- ConsenSys is a software company that plays a mammoth role in the crypto ecosystem.
- The chief of strategy explains how they are preparing for “the merge” — ethereum’s next upgrade.
- He says blockchains and VCs are in a “decentralization dance” that may pose a problem in the future.
Blockchain technology company ConsenSys’s footprint in the crypto ecosystem is mammoth in every way possible.
It’s founded by Joseph Lubin, a legend in the crypto space for having played a role in the founding of the ethereum blockchain, the world’s second-largest after the bitcoin network.
Its stable of products and services include MetaMask, the best-known crypto wallet, which has over 30 million users, and Infura, an ethereum development platform.
And it just raised a whopping $450 million in a Series D fundraising round valuing the company at over $7 billion, doubling its previous valuation from its Series C round in November.
ConsenSys might seem like a complex web of services and technologies, but Simon Morris, the company’s chief of strategy, explains that actually, it’s far simpler.
“We actually only do two things,” Morris told Insider in a recent interview. “It’s pretty straightforward … Essentially we provide ways for developers to build Web 3.0 applications and then we provide a platform for end users to use those applications.”
ConsenSys is closely intertwined with ethereum, given that its CEO helped found the blockchain and that MetaMask is one of the main ways users tap into the network.
This doesn’t make ConsenSys an ethereum maximalist, however.
“We’re not interested in competing with Web 3.0, we don’t want to compete with the Uniswaps of the world, we want to empower the Uniswaps of the world,” Morris said. “We view a lot of what we do is just build all the tooling and infrastructure to enable developers to succeed, and then build the application that enables end users to connect in with all of that innovation that’s happening.”
Morris welcomes the arrival of so-called “ethereum killer” rival blockchains, such as solana and avalanche. He expects MetaMask and Infura will support other blockchains in the future.
“A lot of what we’re doing is extending our support on both the Metamask side through a thing called the Snaps framework,” Morris said. “And then on the Infura side, we’re adding new networks all the time.”
The challenge, however, is whether some of these newer blockchains can keep their promise of decentralization.
“You see a lot of very short-term thinking going on and some of these other chains where they’re saying, ‘Well, let’s build essentially a very fast chain that is kind of decentralized, that kind of isn’t,'” Morris said. “And as time goes on, the size of the state involved in these chains grows so quickly that it drives further centralization because it’s simply not possible to to decentralize it”
While this might not be a problem right now, Morris expects it could in the coming years.
“Unfortunately, I see a lot of VCs who also played that game and really they’re interested more in ‘how do we make a bunch of money quickly’,” Morris said. “They do a decentralization dance and talk a big game on decentralization, but really it’s not there.”
“These games will play out in months and years, not in the court of public opinion on Twitter,” he added.
Morris is already looking at how ConsenSys can solve this problem even if it’s at least a year out.
“How do we help technologists who are on big, fast chains today that are increasingly going to face these centralization pressures?” Morris said. “How do we help them explore paths to decentralize so that they’re not suddenly just viewed as essentially an alternative centralized version of a bank?”
He describes the Web 3.0 ecosystem as having a culture of “defiant optimism” that will help move the conversation in the right direction.
“The merge”
Ethereum itself is transitioning from a proof-of-work network to a proof-of-stake one. This shift is expected to reduce the blockchain’s energy usage and gas fees while increasing transaction speeds.
“[The transition] is a huge factor in how we operate,” Morris said. “And I think it will be a blink, and you’ll miss it factor for developers, and that’s a good thing.”
ConsenSys is one of the “prime movers” working toward “the merge”, a major upgrade that due to take place in the second quarter of this year, Morris said.
It will be “a blink and you miss it event” because it’s simply a switchover where the block production will be redirected from one source to another, Morris said.
“All of DeFi, all of NFTs and everything that’s built on top of ethereum and the layer twos, will just keep on trucking,” Morris said.
After the switch, ethereum will then start using a proof-of-stake consensus mechanism and rely on the Beacon Chain, which has already been in production for over a year, Morris said.
“This isn’t a ‘move fast and break things’ type industry, this is a move cautiously and do it right first time,” Morris said. “And so I think there are the right people involved, I don’t have any obvious concerns that there’s going to be late in the game delays, but if there are, then they will be for the right reasons.”
The merge alone won’t mean the ethereum blockchain can suddenly grow as use of the network increases.
“The merge is not going to introduce scalability, it’s going to introduce the preconditions from which you can scale but in and of itself, it’s not going to introduce scalability,” Morris said.
Looking further at layer two solutions and sharding will be the next steps in pushing ethereum forward, he added.