co-founder Frederieke Ernst on building Gnosis and bringing cypherpunk ideals to real life

Gnosis co-founder Frederieke Ernst talks about the future of money and how the cypherpunk movement continues to influence crypto innovation in an exclusive interview with crypto.news.

In the vibrant crypto landscape, Frederieke Ernst, co-founder and COO of Gnosis Pay and Gnosis Safe, has carved out a unique niche for herself. A semi-retired physicist with a passion for construction and cryptography, Ernst’s journey from academia to co-founder of one of the most widely used decentralized payment platforms is a testament to his innovative spirit. During a recent interview on the sidelines of the Emergence Conference held in Prague on December 6, Ernst delved into the evolution of Gnosis Pay, Gnosis Safe, and Circles, shedding light on their origins, mechanisms, and impact on the Web3 ecosystem.

Ernst’s passion for cryptography began with a book gifted to him by his father in his childhood: The Code Book (1999) by Simon Singh. “I was a 12-year-old kid who created his own PGP server,” Ernst recalls. “No one else was using it, but I had a good time.”

After completing his studies in physics and neuroscience in London and Berlin, Ernst began an academic career by conducting postdoctoral research at Columbia and Stanford before becoming a professor in Hamburg. In 2017, Ernst decided to leave academia and founded Gnosis together with the original co-founders of the onchain wallet, Martin Köppelmann and Stefan George.

Originally incubated at ConsenSys as a prediction market, Gnosis has emerged as a pillar of the Ethereum ecosystem. “We started with the goal of creating a prediction market platform,” says Ernst. “Our contingent token framework, launched around 2019 or 2020, has become the backbone of projects like Polymarket.”

Seeing that the prediction market was scarier than the payments industry, Gnosis eventually expanded its portfolio and created critical tools and infrastructure for Web3. This includes Gnosis Safe, the largest non-custodial smart wallet that manages over $100 billion in assets, and CowSwap, a decentralized exchange aggregator that matches buy and sell orders directly between users to reduce fees and slippage.

In recent years, Gnosis has focused on making blockchain technology more accessible to everyday users. Launched as a blockchain-based payment solution, Gnosis Pay aims to integrate on-chain assets with real-world financial systems.

“One of the reasons we chose the payments vertical is its simplicity compared to other verticals,” Ernst explained. “Payments are about shifting balances according to well-understood rules.”

Gnosis Pay integrates with existing financial channels such as SEPA and VISA, allowing users to spend cryptocurrencies in traditional environments. “If you walk into Aldi and say you only have USDC, they won’t accept it,” says Ernst. “Our goal is to make on-chain assets compatible with real-world situations.”

Ernst underlines the importance of user experience, criticizing the traditional crypto onboarding process as overly complex. “The 24-word seed phrase is a terrible user experience,” he argues. “We are leveraging cryptographic advances like biometric login and social recovery to make crypto as intuitive as PayPal or Gmail.”

Additionally, Gnosis Safe, launched in 2017, has become an indispensable tool for secure management of digital assets. Unlike traditional wallets, Gnosis Safe offers multi-signature functionality, allowing multiple parties to confirm transactions.

“Gnosis Safe is more than a wallet; it is a digital safe,” says Ernst. “DAOs are used by institutions and individuals who prioritize security and transparency.”

With integrations into decentralized finance (DeFi) and NFT ecosystems, Gnosis Safe has become a cornerstone of trust in Web3, protecting billions in value.

Creating a fairer money supply

One of the developments that Ernst is most excited about is Circles, another Gnosis initiative that takes a new approach to universal basic income (UBI). Running on the Gnosis Chain, a sidechain of Ethereum, Circles allows users to issue and exchange personalized currencies across their social networks.

“The aim is to create a grassroots financial system,” explains Ernst. “Circles emphasize trust and community, making UBI more sustainable and scalable.”

The idea behind Circles is to create an economy that operates parallel to fiat, nation-state-backed forms of currency, an alternative form of exchange that aims to unlock communities and peer-to-peer collaboration.

At the recent ETH DevCon in Bangkok, Circles 2.0 was introduced, bringing new protocol improvements aimed at ensuring stability by allowing communities to create and manage their own group currencies.

Members of a group can mint a common currency by locking their personal CRCs as collateral in the group’s vault. These Group Circles, which can be traded and traded within the group, can then be redeemed for any CRC in the vault, maintaining a stable supply while supporting community-driven economies.

This innovation aims to empower local communities to launch complementary currencies, including organizations that may want to create internal economies. It also helps groups pool and manage resources in collective economic spheres. Technical upgrades with Circles 2.0 include ERC1155-based Personal Circles, ERC20 Group Circles, improved interoperability, and an optimized transaction pathfinder for improved scalability.

MiCA and the regulatory environment

Regarding the current regulatory environment in Europe, Ernst is candid about the obstacles faced by the crypto industry in Europe, especially under the Crypto-Asset Markets Regulation (MiCA). “Regulators are inherently risk-averse and aim to prevent crises,” he observes. “But this approach often stifles innovation and leaves Europe at a disadvantage.”

Ernst therefore advocates a balanced regulatory approach that encourages innovation while addressing risks. “Potentially disruptive technologies such as artificial intelligence and blockchain require nuanced oversight,” says Ernst. “Banning or overregulating them will only redirect development elsewhere.”

Looking ahead, Ernst imagines a future where decentralized technologies are seamlessly integrated into everyday life. “We need to bring real value and real people to the ecosystem,” he says. “This means closing the gap between on-chain and off-chain assets.”

Staying true to the core principles of decentralization (shared ownership, individual agency and permissionless innovation), Ernst still sees plenty of room for innovation and growth.

“I think the cypherpunk movement has always been about restoring agency to individuals,” Ernst said.

“We built the pipes; Now it’s time to install the drywall.”