darwn Expert Talks: Claudio Tessone (UZH Blockchain Center)
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Today, I'm happy to be joined with Claudio Tessone. Claudio is a professor of blockchain and distributed ledger technologies at the informatics department, University of Zurich. He's also the co founder and chairman of the Blockchain Center at the University of Zurich, Switzerland's largest and most active blockchain hub, and has written more than 20 papers in this space. Claudio, thank you so much for joining me today. And first of all, congratulations again to the University of Zurich for being ranked third worldwide in coindesk's 2022 best blockchain universities ranking, certainly a great recognition for the University of Zurich and no doubt also linked to your accomplishments with the Blockchain Center.
Thank you very much, Dario, for the introduction and thanks for these words, really appreciated. Let's start at the beginning. So, when and how were you first exposed to blockchain technology and what in particular fascinates you about this technology? Yeah, I was first exposed to blockchain cryptocurrencies back then, in 2013. I was a postdoc at ETH Zurich in the Management, Technology and Economics Department. And I was doing research on a socioeconomic networks and sitting discussing with other team members, by the coffee machine, other people told me about this Bitcoin thing that was a kind of new payment system with its own unit of account. And it was, in a way related to the kind of research that I was performing back then. And the more I learned about them, the more I like thinks about them. On
the one hand, the first thing that did and this is why I wrote a paper on this topic in 2014, I was fascinated by the fact that you have a full economy who's in which the only history of transactions were recorded inside of this ledger, then it looked more into this thing that I saw that actually, and this is what fascinates, still the most to me, related to blockchains and all the solutions that are built on top of this, is the fact that there are very few systems in which the incentives are written inside of the design of the platform, so openly. And the outcomes are so driven by these kind of things. And by outcomes here, I mean, the economic functioning, also the adoption, and multiple other things. So now, what fascinates the most to me about
these solutions, they're not only technology is the interplay between design principles, incentives, that are placed in between and the outcomes that these systems have. Thank you very much. So, you mentioned that you were involved quite from the beginning. Since your introduction to blockchain in 2013, what has been the most interesting or exciting industry developments since then. Do think is there any current developments underway which you feel is especially promising? I think that we have a there has been so much water under the bridge with these eight years, that it is very hard to find a specific moment I think that all the the rise of Ethereum and then all the third generation blockchains that completely changed the incentives but also serve as a as a full platform to deploy the apps, DAOs and many other solutions that are much more sophisticated is very interesting. The rise of DeFi is a second point in which it was very interesting to be there and this kind of field never stops rising many interesting questions that in general, are not immediately answered by the solution that are inside. And with respect to the
developments, I think that on the one side, this push towards harder notions of identity inside of the systems are particularly interesting to me. I am interested, we will see how it plays out later on, this transition of Ethereum to proof of stake. It is from the research point of view, it's been interesting because this is the only platform that has migrated. And we will see how successfully in some time from now, from a proof of work restating which everybody can participate in the consensus, towards a one which only produces stakeholders can participate in the consensus. This is also something that is interesting. And the other thing is, I think that novel usages of NFTs are going to be interesting as well in the future. And this I link this with the previous answer that I gave with respect to identification. I think
that proof of achievements and these kinds of things, even certifications stored in some way in blockchains, will be an interesting aspect that we'll see in the near future. Right, thank you so much. So speaking again of the Blockchain Center I understand that the Blockchain Center started its activities about five years ago in 2017, before formally establishing in a Competence Centre in 2019, and the organisation it is today. So, can you tell us
how the organisation was created back in 2017? In particular, what were the circumstances that led to the creation of the blockchain-focused organisation at the University of Zurich? The reason is one thing that I like very much of the University of Zurich is that the broad areas of expertise that the that the members of the faculty the professors have. We have seven faculties, that encompass from art and social sciences, theology, to law, in business, economics, informatics that these are order a faculty. And back in 2017, there was an era that was very interesting, once again, that was on this period in which a lot of ICOs were taking place, there was this first wave of tokenization, and chatting in assemblies of the faculty, for example, we met a lot of professors who are from completely different angles, people that were looking at this from the financial point of view, people that were looking at it from the technical point of view, people that were looking at this from this, the two angles in between data science, like I do, in some sense, we found that there were a lot of professors who were interested in these new developments in blockchains. And these, and a later we also found that actually, there were many professors in the law faculty as well, were interested. So in 2017, we started as an informal club, this is the word that we use to back then, of professors that we'll just meet here and there and to see what was interesting to us. We started to have a some events and we saw that actually, there was a lot of traction and that many of us were very interested in pushing forward the the development of something that is more formal. And this is how in 2019, we applied to the faculty and
to the University Board later to be recognised as a competent centre. And this kept attracting even more and more professors to join the Blockchain Center, which I'm really happy with, and I really value their time. And on the other side, we were also looking into, we also continued to widen the scope of our educational offerings, not only to our students, but also to students abroad that are abroad, that can also benefit from the education that they have the University of Zurich. We also extended our programmes to people from industry as well we have a CES in blockchain and then a that we continuously have. We will have another edition in spring 2023. And we continue to interact with them more and more with industry and
so on. And that's also something that being in Switzerland is particularly beneficial. 9:43 And what were the goals at the time and how has the organisation and its goals also within changed or developed over time? So on one hand, you mentioned the educational topic. I think that we have three main a goals as an organisation. One of them, obviously because we are a university, is a to provide a complete educational offering, be it for our students, be it for, as I said as well, for students all around the world, for industry leaders undergraduate students post-graduate students. The second goal that we have is to
coordinate research at the University of Zurich in this space, but I repeat a concept that I said before and that for me is fundamental in order to properly understand blockchains which is in order to understand them, you cannot approach the problem from a single disciplinary point of view. Blockchains have not just the technology are not something that they solved in the computer science department. Partially yes, but not only. There are insights that you can gain from people from law and regulation, professors there in the law faculty are particularly important in this setup.
