The Bitcoin Renaissance: Unleashing New Possibilities - TOKEN2049 Singapore 2024

we're going to talk about uh something called the Bitcoin Renaissance Bitcoin season 2 some people call it uh we're going to dig into what that is exactly uh basically we're making Bitcoin great again it's no longer a pet rock uh it's going to interoperate with other blockchains it's going to be useful it's going to be more programmable and we're right on the cusp of doing this it's something I'm very excited about something where we're inv investing in a lot uh we're investors in some of these guys here on stage so we have Fisher from Babylon man from Stacks Leo at alchemia and yq at all layer uh so maybe very brief uh two sentence introductions in terms what you're building and how it pertains to the Bitcoin Renaissance uh let's start with you Fischer yeah sure hi everyone uh this Fisher from the babyon project at Babylon we build a we aim to build Bitcoin secured decentralized world and what we are currently offering is Bitcoin staking which turns Bitcoin into a stable asset for any proof of stake systems in a trustless and self- custodial way thank you everyone uh M uh co-founder Stax sta is one of the OG l2s started when lightning starting in late 2017 um and think of that as like a L2 on top of Bitcoin that is trying to make it faster easier cheaper more programmable to use BDC hey guys I'm Leo U I'm building alchemia it's a block space Futures markets where people can tokenize gas or BTC transaction fees so that they can trade it or use it to hedge against their expenditures uh so for example during the babyon phase one some of the users uh were able to uh capture outsized profit uh including myself so hi everyone yq font of Aller so at Aller we building uh sort of Rolla Services we provide rabs basically C on ethereum and right now we are trying to provide some Services CLE on bitcoin beyond that we are also closely working with Babylon to provide this share Securities of BTC for all different like sort of rooll apps and the new Evas so uh man let's start with you we do a lot of panels together I know you're very reliable um where does this notion of Bitcoin Renaissance come from like where did it begin when did this change occur has there really been a cultural shift in Bitcoin and then I know it's a lot of questions what are the technical drivers of the shift too yeah so I think I the way to think about this is like pre ethereum so this is the era so I started in 20 2013 so between 2013 and 2016 there was a builder culture on on bitco coin right like not a lot of people know this but nft started on bitcoin as counterparty stablecoin started on on bitcoin with the omn layer uh even icos with colored coins like stared on bitcoin back in the day and and and yes Bitcoin Community has always been a bit like more careful risk averse but there was Dev Community um and when ethereum really started taking off in 2017 Bitcoin was going through a Civil War uh and and we've been going through Dark Ages since the Civil War where they pushed out a a lot of developers they became very sort of like close-minded overreacted in a way to to the Civil War and I think projects like us at Stacks some others like lightning uh we've been trying to like open the doors again and in the last year and a half like starting with ordinals I think this was the kick of the Season 2 where uh I think developers are coming back capital is coming back people are realizing that there's so much more you can do with Bitcoin and there have been some technical uh breakthroughs as well I wouldn't go too much into it but two things I would want to mention is one is bit VM so one of the biggest criticisms of Bitcoin l2s has been that they're more trusted than the theum l2s but with things like BPM you get almost trustless like it's still an R&D not in production yet but at least there's a path forward uh where Bitcoin l2s can become a lot more trustless in terms of moving your BDC in and out and and then some of the work that we have done at Stax sta is going through a major upgrade called stack Nakamoto we are able to reuse 100% of Bitcoin hash hash power for finality so if you do a transaction on L2 as soon as a Bitcoin block comes now you're secured by 100% of Bitcoin hash power so I think it's things like that where people see real value that uh now I can come build a Bitcoin and and and you know there are real real benefits to it so Leo we'll move to you next uh you used to work in the Bitcoin mining space and then started building alcha um and now alcha pertains to bitcoin it's on ethereum you also mod ated your stance on bitcoin you were kind of a bit like me you know pretty hardcore Bitcoin guy and now you're building on ethereum granted Bitcoin products on ethereum tell us about the transition to moderating your own stance as you went through the process building this company yeah um I I was definitely much more interested in the U ideology of Bitcoin more than uh most other other projects um I started building alchemia and I really I just I I really wanted to create the thing but I didn't want it to be a centralized uh solution uh so I you know I had to use I had to use Smart contracts and this this was 20 uh 2021 well it still hasn't changed but um the there was very limited options and um the