PoS layer 1 protocols must make 3 ESG changes to improve the user experience

The following is an op-ed by Maria Eisner, the ESG & Sustainability Lead at Concordium.

As Web3 strives for mass adoption, layer 1 protocols should treat users – especially their developers – like consumers. They must prioritize a positive, valuable experience for each person interacting with the protocol.

So, when traditional consumer statistics come to light, layer 1 protocols should take heed: 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 making environmental, social, and governance (ESG)-related claims “averaged 28% cumulative growth over the past five-year period, versus 20% growth for products that made no such claims.” This data is directly applicable to Web3.

Speed, convenience, consistency, and sustainability values attract users while lacking these qualities drives users away. Luckily, when layer 1 protocols implement green initiatives, they often directly incentivize heightened use. On the contrary, when blockchain protocols are energy guzzlers, developers, and users are deterred from engaging with the platform.

On a practical level, energy-intensive networks are even forced out of operation in certain circumstances. For example, this summer, we saw that Bitcoin miners had to shut down as a Texas heat wave drove up power prices and threatened the power grid. This is a recurring industry event. As shown below, less dramatic examples of sustainable initiatives positively influencing user adoption are plentiful.

Perhaps there is a contention 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 layer 1s want to continue onboarding users and ecosystem projects. Three key moves can set up layer 1 protocols to save the planet and boost their popularity.

Incentivize Green Energy for Validators and Nodes

While Bitcoin still has a hold on the hearts and minds of Web3, projects must favor PoS protocols over their more energy-intensive counterparts. While some point to Bitcoin’s move towards cleaner energy sources as proof that there is growing sustainability within PoW projects, the reality is that there remain more sustainable options and that those renewable energy sources would be better utilized elsewhere. Making Bitcoin greener does not make it as green as PoS.

Layer 1 protocols should prioritize PoS consensus mechanisms above PoW, and, wherever possible, rely on renewable energy sources. Web3 must pursue green energy goals and disprove the narrative that the blockchain industry as a whole is bad for the environment. To do so, layer 1s should invest in incentives encouraging users to power their work through renewable energy sources. Powered by subsidized clean energy, users will find their work cheaper and more environmentally conscious. This is something that consumers of 2023 explicitly want.

Use an Efficient Program Language

Choose sustainable fundamentals to build a popular and ESG-friendly PoS layer 1. An efficient program language allows developers to save time and enjoy a seamless coding experience. Simultaneously, efficiency saves computational power, using less energy and lessening wear and tear on computer hardware. Over time, these seemingly small changes create more sustainable layer 1 protocols.

Rust is just one example of a programming language that optimizes both computational resources and accessibility for developers. Rust is renowned for its ease of use and innovative coding that reduces errors, makes fixing bugs easier, and allows for easily reusable code. These qualities have made it a consistently popular choice for coders and companies like Microsoft and Discord, which entirely rewrote its garbage collector program in Rust.

Now, it runs ten times faster. Web3 should snap up the opportunities that efficient coding languages like Rust offer. That could mean choosing a language like Rust from the beginning of a protocol or even rewriting systems in a new language to maximize efficiency.

Ensure Fast Finality

Finality, which refers to the (near) guarantee that blockchain transactions will not be reversed, is an essential component of decentralized technology. However, in the case of PoW, finality requires enormous amounts of energy. PoS blockchain protocols, such as post-Merge Ethereum, can use 99% less energy than their PoW counterparts by selecting validators based on the number of 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. If transactions take minutes to hours to complete, they use huge amounts of energy and create a poor user experience.

Long transaction times wear down the patience of protocol users and developers, which are the bedrock of efforts to grow Web3 and not as available as the industry needs them to be. Additionally, serious businesses will not onboard Web3 technology if it is more time-consuming than Web2 technology. Thus, fast finality should be a priority for every protocol. Fast finality not only adds to the user experience; it allows a layer 1 to claim true efforts to protect the environment.

For the layer 1 protocol, sustainability, business development, and expansion goals are harmonious. As protocols implement efficient coding languages, incentivize renewable energy for nodes and validators, and take steps to ensure their protocol prioritizes fast finality, users and projects will increasingly gravitate towards layer 1s.

Making ESG a priority in Web3 will attract non-Web3 natives to blockchain technology, accomplishing the industry’s long-term aspirations of mainstream adoption – simply by giving the consumers what they want.