You also have as I said before, as well incentives but also business models, financial aspects of valuation of crypto assets, and in order to do that, you need a completely interdisciplinary approach. So, the role that we have as coordinating research is coordinating research from a completely interdisciplinary point of view. And the third role that we have as Blockchain Center, the third goal is to a act as a single point of contact of the University of Zurich with set of parties, be this industry be these other peer institutions, academic institutions, we have several memorandums of understanding a that we are signing with a key players worldwide, and also government, and society as a whole. Okay, we will, for us outreach activities are important, as well. You mentioned one of the core functions of course, is research. Obviously, the crypto market is a very fast moving environment. What are some of your recent research topics and how have those topics also developed in the blockchain industry? I am very interested in three aspects of blockchains that are a heavily intertwined. On the one hand, and mirroring my original interest
in blockchain, I am very interested in that area that now, you can call it blockchain Analytics, which is looking at the data that you see inside of these public Ledger's, because in the blockchain, you have all the transactions in which the assets exchange hands and try to understand the economic processes that happen due to this exchange of value. I am very interested in processes like centralization or concentration of power in blockchain-based platforms but also in token economies. I am a interested in forensic analysis of a blockchain because at the end of the day, you can always follow the money and understand who are the previous owners and for that you need to develop methods to detect which are the families of addresses that are controlled by the same user because this is very important and we this is something which we are very active. This is with respect to blockchain
analytics. The second pillar and, as I say, this is intertwined with the first one and that's why I briefly mentioned it in my first answer, is crypto economics, because I am interested to see the link between design principles and outcomes in the economic functioning of token economics and crypto economist. And for that the data pillar is specifically important. The third area in which we are developing a lot of research, is in consensus and in consensus I can mention two areas, two sub areas as well. On the first side, I'm interested in scalability properties of blockchain-based systems. And because of this we have been developing models to understand proof of work consensus. Now, we are extending these models to different variants of proof of stake. One of them is Ethereum as I mentioned before, and the possible attacks
that you have with maximum acceptable value, these kind of things. We are also developing models for a stellar concsensus, IOTA consensus and this is something very interesting because you'll see some commonalities and very strong differences and always here the question is: how scalable is a system when the number of nodes connected to the network is, how even determine finality in these networks etc. The second area inside of this consensus party is looking at the effect of reward distributions and inside of all these systems. We are now doing a very large scale data analysis of different proof of stake based protocols, variance of proof of stake and delegated proof of stake to see exactly how centralization and concentration, going back to crypto economics, is affected by the specific design choices.
Great, thank you so much for these insights. You also mentioned that the third pillar of the blockchain centre is the single point of contact also in regards to other parties. So, how can or just the blockchain centre also work with other external partners? So, for example, research cooperations with other universities or even is there an interest from the private sector? Yeah, actually, both we have a con i am very happy to welcome the students from different universities every year to visit us and to perform research with us. We have people from the European blockchain Centre in Denmark. In the first half of the year, we'll have people from the University of Cape
Town in the next year as well, University of Tokyo, the Beijing Normal University as well is going to be as well next year we'll have another visitor so we have a lot of visitors. A we have some active collaborations with Indian universities, with other blockchain centres in Europe, as I mentioned before, the blockchain Centre in Denmark, the Centre for blockchain technologies at UCL different universities in Italy, but also a we have recently as well, a sign that memorandum of understanding with the University of British Columbia in a Canada and we have hosted different conferences. So we have been very active on academic collaborations with respect to industry. We have a research projects that are funded by different foundations that are around a blockchain protocols. We have a a,
I go in historical order such that nobody gets offended. So the first agreement that we had was a with IOTA Foundation. The next one was with Cardano foundation cuspid Association, then a Ethereum foundation and stellar Foundation, a lot of the ones that are currently active. So we discovered origins, obviously with people from eth in the area of the house. So, how can one also get involved or participate in the blockchain centre? Is membership limited to the students of the University of Zurich? Or are there opportunities also for the public sector? And if so, is there a certain requirement of knowledge necessary to be able to participate? The blockchain Centre is a Competence Centre of the University of Zurich and as such has a specific set of bylaws that only allow members to be a either senior researchers or professors at the University of theory, that's the Constitution. You guys have also
associate members that are other professors or senior researchers from other universities. We have a lot of research associates that are in general PhD students in our university. There are two other categories that are very important to us and that relate to our educational activities. Of course, now the summit is we were nice to have two flagship a educational offerings. One of them is the deep dive into blockchain summit school, that next year is going to be hybrid here at the university.
