The following is an opinion piece from Maria Eisner, the ESG & Sustainability Lead at Concordium.
As Web3 strives for mass adoption, layer 1 protocols should treat users – especially their developers – as consumers. They must prioritize a positive, valuable experience for each person interacting with the protocol.
So when traditional consumer metrics come to light, layer 1 protocols should be taken to heart: a PWC report found that 32% of customers will leave a brand they love after a bad experience.
a report by McKinsey and NeilsonIQ also found that products with environmental, social and governance (ESG) claims “grow an average of 28% cumulatively over the past five years, versus 20% growth for products that did not make such claims.” This data applies directly to Web3.
Speed, convenience, consistency and sustainability values attract users, while the lack of these qualities drives users away. Fortunately, layer 1 protocols often directly drive green initiatives to increased use. On the contrary, when blockchain protocols are energy hogs, developers and users are discouraged from working with the platform.
In practice, energy-intensive grids are even forced to shut down under certain circumstances. This summer, for example, we saw that Bitcoin miners had to to block while a Texas heat wave drove up power prices and threatened the power grid. This is a recurring industry event. As shown below, there are plenty of less dramatic examples of sustainable initiatives positively impacting user adoption.
Perhaps there is a claim that proof-of-stake (PoS) layer 1 protocols, which use 99% less energy than the proof-of-work (PoW) model that supports Bitcoin, are immune to ESG criticism. However, sustainability cannot be a secondary mission if Tier 1s want to continue to onboard users and ecosystem projects. Three key moves can establish layer 1 protocols to save the planet and increase their popularity.
Stimulate green energy for validators and nodes
While Bitcoin still holds Web3’s hearts and minds, projects should favor PoS protocols over their more power-intensive counterparts. While some point to Bitcoin’s move to cleaner energy sources as evidence of greater sustainability within PoW projects, the reality is that more sustainable options remain and those renewables could be put to better use elsewhere. Making Bitcoin greenuh doesn’t make it as green as POS.
Layer 1 protocols should prioritize PoS consensus mechanisms over PoW and rely on renewable energy sources whenever possible. Web3 must pursue green energy goals and refute the narrative that the blockchain industry as a whole is bad for the environment. To do this, Tier 1s must invest in incentives that encourage users to power their work with renewables. Powered by subsidized clean energy, users will find their work cheaper and more environmentally conscious. This is something that the consumer in 2023 expressly wants.
Use an efficient programming language
Choose sustainable fundamentals to build a popular and ESG-friendly PoS layer 1. An efficient programming language allows developers to save time and enjoy a seamless coding experience. At the same time, efficiency saves computing power, consumes less energy, and reduces wear and tear on computer hardware. Over time, these seemingly minor changes create more durable layer 1 protocols.
Rust is just one example of a programming language that optimizes both compute resources and developer accessibility. Rust is famous because of its ease of use and innovative coding that reduces errors, makes bug fixing easier and enables easily reusable code. These features have made it a consistently popular choice for programmers and companies like Microsoft and Discord, who have completely rewritten their garbage collection program in Rust.
Now it runs ten times faster. Web3 should seize the opportunities offered by efficient coding languages like Rust. That might mean choosing a language like Rust from the start of a protocol or even rewriting systems in a new language to maximize efficiency.
Provide quick finality
Finality, which refers to the (almost) guarantee that blockchain transactions will not be reversed, is an essential part of decentralized technology. However, in the case of PoW, finality requires huge amounts of energy. PoS can use blockchain protocols, such as post-Merge Ethereum 99% less energy than their PoW counterparts by selecting validators based on how many coins they hold.
PoS protocols can become even more sustainable by minimizing congestion on the blockchain. It’s common sense: when a transaction is completed quickly on a blockchain, it uses less energy. When transactions take minutes to hours, they consume huge amounts of energy and create a poor user experience.
Long transaction times erode the patience of protocol users and developers, which are the foundation of Web3 and not so available as the industry needs them. Moreover, serious companies will not adopt Web3 technology if it takes more time than Web2 technology. Thus, fast finality should be a priority for any protocol. Fast finality doesn’t just add to the user experience; it allows a layer 1 to claim real efforts to protect the environment.
For the layer 1 protocol, sustainability, business development and expansion goals are harmonious. As protocols implement efficient coding languages, encourage renewable energy for nodes and validators, and take steps to ensure their protocol prioritizes fast finality, users and projects will increasingly gravitate toward layer 1s.
Making ESG a priority in Web3 will attract non-Web3 natives to blockchain technology, furthering the industry’s long-term ambitions of mainstream adoption – simply by giving consumers what they want.