Solving Scalability Challenges in Web3 with Maggie Love
Jessica Galang: Hi everyone. And welcome to The Impact podcast. I'm Jessica Galang, the content editor at Georgian. In this podcast we're going to talk about how to make decentralized finance or financial services that operate on the blockchain, more accessible, both from a technology standpoint and a people standpoint. Our guest today is Maggie Love, founder of SheFi, a crypto educational initiative that aims to onboard more women into DeFi and Web3. Maggie's also co- founder and director of business development at W3BCLOUD, a global network of data centers, specifically for Web3 and the blockchain economy. We had an awesome conversation, both about her passion for Web3 and her passion for education. So we decided to break this podcast down into a special two- part series. This first part will focus on her story, building the infrastructure needed to scale Web3 applications and how layer 2 solutions can help us overcome scalability challenges. I'm excited for you to hear more of these insights on how we can get more mass adoption within Web3 and DeFi. Make sure you look out for part two of this series, which will cover how we ensure sure that everyone has a fair shot at benefiting from these opportunities. Maggie, thank you so much for coming on the show.
Maggie Love: Thank you so much for having me today. Really looking forward to discussing everything you just mentioned.
Jessica Galang: Before we get into it. I want to know your story. So how did you get interested in DeFi and what is it about DeFi that interests you particularly, in the Web3 space?
Maggie Love: I've always been interested in finance, in financial literacy and financial empowerment, really since I graduated college in 2013. So I moved to New York about six years ago today, and just being around Wall Street and people that work in Wall Street, and you're in one of the financial hubs of the globe, you can't help but be interested in what's going on. And specifically what I noticed, I worked in technology, so I was doing product strategy at IBM Watson in financial services. So I was touching finance, but I wasn't directly in finance. I didn't decide to do spreadsheets after college and work crazy hours at a bank. And I realized that my peers who had done that, mostly male peers and friends were always continuing to talk about finance, talking about finance was table stakes. Whether we were watching football at a bar or on our way out to go see a show or hang out in the park, whatever it was, they had this special language and they were included on that and I and people who were not in finance were not included in it. So around then, I really realized that in order for me to be an empowered person in this world, to achieve the goals that I wanted to achieve, it wasn't enough for me to just be working. I really needed to be in the know in finance and people who had joined the financial industry just had such a leg up in this world. And it wasn't necessarily shared with people who didn't have that same background. And so I learned about blockchain in 2016. I was at a corporate strategy meeting at IBM and they were talking about technologies that they could start deploying in the financial services vertical, beyond Watson and others. This one man was on the phone. He wasn't in the corporate strategy meeting in the physical room, blockchain, blockchain, blockchain, talking about blockchain. And everyone's like," We should mute that guy. He won't stop talking about this blockchain thing." And for some reason I was like," Wow, this man seems super passionate about this word that I've never even heard of. Maybe I should go look it up?" So I went to Barnes and Noble in Union Square after work, very old school, picked up a physical book called The Blockchain Revolution and I read it voraciously. I finished it, I think, in 48 hours. And it was all about the different use cases of the blockchain, of global remittances, supply chain, digital identity and transforming the financial services industry was one of them. And the fact that anybody could have access to this financial technology, from that point on, I made it my mission to get a job in the cryptospace and in Web3. And I was interviewing at companies with all of my free time. When I was just endlessly curious about this technology, I tried to read anything I could find about it on the internet in 2016, 2017, which wasn't that much. And found a friend of a friend through a LinkedIn search that worked at Consensus, which is this big Ethereum company back in 2017. If you were in New York, it was the place you wanted to