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Hedera: Fair Ordering for Business, Consensus Mechanism & Finality
Recorded: July 9, 2024 Duration: 1:01:21Space Recording
Full Transcription
Hey guys, we're going to get started in just one minute.
I'm just sorting through some rugging issues I just went, that's why I had to do this different
space link.
Give me one second.
I'm going to make sure we got everyone up here and we'll get started on an amazing conversation.
One second.
All right, all right.
I just shot a co-host invite to Hedera.
I think you guys are co-hosting with me.
I see Mance is up here.
Eric, I also sent you a speaker invite.
Let me know if you got it.
I would love to just do quick little mic checks and make sure we're all set.
I had, again, like I said, the, had some major rugging on my end, so.
Eric, can you hear me?
Yes, I can.
Can you?
Awesome.
Awesome.
Yes, sir.
I can hear you.
Loud and clear.
Sounds good.
How are you doing?
Yeah.
Hey, good morning.
I'm well.
Awesome.
Awesome stuff.
Sounds good, guys.
Eric, also your mic is on.
There's a little bit of background noise in the back there.
It could also just be my AirPods being extra sensitive here, but guys, welcome to Wolf Web
I'm super hyped to talk about Hedera today.
The main focus is going to be talking about the business side of this, you know, the fair
ordering for business, the consensus mechanism, finality.
These are all big words, you know, but we're going to dive into it.
We've got some experts on the panel today and I just can't wait to get into it.
It's something I've really enjoyed about these spaces.
Something I didn't, I guess I maybe should have foreseen it, but I didn't really think
about it before we had kind of begun this partnership doing these spaces was just the
amount I was going to learn and also just get interested in the learning side of this
tech stuff and getting deeper into the blockchains and really understand kind of
from a business perspective, as well as a blockchain perspective, really what's
going on under the hood here at Hedera.
So just real quick before we dive into the questions, we'd love, Mance, I'll start with
you just to give a quick introduction to yourself.
You know, how long you've been with Hedera, the kind of stuff you're working on every single
day and just kind of give a little bit of color and context to the conversation.
Sure.
Sure.
Well, so hey everyone, it's Mance Harmon.
I mean, Lehman and I started all of this back in actually 2012 is when he went to work
on the algorithm.
We started Swirls in 2015 and that was the original member of what became Hedera in 2017.
So in 2017, we started creating the public network.
Swirls is the original member of the LLC.
Hedera is a Delaware based LLC and Swirls was the first member.
And these days, well, a lot has changed since 2017.
Notably, I think you all already know this, but Eric is now the CEO of Swirls Labs.
Swirls Labs could be a little confusing.
So Swirls Labs is not related to Swirls, not directly.
They're not the same company.
It's a separate company that spun out of Hedera a couple of years ago when we were decentralizing
operations of Hedera.
Swirls Labs continues to build the software and do some marketing and various things as
services to Hedera.
And I am now chair of the board at Swirls Labs.
And of course, I continue to be active in the governance of Hedera in various meetings
and committee meetings and that sort of thing.
But Eric is now running the show.
Eric is the CEO.
I'll let him introduce himself.
But I am originally co-founder of Hedera and now I'm just the chair of Swirls Labs.
Eric?
Thanks, Mance.
Yeah, thanks for having us first.
Excited to be here and share a little bit of perspective on what's happening in the ecosystem.
So my name is Eric Piscini.
You can hear I was born in France many, many decades ago and moved to the US in 2001.
I did a lot of things in the US, including being a partner at Deloitte where I started the blockchain practice back in 2013 on the consulting side of Deloitte.
And after that, I started my own company.
I joined IBM to continue my blockchain journey in different industries.
In March of 2023, I joined Swirls Labs to be the chief operating and chief revenue officer and became the CEO recently when Mance and Neiman moved to more exciting things.
Still within there, obviously, but they asked me to step into the CEO world.
So really excited to be here on a day to day basis.
I think, you know, I'm not going to be very original, but, you know, a CEO does pretty much three things.
I think it's really exciting to be here.
I think it's really exciting.
I think it's really exciting.
I think it's really exciting.
I think it's really exciting to do that.
The second one is to set the strategy with the executive team, with Mance and Neiman on where we need to go.
Not just as Swirls Labs, but as Hedera, because we are the team behind the project today.
And then third is to make sure that we communicate externally and have a very crisp and very good story to tell to the market and make sure that people understand why they need to build on it.
So those are the key things I am working on.
And every problem that no one else wants to deal with is also mine, as you can imagine being the CEO.
Wow. Yeah, I love that. Awesome. Awesome. Really appreciate the bit of context there for the rest of this conversation.
And I think it's something that people are super interested in when they join the crypto space.
A lot of people, I'm sure, are here to buy the 100,000X and get in and out of here.
But I know there's a ton of people who are very interested in the business side of things and some of the why behind how things happen, how things get done.
Why does one cryptocurrency survive and able to surf the waves of the bear market and the bull market and come back and make big partnerships?
And you guys, you know, you're working with some awesome, awesome projects and companies here.
So I'll kick it off with this one. And it might be helpful.
And Mance or Eric, either one of you, feel free to take this first question.
But when it comes to the business side, you know, it's important with this applications to be able to ensure predictable and stable transaction fees on the network.
Now, not all teams are able to do this because, you know, things happen and you don't know exactly what's going to happen.
But with Hedera, you guys are able to do it. So my question is a little bit just kind of how.
