why they range but the problem is digital identity and it's really really a hard problem technically very easy but social and culturally very hard so we have about two minutes left so we could take one more question if not then i have a question for sandra oh here we go uh uh

so i'll repeat the question so everybody can hear it so what are you doing to grow your developer system specific developer ecosystem specifically because you chosen haskell to be at the foundation of the cardinal blockchain and haskell is a it's a very difficult programming language and it's a it doesn't have a large adoption in the mainstream programming that's correct uh yeah i can go ahead so we're doing multiple things so first of all we would love that there becomes more clients so we're actually working with a couple of companies to do a rus client and we we do think there will be a java client and so forth over time and that's going to to be you know a good thing then secondly we have uh evm

compatibility right but it doesn't really solve the real thing the reason why we chose haskell is because the formal verification methods which is what you really need if you want to put real value in a blockchain i'm sorry about putting it like that but but what we see today is that we have over 10 billion dollars of hacks going on for just last year right we see that nearly every smart contract is today being verified by a team of auditors or a team of coders and you know how it is you won't find everything it's just it's just too cumbersome so we basically built it around formal verification so we're doing a couple of initiatives around this so first of all reference code dockers and so on on our developer portal second of all we just opened a school in ghana to teach to teach

haskell and to teach smart contract language there we're building this evm capability towards solidity and other languages we are you know teaching regularly and have strategic cooperations with universities there's actually university here in zurich or in switzerland where we're hoping they're going to spin up a carano node as a part of the education so we're doing quite a lot but um but we won't go to uh we won't lower the barriers i would say this way we will try and educate us and uh and encourage and incentivize us out of it all right that's it thank you very much

for listening i wish you great thank you you