Deutsche Telekom AG, Europe’s largest telecommunications company by revenue, is now one of the main data providers to Chainlink – the omnipresent oracle service on which decentralized finance (DeFi) relies.
Not only that, Deutsche Telekom subsidiary T-Systems Multimedia Solutions (MMS), says it has begun staking on the Flow Network, the ultra-scalable proof-of-stake (PoS) blockchain from CryptoKitties creator Dapper Labs, and has plans to begin staking on several other chains in the near future.
Yes, Deutsche Telekom is providing DeFi data support, and has quietly gone beyond helping with the infrastructure of PoS blockchains and actually started custodying, staking and earning crypto rewards.
But lumbering telco giants are meant to be mired in enterprise blockchain proofs-of-concept, or stuck doing rather dull blockchain-as-a-service cloud offerings, right?
“We started roughly five years ago, like everyone else, doing all those enterprise blockchain proofs of concept,” said Andreas Dittrich, head of the Blockchain Solutions Center at Deutsche Telekom. “But we gradually began to feel we were not focusing enough on public blockchains.This is where digital value will be moved in the future, and it’s really where a telco should be active.”
T-Systems announced it was going to run a Chainlink node back in summer of last year, right around the time DeFi basically exploded. Since then, it’s been “a hell of a ride,” admits Dittrich.
“We were really jumping into something new, providing public blockchain infrastructure and having a token-natured business model on top of that,” he said. “So, of course, we started really small, with few data feeds. But then scaled rapidly, and by now, I think we are among the top three data providers at the moment on the Chainlink network.”
Chainlink’s system of data feeds, known as oracles, pipe information into the blockchain world of smart contracts, eliminating reliance on any single, centralized source.
“We are providing 51 data feeds right now,” said Gleb Dudka, an analyst at T-Systems. “We don’t handpick applications we provide data to, but examples would be Synthetix, a few decentralized exchanges, Nexus Mutual for insurance. The data is mostly digital asset prices, FX rates, and commodity prices like gold, silver, etc., and these mostly go to Synthetix.”
It’s only a matter of time until other big enterprise firms follow Deutsche Telekom’s example and run Chainlink nodes, said the network’s co-founder, Sergey Nazarov.
“Chainlink enables top infrastructure teams like T-Systems to monetize their globally distributed infrastructure and security expertise across the many chains already being served by Chainlink oracles,” Nazarov told CoinDesk via email.
Ethereum 2.0 staking?
Providing complex infrastructure for the internet is something Deutsche Telekom has done for decades (it’s also worth pointing out the telco has its own cloud offering and so reduces reliance on the likes of AWS). So on the surface of it, there should be nothing surprising about it providing infrastructure support for the incipient “internet of value.”
However, Dittrich acknowledges there’s an interesting blurring of the line between IT services and financial services.
The hardest part was getting this right from a legal, risk management and tax perspective, Dittrich said. T-Systems partnered with Bankhaus Scheich as a broker, and Berlin-based crypto custodian Finoa, one in a slew of German firms waiting in line for a crypto custody license from regulator BaFIN.
“It’s quite a unique thing, because our business model means we need to be able to handle crypto tokens,” said Dittrich. “We need to have them on our balance sheet, various types of crypto tokens. And that’s a hard thing to pull off for a company like us.”
Dittrich said his team has been busy looking at a range of other crypto staking candidates. The elephant in the room in this case has to be Ethereum 2.0 staking, the largest blockchain after bitcoin, which is the first phase of its transformation to PoS.
“We are not doing Ethereum 2.0 staking yet,” said Dudka. The ETH T-Systems buys is needed for Chainlink, he said, and has to be spent in order to sign transactions on the Ethereum public mainnet.
“There are quite a few networks in the pipeline that we plan to go live on,” Dittrich added. “Obviously, the bigger proof-of-stake networks are in there, be that Tezos, Polkadot, Ethereum 2.0, you name it.”