I would love for you to just give some color on how Hedera is able to ensure predictable and stable transaction fees and kind of why it's important for business applications.
Sure. Happy to. So I'll start. Eric, please chime in if I miss anything.
The how is actually pretty simple.
The when developers build applications that make API calls to a network layer one, then they have to pay for that API call at the time of the call.
The question is whether or not you are calculating the fees in H in our case, H bar or whatever the native currency might be.
It could be ETH. You know, you choose your your platform or you're calculating your you're pricing the API because I shouldn't say calculating the fees.
You're you're pricing the cost of the API call in the native currency or in some other currency like USD.
In our case, a an API call gets priced in USD.
And there's an SDK that developers use when making those API calls that automatically calculates how many H bar is required for the API call to be paid in USD.
And of course, the USD is not volatile. The pricing is not volatile in the same way that native currencies are are highly volatile.
And so the number of H bar that you might have to pay will fluctuate wildly.
You know, it just goes up and down with the market.
But you know that you're always paying.
And for example, one of our API calls to the Hedera consensus service is a tenth of a penny.
So it's a penny of a penny.
And so in real time, when the application, the DAP is running and it's getting ready to make a call to the Hedera network, the the software itself calculates how many H bars required to pay a tenth of a penny to the network.
And then it pays it, it makes that makes that call.
So you do have to worry about what the conversion rate is, obviously, and and the conversion rate automatically gets updated.
I think it's once an hour, if I'm not mistaken, I'd have to go back and check what the frequency is, but it's it's frequent, it's relatively frequent.
And so as the currency moves up and down, I shouldn't say the currency that the token price moves up and down the number of H bar that's required to make API calls gets adjusted automatically.
It's all behind the scenes developers don't have to worry about this.
They just use the SDK and SDK does the magic to make all that happen.
And of course, it's, it's a, it's really important to, to the developer community, anybody that is building an application and they're going to try to monetize that.
And so I mean, they're, they have to pay for the API calls.
They need to know what their costs are going to be, right?
They need predictable, a predictable cost structure.
If they want to build a business around the application, if you don't know what your costs are and worse, if costs go up during times of bull markets, and you can't predict that you can't predict what they're going to be.
How in the world do you build a business around that?
It's really, really hard because ultimately you either have to pay for it out of, you know, your, whatever your treasury is, or you pass on the costs to the consumer, whomever it is, that's using the application.
And in both cases, even the consumers, if you're passing it on to the consumers, the consumers have no idea what their costs are going to be until the time that they happen.
So it's just a terrible model.
It's a problem.
Frankly, I'm just shocked that the rest of the market hasn't tried to address in a meaningful way.
We knew from the very beginning that it was fundamental to attracting dApps and not just dApps, real, you know, large scale consumer and enterprise applications.
When we talked to those really large scale application developers, this is a major feature.
You know, they're, they're just shocked that they, they can't with the other chains, they, they can't predict their cost structure.
And that was the whole point.
So technically it's really not that big a deal.
It's, it's pretty simple.
And from a business perspective, it's huge and represents a real value point for the Hedera network.
Yeah, I think what I would add is to along the same lines is it's a, one of the best kept secrets of Hedera.
We don't talk about this enough, but this is a huge differentiator.
When you talk to the people on the council, for example, those large organizations building business applications, when they know that they can predict the cost in USD of running a platform.
So they can charge their own customers, a fixed fee that changes completely the dynamic of building that application on Hedera.
So it's a, it's actually one of the reasons I, I was excited about joining the Hedera ecosystem because of that predictability of the transaction fee.
So it's a huge differentiator.
And I don't think we talk about this enough.
So I'm glad you started with this point specifically because it is not talked about enough.
Yeah.
And I appreciate you guys opening up a little bit about this.
I think this is super helpful.
And I got Brad in this space too.
He's our resident blockchain expert, one of the very best.
He hosts some incredible developer, developer perspective spaces, you know, just on the whole thing going on in crypto land.
And Brad work just for a bit of context, we're talking about the business side of crypto and sort of how for a fair ordering consensus mechanisms find out how this all incorporated into, you know, what basically why that's important for business applications and stuff like that.
Kind of curious.
I don't know if you have any thoughts.
You might not yet.
I know you're going to go in a few minutes.
So I'm glad to have you for any time at all.
But do you know why maybe other companies, other blockchains aren't ensuring predictable, stable transaction fees?
Is it way harder than it sounds like?
Why is it that the other competitors aren't doing this as much?
Is there something that they're not seeing?
Just kind of curious on if you have any thoughts on that.
Yeah, GM fam.
No, I appreciate it.
You know, it's one of those things.
It's honestly, I mean, you know, the biggest problem I have with Solana, you know, is the fact that they do have these fixed, these fixed gas rates, right?
Or, you know, incentives, essentially, that ultimately what that leads to is it's much easier to deploy bots.
Because you know exactly what that gas fee and what that gas rate is going to be.
And so it tends to ultimately you can flood that network with bot transactions.
And that's usually why you get a lot of these dropped transactions, you know, not failed transactions.
They never even they never even hit the chain.
They're dropped before even being committed because the block gets filled with a bunch of bot transactions.
You know, so what Solana did was they introduced priority fees, right, so that you could pay more to kind of incentivize that your transaction is included in the block.
Right.
Ultimately, that's kind of like a bandaid solution in my mind, you know, that doesn't really solve the problem, you know.