the possible solution I guess Bitcoin adjacent smart contract options are uh didn't have um enough liquidity unlike today right so that has changed um so I started exploring and realized wow there are a lot of very forward thinking ideas in in ethereum and uh and that was also the beginning of the whole me conversation it was uh very friendly with the flash boss crew uh and I got nurse sniped it was very fascinating yeah so fiser we'll move to you um in terms of Babylon babylon's maybe the most emblematic project for Bitcoin season 2 it's a new launch it's done very well people are excited about it what made you think that the timing was right to launch a system like that now what do I think like the timing of Babylon was it just this is when you decided to launch or was it you felt that the Bitcoin Community was ready for something like Babylon yeah sure uh about timing I think bobon is super lucky so the the whole Bitcoin Renaissance list all Bitcoin season 2 I think it starts from early last year starts with the uh hype around ainos and BRC 20s which attract attention of the community from E and salana ecosystem back to bitcoin so that people know hey Bitcoin can actually do something then the second wave that drives Bitcoin Renaissance is the technical uh advances on the Bitcoin side including BVM and Bon's trust L Bitcoin staking and then like early this year bobon made another little contribution to bitcoin Renaissance uh we hosted the conference called Bitcoin Renaissance uh in East Denver great conference yeah and turned East Denver into Bitcoin Denver yeah then we kept been keep building and then yeah in this a uh in um August yeah we launched our menet which is very successful so I think it's uh we are very lucky with the timing and the the support from the community is super important yeah yq uh moving to you uh you spent a lot of your career outside the Bitcoin space but now there's enough interesting things to build on bitcoin that you are at least partially focused on and you're working with Babylon tell us about that transition and how your prior work on igen layer now it applies to bitcoin yeah absolutely so um as we all know right so there are lot of new features actually on ethereum for the past two years especially on raking side um if we look at like sort of the history for the reaking we can probably look at this IG history uh originally since last year they are trying to focus on the supply side basically they attract a lot of tvl from the sers over 30 billion or something and after that rightly they try to focus to try to find the demands for this uh tvl basically we call share security and we work closely with the igen first um basically trying to figure out like okay what are the real use cases for this reate asset and then we find out okay since we're launching a lot of rollups that' be great we find ways to do the decentral verification and faster finality by leveraging this share security that's how we build a bunch of EVS for igen and also ethereum but as you mentioned right now somehow we re this Bitcoin season 2 basically a lot of Bitcoin holders and developers want to see what are the new utility we can bring to the Bitcoin so that the thing like sort of like since um last year we talk to DAV and offure and basically we try to figure out okay babon is building this rcking platform so babyon can really attract a lot of Bitcoin holders to provide this sort of the tvl for security then on top of that what kind of unit demands or use cases we can provide for bablon and all four BTC holders on top of that we can generate extra use right so that's a part like um so far we we've been seeing a lot of Demands at least from our clients and customers they want to figure out okay is it possible we can bring the lsts on top of Babylon to their rollups or l2s that's one thing the second thing will be okay babyon is already onight what kind of new EVS we can build by leveraging this share security from BTC because it's like over trillion dollar that's huge and definitely can secure a lot of interesting use cases so that's why we're working closely with babon on like sort of building one is this forkless roll up and just use leveraging the share security to uh Slash if some of these validators are doing something wrong for the l2s or rooll apps beyond that also we are trying to figure out like is it possible that leveraging these uh Securities we can provide better guarantees for bridgings between BTC and the other chains so in that case right we can see okay previously we have a r uh coding Bridges but in the future probably we can have a better permission list a list with better share security Bridges to bring the liquidity from this state uh BTC to some other chains yeah I want to come back to the bridges actually cuz a very good question around how do we make Bitcoin portable towards other chains and we're in the middle of kind of a war over that nobody really knows what's going to be the dominant one a lot of questions around rap Bitcoin these days but on the Babylon topic I mean uh you know maybe Fisher how does this change the game for Bitcoin you know Bitcoin now is maybe a productive asset what does that mean for Bitcoin The Narrative and then also how does it change the game for these other blockchains that are leveraging