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A Look Inside the World’s 2nd Largest Ethereum Mining Pool and Their Thoughts on Defi

Global Coin Research Founder Joyce Yang interviewed CEO of Spark Pool, Xu Xin, at the 2019 Asia Blockchain Summit. Here we highlight the main takeaways in our conversation with Xu Xin, as he sharese insights on the history of Ethereum in China, the role of mining pools and his take on defi.

Below are the interview highlights with slight edits to ensure more smooth flow of the text. To see the full interview, check out the Youtube video below


Origin and Background of Spark Pool

Joyce Yang 

So can you tell us a little bit more about SparkPool and how you guys started? 

Xin Xu 

Ah yeah, sure. SparkPool was originated by the community about 3 years ago from the Chinese tech community called Ethfans. We went to commercially about a year and a half ago at the beginning of 2018, and now we started with around 0 and now we’re about 23-24% of Ethereum’s global hash rate. So far maybe the second largest Ethereum mining pool in the world.

Joyce Yang 

Now, when it comes to when you’re a Chinese mining pool and then you’re also contributing so much power and hash rate to the community, there must be a lot of scrutiny from folks outside of China who asked there’s so much centralization in China.

Xin Xu 

Yeah, there is. I think its fine. I think once the power is actually controlled by the good people, its fine. Because otherwise Ethereum would have been destroyed more than once if we are evil.

Joyce Yang 

Yeah, so is how much of the hash power is actually coming out of China right now from Ethereum? 

Xin Xu

I think more than 60%. 


History of Ethereum in China

Joyce Yang

How has Ethereum evolved in China?

Xin Xu

That’s interesting because I think at the early stage of Ethereum I mean the early 2015 or 2016, only tech people were actually interested or know about Ethereum. And at that moment, there were a lot of amazing ideas and talks,  debates about Ethereum, how it’s going to change the world is stuff like that. And I think once the price of Ethereum actually goes up in 2017, and people come into the community and become more like profit driven people or we say investors, then the vision of Ethereum kind of disappeared for like a year or two, in my opinion. And everyone was crazy about ICO and stuff like that, and the people actually behind Ethereum are like nowhere, and we cannot find them.

Joyce Yang 

Interesting. Vitalik was always there though.

Xin Xu 

Yeah, kind of, but the people that surround him are no longer the tech people, in my opinion. But well I think at the beginning of this year when the price dropped and the hyper went away, the tech people came back again. I think they recognized a new topic like Defi and stablecoin and stuff like that, and so now things are becoming more interesting than before 

Joyce Yang 

Yeah, and it sounds like SparkPool is a really involved community member within China as well in supporting the Ethereum community. 

Xin Xu 

Yeah, it happens to be Hangzhou because I’m presently, I’m from Hangzhou, originally born there, and like the Imtoken, and like public chains like Nervos, because the CEO of Nervos has also been involved with Ethereum at the early stage. We have been friends since the early stage, very early stage, and we have always tried to actually push [forward] the Ethereum community back in China, and try to maintain it in a relatively calm and stable way of discussing the technologies, instead only hype for a price. So we have been always like that, that’s where the events like Ethfans comes from and it has been like there for 4 years. 


On Staking and Defi

Joyce Yang  

So you know, obviously a lot of projects are coming to China looking for validators, looking for participants. You guys are also participating in Cosmos as well now. How do you involve and foresee this type of community to build out and grow? 

Xin Xu  

I think the reason we’re all staking, is more about Ethereum is going to PoS in the future and they have been researching, developing and preparing for that moment to come. So that’s why we are using Cosmos or maybe Polkadot or other POS chains for testing our existing infrastructure. And the reason we can’t [provide] a relatively cheaper staking fee to attract more people to join our pool is that we actually can’t share our current infrastructure with our PoWpool, because in the staking, the barrier of technology is relatively lower. 

Everyone could be a validator, but the thing is they actually need more sense of security compared to PoW, because PoW with its barrier of technology, it actually cling out to a lot of incapable operators. But in the POS world, everyone can be an operator and no advanced technology is actually needed. 

If you read the news you’ll see that I think last week, the first double sign accident was done on Cosmos, and one of the barrier was slashed and permanently jailed. So that’s hecan no longer run the validator. I think that’s a good example of people with less sense of security joining the POS community, because it does not need actually that much technology. But actually the security sense or the network security provided by PoS needs more attention on technology compared to PoW.

[…]

my attitude to Ethereum 2.0 is always like love and hate and “Hey, that’s just for miners.” But we are always supporting Ethereum to develop, and we have been preparing relative infrastructure and the tools for Ethereum 2.0 staking since I think the beginning of 2018. Because in the early road map of the 2.0…. Not 2.0, but the PoS Ethereum should actually was [planned to] come at the end of 2018, so we had everything prepared at the early 2018, but nothing happened to it, even now. So it’s also the love and hate is part of the relationship, we are always supporting the team to actually conquer the problem. 

Joyce Yang 

What are the next plans for SparkPool?