And so I think that having like an open fair, you know, fee market for gas is really crucial almost, you know, to make sure, you know, to, I guess, disincentivize bad actors.
You know, the other way that usually that happens with bots is the fact that, you know, that's why you don't see a whole lot of bots on the Bitcoin network is because the transaction finality is so long.
It takes it just takes too long to really be able to effectively sandwich any transactions, you know.
You know, and so it's an interesting balance between, you know, having all of these, you know, these TPS, you know, everyone boasts like we've got a million, you know, transactions per second or whatnot.
And it's like, yeah, well, you know, yeah, for four users across three nodes, you know, maybe, you know, but like, once you start to scale, you really do have to keep in mind the effectiveness and efficiency of the chain and of the network, while also trying to make sure you're keeping out, you know, some of those bad actors and trying to keep down on the bot activity, we'll never get rid of the bots entirely.
That's like, that's a pipe dream, you know, but realistically, we can try to curb them or, you know, incentivize them to go somewhere else other than, you know, the chain that you're building.
Definitely, definitely.
And man, Eric, if anything, if Brad ever says, if that sparks something that you want to jump in, you definitely throw up a hand.
We'd love to have a bit of discourse on this topic as well.
But otherwise, you know, Brad, I appreciate that take.
Like, I was curious on this.
So, like, something that I learned kind of through my research with these spaces and learning more about the blockchain, you know, with the transaction finality, for people who aren't aware, if you don't have the transaction finality, there's nothing, there's no way to sort of, like, guarantee that when you make any kind of transaction that's going to go through, there's no way to trust that you have no idea if it's going to happen.
And with Hedera, I'm curious on how you guys have been able to, how you guys were able to achieve near instant transaction finality, and curious on the impact it has on industries that require fast transaction processing, how important it is.
And if there are, if there are watchings that don't have this kind of like, what are the things that they're missing out on?
So, I'm kind of just kind of wanting to have some color on this topic.
Sure.
Well, so, I think it's useful to just give a 30-second primer, and probably the listeners already know this, but it's useful for context to talk about how blockchain works as opposed to Hashgraph.
In blockchain, you have transactions that are flowing in from developers, and they go to all the miners or node operators, talk about proof of stake.
And when I say blockchain, what I mean here in this context is any chain that the miners or node operators are collecting transactions from the pool of applications or dApps that are submitting transactions into a block.
And then they do something to figure out which miner or node operator gets, maybe you call them validators, gets to publish their block that goes on top of the chain, right?
In that model, what you have are blocks that are being created, and then there's some kind of consensus process that happens where all the node operators decide which block from the block that has been validated should go on top of the chain.
That takes time.
It's a slow process.
And in the case of proof of work blockchain, it's intentionally slow.
You know, the whole proof of work mechanism is designed to slow the process down long enough that the community of node operators can come to a consensus on what block to put on top of the chain.
So it's all architecturally designed to be slow enough for this consensus process to happen.
Now, in our case, there are no blocks.
Let's just take the Hedera network.
There are 32 council members, each of which are running a node in the network.
And when the transactions flow in, each transaction goes to every node operator, so all 32.
But they're not building a block.
What they're doing is they're putting a timestamp on the transaction.
And what they end up calculating is a consensus timestamp.
So you have a transaction that gets gossiped out.
So I have a transaction.
I submit it to one of the node operators in our network.
That node operator turns around.
They put a timestamp on it, by the way.
Whatever their local time is, they put a timestamp on it in consensus time.
And then they send that transaction out to two other nodes in the network.
And they put a consensus timestamp on it.
And then they send it out.
You know, it propagates like that exponentially through the network until everyone has received the transaction.
And they put a timestamp on it.
And then what we do is we take the median timestamp.
If you look at the timestamps across the 32, and you look at the median timestamp, you line them all up in temporal order.
Take the median timestamp.
That becomes the official timestamp of the transaction for the entire network.
And you do that for all transactions.
And all you do then is you just line up the transactions with their consensus timestamp in consensus timestamp order.
And you have finality.
So there's no delay in the same sense that proof of work introduces intentionally a delay or, you know, you have these blocks where you're having to fill blocks with transactions.
If you just sort of visualize it, you end up with a graph.
It's difficult to visualize, but you end up with a graph that represents all the transactions flowing in to the network.
And as the graph builds up, just automatically, a few levels down, the transactions that have been received just, you know, a few seconds previously are at the point where they have a consensus timestamp.
You put all those in order and you have finality.
So architecturally, it's just fundamentally different in the way that the consensus works from any chain of blocks approach to consensus.
And it has huge advantages.
Of course, one is just the time it takes to come to finality.
And by the way, you come to true finality, 100% certainty that the order of the transactions will never change in the future,
which is different than proof of work finality and many blockchain finalities.
It's probabilistic, right?
So you never really achieve finality.
In our case, you achieve finality with 100% certainty that the order will never change.
And one other thing I'll just touch on, we'll probably go into it in a little more depth in a moment,
is that this approach makes it possible to have what I would call a fair timestamp on this.
This approach eliminates the possibility of a miner or validator taking a block of transactions
and manipulating the order of the transactions within a given block.
There are many cases where you might want to do that, right?
If you have a lot of hashing power, we'll talk about proof of work for a second,
a lot of hashing power, and it's likely that you're going to be able to publish blocks on a regular basis.
Well, then you can manipulate the order of the transactions inside of your blocks.
You can withhold transactions from going into blocks.
You can effectively do front running on transactions if you want to do so.
