Apr 25, 2022
BICOWG’s Interview with Daniel Hwang, head of protocols at Stakefish
Daniel Hwang is the head of protocols at Stakefish (a leading proof of stake validator, largest non-custodial ETH2.0 validator, and #1 Cosmos validator). In addition, he is the special projects lead at F2Pool (the world’s largest Bitcoin mining pool and second-largest Ethereum mining pool). He is also a founding organizer of HanDAO (Korea’s first DAO; supporting the Korean creator community with education, financial support, and ecosystem building).
Hwang also leads the Blockchain Infrastructure Carbon Offset Working Group. He started his journey into the cryptocurrency and blockchain space as a cryptocurrency miner in 2013. He has since supported cryptocurrency-based remittances in southeast Asia, led the IEEE (Institute of Electrical and Electronics Engineers), a working group on health data on the blockchain, and built localized decentralized exchanges in Asia. He has also researched and worked on cryptography, and distributed systems during his graduate program at Johns Hopkins University and has extensively supported the NFT and metaverse space for creators.
Q #1 Given your work at the intersection of climate technology and crypto, how did you first enter the ReFi space?
I am a part of the Blockchain Infrastructure Carbon Offset Working Group (BICOWG) — a mouthful, I know, but it was a purely utilitarian choice of name that eventually just stuck. My day job is both at F2Pool, a Proof-of-Work (PoW) mining pool, leading special projects there, and also as Head of Protocols at stakefish, a Proof-of-Stake (PoS) validator. Both F2Pool and stakefish share parts of the same family (#fishfam).
As a result of my work, specifically at F2Pool, I found myself constantly engaging with an ever-growing climate outcry as it related to the cryptocurrency ecosystem. F2Pool is one of the largest PoW mining pools and was understandably getting a lot of questions and even criticisms.
The short of it was that we took on the responsibility of addressing these climate issues which eventually led to the creation of the BICOWG.
The long of it was that the BICOWG almost didn’t happen. Late in 2020, just when we were seeing the growing tremors of the NFT wave sweeping across the planet, I was working on a project presentation with Gregory Landua from Regen Network (stakefish is a proud supporting validator!). This presentation was code-named “Project Eleanora” (Greta Thunberg’s middle name) that detailed a plan of having blockchain infrastructure service providers (like F2Pool and stakefish) adopt climate positive initiatives.
These initiatives included carbon emission measurements; offsetting those measured emissions, and eventually greening our reserve assets with the potential for additional yield generation on those greened assets. This project did not get through the front door, but fortunately, we got it through the side door and now we have the BICOWG! We were also able to offset our emissions for both F2Pool and stakefish!
The BICOWG then was started after these efforts which included many of the who’s who in the crypto-climate ecosystem. Now the BICOWG has a brain trust of crypto-climate experts that many of us rely on to helpfully separate the signal from the noise and provide accurate and level-headed instruction, education, and support!
Also, fun fact: a lifetime ago, in addition to the CS undergrad and grad school. I was once a bio major! I actually had focused on soil biology–specifically metagenomics. I also had done bioinformatics research of gut bacteria as well! So perhaps that’s where my love of the climate stemmed from before I dove down the Bitcoin rabbit hole in 2013!
Q #2 Your unique position straddling mining, protocols, and DAO’s coupled with your experience in the crypto industry provide you with a bird’s eye view: What do you see in terms of opportunities (like refi) and challenges (like statutory regulations or broader usage among web2 users)The composability of web3 means there are many more opportunities across the entire vertical stack for carbon credit usage in many exciting ways!
Q # 3 The crypto, blockchain space is very noisy. How do you identify, track good conversations or projects to follow?
Unfortunately, there is no easy answer to this question. This is obviously highly subjective, but I think the brain trust members at the BICOWG are a good start, and the ReFi ecosystem members are active leaders. Twitter seems to be where most of the engagement and activity happens!
