Speaking with the CEO of Algorand, Staci Warden, we dive into the competitive, no carbon world of 'proof of stake' Find out why some D'Apps and developers are better suited for Algorand. Starting from a base of traditional finance, we also spoke about her pivot to blockchain.
Walter Jennings: Welcome to Waves in the Finoverse. I'm Walter Jennings, the host of a podcast, brought to you by Finoverse. We're talking with the wavemakers that are creating ripples, waves, and tsunamis across finance, crypto, FinTech, Web3 and beyond. Listen weekly to hear the change makers talk firsthand about their experiences in this dynamic industry.
Welcome to Waves in the Finoverse. I'm your host Walter Jennings, and I'm excited to be joined in the booth today by Staci Warden, the CEO of Algorand Foundation. Welcome, Staci.
Staci Warden: I'm so happy to be here.
Walter Jennings: Now, Staci for those who don't know their blockchain, can you introduce us to Algorand?
Staci Warden: Sure. Algorand was invented by a Turing award winner MIT professor in computer science named Silvio Micali. Silvio actually invented a number of the primitives in cryptography that the whole ecosystem uses, particularly zero knowledge proofs and verifiable random functions. And he watched the space developed from Bitcoin to Ethereum on, and he thought to himself - I could probably do a better job. And so in 2017, he raised some money the old fashioned way and was able to do so quite easily because of his name and the quality of his senior team. And we went live in June of 2019. And here we are, the Algorand blockchain.
Walter Jennings: Staci, I understand from my conversations with other blockchains that there's a unique business model where this is a foundation. Can you help us understand why the blockchains are held by a not-for-profit or a foundation?
Staci Warden: Oh, sure, sure. So algorithm technologies are Algorand Inc. They are filled with cryptographers and software engineers and architects, and that is located in Boston. And they run the tech and they keep building the protocol and they have a protocol upgrade list. You know, as long as your arm, we are now at 6,000 transactions per second. They're going to go to 10,000 transactions per second. They're working on decreasing the latency of the blocks, all of that kind of thing. Super like hardcore tech. The foundation though runs the ecosystem, the community,the tokenomics. And it's very important that those two things are separated. Not that we would ever do this, but you don't want your developers absconding with all of the funds. You're doing a rug pull or something like that. So it's for safety reasons. So we are, we operate, we're friendly with each other, of course, but we operate very much on our arms length basis. They're based in the United States, we're based in Singapore. And in a word I like to say, the foundation is in charge of everything that's fun. And Algorand Technologies is in charge of everything that's hard. So...
Walter Jennings: Okay. Now, earlier in blockchain we'd heard so much about proof of work and that being a high carbon emission technology, yet Algorand operates under a different model. Could you introduce us to that and how you overcame the carbon issue?
Staci Warden: Yeah, you know, it's very interesting. So the two sentences on kind of blockchain 1 on 1 is that you've got to get these computers that don't know each other, that don't trust each other. Some of them may be evil to agree on the order of transactions, and what is that consensus mechanism among them that makes them cooperate together to agree on this order of transactions? And Satoshi Nakamoto is a genius because he came up with this idea of proof of work. Whoever does the most work wins a kind of a race. They get to append the next block, and they're paid for doing so. That's a very interesting model, but as you noted, it's an arms race. It's inherent to the model that it uses a lot of energy. So then others came along and they said, okay, well let's use a proof of stake model that, you know, that will not use the energy.
And also it is a bit more fair because whoever has the biggest stake will get paid to append the next block. The problem with that though, is that it is inherently unequal. The rich get richer. You know, if you have the biggest stake, you get paid, you get richer. And it's also not very secure because it's like, who are you gonna attack? Like attack that guy with a big stake? So what Silvio did is he came up with a consensus mechanism called pure proof of stake, and that pure proof of stake model allows us to be secure. It's based on on randomness. So it allows us to be secure and decentralized and scalable at the same time. And it's got a very light carbon footprint. And the carbon footprint is light because you can run all of the participation nodes, you can run off of a laptop, a high performing laptop, but you can run off. So it's basically kind of the power of a couple of hundred up to to a thousand say laptops. And that's about seven or eight houses per year. It's nothing.
Walter Jennings: Right. So you've managed to dramatically curtail carbon emissions.