So, you know, this whole fairness of ensuring that as transactions flow in,
they can't be, the order of those transactions can't be dictated or dramatically influenced by any node operator
becomes critically important.
But in our architecture, in Hashgraph, the consensus algorithm gives us a fair ordering that is unique in the industry.
So those are the differences.
Wow, that was an excellent breakdown.
And Matt, you're actually exactly right.
Literally, the next question is that topic of fair transaction ordering.
And it makes so much sense, like you were just saying, like you have this transaction finality,
and you get this receipt basis saying, here, it happened at 6 p.m.
and the next one gets the exact same time.
There's no way to fake that.
Like, you would be able to tell.
And so you get that fair transaction, and you get that finality.
And that's so important for business because they need to have that reliability.
It kind of ties into the whole overarching conversation we just had.
You wrapped it up so nicely and gave us a top-ridden boat with it, too.
Like, it was so well put together, that answer.
And it makes so much sense.
Wow, that was amazing.
Eric, I'd love to hear if you have any other thoughts on it,
if there's anything you wanted to give your take on it, I'd love to hear it.
No, you know, I love the way MENSE presents those topics
because it makes it very easy to understand and remember.
I was just writing down.
I think it's interesting.
We have the four Fs, the fixed price, the finality, and the fairness.
All of those things, the three Fs, are exactly why we are a very different type of DLT.
So I'm going to use that in the future.
You know, those three words, starting with the same letter.
Definitely, definitely.
Brad, curious on your thoughts.
I know you may, well, let me know if you have to go.
I know it's around the half-hour mark, but if you had any thoughts on
sort of the conversation around the transaction finality and stuff like that,
like, do you think this should be adopted by more blockchains?
If they, if you do, like, why aren't they?
Do you see more other blockchains starting to move this direction?
Like, what is your take from a developer perspective?
I think that it was, I mean, there's, you know, there's a lot of people that are super
decentralized maxis, right?
That think that every single aspect of everything should be decentralized.
And at the end of the day, there's a, there's a distinguished, you know, it needs to be distinguished
the difference between transparency and decentralization.
And, you know, the big argument was that when we went from proof of work to proof of stake,
everything got, you know, oh, well now it's centralized.
And it's like, well, sort of, not really, you know, it's not like there's still a single
node, you know, out there just processing everything, you know, it is still decentralized
by nature.
And we still keep that transparency of things being on chain, you know, um, I think that
as we start to kind of now go deeper into the rabbit hole of L2s and parallel execution,
and there's a lot of kind of new tech advancements that are happening that I think will start
to lean closer into that narrative of, well, it's sort of centralized, you know, and it's
like, well, is it worth it?
Kind of thing is going to be the big question, you know, over the course of the next year
or so is, is the sacrifices that we may have to make for, you know, true, pure decentralization,
you know, to ultimately achieve, you know, instant finality or a realistic, you know, million
transactions per second, you know, things like that.
Um, it's going to be something interesting to see, you know, um, um, I'm bullish on a lot
of the teams that are, that are building kind of creative new solutions, um, outside of
just roll ups, you know, um, that's why, you know, one of the primary reasons I'm bullish
on, on Hedera being like, you know, as far as I know, one of the only hash graph, uh, you
know, out there.
I think what's also interesting is, um, yeah, what's also interesting is the consensus mechanism.
So HCS, Hedera Consensus Service, that service, which provides finality and fairness could be
implemented on a different blockchain, right?
I think that is something that maybe we don't talk enough about either, uh, is the fact that
you can use that same mechanism of consensus on a different set of platforms, blockchain
and others, and benefit from the innovation that, um, Lehman and Manz put out, you know,
many years ago and still provide that, that fairness and that finality.
So I think that's a really exciting time for others to actually consider HCS as an opportunity
to deliver the same services.
Yeah.
Let me just, let me just unpack this a little bit, because I think it's an important point.
Well, both of those, both of those are good points.
Um, when you talk about decentralization, I think it's really important that you define
your terms.
You need to say specifically what it is that you're wanting to decentralize.
If we talk about the large, uh, you know, proof of work networks and then subsequent, you
know, Ethereum's made the transition, but I'll throw Ethereum in there and, and, you know,
the other layer ones that have lots and lots of nodes, hundreds or thousands or tens of thousands
of nodes, if it, if it's the case that what you care about is that no single actor has an
inordinate amount of, uh, weight in ordering transactions.
If you care about decentralizing the influence over the order of transactions, then, and you
take a look at Ethereum today, just as sort of a canonical example, there are half dozen
miners, if you include the mining farms, that pretty much can dictate the order of transactions
within Ethereum, right?
If they were to collude, and I'm not suggesting that they are, but if they were to collude,
then they could dictate the order of transactions in Ethereum.
And it doesn't matter how many more nodes you add, you could dump another 10,000 nodes onto
the network.
And what, at the end of the day, what matters is overall hashing power.
And if it's the case that you still have five or six, uh, mining farms that represent 51%
of the total hashing power, then it doesn't matter how many more nodes you add.
If you instead take the approach that we've taken, that is to say, let's ultimately have
39 node operators in this first phase, if you will, the first phase of Hedera, 39 operators.
And by design, each operator contributes generally about the same amount of weight to the ordering
of, of the transactions.
It's, it's set up so that you can't have consolidation of that same, uh, influence over the order that
you have in Ethereum and, you know, the other layer ones and many layer twos.