work. And met with him for a coffee, he took me into this flat in Bushwick. Now for contrast, I was working in a very buttoned up Astor place, beautiful, business casual every day, in New York city. And then I went all the way out to Brooklyn, to Bushwick and people were just wearing jeans and t- shirts and were very friendly. And I was working in a flat above Roberta's Pizza, that would be amazing. So feeling that energy there, I knew I wanted to be part of it. Then when I got into it, I was 26 and I didn't need to be an accredited investor and I could invest in this thing called Ethereum. And I could see people building products on it. I could see people working on the core technology around me. And so no one could stop me from investing in something that I knew was going to have upside value, just because of the people working on it and what it had accomplished so far back then. And so that was really an empowering moment. And getting back to this, not gate keeping my access to invest in finance and grow my wealth. And so if I was out with my finance friends again in 2017, after I had gotten the job, I was like," Oh, crypto and Ethereum is going to totally disrupt Wall Street." It's already disrupting investing right in 2017, people could raise money from anybody in the world via ICOs, initial coin offerings. Even though it's didn't end incredibly well, it showed that the use case, we could open investing, it totally disrupted that use case. So I was like," Oh, I'm going to totally disrupt your banking industry." I wasn't as fun for my finance friends to be around, but I was totally taken by this idea that anybody anywhere could invest in this asset. And so we didn't really see decentralized finance take off until 2019, right? So I got into this space 2016, 2017, a lot of people were trying many different use cases, tokenizing real estate, collaborative storytelling, on the blockchain, early music NFTs, and definitely there was some work around taking the financial sediment from T + 3, which is how long it takes a large transaction to actually finalize today to just immediacy basically on the blockchain. So there were some of that, but we really started seeing DeFi in 2019 with Compound and MakerDao and Aave, these DeFi lending platforms really taking off. And so at that moment, I had already co- founded W3BCLOUD, which is more of an infrastructure play. But at that moment I was like," Oh, it's here. Decentralized finance is here. The thing I've been telling my friends about beyond just investing in Ethereum is here. We're going to open all these banking services." And I just noticed not a lot of my female peers were using it. And I was like, if DeFi looks like traditional finance or TradFi, and we're also promoting that it's different and inclusive and creating all this value for new people, that is a problem. There's a mismatch there. What we're saying, is not what we're enacting. And so I'm going to make it my mission to change that narrative and ensure that we don't leave women and non- binary folks and other marginalized communities out of decentralized finance, outside of DeFi, because then we're only creating the old systems. And we cannot deny that many of the people that were first into crypto in the earliest investors were already male and reaping the most advantages from this technology. So that's my long story of where finance has always been this through line of something I really wanted to master myself and make sure I share with other people. And my story into crypto was really a story of curiosity, hearing something, reading about it and just not giving up until I found my way into the industry. And leaving that plushy Astor place managerial job to risky, crypto 2017 wild, wild west. But it was one of the best calculated risks I've ever taken in my life.
Jessica Galang: I really love how you told that story, because it really shows two sides of the work you do at W3BCLOUD and SheFi, increasing adoption of blockchain technology and disrupting how we work in finance today and increasing accessibility for people who have been traditionally left out. I definitely want to dive into both sides of that. So let's start with how much things have changed in the blockchain space since you started in 2016. I think the work W3BCLOUD does is a really good example of this. So W3BCLOUD provides enterprise cloud computing, blockchain infrastructure, just for reference for our viewers. So can you talk about what challenge that solves in Web3? And what are some of the scalability challenges that come with making DeFi applications more mainstream? Maybe you can tie those two things together.
Maggie Love: So W3BCLOUD builds infrastructure for decentralized protocols. So today even the Zoom that we're on, we're existing on the internet, right? So the internet is not actually a Cloud, you're not actually really accessing your services in the Cloud. Everything you do that is digital, runs on hardware infrastructure somewhere. So right, if you're storing files on AWS, that's happening actually in a data center somewhere, that's not yours. If you're sending money via Venmo, that's also happening through a web to Cloud service and those Cloud services are hardware. What the blockchain is building, is not only completely new currencies and tokens and services outside of banks and governments, it's operating on an entirely new infrastructure as well. So W3BCLOUD provides that infrastructure for every type of transaction that you want to execute on these different protocols. So for every NFT you mint or swap or token you exchange on Uniswap or deposit you make on a lending platform, all of that ends up on our hardware and our hardware is part of a global network of computers that are not run by the big Cloud companies. On this new infrastructure, if you send Ethereum to me, it's going on this new infrastructure, it's not going through traditional banking or Web2 infrastructure. So when we say Web3.0, it's actually an evolution of internet infrastructure, right? That has become more decentralized, because it's many operators that are coordinating through the software that is Ethereum to allow you and me to send transactions directly to each other. And it's becoming more dynamic as well, right? So now we're building metaverses on this new infrastructure. And so yes, with the way the Ethereum infrastructure works today and other decentralized infrastructures, it can be slower and harder to scale, because the technology infrastructure was adopted from Bitcoin, from proof of work and applied to Ethereum, because at the time that's what we had. And we are transitioning to proof of stake, which will alleviate a lot of these scalability challenges. But just the nature of having something distributed, having users being able to own their funds and transact on a network outside of these Web2 networks, allowing them to not have to worry about KYC, AML. For owning your assets, it's going to be undisputed infrastructure. And that also requires that we have some challenges in the transactions, because now everybody wants to transact on it. And it's some of those trade offs. There used to be called a scalability trilemma. It's like you could either have decentralization, scaling, maybe speed or something like that, you can't have all of them necessarily. So W3BCLOUD is part of that, it's part of the network that makes sure every transaction is secure and verified. On Ethereum network, we also do storage providing for Filecoin network, right? So instead of storing your files with a centralized provider, like AWS, you can store it in a decentralized censorship manner. And we are also looking at other protocols as well, that I can't announce, but we are very interested in supporting the infrastructure of decentralized protocols. And so my day job is very nitty gritty, understanding other layer 1's, understanding layer 2's, understanding node infrastructure plays. And so that's where I spend a lot of my time. And then business development, strategic partnerships. So seeing an opportunity, working very closely with the teams to develop a solution with them. And we have a lot of exciting things coming up, so you'll have to stay tuned for what those are.
Jessica Galang: Okay. And if I'm understanding that correctly, is the idea behind W3BCLOUD been bringing some of those benefits that we see in Cloud storage and Web2 and all the innovations that came out of that and bringing that into Web3, with the solutions that you offer?
Maggie Love: Yes. So both the transactions, we verify all the transactions that happen on the Ethereum network. And we also support decentralized storage as well. And we're going to continue to expand the protocols we support, so it's a multi- chain future. And so we will be that infrastructure for those protocols. And so this way, we're not going to the big Web2 players that are already owning the market, right? If we're running all of our infrastructure on Amazon, we're not actually decentralized. If we're running our networks on Amazon, Jeff Bezos can shut us down. So we're really a decentralized answer, an option for protocols that really want to make sure they're putting decentralization first for their users and their applications, right? If AWS goes down and let's say a protocol goes down that runs on it, a user doesn't own their token set, that's not decentralized. So we provide that decentralized option for protocols.
Jessica Galang: So I want to move on and talk about something I read in Consensus, is Q321 report about Web3. So in the report, they note that layer 2 solutions are important for scaling DeFi applications. And as a quick explainer for our audience, layer 2 systems and protocol are built on top of blockchain networks, which are known as layer 1. Layer 2 systems can process new transactions faster, while reducing pressure on the blockchain network. So we'll put some detailed resources in our show notes for reference, but basically layer 2 makes it easier to scale applications without sacrificing the security benefits of blockchain. So Maggie, I'd love to talk about what some of the challenges are right now with layer 1 and how layer 2 can help us find that scalability in blockchain that would really get this to the next level of mainstream adoption?
Maggie Love: Yes, that's a great question. And we're seeing a lot of great innovation around layer 2's. In my SheFi program, I give a presentation called Ethereums Glow Ups and I focus on the different scaling solutions, right? So a glow up is when you personally improve yourself and that's a great thing. And Ethereum in our technology also goes through these stages of continuous improvement, even Ethereum has its glow ups. What happens on this decentralized distributed technology, is now everyone around the globe is trying to transact on it. And we can think of Ethereum layer 1 like a highway, right? And we can think of all the transactions like cars. And even similarly, you need Ethereum for gas to make your transaction execute on the blockchain. A car needs gas, right, in order to go on a highway. When you think about that, what's happening with these layer 1's, is the highways becoming extremely congested, because all of the cars want to ago on it at the same time, just like looking at a picture of traffic in Los Angeles, right? When a hot NFT drops or when a big DeFi protocol launches or when there's rewards, right, for depositing your token somewhere, everybody wants to get there. Everyone's entering the highway at the same time and all these cars, all these transactions get congested. So what congestion leads to, is high network fees, right? You're going to have to pay more for your car to zoom ahead of the other cars. So you can even think of it, maybe there's a toll booth and the toll booth is the miner, that's saying," Who's willing to pay$ 50 to get out of this traffic?" And so what happens, is fees get really high because everyone on the network is starting to bid up and say they're more willing to get their transaction out. So then you wanted to send me a transaction during an NFT drop, and you didn't know it was a Doodles V2 NFT drop. And you're like," Wait, I don't want to spend$ 20 just to send some ETH to Maggie, that's crazy. This is not the future of finance." Right? But it's because we're trying to transact at a time that a lot of people are trying to transact. So congestion, even your transaction might fail, so you'll have even have paid for that failed transaction. So congestion leads to high fees and slow transactions and even transactions that get dropped, so it's really not a great user experience. We don't go to the coffee shop at the deli at the corner and they say," Oh, Visa network is too congested right now. You either need to pay more or you going to have to come back and get your coffee later." You're going to want your coffee right now. And so what layer 2's do, is just like you mentioned, you can think of it as a layered solution. They are smart contracts, so that's code, Ethereum code, code that runs on Ethereum and they move transactions off chain and they allow for many transactions to happen off chain. And what they do, is when the Ethereum layer 1 is still connected to it and needs to know," Hey, what's been going on your chain? What's the deal? I still need to know what's happening there." What a rollup will do will roll a bunch of transactions into one mega transaction. This transaction will have all the information, here's what's been going on in our layer 2. And it sends that down to the Ethereum layer 1, so the Ethereum 1 can still validate it. It's like, you can move the transactions off the layer 1, and you can do all the activities you want. You can access all the DeFi applications, you just need a check in with us every once in a while. And by checking in, the layer 2's actually use Ethereum's security properties, right, to verify those transactions. And still, people say are more decentralized than a whole different chain that has less validators. So that's what rollups do. There's different types of roll up. There is optimistic rollups, so that's Optimism. And Arbitrum, which are two Ethereum layer 2's. And there's ZK- Rollups. So they use a different type of solution to basically, verify transactions. And some ZK-Rollups are StarkNet, Aztek and zk- Synch, those are both what we call layer 2 rollup solutions. They just allow transactions to move off the chain, rollup the information and report it back down to Ethereum.
Jessica Galang: I'm glad you brought up rollups, because just to recap for our listeners, rollups can take multiple Ethereum transaction and roll them up to a single piece of data before being submitted down to the blockchain and this can reduce a lot of friction that happens. So one of the things in my research that was identified, was that this can create less friction around creating smart contracts. What would less friction around smart contracts mean for increasing adoption of DeFi? And why are smart contracts so integral to the development of DeFi?
Maggie Love: So a smart contract is the code that runs all of Ethereum. So smart contract, they joke it's neither smart nor is it a contract. It's a piece of code, that has built in logic. And so it can operate autonomously or self- execute. And so smart contracts are the language of Ethereum. It's how everything works. Everything operating on a DeFi platform is done in a smart contract, your hot wallet, so your metamask, is a smart contract. It's all the code and this is the code that holds all of the data of the different blockchain applications. So people are working on, you have a lot of data in these smart contracts, so the more complex they are, the activities that are more complex, that they need to execute to finalize a transaction or how much data they have on them can make them really bloated. And that's what makes transactions expensive. So both the complexity of the smart contract and how much data it's holding. So many blockchain scaling solutions are looking at, how do we optimize and make these contracts both more efficient? And maybe you don't need to report as much data to the layer 1 Ethereum let's say, to know that what happened on that layer 2 is true. So that's really what smart contracts are, just think the whole Web2 that we're existing on right now, also runs on code, web3 code is a smart contract to put it simply.
Jessica Galang: Awesome. Okay. And what are some of the building blocks that could create the foundation for more mainstream DeFi adoption? Some examples that come to mind, is treasury management within Dows or platforms that manage governance and upvoting for Dows. Is there anything in that realm that comes to mind, as we build this DeFi future?
Maggie Love: Things that would make DeFi adoption happen more quickly. I guess when we think about Dow treasury management, so a Dow probably holds all of its funds in a multi- signature wallet and what a multi- signature wallet is, is a smart contract that holds funds and it needs multiple signatures before it executes. So this allows people to jointly manage a wallet together. So just as like in your banking portal, if you share account with maybe another person, it's a similar thing. That person can see everything that happens, maybe they don't have to sign off on it. Think of a multi-signature wallet that anybody can see and multiple people need to say," Yes, you can move this money." And so what we saw in 2018 when ETH hit 80, was a lot of these projects actually weren't managing their money that correctly, they were in all these tokens or other things. And people just didn't think about," How do we manage this treasury? How do we optimize it?" Et cetera. And so now, that's really a piece of the Dow infrastructure that has taken off." How do we hold tokens? How do we pay for things? How do we do things with our money in the back end, so we are always optimizing?" And so I think for DeFi to go mainstream, we need to have those services so people can easily manage their money. And I imagine if we're thinking about mainstream in more of an institutional way, that's where I really see like Dow treasury playing. Banks and other institutions getting comfortable with this idea of managing this multi- sig wallet and using it in different financial tools and services. I think in general, for DeFi to go mainstream, really what you have to do is just let people know what they're actually lending into, what they're actually staking into, how to actually even read on a lending platform like Aave. They will tell you how much USDC is in the platform, how much has been lent in, but USB user can even go to the specific smart contract on Etherscan and the blockchain and verify it yourself. So I think in general for DeFi to take off as much as we want to abstract away a lot of the user experience, I think a big part of it is bringing people into knowing what your lending into and even how to do a little bit more research yourself. And it's not that scary and really it's just about navigating around and being aware of the different parameters that you have to be responsible for. DeFi is really becoming responsible with your own finances and learning about the tools in ways to do that more effectively.
Jessica Galang: What is the SheFi approach to education and how do we ensure that we get more diverse perspectives in a fast moving and fast growing space, like Web3 and DeFi? How do people overcome the knowledge barriers to entry? What are some of the biggest challenges Maggie has seen? And why does she see Web3 as a tool of empowerment for groups that have been underrepresented in the traditional finance sector? We'll cover all of those topics with Maggie in the next podcast. Be sure to check it out.
In part one of a two-part series on the Georgian Impact Podcast, we talk to Maggie Love, founder of SheFi and co-founder of W3BCLOUD. In part one, Maggie talks about her story, building the infrastructure needed to scale Web3 applications and how Layer 2 solutions can help us overcome scalability challenges.
In part two, we’ll talk about how to get more underrepresented groups interested in Web3 and DeFi, what Maggie has learned about onboarding more people onto DeFi and the SheFi approach to education.
In this podcast, you’ll hear about:
● How Maggie became interested in blockchain.
● The evolution of blockchain into DeFi and Web3.
● The challenges with scalability in blockchain.
● How less friction around smart contracts would help with DeFi adoption.
● The building blocks that can create the foundation for more mainstream adoption.