Q #4 Most people have a generic answer to reducing the carbon footprint of Blockchain — Either use renewable energy or use PoS (proof of stake)
-Can you break down (with examples) how different projects are taking responsibility for their carbon footprint through carbon offsetting and the development of industry-wide, protocol-level opportunities to reduce its ecological impact.
We as an organization at F2Pool and stakefish purchased carbon offsets. There have been entire blockchains that have offset their emissions. FTX has committed to contributing to carbon removal and research: https://twitter.com/SBF_FTX/status/1419984841190219777. NFT projects like the Shl0ms $CAR drop were offset by 3x: https://twitter.com/SHL0MS/status/1504238654541156360. And there are even initiatives from Bitcoin mining device manufacturers to develop carbon-neutral strategies for chip development: https://www.bitmain.com/news-detail/bitmain-develops-carbon-neutral-strategy-while-improving-plans-for-enhanced-chip-development-162
Q# 5 Can you share the work done by BICOWG with reference to preliminary drafts for a system designed to incentivize offset of carbon footprint through the use of tokenized carbon credits and integration into existing yield generating opportunities in DeFi and indexes?
There is theoretically a limit to the number of demanded offsets. The idea is to make use of the utility the web3 ecosystem provides. This specifically is its composability through the “green money legos” (composable applications that can be pieced together). The type of demand sink that offsetting provides can be potentially outpaced by introducing more opportunities for tokenized carbon credits to be used. This comes from the concept of ‘incentivizing good behavior ’ — which in this case can be the purchasing of tokenized carbon credits.
I’ll draw from a section of a paper we’ve been working on at the BICOWG:
Crypto asset networks can achieve carbon neutrality through incentivized carbon offset purchases. When carbon offset credits are packaged with crypto assets, these assets, command price premiums and add value to all stakeholders within the system. Identifying, connecting, and incentivizing the stakeholders that facilitate this system is tied with the network ecosystem’s desire to purchase, hold, use, and be affiliated with carbon offset crypto assets, thought of as ‘greened’ assets.
This system implementation identifies five key stakeholders:
- Crypto asset producers/holders
- carbon credit tokenization entities/digitally native registries
- green crypto-asset packaging entities
- NFT indexes,
- DeFi applications.
- The network’s belief in and incentives to purchase, hold, use, and be affiliated with greened crypto assets is critical to the system’s success.
- A crypto asset is ‘greened’ by being paired and packaged with carbon credits that offset its carbon footprint. These greened crypto-assets can then generate yields on DeFi products that reflect each asset’s impact. Additional value can accrue to stakeholders who are part of the asset-greening process in the fees and governance of the carbon credit tokenization, curation, and selection process.
Q# 6 We would love to know what projects are you currently working on — apart from BICOWG or any recent updates at F2Pool, Stakefish or HanDAO
A lot of exciting things!
F2Pool: BICOWG, adopting carbon emissions measurements dashboards, offsetting
stakefish: chain-level governance frameworks, interchain governance frameworks, delegator-communications initiatives (metaverse HQ, videos, roundups)
HanDAO: social DAO frameworks
Q#7 What does Dan Hwang like to do in his free time?
I really like the work I do at HanDAO where I help artists with smart contract development, deployment, minting, and education. Some of the most fun I have there is the DAO governance dynamics that constantly change and also get updated. It’s very interesting being able to apply the learnings I have from my day job interacting with governance at the L1 level and applying them (or not applying them) to the DAO governance level–especially with social DAOs which I believe are fundamentally different from investment DAOs.
But for more non-work stuff, I like taking walks by myself. I call it ‘brain defragmentation’. Also, 20 minutes of sunlight is recommended!
Q #8 What is the best way one can reach out to you / BICOWG if they have any projects, thoughts, or want to know how to contribute, participate in BICOWG
Twitter: @danhwang88, Email: dh@stake.fish, or Telegram: @hwangarang