Staci Warden: Right. And we also buy carbon offsets with our transaction fees for any carbon that we do emit. So we are always carbon negative as a blockchain.
Walter Jennings: Oh, that's an amazing achievement. Congratulations and thank you.
Staci Warden: Yeah. You know, and of course because we're a blockchain, we have to do this in a fancy blockchain way, so we use smart contracts to make sure that we do that.
Walter Jennings: I wouldn't expect anything less. Now amongst blockchains, what use cases are, is Algorand best for and how do people use it and what are, where does it really?
Staci Warden: Yeah. You know, we are, I would say, capable of scale and probably uniquely capable of scale in a decentralized way, right? So there's a couple of things about that. One is that we can now do, as I said, 6000 transactions per second. We get a final settlement in 3.9 seconds right now. And that means that at 3.9 seconds your transaction is final and can't be reversed, and the chain can never fork. It's not that it doesn't fork it, it's it can't fork. We have never been down for one second since we went live and we have sub penny transactions fees. Our transaction fees are solo that you can't even notice. So that lends itself to a couple of obvious things. First of all, our NFT marketplace is just growing like crazy because if you have low priced items, you can't pay high gas fees.
So artists and musicians that, you know, they need sub penny transaction fees. So we tend to, and also they tend to care very much about the environment. So we are really attracting a lot of attention there. And I think the next thing, because we can scale is we can actually try to go after some of that payments business. And we haven't done a big payments play yet, but it's there. We are working, for example, with some disaster relief payments organizations in the United States. There's some crazy stories about how that works now. And if you put that on chain, it can be automated. It can be much better for the people whose houses have just been flooded. It could be much better for understanding that there's no kind of fraud going on. These kinds of things are very good on the blockchain.
Walter Jennings: Yeah, no, low cost transactions are very desirable. I loved hearing a story of one grandmother who had to pay $135 gas fees for their grandchild's art project.
Staci Warden: You know, our head of DeFi, who's really you know, he's a core OG DeFi kind of, I mean Web3 guy and NFTs, he said he spent $9,000 on Ethereum just on gas fees, not buying the NFTs, but just on the gas fees.
Walter Jennings: Great use case of NFTs for pennies versus thousands of dollars. Now, you recently became the official blockchain for FIFA. What was it that made FIFA choose Algorand as its official blockchain?
Staci Warden: Well, a lot of companies and crypto companies, they pay to have their name on the inside of the stadium or on the billboard or whatnot. We don't actually do any partnerships where there is not a use case where some, the blockchain is being used, we are where we are, not a technical partner with the partnership. Uh, so that's number one. And what happened is FIFA understood that they needed to somehow do something with this blockchain thing. And they thought about NFTs for players, of course, they thought maybe about something around secondary ticket sales, perhaps, maybe, player trading eventually. But they wanted to start with the NFT marketplace. And so they actually called in a consultant and said, you know, we're FIFA. We have a very big name, we have a very big reputation. We can't mess this up. And so they hired a consultant who did a survey of all of the layer one blockchains, and he told them, you have to go with Algorand.
Walter Jennings: Oh, that's a fantastic endorsement. Staci, how do you attract developers to the chain? Because there are a few out there and how do you build out the ecosystem to make Algorand much more widely used?
Staci Warden: You know, that's a very good question, and I think one of the.. I kind of call it a bit of a deal with the devil that Silvio made in the beginning, which was that he found that Solidity just frankly was not a good enough language. It's the kind of language that you might write Facebook in, but it's not the kind of the language that, our language is just called TEAL is the kind of language that you can fly airplanes in. It doesn't let you make mistakes. And so as a result, we couldn't just import a couple of thousand Solidity developers from Ethereum. We had to attract developers from the beginning. And this is part of the reason, maybe we were off to a little bit of a slower start when we started, because we had to convince developers to learn this new language.
And right now, I will say my top three priorities are developers, developers and developers. And our new CTO, John Woods, is determined to make developer tools his number one priority. We're going to be launching a new developer tool suite in January, or maybe February, but we think January. And we are having a concierge. He talks about this constantly, a concierge level development, developer relations experience. So really just very white glove to help developers. And they are coming. I mean, we just see so much more the anecdotal evidence in our discord and we just keep having to hire more. So we're getting a lot of interest. And then the third piece to that is developer education. And so we are launching a whole new suite of developer education tools and revamping our whole developer education, our zero to hero experience. So yeah, lots of good stuff coming that way, for sure.
