Raj Gokal, co-founder of blockchain protocol Solana and chief operations officer of Solana Labs, started his career in venture capital with a focus on high-growth tech business.
For seven years, Gokal focused on health tech, first with wearable sensors using Bluetooth Low Energy as a wireless protocol, then leading product management at Omada Health. He aimed to address the fractured, challenging United States healthcare system but “encountered challenges with health plans and regulators, leading me to recognize the industry’s persistent issues,” he told Cointelegraph.
After meeting Solana co-founder Anatoly Yakovenko and seeing his “vision to resolve scalability in crypto,” Gokal immersed himself in the crypto industry. “The journey has been rewarding over these past five years.”
Recently, Gokal sat down for an interview with Cointelegraph to discuss Web3, scalability, tokenization and more.
Cointelegraph: There has been a noted absence of substantial real-world use cases in the Web3 domain. This contributes to the perception that there’s no product-market fit for the industry. What are a few real-world use cases Web3 is currently prioritizing?
Raj Gokal: A real-world use case that comes to mind is decentralized physical infrastructure networks, or DEPIN. Developers often lead the way, as seen with projects like Helium, which established a decentralized 5G network with 1.5 million hotspots before transitioning to Solana. Similarly, Hivemapper launched its decentralized maps, utilizing a distributed global workforce equipped with dashcams. This is now an alternative to a centralized organization like Google deploying tens of thousands of cars that it owns to map the roads.
The Hivemapper network remapped 8% of the world’s roadways in just a few months, which is very much a real-world application of Web3 on Solana. These ventures showcase the viability and significance of leveraging low-cost, scalable blockchain technology to create innovative solutions. Developers across the world come together without any central authority and create successful business models with tangible value.
CT: Your ambition was to resolve scalability challenges within Web3. What architectural considerations are essential when building real-world solutions on layer-1 platforms?
RG: The benefits of parallelized transaction processing and validation are foundational, offering various advantages for developers and users. Solana pioneered these features, optimizing for speed with 400-millisecond block times and near-instant confirmations. We hear testimonials from users that a transaction was completed on Solana even before they could switch tabs. This fast, seamless experience builds trust and user satisfaction. Additionally, low transaction costs are crucial.
Compatibility and composability are essential, too, allowing various applications to work together. Decentralization is a linchpin, ensuring longevity and reliability. For instance, on Solana, we have close to 3,000 validators and the highest Nakamoto coefficient of 33 across all blockchains. While achieving these feats within a decentralized, high-performance network is challenging, it has been achieved through rigorous effort and innovation.
There are several such architectural decisions that make real-world solutions possible on blockchains. It is often not just one feature — it is the convergence of several architectural considerations that make it viable and scalable.
I also think blockchain networks must be battle-tested across multiple cycles. As ecosystems thrive through difficult market conditions, it provides developers, users and investors confidence that the network is here to stay.
CT: Let’s move on to Web3’s approach to mobile and payments. Solana has taken steps to introduce Solana Pay. You also recently launched the Saga phone. What are the motivations behind this, and how does it impact the broader mobile and payments landscape?
RG: The Solana Saga phone has shown that there is a huge opportunity for handset and operating system makers to create a sandbox where developers can build what they want with token incentives and without any restrictions on nonfungible tokens. Since the launch of the Saga, Apple and Google have eased their stance on digital assets in their application stores.
We have seen similar initiatives in the past, when Tesla created a new market for electric vehicles. It started with the Roadster, which initially only sold a few thousand cars. But over time, it has made it a more accessible mass-market product. We should see a similar trajectory for Web3-friendly mobile phones over the coming years, and Saga is just the beginning.
Solana Pay, on the other hand, operates at the crossroads of fostering a more accessible and open payments ecosystem. If you look at the Bitcoin white paper, the initial purpose of Bitcoin and the whole idea of digital money was to facilitate permissionless peer-to-peer online payments. That was the initial vision for cryptocurrencies.
By providing an alternative platform, Solana aims to influence these giants to adopt more user-centric and app-friendly frameworks. As for Solana Pay itself, it’s designed to enable any developer to integrate QR code-based payment features across various contexts, whether in point-of-sale systems, mobile apps or web-based services.
This has sparked initiatives like Decaf in over 30 countries, focusing on cross-border remittances. Sling, another Solana-powered platform, competes with Venmo on a global scale. Over the next few years, we can anticipate an upsurge in grassroots and enterprise-driven solutions that leverage crypto for payments.
CT: Let’s talk about real-world asset tokenization. While this area holds immense potential, it hasn’t fully taken off. What are the barriers preventing the widespread adoption of real-world asset tokenization, and how can these hurdles be overcome?
RG: Real-world asset tokenization indeed presents enormous opportunities, especially in sectors like real estate. Initiatives such as Parcl and Homebase are pioneering this space, though it requires time for adoption. For instance, Homebase is focused on individual properties that are tokenized and fractionalized so that you can get rental income that is globally accessible to anyone.