So, you know, this is one of those things that kind of gets them across.
It's, it's, Hedera is often pointed to as being centralized, but it, it depends really
importantly on what you care about when you talk about decentralization and how you define
the term.
We don't have 10,000 nodes, but we're more secure in terms of preventing collusion across
bad actors than the other layer ones out there.
I believe that Hedera is the most decentralized in terms of securing what people should actually
care about.
Protecting order of transactions can't be manipulated.
Yeah, that's huge.
And for big businesses, it's a must.
You can't, you can't be having the manipulation factor happening.
So, and actually this is, this is a great and amazing segue here into the conversation.
And you guys are working with some, you have some big, big time web two institutions.
Like we're talking Dell, Google, ServiceNow, a bunch of other ones, you know, as well as
some big, um, with three companies like Chainlink, BitGo and others, you know, you've got 30 plus
institutions in your governance council.
What's the relationship between you, all you guys?
Like how is that relationship?
How does it work?
Um, I would just love a little bit of color on, on how you manage all these relationships
and what it's really like when you're working with these top dogs.
And by the way, you guys are also a top dog, not to, not to call you out like that, but.
We don't have the size of Google and IBM yet, but, but we will.
Um, no, I think I would categorize the relationship with the council members.
We call them the council members, uh, maybe in three different groups, I think you have
a set of companies on, on that council who are really deeply engaged, uh, building solutions
with us.
And so that's really exciting.
Um, I'm thinking about, you know, uh, every Denison I'm thinking about, um, uh, service
now, you mentioned service now, um, um, Aberdeen.
Um, so there is a lot of building activity taking place with, with them.
I think the second category of companies who are maybe not building as much for different
reasons, uh, even though they, they want to, but they are deeply involved into the governance
of the network.
So they are involved into making decisions around, um, the evolution of the network,
the roadmap, the product roadmap, uh, and are engaged into, uh, the operations of the,
of the network as well, the defining how the operation would work.
They involved into the management of the treasury, uh, that is, uh, uh, still available
within the header, uh, or of that is public information, obviously.
So you have, um, organizations and I'm thinking of, you know, a few of them, you
know, Magalu and, and others deeply, deeply involved into the actual governance of the network.
And to me, that's really interesting and really important because that's our credibility.
As a, as a differentiator, having the cancer, being in charge of the governance and the
operation of the network is really what Matt was, was mentioning earlier, the demonstration
of decentralization, uh, it is not Swerve Labs or Hedera making those decisions.
It is the cancer who's actually making those decisions.
Um, so, so that's the, I would say the second bucket.
And then the third bucket is, uh, organization who are about to, who joined recently, right?
And we are, we are starting to get engaged with us, uh, us being the ecosystem.
Uh, and so they are in the process of, you know, uh, starting to run a node.
Not all of them are running a node yet because they are in the process of standing that up.
Uh, and then there are, next step is to start building solutions with us.
So, you know, Dell is, um, I think now they are running the node, if I remember correctly.
Uh, but now, and, and, you know, Hitachi is in the same situation, uh, BitGo is in the same
situation.
BitGo was already running infrastructure on Hedera, so that's an easier lift for them.
Um, and then now we are starting working with many of them on building solutions.
So, so think of the council as builders, governors, and operators of the network.
Um, and to me, that, that is really exciting.
It's a really exciting time for, for all of them and for us.
And so, as you guys probably know, we are looking to expand the number of council members
to 39, which is the original intent was to reach 39.
Uh, we are at 32 today, uh, and we are actively engaged with many big organizations to continue
to join, to join the council, to continue that journey.
Vance, anything you want to add?
Yeah.
Amazing stuff.
Yeah, yeah.
Vance, I was going to say, do you, do you have anything you want to add there?
I think that's a great description of the council.
You know, it was, it was always the case that we believed that the form of governance would
be equally important, if not more important than the technology when the market was mature
back at the beginning for us, you know, in the 2014, 2015 timeframe, uh, the consensus mechanism
was all important, right?
That we were so early in the industry and there's so much innovation that happening right
then around consensus.
Remember in 2015, I think it was the fall of 2015, Ethereum launched.
So prior to that, there was no Ethereum.
There was really just Bitcoin.
And so that, you know, there was a time when consensus was all important and overcoming the
challenges, the problems associated with proof of work blockchain was preeminently important.
But we knew that as the industry matured, that that bottom layer of tech, the consensus
layer of tech would mature and that, uh, others would also solve some of the problems, maybe
not all the problems that we've solved with Hashgraph, but they would address some of the
issues, certainly in terms of throughput and performance and finality.
Um, I've never seen anybody else touch fairness, by the way.
I think we're unique in terms of fairness.
We're unique in some of the other things we've talked about still even to this day.
But I thought that governance over time would become increasingly important.
And I, I still believe that that's true.
When we designed the governance model, we wanted to make sure that it was a model that
would be trusted by the, by the overall market.
When we decided we were going to have these global enterprises working together to run the
network initially, because we knew that other really large scale consumer products in, in
enterprise products and government related products would care about who it is that is
actually providing the oversight of the network, helping to determine the product roadmap, et
cetera, et cetera.
Managing that, uh, that treasury in a thoughtful, mature way, uh, and can be trusted to, uh, you
know, to, to, to, to not do things in a, in a nefarious or, you know, untoward, uh, way as
it relates to the network.
Remember when these big enterprises build their products, they're making huge financial bets on
the layer ones and twos that they decide to use because they're investing a lot of money.