Walter Jennings: Well, I'm glad I asked about developers. Algorand and every blockchain is truly global without any single center, being a distributed ledger technology. What markets, though, are you finding the fastest adoption of Algorand? Are there is key geographies where you're hotter than others?
Staci Warden: You know, I would say our fastest growing geographies is definitely India. I mean, it is crazy how many wallet openings. We can see how, where wallets are open. And we have a lot of traction in Nigeria as well. Of course, the bigger markets are going to always be our bigger markets. But India is just growing like crazy. And we've got a new Algorand team in India, and they are holding, they're working with universities, they're holding all kinds of hackathons. We're gonna have an accelerator in India next year. And the developer community in India is quite strong. And we're pretty excited about that. I would say.
Walter Jennings: You know, along with your green credentials, a lot of use cases for blockchain are helping those that are unbanked or lack identity. If you don't have a birth certificate, how do you get a bank account and a passport? In some of these markets where you're seeing growth, it like crypto had been where in some of those developing countries that need these kind of tools. So is that one of the reasons you're seeing great growth in?
Staci Warden: Well, I will say it is also a very important reason why I came to the Algorand Foundation. This has been a passion of mine all of my life. Financial inclusion, access to capital, making sure that the 1.7 billion people on this planet that don't have access to financial services of any kind, could you imagine living your life without that? And so, yes, you're absolutely right. We do, we care very much about identity. We've got two identity plays building on Algorand. One to answer your question actually, is they're based, this team is based in Zimbabwe, and they run an application called Flex id, which I wanna give a little shout out to these guys, and they are trying to solve the identity problem in Africa. It's pretty exciting stuff actually.
Walter Jennings: Yeah, no, I think it's really revolutionary to have these technologies and tools that may have been developed in the first world, but are certainly solving some real pain points around the world
Staci Warden: Right. I mean, two kinds of pain points, I would say with respect to identity, because I think you really put your finger on it. Identity is fundamental, but there's two aspects to it. One is that you don't have an identity, so you need to marshal your identity from different pieces of evidence that you've done things. So that's one piece. The second piece though, is what part of your identity do you want to share and do you need to share? So if I have a, if I go, I'm not young enough to have this problem anymore, but if I'm a young woman and I wanna go to a bar, it would be important for me to be able to show that bartender that I'm old enough to drink in that bar. But why do I have to show that bartender where I live? You know, this does not seem particularly safe to me, right? And so the idea that you can prove and show the important parts of your identity without having to reveal your entire identity is also a very much a breakthrough for blockchain technology.
Walter Jennings: Oh, well, thank you for that killer application, although it's been a while since anyone has asked me if I'm a legal drinker.
Staci Warden: Me too. This is not a personal need, I will say. But..
Walter Jennings: Now, for those of you listening to us here at Singapore FinTech Festival, I'm in the booth with Staci Warden, the CEO of Algorand Foundation one of the world's fastest growing blockchains. Staci, what are the things that keep you up at night?
Staci Warden: I think what keeps me up at night is making sure that the crypto ecosystem more broadly lives up to the hype. You know, we have spent a number of years saying that blockchain can be a solution to real world problems. And I will say that as an ecosystem, we're still in the nascent stage of delivering on those promises. And for me, it's really about these. I care very much as I've said before about financial inclusion, about helping the world's poor, about helping the disenfranchised. And I guess I worry about that at night, the way I've been worrying about that for the last 20 years of my professional career, honestly. One thing that I do not worry about though, is the Algorand technology, because it has never gone down for a second and it is so performant. So thankfully, I don't have to worry about that.
Walter Jennings: Now, Staci, I do have to ask you about what attracted you to Algorand Foundation, because when I look through your biography, you've worked for the US Treasury Department, you ran NASDAQ's market for microcap companies. You'd been with JP Morgan running their public sector practice for EMEA and most recently global market development practice at Milken Institute. So these all seem like real heavyweight traditional finance roles. And suddenly you're in blockchain. What happened?
