8 months ago
Blockchain platform Harmony CEO and founder Stephen Tse draws on a background in research, systems and programming. The blockchain entrepreneur sees a bright future in DeFi tech.
Harmony CEO Tse is clearly committed to a future in DeFi. He did his master’s in mathematics and computer science and PhD in compilers, before moving on to type theory. To really understand what role other infrastructures play, he went to Google for a few years and worked on Google Maps.
Stephen sold his first startup to Apple. “So many of us got together at Google leaving the big company to think about doing startups,” he says. “At that time, blockchain had just become the basis for a currency, but many of us were thinking about what an impact could happen through the blockchain, to solve some of the problems at that time.”
He was thinking about how to make it more professional in terms of stability and global scale. Stephen was able to assemble a number of Google friends and Amazon engineers together to start Harmony.
Harmony Protocol: open consensus for 10 billion
Harmony’s vision is “open consensus for 10 billion”. Stephen has ambitious expansion plans. “We really think about global scalability of the scale and the practices, so it’s not just about tuning the process permission chain. We need to figure out how to put many of these applications now onto the platform that really help bring it on.”
Here, scalability is a key topic. Stephen regards it as critical to ensure that Harmony is seen as the faster and cheaper side of things. “It’s not just about what’s possible now with a CryptoKitty and so on. It’s what is also about what people couldn’t do with the central exchanges. That, and having more game assets to be trading, is what people are thinking about now. For us, other protocols like Ethereum are evolving. Polkadot is also a great story with the sub-chains that can scale. So whether it’s good about Algorand or Avalanche coming out is where we pay a lot of attention to different architectural approaches to this problem. We’re very excited to be in this big space and really making a large open platform.”
Harmony conducted an initial exchange offering (IEO) on the leading crypto exchange Binance in 2019. Stephen regards it as nothing less than fantastic. “I think Binance is a great platform. Also a great partner to really have a long-term view about how the world should be, whether about new projects or new applications to build an ecosystem. So we have a fantastic partnership.” He continues, “DeFi is a full stack. As we all know, most of DeFi – if not 90% – happens on Ethereum right now.”
The blockchain quadrilemma
Harmony has put forward a bold vision of creating an open consensus infrastructure for 10 billion users. To achieve this, the firm has defined a new, specific challenge for blockchain protocol development – the quadrilemma. In recent years, advances in blockchain protocols have focused on resolving the trilemma, realizing the three different conflicting goals of decentralization, scalability and security.
“To us,” Stephen says, “achieving all these characteristics is not an impossibility, but an expansion of the triangle through great engineering.”
The blockchain quadrilemma adds a fourth critical dimension: privacy. Stephen regards it as one of the most important problems for his generation to solve in the coming decades: to understand what privacy means in terms of human rights, product design and digital economy. Harmony is dedicated to building an open platform with no compromise on performance, without delegation to a central entity and with verifiable security.
Obstacles to mainstream DeFi
At the same, Stephen is realistic about the issues that DeFi needs to overcome. He sees stablecoins with utility value as essential for DeFi to go mainstream. “Most new chains, you need to figure out basic things like stablecoins so that people don’t need to speculate right?” A second point is cross-chain interoperability. “You really need to work on multiple chains now. Whether it’s an asset that you see transfer from Ethereum or back to Bitcoin or to some of the exchange coins like Binance’s BNB.” As the third aspect, he names is the oracle, and getting foreign exchange to function. “It’s not just about having US dollars, right?”
He emphasizes the importance of liquidity across foreign exchanges. “If you think about what business needs, they actually work with like private bankers to get a quote on the money they are transferring in the country. You want to manage liquidity. You want to know how to do OTC, how much money you can move and on what schedule, right? Let’s say you do a payroll for your company with employees all over the world, which is really happening to us, lots of freelancers and a decentralized workforce now. How to do even payroll if this new on-chain infrastructure is going to be a great problem?”
Harmony has plans to work with local partners that actually have the remittance problem not just one time, but regular payroll challenges. “Maybe how to put Expensify, bill.com or any of these are corporate accounting systems to use. So they become a B2C place. So there’s an ongoing FinTech revolution I’d say.”
Stephen regards the cross-border finance market as central to DeFi. “I’ll pick a title this year,” he says. “CrossFi, like cross-border finance or DeFi. I think Ethereum and many of the DeFi players this year we spend lots of time on the right ideas.”
