Co-founder Frederieke Ernst talks about building Gnosis and bringing cypherpunk ideals to real life.

In an exclusive interview with crypto.news, Frederieke Ernst, co-founder of Gnosis, discusses the future of money and how the cypherpunk movement continues to impact crypto innovation.

In the bustling cryptocurrency landscape, Frederieke Ernst, co-founder and COO of Gnosis Pay and Gnosis Safe, has created a unique space for herself. A semi-retired physicist with a penchant for construction and cryptography, Ernst's journey from academia to co-founding one of the most widely used decentralized payment platforms is a testament to her innovative spirit. During a recent interview in Prague on the sidelines of the emergency conference On December 6, Ernst delved into the evolution of Gnosis Pay, Gnosis Safe, and Circles, shedding light on their origins, mechanics, and impact on the Web3 ecosystem.

Ernst's fascination with cryptography began in childhood, sparked by a book his father gave him: He code book (1999) by Simon Singh. “I was the 12-year-old girl who set up her own PGP server,” Ernst recalls. “No one else was using it, but I had a good time.”

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

Initially incubated within ConsenSys as a prediction market, Gnosis emerged as a fundamental pillar of the ethereum ecosystem. “We started with the goal of building a prediction market platform,” says Ernst. “Our conditional token framework, released around 2019 or 2020, became the backbone of projects like Polymarket.”

Seeing that the outlook for the prediction market was more bleak than the payments vertical, Gnosis eventually expanded its portfolio, creating critical tools and infrastructure for Web3. This includes Gnosis Safe, the largest non-custodial smart wallet, managing over $100 billion in assets, and CowSwap, a decentralized exchange aggregator that matches buy and sell orders directly between users in an effort to reduce fees and slides.

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

“One of the reasons we chose payments as a vertical is its simplicity compared to other sectors,” Ernst explained. “Payments refer to balances that change according to well-understood rules.”

Gnosis Pay integrates with existing financial avenues such as SEPA and VISA, allowing users to spend cryptocurrencies in traditional environments. “If you go 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 emphasizes the importance of user experience and criticizes the traditional cryptocurrency onboarding process as too complex. “The 24-word seed phrase is a terrible user experience,” he says. “We're leveraging crypto advances, like biometric logins and social recovery, to make cryptocurrencies as intuitive as PayPal or Gmail.”

Furthermore, Gnosis Safe, launched in 2017, has become an indispensable tool for managing digital assets securely. Unlike traditional wallets, Gnosis Safe offers multi-signature functionality, allowing multiple parties to approve transactions.

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

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

Build a more equitable money supply

One of the developments that Ernst is most excited about is Circles, another Gnosis initiative, which takes a novel approach to universal basic income (UBI). Circles, which operates on Gnosis Chain, an ethereum sidechain, allows users to issue and exchange custom coins with their social network.

“The idea 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 runs parallel to forms of fiat currency backed by nation-states, an alternative form of exchange aimed at unlocking communities and cooperation, peer-to-peer.

At the recent eth DevCon in Bangkok, Circles 2.0 was unveiled, introducing new protocol improvements aimed at stabilizing communities by allowing them to create and manage their own group coins.

Members of a group can mint a shared currency by locking their personal CRC as collateral in the group vault. Fungible and tradable within the group, these group circles can later be redeemed for any CRC in the vault, maintaining a stable supply while fostering community-driven economies.

This innovation aims to empower local communities to launch complementary currencies, including organizations that want to build internal economies. It also helps groups gather and manage resources within collective economic spaces. With Circles 2.0, technical updates have been introduced including ERC1155-based personal circles, ERC20 group circles, improved interoperability, and an optimized transaction finder for improved scalability.

MiCA and the regulatory climate

Regarding the current regulatory climate in Europe, Ernst is candid about the obstacles facing the crypto industry, particularly in Europe under the Markets in crypto Assets Regulation (MiCA). “Regulators are inherently risk-averse and their goal is to prevent crises,” he observes. “But this approach often stifles innovation, leaving Europe at a disadvantage.”

As such, Ernst advocates for a balanced approach to regulation, one that encourages innovation while addressing risks. “Technologies with disruptive potential, such as ai and blockchain, require nuanced oversight,” Ernst argues. “Banning or over-regulating them only drives development elsewhere.”

Looking ahead, Ernst imagines a future where decentralized technologies will integrate seamlessly with 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 returning agency to individuals,” Ernst said.

“We have built the pipelines; Now it’s time to put up the drywall.”