A Talk between Staking Rewards and Niklas Nikolajsen
Niklas Nikolajsen is the Founder and Chairman of Bitcoin Suisse.
Bitcoin Suisse played a crucial role in the development of the crypto valley and the overall Swiss blockchain ecosystem.
The services provided to the global institutional and private client base include Prime Brokerage, Custody, Collateralized Lending, Staking, Tokenization, Payments and other related services.
Q: You are an early adopter of bitcoin and founded Bitcoin Suisse already in 2013…What have been your initial thoughts about “altcoins” that are based on Proof of Stake? Did you consider them a viable alternative to PoW and how did your opinion on PoS change over time?
A: I think the jury is still out on PoS, as we have yet to see a major implementation of PoS working flawlessly over time and for a major blockchain – as well as fully understand it’s impact on decentralization. It is however my hope and also my expectation, that PoS based blockchains will play a major role in the future.
NB. Bitcoin Suisse was founded in 2013, but already in 2010 I got involved in Bitcoin and in 2011 I moved to Switzerland to start the work of setting up a company in the space, the company which eventually became Bitcoin Suisse.
Q: In your opinion, What are the most relevant differences between Proof of Stake and Proof of Work today? Is PoS superior or why is every new blockchain launching with some kind of PoS?
A: PoS represents a major paradigm shift, transferring control from those with processing power to those who hold large stakes of the protocol level tokens of the PoS blockchains. PoS has the potential to be vastly superior in terms of power consumption for transaction processing but we have yet to determine how this transfer will impact governance, decentralization and potentially, immutability. There are also no single PoS model, but rather many, and only time will tell which of these will ultimately be successful.
Q: Which launching-soon protocols are you most excited about and why?
A: I think at this moment, all eyes are fixed on the upcoming launch of Ethereum 2. The successful launch of Ethereum 2 and a (by no means guaranteed) subsequent move of Ethereum-based applications to Ethereum 2. There are also other interesting recently-launched or about-to-be launched blockchains and/or distributed ledger projects out there, but I cannot name any without naming all, due to the position of Bitcoin Suisse as being blockchain agnostic.
Q: DeFi is gaining significant traction and at the same time you offer competitive custodial lending services. Do you believe high lending rates (especially in bull markets) could be a danger for Proof of Stake assets by scooping up all the collateral?
A: It is a topic for some concern. Not only custodial lending/credit providers, but certainly also custodial staking providers or plain storage providers. These providers will accumulate very large stakes and should a number of these actors become very large, the integrity of the various PoS blockchains could be threatened. Just as we historically have had similar concerns regarding the large PoW-based mining pools.
Yet – as no centralized mining pool or groups of pools did ever actually conspire against the blockchains on which they operate, it is reasonable to assume the same will be the case for the various custodial services. After all, this would not only be potentially illegal – it would be immensely harmful to the crypto economy and thus, for said custody providers own long term business. It is also reasonable to assume that just as there are numerous providers of mining pools, as will there be in the custody space and much would suggest that there would be even more providers than in the mining pool space.
Q: Are you planning to build any other value-added services for your staking clients or the token ecosystem? E.g. protocol governance education / participation, open source-tooling etc…
A: We are currently focusing on the value-added services for our custodial solutions, with direct financial impact. That is, custodial clients can stake their different crypto assets, they can be assured to be rewarded in case of (meaningful) forks and airdrops, they can take out credit against their assets even as they are staking, they can stake regardless of e.g. minimum node size requirements – and they can trade their assets, even if locked up in staking. Governance participation will be a ‘next step’ and certainly something we will be looking at providing in the future, as it becomes relevant.
Q: How do you plan to compete with other custodial staking providers such as Binance who offer 0%-Fee Staking?
A: The pricing of our services at Bitcoin Suisse are subject to constant review, also with a keen eye to the other service providers in the market. But pricing is but one of many things to evaluate when one chooses a service or a service provider. Quality, security, track record, regulatory certainty, stability, consistency of the fiat on/off ramps etc – these all and more make up part of the complete offering. Currently we charge a all-inclusive 15% fee on staking, and this is by no means set in stone that we cannot in the future lower prices if we deem it necessary to defend and grow our market share. However, with the level and quality of service we provide, we currently feel we are pricing it correctly.
Q: Crypto is all about “Be your own Bank” – As a custody provider in the space, to which degree do you believe is it important to have a decentralized ecosystem where users are in charge of their funds?
A: We at Bitcoin Suisse believe very much in decentralization and in decentralized services as being a key part of the eco-system. Also in terms of allowing individuals to be in control of their own funds. Nevertheless, having the option to retain full individual control does not run contrary to having custodial services in parallel, and certainly not at this particular moment in time, where the crypto-space and the solutions and applications available are still some way from being optimal in terms of usability, stability and accessibility. One day we foresee many of the centralized and custodial solutions we currently provide being redundant and perhaps entirely unnecessary, but it is not today.
Q: Can you imagine to offer any kind of decentralized / non-custodial staking or lending services in the future?
Q: Right now you are supporting Tezos and Dash with your staking services. How do you evaluate or choose assets that are being added to the offering?
A: As well as Cosmos (ATOM). And naturally – we are very much prepared for tacking ETH2. We are essentially a demand driven organization, so we evaluate assets, based on demand from our clients. The infrastructure we have built and are building for staking is to a large extend agnostic, even if the underlying technical and node-infrastructure is not. So as sizable blockchains move to PoS or launch as PoS, we will be ready.
If you want to learn more about Bitcoin Suisse, make sure to check their profile here.