Staci Warden: You know, I think I have a unique falling down the rabbit hole story because I ran at the Milken Institute... First of all, I was always disappointed by traditional finance in its approach to financial inclusion, but I was at the Milken Institute and I did a series for the press in the United States for kind of financial markets training. And they requested that I do a session on this Bitcoin thing. This was in 2013. And so I think, in that I had to learn about it in order to teach it, you know, two weeks later. So I locked myself in my..I, I remember my house was being renovated, and I was living in this like tiny little apartment while they were doing this renovation. And I locked myself in there for like six days trying to figure out what this was, what was this proof of work.
And I emerged as I like to say six pizzas later, and in love with this idea of the Bitcoin blockchain. And it was too for the things that I cared about, and it was too early, and Bitcoin's not quite fit for purposes. We've subsequently realized, but I was hooked from then. And you know, it was always a bit of a side hustle. And it just gets bigger and bigger and you can't keep up with it unless you do it full-time. You have to be in it or you're not in it, like with all things, right? You have to commit. And I was headhunted to be on the board of the Algorand Foundation, and I am ashamed to say that I didn't really know what it, I was already sitting on the board of the global Blockchain Business Council.
I was in the space and I had kind of vaguely heard about it, but I didn't know what it was. And then when I did some research, because you're not going to join a board and lend your name and your reputation. So you've got to do that same deep dive. And I had that same feeling that I did in 2013. Like, ah, this is the real thing. This is the real deal. So I joined the board, and then they made me the CEO this year.
Walter Jennings: Well, took back in 2013, you didn't tokenize your curriculum. I see the ability now for the tokenization of education providing rewards to educators. There are so many potential use cases.
Staci Warden: Oh, yeah, a hundred percent. And I also am quite interested in the tokenization of larger financial assets because this brings liquidity to markets and it allows retail people to participate. So how rich do you have to be to own a rental property, right? That can just provide you rental income. You've gotta be pretty rich because you've gotta be able to buy that property, and you've gotta be able to find renters, and you have to have lawyers and all of that. But if you can tokenize that, if somebody does that and splits it into, you know, a hundred or a thousand different slices, then anybody can have rental income, right? This is part of the magic of the blockchain.
Walter Jennings: Yeah. When people first started talking about security token offerings, people were confusing it with an IPO, I think there are a series use cases for the public equity markets, and that certainly propels companies to the top of the NASDAQ, but also then tokenization is different. It's used for completely different use cases. You can't make an IPO with your rental market, uh, with the rental unit. So..
Staci Warden: Yeah, it's kind of an NFT, it's not a piece of art. It talks to the real world, but it's very much a unique asset in a very micro form. And when you have a micro form of assets, liquidity improves and more people can participate.
Walter Jennings: Now, Staci, we're speaking to you now at Singapore FinTech Festival. What are you seeing, hearing during this event that intrigues and interests you? Any new technologies? Not Algorand Foundation related though.
Staci Warden: Okay. Well, I did have the opportunity to sit on the greenest blockchain panel, and that was really good and fun. But I also had the opportunity to moderate the keynote speeches of Stuart Haber and Balaji Srinivasan. And so I think I will pick Balaji Srinivasan and his idea of the network state and the idea that in a networked way, we can kind of create even new countries of like-minded people and associations that can form communities based on interests in things and like-mindedness. And maybe this is the crazy part about what he envisions. Maybe they can actually become a kind of a country, a network state country that could have recognition and the like. I mean, it's so as is his nature, it's very bleeding edge. And I thought that was just amazing to be able to have a conversation with him on the main stage about that.
Walter Jennings: Well, I think in today's world of crazy geopolitics, finding a nation of like-minded people sounds like a good opportunity.
Staci Warden: Yeah, a hundred percent.
Walter Jennings: Okay, well, Staci, look, we like to end our show with a segment we call Tracks in the Finoverse. And so we ask people what music powers their journey through their role.
Staci Warden: Oh, I see. You know what, I think I'll pick the very famous top 40 hit. The Best Tech will always win in blockchain. I, you know that right?
Walter Jennings: Oh yeah. It's a real hot, it's...
Staci Warden: It's the one I play every morning when I get up in the morning. Um, but if you want something that maybe more people have heard of, you know, I guess I would say, I don't know what would get me up. Uh, can't stop thinking about tomorrow maybe just to show my age and my roots.
Walter Jennings: Well, there you go. We'll let our listeners join you. It's a great song. And thank you so much for joining us here on Waves in the Finoverse.
Staci Warden: Walter, thank you so much for having me. I appreciate you.