And if something happens, if the network goes down or it's hacked or, or the leadership, uh,
you know, the governance that's happening around the network, uh, is not trustworthy and that
gets demonstrated in some way, it really damages, potentially damages the products and brands
associated with that network.
And so we've seen that play out.
We, you know, when, when there are opportunities, uh, especially for very large consumer and
enterprise applications, when those opportunities arise and there are these concerns about the
industry, you know, you, you all seen what's happened in recent years with the industry and,
you know, the black eye, two black guys, three black guys, we got in some of these cases,
when they see who is governing the network, that box just gets checked immediately.
And they trust us to be good actors in the industry and to, to operate a network in a
professional way, et cetera, et cetera.
So all of those things are important.
And that's, that's some of the thought behind the design when we started it all.
And I think maybe, maybe to answer the question to the next level of details, um, we have six
different committees on Hedera who are really making decisions on the future of the network.
And I'll give you the list because it's, I think it's interesting to, uh, represent the
maturity of the, the topics that are being discussed and why those committees exist.
Uh, but also to show you that this is real, right?
There is meetings every, every other week for each of the committee to actually work on this topic.
So the committees are, and it's public information.
You can see that on our website.
Um, the, um, the membership committee is in charge of finding new members and managing members,
making sure that those members are, uh, taking care of, right?
So that's very unique to any kind of blockchain.
If you can think of any or anyone else, we have a team dedicated to managing and making
sure that those members, validators of the network are taken care of.
Number two is what we call corporate utilization, which is really, how do we make sure that we
bring all the parties to the party so that everybody can use Hedera, uh, and, and remove friction.
So for example, that team is working with the ecosystem, right?
What kind of bridges do we need?
What kind of, um, um, uh, wallets do we need?
What kind of, you know, infrastructure overall do we need in order for Hedera to be successful?
The third one is the, what we call the coin committee.
So the coin committee obviously is in charge of managing the treasury, but they are also the,
for example, deciding on, um, how do we allocate the treasury?
How do we create new services on Hedera? And we have a lot of good ideas.
And how do we price those services on Hedera, right?
So the pricing decisions is at that level.
You have a tech committee, number four, which is a technology committee that Lehman is deeply
involved in, obviously, which is defining the future of the product, the future of the network.
And that's where the heap process is taking place as well.
Uh, the number five is, uh, what we used to call the right committee as regulator regulations.
Now it's called gov committee as government, um, government affairs, and it is really a
committee to share information about what's happening from a regulatory point of view across
the globe so that Hedera can be positioned to address those regulatory changes and be on top of
those changes as well as being able to answer questions about those regulatory frameworks.
And then the last one is a marketing committee, which defines a strategy around how Hedera needs
to be presented and operationalized in the market so that we attract the right companies, the right
developers, and so on. Uh, so, uh, it's very specific, right? Those six committees are very specific
mandates and all of them have many, many country members involved to drive those activities.
Wow. That was a really, really good explanation. And, uh, I appreciate also, Manc, you diving in a
little bit on how all the governance stuff, um, works there. And so it's sort of like a, just something
I noticed that I was thinking about when you were talking too. I also joined, I went from, so I, just for
some context, my personal is up here on the speaker. It was just because I don't trust Twitter spaces and I'm
worried I'm going to get rugged and I might have to jump to my computer. So I have my personal up
here, but, um, on my own stuff, I was always doing independent content and I was always on my own.
You know, I had worked with people a little bit on, you know, a video by video basis when I was
doing content, but for the most part, I wasn't really working as part of the team, even though
I grew up working, uh, I was part of a team, you know, I played college soccer and stuff like that.
But, um, you know, once I joined Wolf and I started working with, um, a few different companies
and stuff, I was like, oh man, it's so different when you've got a bunch of people working
towards a common vision and each person has their expertise, but everyone's best interest
is still, you know, the, the, the highest potential essentially of achieving that.
And with Wolf and three, you know, it's the, the top achievement is like, you know,
the best spaces, the coolest people in the spaces are really driving up, um, that market share on the
spaces. And so like, we're having all these amazing conversations. We obviously love the ones with,
with you guys at Hedera. We have people who are putting, you know, a little bit of risk in their
brand, kind of how you were saying, man, it's with their companies are taking on some rich
work with you guys. And so it's in their best interest that things go the right way with you
guys and they want to help. And so when these guys come on and they host spaces with us,
like we had Brett in here earlier, talking about developer stuff before you had to leave,
he's taking a risk, you know, he's making sure he's like, oh, I mean, you guys could do something
totally left field and totally screw me, but I'm hoping you guys don't, and we'll work together.
I'll do my part. You do your part. And so that was just something that was kind of echoing in the back
of my head when you were talking about that super, super awesome stuff. And I do have another
question here. It's a bit, I guess it's a bit of a different direction here. We've got about 10
minutes or so. I think we have time to, I've got two or three questions left. I don't know if we're
going to get to all of them, unfortunately. You know, I don't know what you guys think about this.
It might be really cool one week if we just do like an open format Q and A style. There's,
but I know there's a bunch of questions here. I don't want to throw with you a,
I don't want to throw like a curveball at you guys in the last 10 minutes here. So I'll keep it,
I'll keep it reserved, but I think it'd be cool to do a Q and A space at some point in the future.
But anyways, curious on this one. So, you know, I wanted to know about some of the examples on
innovative business models, applications that have been enabled by the Hedera's consensus properties.
