Tuesday, February 28, 2017

Some Thoughts on Lisk

Lisk has been a fairly controversial and frustrating cryptocurrency project since its inception. I wasn't involved in the Crypti community nor had met Max and Oliver prior to signing on as an advisor shortly after they had just finished their crowdsale. It was a hard decision to join and I feel that I need to elaborate a bit more on it to provide some context and more accurately explain my involvement

First, I mostly ignore other altcoins unless they have some unique piece of technology they they bring to the ecosystem. For example, IOHK recently published a comprehensive report on Dash and we later followed it up with another report containing a series of improvements. I think Tezos has its heart in the right place and just needs some TLC to make a serious impact on the space. Monero has started a great privacy conversation.

With respect to Lisk, it had all the right marketing jargon in its beginning- blockchain apps, sidechains, javascript, etc. But I honestly couldn't grok what the platform offered to developers and why it was unique and interesting to the space. Furthermore, the technology seemed to be a rehash of older ideas that have failed in the space such as the original DPoS and Crypti.

Hence, I initially completely ignored the project and happily went on my way to other things. Then a friend of mine participated in the crowdsale with a six figure amount. He asked me to try to be an advisor and help the project along. I generally reject these requests, but he is a good friend and thus I figured I'd meet Max and Oliver to see their vision.

I sent over a list of due diligence questions alongside some technical and roadmap questions. The answers were sufficient to warrant a meeting. Upon some discussions with Max, I realized that Lisk could actually serve a valuable place in the community.

Microsoft has been pushing a Blockchain as a Service platform. It seemed like Lisk could serve as a decentralized version of this idea by creating a marketplace for developers to consume blockchain related services for their applications where and when needed from immutable storage to oracle services. All these services could be priced in Lisk. I discussed this in more detail here.

Ok, so we have a decentralized version of something that Microsoft is doing and it's a marketplace. Sounds like a decent experiment to run. If anything, we could explore improving DPoS, sidechains and a lot of incentive schemes with the funds. Also, building a cryptocurrency in javascript is a really interesting pedagogical project.

Thus, we hammered out a deal for me to come onboard as a non-fiduciary advisor to Lisk alongside a lawyer friend of mine Steven Nerayoff. To be extremely clear what this relationship meant:

  1. I never had control over the funds lisk raised at any time 
  2. I never had control over management of the project nor HR decisions 
  3. I never had control over project governance, the roadmap or direction
I was hired to be exactly what my title denoted- an advisor. That meant to me that I would provide advice to Lisk's management when asked about any topic I felt comfortable discussing and also be available for meetings. As an advisor, I shared several concerns about the project from the very beginning. 

First, I recognized that they raised funds without an operating entity. I requested that they form a not for profit and aggregate the funds held their trust to it. Their original strategy was to accomplish this task from a German structure. I have no experience in German law and thus recommended a Swiss Foundation. Eventually the Swiss option was followed after many months of spinning in circles on a German ggmbh. 

Second, I requested an immediate increase in staffing. To facilitate the advice, I recommended several recruitment options from outsourcing some development components to a trusted Ukrainian shop to directly recruiting using some talent scouts that I've worked with in the past. 

The lack of a legal entity and lack of access to funds seems to have greatly slowed this process. I still cannot understand why they don't have more developers. For example, IOHK hired seven full time scala developers in three months time for ETC. 

Third, I requested that they get a security audit of the existing source and protocols. As it was inherited and written in a very dangerous language (javascript), I speculate that is a high probability there exists at least one ticking time bomb in the github repo. To the best of my understanding an audit hasn't been done. I could be wrong.

Fourth, I requested that a whitepaper and roadmap be drafted with explicitly clear goals and a solid value proposition for the project to focus on. Blockchain apps and javascript is not a business strategy. Lisk does not support smart contracts and to the best of my understanding does not currently offer app developers any reasonable support for their applications. 

The decentralized Microsoft play stated above is one example of a conceptual direction they could take and I believe there exist sufficient whitepapers and tech out there to make a push for it. I am uncertain exactly what Lisk is trying to do and honestly it hasn't been well communicated to me. 

As Lisk isn't my project and I just advise, it's perfectly ok for me to disagree with things or to say that I can't divine the reason for XYZ. It's Max and Oliver's project and they were entrusted with over ten million dollars. I'm just the guy in the back. However, what has deeply frustrated me throughout this process is the lack of communication and strategic execution.

I've always been just an email or skype message away and I have one of the deepest networks in the cryptocurrency space. My value as an advisor was to share that network at any time. It really wasn't used. For example, I was totally willing to help vet and hire candidates. This was never asked. I was totally willing to help get security auditing setup or assist in planning out a whitepaper. Again never asked.

Hence, I- like many in the Lisk community- was left on the outside looking on in hoping for progress. In the meantime, some in the Ethereum community blamed me for the failures of Lisk. I recall one post on reddit entitled Charles Hoskinson's CV and then posting a price chart of Lisk. It was hurtful, unfair and exactly what one expects from the cruel internet.

If there was a point to taking the criticism, I'd be willing to brush it off. But not being utilized, I can't honestly understand why it's necessary or fair. I've always wanted to see young entrepreneurs in this space succeed and I have spent hundreds of uncompensated hours answering emails and skype calls from dozens of projects providing advice. In fact, my entry point in the cryptocurrency space was through a free MooC Brian Goss and I created on Bitcoin.

While I really want to see Max and Oliver succeed and for Lisk to become a prominent project with real utility and good technology, I'm not sure I'm the best fit to advise them on how to get there for whatever reasons. Therefore, I'm officially resigning as an advisor.

This doesn't mean that I think Max and Oliver are bad people or that Lisk will fail. It just means that my role wasn't being utilized and thus I'd like to move on to not waste anyone's time or resources.

As a final point, I honestly do hope that the Lisk Foundation funds an independent team to develop a parallel client. I think competition would do the project a lot of good. I also hope they draft a whitepaper clearly outlining the goals and value proposition of Lisk.

If there is any technology in IOHK's portfolio that's useful to Lisk, they are of course welcome to use it (everything we have is open source). I'm also always willing to answer an email if it should come across my inbox.

Thanks for reading,


  1. So, your friend (the reason you started advising Lisk) has already sold his LSK?

  2. How the fuck did these guys collect 12k bitcoin without a whitepaper, unbelievable how stupid people are.

  3. Will you be returning the unearned proportion of Lisk you received when you vested to work as an advisor now that you've resigned?

  4. The unearned vested lisk is under Max's control. He can do whatever he wants with it. I'd rather he spend it on the project.

  5. I was on the Crypti team. I refused to get involved with Max's scheme because he basically stole the project from Boris and Stas.

    IMHO, Max and Oliver are faithless opportunists, thieves, and are unreliable and inexperienced as leaders

    1. That's not how I interpreted it, from what I heard Crypti had an identity crisis and wanted to move on. Max and Oliver left and forked the (open source) code. Crypti-coins could be burned for Lisk. Not sure where thievery comes in. Everything else stands, however.

    2. This comment has been removed by the author.

    3. You heard wrong then, read this blog post to see what really happened: