Efficient by Design
Sustainability. It can be a charged word in the context of blockchain and crypto – whether from outsiders with a limited view of the technology or from insiders using it for competitive advantage. But as a CEO in the industry, I don’t think either of those approaches helps us move forward. We should all be able to agree that using less energy to get a task done is a good thing and that there is room for improvement in the amount of energy that is consumed to power different blockchain technologies.
So, what if we put the enormous industry talent and minds that have created and developed blockchain to the task of building in a more energy-efficient manner? Can we not just solve the issues but also set the standard for other industries to develop technology in a future-proof way?
I think we can and it's what motivated our organization, the Stellar Development Foundation (SDF)[1], to work closely with an international consultancy to research and understand the energy efficiency of the Stellar network and its Proof-of-Agreement (PoA) consensus mechanism, the Stellar Consensus Protocol, so that we can take actionable steps to address the network’s carbon footprint – learn more about the findings here.
We hope this is a driver for others, within and beyond blockchain, to do the same. While this research was meant to make the Stellar network better, we believe that we came away with a framework that can kick start a dialogue around a path forward for the industry.
Here are some takeaways:
Data and research on electricity consumption in blockchain and financial services is sorely needed
First, we wanted to understand how Stellar compares to other blockchains and the legacy financial system. But as we tried to gather information on what was publicly available, there was little to be found. Rigorously-tested data and research from the blockchain and traditional finance industries as a whole is lacking and not easy to come by.
We hope to use this research in a couple of important ways with our broader industry counterparts. True to our open source roots, we will share the methodology that other blockchain networks can use as a framework to figure out their carbon impact as well as encourage greater transparency from legacy players to share their data so we can all have visibility into the sustainability of financial services as a whole. The framework will serve as a guide for other public blockchain networks to assess sustainability through the lens of three key impact areas: energy use, GHG emissions from energy use, and e-waste/embodied carbon. It serves as a resource to assess the comparative impact of blockchain protocols—namely, the electricity used in running the blockchain software responsible for handling transactions, and electricity consumed by data transmission and storage. As more players from traditional financial services and blockchain share their own footprints, we’ll get a better look at what works and what needs to be improved so that next generation financial infrastructure is built with transparency across the board.
Stellar is efficient by design
Second, the research reaffirms something we already knew but can now prove: the Stellar Consensus Protocol is incredibly efficient.
The research found that the Stellar network uses:
- An estimated 481,324 kWh of electricity per year
- 0.00032 kWh of electricity per transaction (This is equivalent to 0.017 smartphones charged.)
- 173,243 kg of CO₂ in estimated emissions per year (This is equivalent to the greenhouse gas emissions from 33.7 US homes’ electricity use for one year.)
- 0.00011 kg of CO₂ emissions per transaction (This is equivalent to 0.013 smartphones charged.)
These figures help put Stellar’s environmental impact into context, and also help demonstrate that blockchain technology can be built in an efficient way.
While these numbers are low considering how many transactions Stellar processes every year, we believe that part of our role in the Stellar ecosystem is to bring network actors together to do what we can to offset the electricity use that cannot be avoided.
A step forward on a greener path
Guided by these findings, SDF has established an ongoing Carbon Dioxide Removal (CDR) commitment. Together with the Stellar ecosystem, we will pay for removal of carbon emitted by the network every year, and are retroactively paying for the removal of the historical carbon footprint of the network since launch.
We’ve chosen to work with a company that captures CO₂ directly from the air and stores it underground. By permanently removing CO₂ emissions from the air, they can no longer contribute to climate change. While there’s no perfect solution for addressing CO₂ emissions, we wanted to invest in something durable and vouched for by the scientific community — and carbon removal was recently deemed an essential strategy in meeting global emissions reduction targets by 2050.[2]
We are also looking at many other initiatives that we can explore on the climate front that directly leverage blockchain technology – namely, an ecosystem standard that could help wallets and other products build in functionality to pay to offset transactions at the time they are processed.
A sustainable future requires a collective effort. For the world to achieve its climate goals, we will each have to play our part, asking ourselves hard questions and using the answers to find ways we can make a difference. Because if we say we want a more inclusive system, we need to build that new system so that it's built to last for years to come. We need to live up to the spirit behind our mission – creating equitable access to the global financial system means creating a system that works for the many, not the few.
If you would like to learn more about our research efforts, visit our landing page for more details.
A fireside chat with the Stellar Development Foundation www.youtube.com
[1] Stellar.org is a non-profit that supports the growth and development of the Stellar network.