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 crypto landscape, Frederieke Ernst, co-founder and COO of Gnosis Pay and Gnosis Safe, has carved out a unique space for herself. A semi-retired physicist with a penchant for building 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 Emergence Conference on Dec. 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 gifted by her father: The Code Book (1999) by Simon Singh. “I was the 12-year-old kid who set up her own PGP server,” Ernst recounts. “No one else was using it, but I had a good time.”

After completing her studies in physics and neuroscience in London and Berlin, Ernst embarked on a career in academia, 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-found Gnosis, alongside the onchain wallet’s original co-founders Martin Köppelmann and Stefan George.

Initially incubated within ConsenSys as a prediction market, Gnosis emerged as a foundational pillar of Ethereum’s 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 for projects like Polymarket.”

Seeing the prediction market landscape as more daunting than the payment vertical, Gnosis eventually expanded its portfolio, creating tools and infrastructure critical to Web3. This includes Gnosis Safe, the largest non-custodial smart wallet, manages 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 slippage. 

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 are about balances that change according to well-understood rules.”

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

Ernst underscores the importance of user experience, criticizing the traditional crypto onboarding process as overly complex. “The 24-word seed phrase is terrible UX,” she asserts. “We’re leveraging cryptographic advancements like biometric logins and social recovery to make crypto as intuitive as PayPal or Gmail.”

In addition, 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’s a digital vault,” says Ernst. “It’s 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 trust in Web3, safeguarding billions in value.

Building a more equitable money supply

One of the developments Ernst is most excited about is Circles, another Gnosis initiative, which takes a novel approach to universal basic income (UBI). Operating on Gnosis Chain, a sidechain of Ethereum, Circles enables users to issue and exchange personalized currencies with their social network.

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

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

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

Members of a group can mint a shared currency by locking their personal CRC as collateral in the group’s vault. These Group Circles, fungible and tradeable within the group, 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 who may want to build internal economies. It also helps groups pool and manage resources within collective economic spaces. With Circles 2.0, technical upgrades include ERC1155-based Personal Circles, ERC20 Group Circles, enhanced interoperability, and an optimized transaction pathfinder for improved scalability have been introduced. 

MiCA and the regulatory climate

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

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

Looking ahead, Ernst envisions a future where decentralized technologies seamlessly integrate with everyday life. “We need to bring real value and real people into the ecosystem,” she says. “This means bridging the gap between on-chain and off-chain assets.”

Staying true to the core tenets of decentralization: shared ownership, individual agency, and permissionless innovation, Ernst still sees a lot of room for innovation and growth.

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

“We’ve built the pipes; now it’s time to put the drywall on.”