This space is about providing assets that people actually want and then making sure the narrative is good enough to win mindshare and convince users that real-world asset tokenizations are now something that’s possible. The idea looks sound on paper, but often, it takes time to execute, and we just need founders who are good at carrying the messaging for this space and have strong product skills. Success hinges on creating accessible, user-friendly, trustworthy platforms that offer real value to users, but also in delivering the narrative to the target users.
Over the next few years, the collective efforts of dedicated teams and the introduction of innovative platforms will likely drive increased adoption and establish a strong presence in the market.
CT: What strategies can mitigate risks associated with potential outages or technical difficulties within the Web3 ecosystem?
RG: Addressing liveness [i.e., the guarantee that a protocol can exchange messages between the network nodes, allowing them to reach a consensus] and reliability issues is essential to ensure seamless operations in real-world applications. The industry has learned from mistakes committed in the past and has actively implemented solutions to minimize outages. This will be critical for institutional adoption, as they will want to see reliable infrastructure before embracing this innovation at scale.
Networks like Solana have made significant strides in enhancing liveness and minimizing potential issues. Collaborative efforts between multiple validator clients, diverse solutions and continuous refinement of the ecosystem have led to increased stability and dependability. While the Web3 space is still evolving, the focus on these aspects will likely lead to even greater reliability over time.
CT: What would you define as a product-market fit for layer-1 protocols and the broader Web3 ecosystem? What would the user experience look like in your view?
RG: I think there are two stages of product-market fit. One is where founders and developers are able to either fund themselves or get funding to launch products that work toward end-user product market fit. And I believe we have achieved that level of product-market fit. Even in the depths of the bear market, you still see quality teams get funded, things are getting pushed forward, and new products are being launched.
Then, there is the second level, which is end-user product-market fit. And I would say that is a stage where the majority of the value that users are getting is not speculative from buying and holding assets but is from earning by contributing to networks, where the value is being shared back to the user. That’s why sectors like DEPIN, even though there are not 100 DEPIN examples, are happening. Users are using their hardware to earn money in crypto by supporting a network that adds real-world value to users. It’s exciting, and I’ll admit that it’s early.
Coinbase holds 5% of all Bitcoin in existence: Data
Blockchain intelligence platform Arkham recently identified that crypto exchange Coinbase holds almost 1 million Bitcoin (BTC) in its wallets. The coins are worth more than $25 billion at current market prices for BTC.
According to Arkham, the exchange’s holdings amount to almost 5% of all existing Bitcoin. Arkham said that Coinbase holds a total of 947,755 BTC. At the moment, Bitcoin’s circulating supply is around 19,493,537, according to coin information website CoinGecko.
Arkham has now identified $25B of Coinbase Bitcoin reserves (~1M BTC) on chain.
This makes Coinbase the largest Bitcoin entity in the world on Arkham, with almost 5% of all BTC in existence – about as much as Satoshi Nakamoto. pic.twitter.com/7sDOczS7WT
— Arkham (@ArkhamIntel) September 22, 2023
Furthermore, Arkham also noted that it tagged and identified 36 million Bitcoin deposit and holding addresses used by the exchange. According to Arkham, Coinbase’s largest cold wallet holds around 10,000 BTC. Based on the exchange’s financial reports, the intelligence company believes that Coinbase has more Bitcoin that are not yet labeled and could not be identified.
While Coinbase holds over $25 billion in BTC in its wallets, the exchange only owns around 10,000 of all the Bitcoin it holds, which is worth roughly $200 million, according to recent data.
Meanwhile, community members expressed varying reactions to the news about the amount of Bitcoin the centralized exchange holds. Some believe it’s a sign to withdraw their BTC from exchanges, warning holders not to wait until exchanges start to halt withdrawals. Others say that since there are legitimate concerns over cold wallets, there’s no good way to store their assets.
When it comes to Bitcoin ownership by companies, business intelligence firm MicroStrategy still owns the most BTC. In earnings results posted on Aug. 1, the firm’s co-founder Michael Saylor declared that the company owns 152,800 BTC, worth over $4 billion at the time of writing.
Coinbase CEO warns against AI regulation, calls for decentralization
Brian Armstrong, the CEO of crypto exchange Coinbase, expressed his stance on artificial intelligence (AI) regulation in a recent post on the social media platform X (formerly Twitter).
On Sept. 23, Armstrong explained that he believes that AI should not be regulated. According to the Coinbase CEO, the AI space needs to develop as soon as possible because of reasons such as national security. In addition, Armstrong also noted that despite the best intentions of regulators, regulation “has unintended consequences,” arguing that it kills innovation and competition.
Count me as someone who believes AI should not be regulated
We need to make progress on it as fast as possible for many reasons (including national security). And the track record on regulation is that it has unintended consequences and kills competition/innovation, despite best…
— Brian Armstrong ️ (@brian_armstrong) September 22, 2023
The Coinbase executive cited the internet as an example. Armstrong believes there was a “golden age of innovation” on the internet and software because it was not regulated. The Coinbase CEO suggested the same should be applied to AI technology.
Furthermore, Armstrong also presented an alternative to regulation in terms of protecting the AI space. According to the executive, it would be better to “decentralize it and open source it to let the cat out of the bag.”
Meanwhile, various jurisdictions across the globe have either started to regulate AI or express concerns about its potential effects. On Aug. 15, China’s provisional guidelines for AI activity and management came into effect. The regulations were published on July 10 and were a joint effort between six of the country’s government agencies. This is the first set of AI rules implemented within the country amid the recent AI boom.
In the United Kingdom, the competition regulator studied AI in order to identify its potential impact on competition and consumers. On Sept. 18, the U.K.’s Competition and Markets Authority concluded that while AI has the potential to change people’s work and lives, the changes may happen too fast and could have a significant impact on competition.
Bitcoin miners double down on efficiency and renewable energy at the World Digital Mining Summit
Bitmain rolled out its next-generation Antminer S21 and S21 Hydro ASIC miners at the World Digital Mining Summit (WDMS) in Hong Kong on Sept. 22, revealing the crucial performance stats the entire industry has been waiting for. The S21 has a hash rate of 200 terahashes per second (TH/s) and an efficiency of 17.5 joules per terahash (J/T), while the S21 hydro hashes at 335 TH/s and 16 J/T, which is notable given that until recently, most Bitcoin ASICS were operating above the 20 J/T level.
With electricity costs continuing to rise year-over-year and the Bitcoin halving projected to occur in April 2024, ASIC efficiency is quickly becoming the paramount focus of miners, and many are also pivoting toward folding in renewable energy sources as a core component of their operations.
Bitcoin miners focus on efficiency and renewable energy
Sustainable development in the mining industry was a core theme discussed in a majority of the panels at the WDMS. In the opening roundtable, team members from Terrawulf, Core Scientific, CleanSpark and Iris Energy shared their perspectives on how further integration of renewable energy sources will become a critical strategy to implement for many miners after the April 2024 Bitcoin supply halving.
According to Nazar Khan, Terrawulf’s chief operating officer:
“There’s a significant transition going on in the supply side of the generation process; there’s a concerted effort to decarbonize the entire supply stack, and so when we talk about Bitcoin miners consuming more renewable energy, that’s part of a broader theme that’s happening across the United States without Bitcoin mining as well. The role that we play is locating our Bitcoin mining loads in places where that’s happening and how do we facilitate that decarbonization process.“
One impact of the upcoming supply halving is that miners will maintain the same capital and operational costs, plus the need to pay down any revolving debts, while essentially seeing their block reward distribution cut in half.
For this reason, miners will either need to increase the percentage of their hash rate derived from sustainable energy sources or make efficiency adjustments to their ASIC fleet to maintain or increase their profitability.
Regarding the rollout of the Antminer XP 21 and its potential impact on the mining industry, BMC founder Justin Kramer said:
“The S21, if reliable, fairly priced and readily available — and yes, that’s a lot of ifs with Bitmain’s history — could revolutionize the crypto mining landscape with its efficiency. It is basically packing the power of two S19 100T miners into one unit. Despite this, the burgeoning aftermarket firmware market, coupled with hydro/immersion systems, give miners more tools to keep older generation miners, such as the S19, profitable also. Thus, while the S21 represents a notable advancement, it may not render sub 110 TH/s miners entirely obsolete.”
When asked about the more exciting aspects of the new S19 XP, Kramer noted that:
“I like that Bitmain is rewarding environmentally friendly mining farms with better pricing and advanced delivery with their new Carbon Neutral Certificate. But, I’ll add that, it was a little surprising when I noticed that both new S21 models offer 33% more hash rate (S21 200T versus 151T on S19j XP; S21 hydro is 335T versus the S19 XP Hydro at 257T). Is this a coincidence? I’m doubtful, and it likely signals more of the same systematic model releases from Bitmain where a slight tweak to the firmware and maybe a few other items that are adjusted results in a moderate increase in hash rate and a brand-new miner.”
Bitcoin is en route to becoming an ESG asset
A theme of the past few years has been an increase in Bitcoin miners and BTC advocates pushing back against the assertion that Bitcoin mining is bad for the environment, and that the industry’s reliance on carbon-based energy production accelerates emissions.
Countering this perspective, Hong Kong Sustaintech Foundation professor in accounting and finance, Haitian Lu, bluntly announced that:
“Bitcoin mining is promoting renewable energy adoption in many areas.”
Lu explained that “over the years, Bitcoin mining has become more efficient and is also using cleaner energy. History tells us that human development from an agricultural society to industrialization to the future of a digitalized economy goes with every increasing energy consumption per capita. What makes the difference is human’s ability to use renewable energy increases, thus achieving sustainable development.”
Like the perspectives shared by other panelists, Lu said that Bitcoin miners’ participation in demand response agreements with power producers and distributors leads to energy grid efficiency, and they “provide an economic incentive for the development of renewable energy “promotion and development of renewable energy projects.”
In addition to Bitcoin mining tapping into stranded energy, encouraging the development of renewable energy projects and helping to balance electric grids, the efficiency advancements of next-generation ASICs like the Antminer S21 reduce miners’ energy consumption while also allowing them to boost their profits.
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