And also online, that we have run already for three years. And we also have this Certificate of Advanced Studies in blockchain. That is a certificate from the University of Zurich thing with that that has already run for four years. So it's summing up these two programmes that are not for people from the university without above 300 alumni, the blockchain centre.
And what we are thinking of doing now is and we are doing this in collaboration with alumni of the blockchain centre of the University of Zurich is setting up a platform that allows to a deep in our offering polo night. Okay, so I think that this is a very large community of highly qualified individuals exactly in this space that is always one in which it is very difficult to find qualified people. And we are trying to create a platform by which we can connect industry with our alumni. Constantly, this is the first thing but it you may argue, it is only limited to your alumni. Yes. The second way in which we are very interesting is important for us is as I said, we have a lot of outreach activities. And we will.
Therefore, we have mailing list groups, etc, in which people that is interested in our activities can always join, and a get to know more about blockchains. We are very active, we have roughly two presentations to outreach activities per month. One is an industry talk. The other is a lecture series by very distinguished scholars in the area of blockchain, and they are open to the public and we are really happy that people joined them. And they are hybrid as well. This is very important since the pandemic, all our events have turned hybrid. So you can either visit
them on site here in the University of Zurich, or you can also do it onsite. interesting. And what about the educational offer for the students at the University of Zurich? A 22:03 we have a lot of I am professor for blockchain activity, as you mentioned before, so in my team, we offer different courses that are mostly targeted to students from the Faculty of Business Economics and informatics. We have a course on blockchain and crypto economics. We have another a couple of seminars. Next year we will have a seminar on the metaverse as well, because this is a very
interesting topic that is linked to nfts but opens many more questions than the ones that Danceworks and that's why this interesting thing to see what their students are able to research on it. In a we also have a professor obviously from the economics department from the finance department and offering as well courses a that relate to cryptocurrencies as a as in financial assets, that are looking at economic approaches from the lenses of a contract theory to blockchains that people in the law faculty has as well a very good offering as well to students and obviously in our informatics department other professors look at it more from a technical point of view than me I am more or less in the in the middle of a computer science and economics. Other professors are more interested in technical aspects and overlay networks on these kind of things that will also present it from the point of view of blockchains. And also looking at this them as information systems and looking at the options that are open by them. So we have a very large offering, actually for our students, and I'm happy with it. And I'm also happy to see the interest by the students. So they're always very keen of learning this.
Absolutely. Which also brings me to the next question. So to my understanding, currently, there are no bachelor master programmes fully focused on on blockchain in Switzerland, are there any plans to change that at the University of Zurich? We have been thinking about this a we need to see how sustain this demand because always setting up a master's programme that this is what we should be able to offer is a requires a lot of coordination with respect to the courses that we are offering and we will we when we evaluated it back then in 2019, it was perhaps too premature. If we are able to grow the professors that can offer courses in this space, we will be happy to make it also an additional offering by the University of Zurich because I think that here in Switzerland we are in a privileged position with respect to this because we cannot saw involve a interesting actors from the ecosystem as well in such an offering and this could be a really interesting additional service of the blockchain centre. Yes.
Okay. Maybe one final question for you. Why do you think in general, this is an important topic for people to become familiar and informed about? Because the blockchains are not only technology, so you cannot just tell the people use this because it will change your life, and you do not need to think about it. That's exactly, exactly that kind of approach is what caused a lot of troubles historically in blockchain based systems. And there are many of them that are not necessarily well designed that they are not robust enough. And people jumping just into them without understanding what they are doing is a very dangerous thing in the long run for all the blockchain ecosystem. And I think that, from my point of view,
education is fundamentally important for blockchains. It's far more important than a teaching people to teaching developers how to develop smart contracts. I think that that the one thing is necessary, people that know how to develop smart contracts, the other is exactly what is going to trigger a sustained adoption of the platforms. And this is something that they all the actors in the space should be aiming at. So thank you so much, Claudio. For the interesting insights and spending the time with me today, I certainly hope that the blockchain centre will continue to grow. And for all the viewers who are interested, all courses from the University of
Zurich can also be found in our darwn Academy will find the link in the description below. And that's it thank you very much, Please connect to us in our social media as well, because there will you have also a lot of updates that you will also provide that but thank you very much for the invitation.