Interview with Discus Fish of Cobo
We asked Discus‘s opinion regarding several topics such as decentralization, incentivisation, challenges and staking awareness in context of our Staking Ecosystem Case Study.
Cobo is a digital asset wallet company that has staking built into its institutional and consumer-facing products. Cobo aims to be a one-stop shop for everything related to digital assets.
SR: In your opinion what is the best way to ensure and incentivize further decentralization within the staking ecosystem?
DF: To ensure further decentralization, we first want to lower the threshold of staking, so that more people can participate and enrich the staking ecosystem.
Second, Cobo Wallet provides very simple Cloud wallet staking and a more complex HD wallet staking mode, where users control the private keys and stakes by themselves. We provide a one-stop staking solution to blockchain users of different levels of expertise. They can share their opinion about the blockchain by participating in voting and community governance through our HD wallet.
SR: What are the biggest challenges for Proof of Stake and Staking, that we still have to overcome or may still face?
DF: The first and biggest problem we have to overcome is security. Because many staked cryptocurrencies need to be signed with private keys, it leads to security risks in the system. There are some main chains that have taken these risks into account, but because PoS nodes need to ensure robustness – it must connect to different networks at high speed and broadcast the blocks at the same time – there could be a risk of being attacked during that process. Therefore, the first things to ensure are the security of funds and network communication, then finally that these servers are not attacked.
The second point is that there needs to be more investment in staking ecosystem, especially to maintain a network. Some PoS chains are very fast and are particularly sensitive to the demonstration network communication. There are many areas that can be improved, for example: make robust blocks, optimize network parameters, and reduce operating costs of the server.
Last but not least, PoS technology is currently hard to understand for ordinary users. A lot of user education needs to be done to open up that option, like with PoW, making it more visible and tangible.
SR: What do you consider to be the most important aspects to attract delegators and stakers to Cobo?
DF: The most important point for users regarding PoS mining, is how to ensure the security of their principal, e.g it’s not going to be attacked, hot wallets will not lose assets, and asset security when personally in charge of private keys. So at Cobo, we have adopted a very typical solution of HSM encryption machine and put most of the assets on the cold end, our future cold end hardware wallet will also support staking.
The second users’ liquidity risks. PoS cryptocurrencies are generally locked-in for a long time and as we know there are always sharp price fluctuations for digital currencies. Because of these uncertainties in prices, there will be high liquidity risk which might end up being greater than its return. Cobo will provide a series of derivative services in the future to meet their liquidity needs so that users can further improve the liquidity of their assets.
Basically, we first need to ensure the security of the users’ principals and then improve liquidity. At the same time, we will also further reduce comissions, operating and server costs, so that users can maximize their benefits.
SR: Do you believe decentralized finance implications will replace traditional finance and it’s products within the next 10 years?
DF: I think that decentralized finance will come much faster, maybe in 4 or 5 years. Especially after many assets have been on the chain, decentralized or open finance is bound to usher in a round of rapid development.
The traditional P to P industry has also developed rapidly in the past 4 – 5 years. But there is a lot of information asymmetry and new frauds, which makes some of the original plans turn sour. If decentralized finance allows a large number of assets to go smoothly on the chain and completes open and transparent contract transactions in the market, it will inevitably ensure the safety and information transparency of assets between investors and borrowers. I think this can solve a great problem of financial opacity, and the next few years may be an important period of decentralized financial development.
SR: How can smaller Staking-as-a-Service companies differentiate themselves from large players like exchanges providing staking services (e.g. Coinbase)? Is there a danger of centralization? Binance Staking in 2019, yes or no?
DF: First of all, PoS mining is relatively centralized at present. We can see that there will be a lot of main chains supporting Proof of Stake in the future, and the number of their nodes will increase. At present, there are more nodes controlled by a single entity, and there are indeed some alliances like in EOS.
Exchanges naturally have capital advantages, because a large number of users’ assets are placed there. Some relatively small companies like PoS or staking-as-a-service company, can do very good iterations in terms of security first. In addition, they can have more iterations in optimizing server costs and improving the robustness of the network, and keeping their operation costs very low.
At the same time, such companies can also focus on the ecosystem of certain chains, such as one or two chains, without the need for an all-in-one model. They may be able to do very deep involvement in some ecosystems, which may achieve differentiated competition.
SR: What do you suggest will increase awareness amongst people about staking and earning interest in crypto assets?
DF: In fact, this is what we have been doing. We can make people aware of staking through a lot of examples or educational work. After April this year, people are generally talking about the future direction of staking economy, which has attracted a lot of attention and discussion. For each currency holder, it does have an inflationary income.
On the other hand, we need to provide extraordinary while easy-to-use products. Because the operations on the chain are extremely complex, users have doubts about its security and convenience.
Cobo needs to start with user education, so that users realize staking is profitable and has a great contribution to the blockchain itself. From Cloud wallet, HD wallet, or Cobo Vault, we will provide a series of staking tools to make it easier for users to access the staking ecosystem with one click.