And, you know, we talked about it a little bit about the consensus mechanism. Well, I should say,
we talked a lot about the consensus mechanism and just curious on how it's contributed to the success,
maybe with some examples of some of those innovative business models.
And I would love to just have you guys talk about that a little bit.
Oh, I can, I can start with one, Manson. I really love, I love this one, which is what we,
what we've done with Hyundai and Kia, the car manufacturers, right? So what we've done with
them is we are, we are in the process and it's ramping up now of onboarding,
I think it's 26 different suppliers to Hyundai and Kia into their supply chain onto the Hedera network.
So anytime there is an event associated with a part that is needed for a car, or the transportation
of that part, the manufacturing of that part, or the assembly of a part of the car before the car gets
delivered. And it's assembled by Kia and Hyundai, every event is captured on Hedera. And every event
is captured on Hedera with a carbon footprint number, right? So at the end of the chain, not the
blockchain, but at the end of the supply chain, when the car gets delivered to the customer,
the customer actually know exactly from that specific car, the carbon footprint of that car.
And if they want to, they can buy a credit to offset the carbon footprint of that car.
So at the individual level, not really relevant, few people will do that. But at the company level,
when you are, when you are a large company and you buy a bunch of cars for your fleet,
and you made a commitment to your shareholders and to the market and to the public that you will be
sustainable, it is a significant value because you cannot set the carbon footprint of what you buy.
And especially if you buy an EV, for example, right? Because that's one of the big topics.
So that's a really cool example for a lot of reasons, but it's a cool example because with
innovative technology, you can create a significant differentiator for the car manufacturers when they
deliver cars to the market. And to me, that's really exciting because it's real, right? It's actually
a real value delivered by blockchain. Finally, right? After being 10 years in this industry,
when I see those examples, I really love them because I really like using those technologies for
real impact. So that's an example that comes to mind every time you ask me, what is the best use case
you can think of? I think this one is top of mind for me, but man, you probably have some,
you know, a bunch of others in my head. Well, that one was the first one I thought of as well. Yeah,
there are a lot of others, but I wanted to spend a moment further on this. It turns out that if you
solve this problem that Lehman solved, how to maximize performance while simultaneously maximizing
security. I mean, that's, that was the genesis of Hashgraph. He wanted to figure out there's this
fundamental dilemma, how to maximize performance and secure security simultaneously. There's always
been a trade-off between the two previously, and he figured it out that became Hashgraph.
Given that he solved the performance problem, the way he solved performance problem, just go back to
the beginning of this conversation and sort of my really high level description of how Hashgraph works
versus a blockchain. It turns out that the energy used per transaction in Hashgraph is far less than
any other chain. In fact, it's far less than centralized systems. If you look at the cost in terms of energy
used per transaction by Visa, you know, you swipe your card at a point of sale system. There is an
energy usage associated with that where orders of magnitude less energy used per transaction than
the Visa network is, and it has everything to do with the consensus algorithm Hashgraph. That's given rise
to a whole sort of ecosystem around carbon credits and how you measure them and how you record the energy
energy used in a production line like Eric was just describing with Kia and Hyundai. And, you know, the opportunity to
record many, many, many thousands of transactions per second, ultimately, in these use cases on chain in real time.
And, and, and at the same time, mint tokens that are appropriate mint consumption tokens, you know, how much,
how much carbon gets used, you mint a token associated with that, and then you trade it for an offset or a
renewable energy credit in carbon marketplaces that can be created and traded directly on chain as well.
Well, Hedera is absolutely perfect for that. I think it's going to be a really important category for
Hedera in the future. We're already recognized as sort of the greenest platform for, for those applications.
And it has everything to do with the consensus algorithm, the architecture, and then you layer on top of
that, the trust associated with having a council of 39 global organizations that are operating the network and the
governance associated with that. And then, and then layer on top of that, all of the, the ecosystem of ESG and
specifically carbon related, uh, utilities and tools that are out there and the developers that are building
on it. I think that Hedera is certainly in the leadership position among all the layer ones and
twos out there as it relates to this. And it's going to be a big, uh, category for, for the organization.
Wow. Wow. That was, yeah, I feel like we could keep going for another hour, but we just don't have the
time. Um, Eric, I don't know if you wanted to add anything onto what Manson said. This is, this has been
an awesome conversation so far. I feel like we've really, I think, you know, yeah, it's awesome.
And, you know, we have a lot of information, uh, available online where you can see all the use
cases. We also launched a stable coin studio, so you can build very quickly a stable coin on Hedera.
We launched that many months ago now, and we are about to launch an asset tokenization studio,
which is also going to be super interesting where you can tokenize a lot of different assets onto, onto
Hedera. And, and the idea here is to accelerate the adoption, accelerate and make very easy for people
to developers and enterprise to build solutions based on Hedera without thinking too much about
the, the, the bottom of the stack, but really helping them build, you know, real applications
like the one we just discussed.
Yep. Yeah, absolutely. Definitely. Definitely. Yeah, this is awesome. Yeah. I, I feel we might
have time to squeeze in one last question. Maybe we can keep it brief. I want to respect your time.
I know you guys have, you guys have plenty of things you could be doing, and I really appreciate
you spending some time with us and, and, uh, you know, just giving us some color on what's going
on behind under the hood, you know, at Hedera. And, and also all the people who are listening,
just want to give a huge shout out to everyone in here. Who's spent some time with us at WolfWeb3.