Xin Xu  

Interesting. We are researching on defi now.

Yeah, that’s what blockchain people are… We are not originally the miners. So we are trying to see how we can actually leverage our resource to help the miner to be more fairly treated with decentralized finance institutes, because now they are borrowing and then lending from the centralized ones with high interest to expand their business, but actually we can do defi, use more decentralized ways to finance their business and actually that’s more crypto native to them as well. 

Joyce Yang 

That’s really interesting, and I remember MakerDao was one of the kind of first folks who went to China with Chao Pan actually kind of helping…

Xin Xu 

Yeah, he is using our office. Next to us. 

Joyce Yang 

Alright, that’s really funny. At the same time defi is definitely growing interest, and at least in the U.S, projects have had problems with liquidity and volume, but I think that’s definitely a lesson of problem for you here right…

Xin Xu 

I think like for defi products; Compound and Dharma, they have enough supply of money, but they don’t have the need of borrowing. They cannot find the need, but actually miners are good, very native need of borrowing at least in China. Yeah, so we are trying to actually see if SparkPool as a brand of that the miners trust, if we can breach defi in those things. As SparkPool, that’s our research. 


Ethereum Community in China and Xu Xin’s Attitudes as Ecosystem Participants

Joyce Yang 

Yeah. How do you often do the dialogue within the team and kind of stay in touch?

Xin Xu 

We have been friends for years. Not only with Vitalik but also like the research team in Taiwan, and we talk of every half a year maybe. And sometimes we meet some persons, the interesting part of being a pool is we’re always at the front line, we are running the chain 24/7. And once we meet some small [activity] and we see some interesting performance, we actually talk to the teams, because the teams are more like doctors in the college and they don’t really know what’s happening every day. And yeah, that’s an interesting dynamic.

Joyce Yang 

Yeah, that’s really interesting. How do you engage with the Ethereum teams other than kind of talk to them directly in Asia?

Xin Xu 

Okay, I would say I actually don’t know because maybe the person or the nature of Asia I guess, they are more focused on the speculation and more profit driven, but there’s always someone like us when you are young, relatively speaking, and we don’t have that much need for money or whatever, we’re more interested to see the revolution change of the technology. 

And those people have been around, because we have been around very early. And we have been trying to attract more people like us to join us, so we are trying to support them in different ways. And we never fade away because speculators come and go, but we’re always around. And like I mentioned like the Jan from Nervos, Ben from Imtoken, and each of us built some great technology and we have a company and pretty good teams. We trying to make it happen, so… 

Joyce Yang 

Yeah. Is there other companies or projects that are also very adamant about supporting the technology 

Xin Xu 

Oh yeah, there are and those people always actually kind of attract each other, they will become friends and that’s how the community grows. It’s more underground. They barely go to those conferences, because China conference are more like a profit-driven and stuffs like that. But for Ethereum, because we’re miners, my relationship with Ethereum is like love and hate again, because we love it, the technology, we support it, but sometimes the core teams or the Ethereum community, they always suspect miners are the evils.

Joyce Yang

[laughs] so you guys got a bad rep to Ethereum?

Yeah, we have been that like that for 3 years, so now I’m more calm to Ethereum. Before I was pretty like a fanatic. We have been super supportive to Ethereum but now we want to be more neutral because that’s what they suspect we are, and we’ll only just behave like that. 

Joyce Yang 

Right. Every mining pool to folks maybe..

Xin Xu

scary..[haha]

Joyce Yang

A lot of the mining pools are more low-key, people are just there and more practial. From the folks I’ve met so far, and they just want to do their own thing. If they don’t have…

Xin Xu 

I think there’s a good and bad part.

Joyce Yang 

I agree.

Xin Xu 

The good part is that’s how they supposed to be; they should not have too much idea about or too much too much claim about things. Otherwise you’ll have incentive to do the wrong thing.

The bad part is they are actually very important and the key officers of the community and they’re supposed to actually deliver some attitudes. But I tried it, but… the Ethereum don’t care about what the miners do.

Joyce Yang 

Really! I’m surprised. So actually I was just at Zcash conference last weekend and Vitalik was there as well supporting privacy technology there. And you know, one of the participants who asked about Asia wanted to know, how can we engage in the mining community in China and Asia, because we know that they are serving so much hash power, but at the same time, do they care about governance? do they care about participating in the community? And I think there’s an increasing interest actually from those folks who want to learn about Asia.

Xin Xu 

Yeah, I would say so, but people are afraid to come to China. It’s still a stereotype, it has been like that for years. 

Joyce Yang 

Yeah, and I’m really hoping that could change in China obviously.

Xin Xu 

Yeah, we’re trying to go out and talk to them as well. 

Joyce Yang  

That’s great. 

Xin Xu 

Because people have the stereotype of that Chinese crypto people are more like speculators, but there is actually technology being developed there. 

1 comment on “A Look Inside the World’s 2nd Largest Ethereum Mining Pool and Their Thoughts on Defi

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