Cross-border remittance is a key topic for DeFi. Blockchain technology can enable cheap and fast transactions for huge numbers of people, including those with no bank accounts.
Stephen says this is an area where his company is strong. “Absolutely,” he says. “We have great partners, we work with Carbon, which really builds a stablecoin.”
In terms for plans for 2020, Stephen says it’s not just for Harmony, but about blockchain adoption in general. People understand the value. “For us, we have been working with gaming partners that do trading and helped us really bring traditional brands.”
Bringing mainstream players into the space
One area where adoption is gaining momentum is gaming. “We’ve talked about bringing Hello Kitty and Game of Thrones onto blockchain through Harmony. With many of our developers the level of adoption is what we’re excited about. Those are really the mainstream brands that people can easily recognize. We want to figure out not just the cross-border aspect, but off-chain aspect of it.”
Zero-knowledge proof and privacy
“I don’t think that a lot of people really understand one new thing that developers have been working on for a few years, which is the idea of zero-knowledge proof.” This another area where Stephen’s math background and PhD in security are key assets. The concept of zero-knowledge proof and privacy is to use cryptography to exchange and verify data anonymously. “If not zero knowledge, proof in particular is becoming very much the hot topic. The keeper is not in control of your data or your life is not owned by governments or big corporations. So to us, privacy may happen this year.”
He sees the issue of data control as the challenge of the millennial generation. “To us, it would be like the key value proposition of blockchain and for us, we are very excited to be part of the new research.”
Asian vs. Silicon Valley startups
Harmony is based in Silicon Valley, where many of its co-founders and around 80% of the team still work. But the firm already has many remote teams, mostly in Asia. “We understand that’s really where the opportunity is, in particular in Vietnam and China. So, we’ve been to China many times to really learn why this is booming there and so many things are happening.” Harmony recently hired a director of engineering in Beijing and plans to set up an office there.
Stephen makes special mention of growth in Vietnam. “It’s just amazing growth in Vietnam. We took a few trips there last year to explore what Vietnam is, especially for the developers, especially for understanding where some of the new economic opportunities.” In addition, Harmony is reaching out to Korea, Indonesia and India.
“So these are some of our key markets. All right, the Chinese market is very competitive right now. We really want to be part of it to understand the growth. But at the same time, you have to know how to position yourself. You have to be political about understanding local partners. If not, you can’t really be part of the market. People really become very attached to the media perspective of the political climate.”
Some of the problems Silicon Valley people experience when setting up shop in Asia, are related to having a different pace and a different approach, even if the business itself is essentially the same. “You really cannot just say, ‘Hey, I’m Silicon Valley.’ We have to at least understand what opportunities and what’s happening there. And having local developers, local partners is really what is required of a blockchain platform. Last year especially, the big topic was 9-9-6 – that is, six days a week, 9 o’clock to 9 o’clock. We experienced that and we can say it’s a lot more solid than all the talk about unicorns in the traditional startup scene. It’s insane now: more than half of the unicorns are actually coming from China. So we have been trailing behind, not just in blockchain, but also machine learning.”
Harmony hosts regular investment events in Silicon Valley, with guests from all over the world, particularly China. Asked to compare Asian and Silicon Valley cultures, Stephen replies, “I would say most people get lost in their ideologies, if not in political discussions. They are actually more similar than most people think. Silicon Valley, to begin with, has lots of immigrants. Many people very idealistic technologists, same thing for China. Seeing the growth there, it’s actually like Silicon Valley 20 years ago. In terms of entrepreneur dreams and opportunities, I see the parallel as well. We say Silicon Valley is the place for dreamers.
I would say same thing for Beijing and Shanghai. People are very passionate and want to make innovation.”
Blockchain hub Berlin
One last question for Stephen was about Europe. What is your plan for Europe? “We actually have quite a few Binance meetups and Europe events already,” he said.
“I do think that Europe actually understands privacy. I want to visit Berlin because it’s the birthplace of blockchain technology as part of cyberpunk. We’re actually thinking about forming an entity there. Hopefully, this year we will get more chance to work with many of the local partners as well as local projects.”
He sees Zero-knowledge proof as an important step in compliance with European data privacy laws. Berlin has a large and FinTech and blockchain startup community. “We like to host people coming from Europe as well. I think if you are talking about public blockchain, it has to be global. Absolutely.”
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