We host based on all things crypto, but these conversations where we really dive deep into the tech and
into the business side and, and just see what's going on behind the scenes. Like these are some of my favorite
conversations. So I guess I'll throw this last question. I'm sure we can have a whole space on
this one. So maybe we'll just keep this high level and we can, uh, we can move on. But just as far
as the future, like how does Hedera prepare to like address future demands, you know, for scalability,
security, cost efficiency, uh, you know, just cause the business landscape evolves so quickly
sometimes. And in crypto, it's even more unforgiving and relentless. So maybe, uh, just, I don't know
if there even is a short answer, but if there is, we'd love for you to get some color on that.
I'm happy to take a crack at it. And Eric, you, you can as well, go ahead, go ahead.
So when we think about how markets, you know, categories, tech categories mature over time,
they typically start with something that's, you know, one big innovation that is, you know, many
times represented in one monolithic piece of software. Bitcoin is a great example of this.
You know, when Bitcoin was introduced, everyone thought of it as Bitcoin. And only years later,
did people even start to talk about blockchain, understanding what the tech was underneath the
hood and how it worked. And then you separated blockchain from, uh, smart contracts and, you know,
programmability as a layer on top of consensus. You know, people started understanding that you can
have the bottom layer of consensus and then a layer on top of that, uh, services,
arbitrary services started with just smart contracts and the EVM. And in our case, we of course have the
EVM, but we also have tokenization service and we have the Hedera consensus. So, you know,
there's a range of services and then you continue to build up the stack. The market, um, evolves in
such a way that certain use cases become increasingly important for various reasons, but they typically
get addressed through competition among vendors, enabling the markets to, you know, enabling
developers to more easily go to market up the stack. And, and Eric just mentioned a great example,
the stable coin studio. Before we had the stable coin studio, the, it took, I don't know, three to six
months for an organization to build a stable coin solution and go to market with that solution.
We built the studio, which is much further up the tech stack that makes it possible for a bank
to create a stable coin within a few days and have the integrations needed with the third parties that
are important to go to market almost immediately with that solution. And so where you see the competition
is not down at the consensus layer anymore, but it's further up the stack. And we continue to
see how the market evolves and focus on creating what we sort of loosely call these accelerators,
the stable coin studio being an example of that, that make it possible for developers to more efficiently,
quickly build their solutions and go to market as quickly as possible. And that's how the market evolves
over the time. You're going to see a lot more competition higher up in the stack and we'll address that
as the market evolves and matures. Eric?
Yeah, no, I, exactly right. I think what's super interesting is that we are also building that
not just on our own, right? But we have a large ecosystem of, of players and friends and different
parties involved into building those additional, what I would call the Lego blocks that we need to
build on the top of the stack, right? So we need better privacy of transaction. For example, we need KYC,
we need data residency, we need a lot of different capabilities on the network so that when people
come to us, we can say, don't worry about it. We have all the pieces. Maybe not all of them are here, but you can
ask the ecosystem that we've built to deliver all those pieces for you. So you can build your supply chain,
your carbon credit, your stable coin or your tokenization platform in a matter of weeks, as opposed to months.
So that's really what we are working on. And to me, that's the really exciting part, which is enabling
people to use the technology very quickly. I love doing those things.
Wow. This is, man, this is such a great conversation. I definitely have thoughts, but we'll have to
do it in another space. Man, this has been a riveting conversation. I've learned so much.
Yeah. Thank you so much, Mance, Eric. This has been an incredible conversation. I feel like
we dove real deep. Man, this was such a good conversation. I'm just so, so stoked. I'm so
stoked. I'm here at ECC right now in Belgium. And it's been, it's been a great time. He's here just
kind of meeting everyone, getting that new real life energy, but this has been a really great
conversation. So Mance, Eric, thank you so much for spending an hour of your time, just chatting about
Hedera with me. And yeah, we'd love to have you back, but I really appreciate you both coming on.
I didn't know if you had any last thoughts you wanted to end on or any shout outs or anything
like that. I'd love for you to just give any closing thoughts, if you have any.
Look, I just appreciate the opportunity to be back with the community. I always enjoy the, you know,
the opportunities here to, to speak directly to the group. And I'm excited about what's next for
Hedera. I think we're moving into what I would call Hedera 2.0. I don't mean to use that as a
branding term. In this case, it's just sort of descriptive of, of the phase. At this point,
we've come a long way through Hedera 1.0. And I think that the next generation of this is exciting.
There's a lot going on that we're excited about rolling out in the coming months. And we look
forward to speaking with you again. Yeah, nothing, nothing more to add. Join us,
bring your ideas. We'd work on something together. We want to, we want to do that quickly.
Absolutely. And I have it pinned at the top, by the way, for people who want to get into it,
if you want to get involved, hit that pinned tweet, give a follow to Hedera. Definitely check out what
they're up to. Definitely give Eric and Nance a follow as well. These guys, these guys really
know what they're doing. And yeah, definitely give them a follow. Guys, if you've enjoyed this space,
please hit the retweet button, get the conversation out there, bottom right corner,
hit that retweet, get the conversation out there, let people know that Hedera is out here putting in
work. And we'll see you at more, more Wolf 1, 3 spaces. We got one in a couple hours here,
and I think we have one two hours after that. So we don't stop, baby. We don't stop.
Have an amazing day, everyone. Mance, Eric, thank you so much again,
and we'll see you later. Take care. Thank you. Thanks, everyone. Thanks.
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