It is one of the largest companies in the sector, but also the one whose strategy has been the least clear in recent years. Launched in the wake of Ethereum's creation in 2014-2015, the US start-up (co-founded by Joe Lubin , co-inventor of Ethereum with Vitalik Buterin) was initially designed to provide financial support to the ecosystem in order to acculturate the traditional world to the technology.
"ConsenSys began by providing consultancy to traditional companies that wanted to experiment with blockchain," recalls Stanislas Barthelemi, Lead Blockchain & Crypto at KPMG. But today, that vision is outdated.
The company is pivoting to focus primarily on infrastructure development, moving away from supporting traditional corporates.
"Today, we are targeting the institutions most active in blockchain networks namely, crypto funds, crypto venture capital firms and companies promoting the emergence of on-chain infrastructures," a ConsenSys spokesperson tells The Big Whale.
So how do you explain this change of strategy?
"ConsenSys has won the battle against the likes of IBM and their private blockchain solutions," notes a source close to the company. "Public blockchain has taken over and ConsenSys no longer needs to convince companies to opt for this solution," she says.
"Companies and large traditional corporates are still in a logic of experimentation vis-à-vis blockchain, which for them is still essentially a cost generator with little revenue to show for it," explains Nicolas Bacca, co-founder of Ledger and former CTO of the French unicorn . "They are therefore not yet the players of choice for companies like ConsenSys with a view to a stable and sustainable collaboration", he adds.
ConsenSys (nearly 800 employees, including around 50 in France) now wants to put its energy and financial strength at the service of tools that will, in turn, promote mass adoption, while generating stable revenues and being as little dependent as possible on market fluctuations.
In particular, we remember that the company was forced to lay off 60% of its workforce at the end of 2018 after a 94% fall in the price of ether (ETH). Today, the company seems more solid, particularly after raising $510 million in 2021-2022 from Singapore's sovereign wealth fund Temasek, Softbank, Microsoft and the largest US investment bank JPMorgan.
ConsenSys has also cleaned up its unprofitable activities. Long one of its core products, the company is gradually going to decentralise Infura, its infrastructure provider, which in particular enables blockchain nodes to be operated or applications to be developed. "We never really managed to monetise it", says an internal source at ConsenSys.
Two flagship products are now at the heart of its strategy: Metamask, the benchmark digital wallet in the Ethereum ecosystem (30 million users), and Linea, a secondary layer of Ethereum (layer 2).
The Metamask goose that lays the golden eggs
"Metamask remains the main gateway to Ethereum, which gives it a major competitive advantage, as this product has always been a major source of revenue via fees generated by swaps," confirms Nicolas Bacca.
The figures are not public, but the portfolio would have generated more than $250 million in revenue in 2022 by charging 0.875% on these crypto-crypto exchanges. But beware of resting on your laurels.
The wallet sector is highly competitive and several newer projects are experiencing significant growth, including Rabby, created in 2021 by DeBank, a decentralised finance (DeFi) wallet tracking platform that is popular with many users.
Rabby's strong point is that it allows users to switch blockchains almost invisibly. Overall, it is much more pleasant and simple to use than Metamask.
"For a long time, the Metamask teams underestimated the user experience, believing that it was up to users to adapt to the specifics of Web3," confides an expert. "But this is changing, there has been a lot of effort put into this in recent months."
"The last two years have been devoted to a complete overhaul of Metamask, which has taken time, like many things at ConsenSys," he insists. "It's often more difficult to innovate when you're the leader in a sector", notes the expert.
For several ex-employees, ConsenSys would have been hit by major strategic divergences and an inability to cut to the chase when necessary.
According to our information, Metamask should soon be presenting an "account abstraction" solution. This recent Ethereum feature eliminates the time-consuming management of private keys, which, if forgotten or stolen, expose users to the risk of losing their funds. From now on, users will be able to log in or retrieve their access via facial or digital recognition, or even by e-mail.
Major projects for Linea
Another major project, ConsenSys is now developing Linea , its layer 2 solution enabling Ethereum to be offloaded by offering low-cost transaction fees. It was launched in mid-2023 and looks set for a promising future thanks to the technical expertise of ConsenSys' teams and its integration into Metamask.
"Our researchers have been working on this solution for more than two years now," confides Nicolas Liochon, in charge of Linea and head of research and development at ConsenSys. "Our ambition is to offer the cheapest scalability solution on the market", he insists.
Currently, the capitalized value (TVL) of applications developed on Linea is in the region of 400 million dollars.
But here too, competition is fierce in this niche. Linea has to contend with behemoths such as Arbitrum ($16 billion in TVL), Optimism ($9 billion), Blast ($3 billion), Starknet (1.7 billion), Base (1.3 billion) or ZkSync (800 million).
Linea is not yet at the same level of development as the two leaders, but its attractiveness could soon increase with the launch of a token. This has never been officially announced, but exchanges with certain members of ConsenSys have confirmed that it will be launched by the end of 2024.
In addition, Linea recently launched a quest campaign enabling users to accumulate points by carrying out tasks on the network. This type of strategy usually foreshadows an operation known as "airdrop", which consists of rewarding the first users of a protocol by sending them tokens for free.
What will bring ConsenSys back into the limelight?
"ConsenSys' huge advantage is that it has been at the heart of the Ethereum ecosystem since its creation in 2015, which is a huge advantage over the competition," bellows a former manager of the company. "After a somewhat hazy period, we feel that ConsenSys now has a clear strategy and the upturn in the markets may enable it to look forward to the coming months with peace of mind," he points out.
"Nevertheless, you have to be wary of this financial omnipotence," warns another ex-ConsenSys. "Some incompetent people occupy or have occupied strategic positions, explaining the procrastination of recent years. Having a lot of money is not necessarily an advantage because it sometimes prevents you from being pragmatic," he confides.
