Energy Web Foundation: 7 Questions

Energy Web Foundation (EWF) has great bones. It was founded by two leading organizations in the clean energy space: the influential Rocky Mountain Institute founded by Amory Lovins in 1982 and the more recently formed Grid Singularity, a blockchain- and grid-focused organization with core Ethereum blockchain developers, experienced energy executives, energy regulators and technology entrepreneurs.

They’ve founded the Energy Web Foundation, a global non-profit organization focused on accelerating blockchain technology across the energy sector.

Lovins, of course, is famous for his early focus on soft-energy paths, a distributed model of electrical generation and consumption with consumption as close to generation as possible, and with fewer long-distance major transmission lines from centralized power sources. This thinking aligns well with the micro-grid and disintermediation focus of many blockchain energy startups.

Peter Bronski responded on behalf of EWF to seven questions we commonly ask of blockchain cleantech initiatives. The following has been lightly edited.

What is EWF’s status today?

EWF is an independently incorporated nonprofit—cofounded by Rocky Mountain Institute and Grid Singularity—headquartered out of Switzerland and with significant team presence in Germany and the United States (but a global reach). Since its founding in 2017, EWF has grown rapidly from 10 Affiliates to ~50, securing more than $21 million in funding to date. Most importantly, EWF has made significant progress on its core tech, including announcing a sweep of enhancements in the beta release of its blockchain testnet and the v1 release of its EW Origin application for renewable energy and carbon markets.

What is the governance model you have put in place to ensure your offering is not misused or abused?

We believe our governance model — both on and off the chain — is one of the key differentiators of the Energy Web chain vs. other blockchains, and that developing the right governance model is critical for acceptance and adoption in the heavily regulated electricity sector. The EW chain remains open-source and free to use; anyone can download the client and start using the network, building apps on the chain, etc.

However, the EW chain uses a new version of the consensus mechanism called Proof of Authority, in which the validator nodes are trusted, permissioned, and known energy companies. On other public networks, these validator nodes are anonymous miners. This kind of transparent oversight is important when managing critical energy infrastructure.

This is also just the beginning of our governance model­ — we are working hard on the technical and governance whitepaper now and plan to release it this summer. We’ll also be testing our governance structure over the next 12 months to identify weaknesses, vulnerabilities, and feedback loops, all in anticipation of a genesis block of our chain in Q2 next year.

What is the incentive model you have put in place to balance value across the set of blockchain participants?

Building upon the governance model described above, there are several incentives on our chain:

• Validator nodes may be incented with a simple block validation reward. On our chain, there is no mining — a validator node is called up via a round robin to perform their function as an auto-updating permissioned node on the network. One way to incent participation of these known, permissioned validator nodes is to incent them with a simple token reward.
• On the other hand, protocol changes to our network are actually in the hands of the developers. Most governance models to date are experimenting with giving token holders the ability to vote for protocol changes. In our model, we give developers the ability to vote for protocol changes. Here, developers who are interested in voting to upgrade the network must go through a simple KYC process proving they are an actual blockchain / energy developer. Then, they are able to vote on changes to the network based on the total usage of their dApps and smart contracts.

We believe the combination of these two on-chain processes — auto-validation by incented validator nodes and on-chain voting by known developers using the network — is a good starting point for the kind of chain we are assembling.

How are you hedging against significant reductions in cryptocurrency value as seen in Q1 2018?

Cryptocurrency value swings can certainly influence how much and how quickly crypto investment flows into energy blockchain, including EWF. However, EWF Affiliates are primarily investing in fiat currency.

More importantly, our primary focus is on leveraging blockchain’s many desirable attributes for the energy sector, rather than cryptocurrency. We’re quite deliberately not tokenizing energy itself. Instead, we’re interested in how blockchain could support or fundamentally transform myriad electricity grid use cases, from renewable energy certificate transactions to peer-to-peer and other forms of transactive energy. Tokens do play a role in the EW network, but their function is primarily to secure the network and make it more resistant to bad actors, not necessarily to trade on exchanges as with Bitcoin and Ether.

Is proof-of-stake an end-state consensus approach or an intermediary step like proof-of-work, and if so, what consensus approaches do you foresee dominating?

For the EW chain, we’re using a particular form of Proof of Authority for consensus. It offers the kind of transparent oversight we believe the energy sector needs, especially for regulators that want to know who’s “notarizing” the blocks of transactions. But in addition, our form of Proof of Authority — in tandem with other tactics such as para chains — also enables the needed scaling and speed that an energy-sector-specific blockchain must have in order to eventually handle the transaction throughput from millions of smart, connected devices such as rooftop solar systems, EV chargers, smart thermostats, etc. Other forms of consensus are simply too slow to achieve the necessary scale for managing grid operations. Proof of stake is great, though. In fact, we are considering requiring both developers and validators on the EW chain to stake some amount of tokens as another check and balance on bad behavior.

What key metrics or key performance indicators do you consider critical for your offering and business model?

Most importantly, we want to see adoption of the Energy Web chain as the standard blockchain foundation — the digital DNA — of the many applications in development by utilities, energy companies, startups, and others. Already, we have more than 30 companies building and testing apps on our Tobalaba testnet. When the EW chain goes live with its genesis block in Q2 2019, we hope to see continued adoption of the EW chain as the leading base layer choice on which others build their energy applications. We also want to see significant throughput—now measured in terms of transactions per second—flowing through our chain to push the limits of scalability.

As an early mover, what one piece of advice would you give to people consider entering the cleantech blockchain space in the coming year?

Having just gone through Event Horizon 2018 — a global summit that brought together the world’s energy blockchain community — it’s clear that this is an exciting, fast-growing space with tremendous potential, but also somewhat in its infancy. With the EW chain, the cleantech industry has an opportunity to coalesce around early standardization and shared investment that accelerates the learning curve and the core technology development. This enables all market players to get to market-ready applications faster and sooner and cut through initial potential hype and skepticism into real, practicable solutions that deliver on blockchain’s promise. For those considering entering the cleantech blockchain space in the coming year, the time to move is now. The space is already fast-moving, so those keen to co-lead the movement need to get onboard soon.