Babylon for their security yeah so I think there are multiple facets to your question so first from uh Bitcoin utility perspective Bitcoin Uh current token currently only has two native use cases one you hold it waiting for the value to appreciate second is to use it for simple payment there's no other native use cases or for Bitcoin the token itself so Bitcoin St can introduce the third native use case for the Bitcoin which is uh stake secure and un yield okay so this is the from Bitcoin use case side and from the technical advancement side Bitcoin staking is our first step to show that Bitcoin is actually has great potential if people think Bitcoin is not smart but actually it's not you can do a lot of great things with Bitcoin so our next step will be to work closely with bit VM uh teams to uh base on security and staking and bring liquidity to the PS ecosystems because think about PS ecosystems what what is needed First Security second liquidity and third uses so Bas uh we lay out the security as the fundamental and then bring uh bring Bitcoin liquidity and Bitcoin users to all the PS ecosystems so that we can eventually create a more united crypto World um let's return to the topic of uh tokenized Bitcoin WRA Bitcoin uh man maybe we can start with you where do we stand uh in terms of making Bitcoin portable to other blockchains what's the Crux of the argument between the various issuers of these tokens yeah I think I think the the way I think about this is like the mental model is you separate Bitcoin the asset from Bitcoin the rails and a lot of criticism for Bitcoin actually is criticism Bitcoin L1 the rail that it's slow it's clunky it's hard to work with it's not programmable but you can actually bring BDC to other rails which are faster cheaper and and I actually sort of look at it as a stable coin market like you know if you look at tether or usdc they can actually go and mint their uh their coins on on different chains wherever the developers are and you know wherever the economy is they're bringing stable coins there but there are centralized companies where Bitcoin is a decentralized sort of like Netbook so there are different ways that these stable Bitcoins that wrapped programmable Bitcoins uh are going to exist right we've recently seen coinbase right like they they launched CB BDC on base and ethereum I think within three days they crossed like 100 100 million dollars and and Bitcoin issued I think it's definitely going to billions like if single digit or maybe double digit in the in the coming years so in the market like you will see like centralized versions like CBBC you're just totally trusting like One exchange one custodian with with all the uh Bitcoin that's there and you'll see decentralized versions like spdc from Stacks right so sbdc the asset is actually secured at the consensus level uh for the L2 and and there are you know it's open network decentralized and you'll see other other things as well like for example U just two days ago um Mo at Aptos like they announced that they're bringing sbdc to apos so that's another interesting link right like and and we'll see a bunch of these wrapped as it's being used in multiple chains and that market is like very small right now but I wouldn't be surprised it becomes like 100 billion plus market so I want to address this to the whole panel because I think this is a very existential question which is if we segregate the Bitcoin protocol and the asset does that pose a risk to the Bitcoin protocol if the usage of units of Bitcoin might be happening on some other blockchain m is not returning any value to bitcoin holders or the min ERS really in the form of fees is it kind of in a sense cannibalizing the security budget of the Bitcoin protocol if all the units of Bitcoin are being transacted somewhere else how do you guys think about that anyone I I I'm might take a shot at it like I thought about this problem a lot I think I think of this as like you know the Bitcoin L1 is a Highway that's congested and it's going to remain congested and maybe there's going to be a very high tariff for actually using it right like because Bitcoin is more like a settlement layer it's more like cold storage right um if I want to use a hot wallet if I want to you know sort of like go play around with nfts if I want to go deploy capital in defi I'm probably not doing it on the L1 uh but if I want to have cold storage if I'm doing settleman if I'm doing like high value nft trading like some ordinals uh that are really like luxury sort of like nfts they might exist on the L1 but I think Bitcoin L1 is always going to carry that premium the block that it will be the most sort of like you know in demand block space but it's going to spill over the it's like building more highways around it right like nothing's going to replace the L1 but uh it's like you're absorbing the traffic that actually can't exist on the on the main chain um Leo I'll come to you in a second but uh Fisher and yq uh how do you think about the way the Babylon uh affects the fee pressure on bitcoin um does it potentially increase fees because now you have other blockchains basically renting security from Bitcoin is that the way we should think about it yeah okay sure so I I don't think at least the protocols Bon design they will not compromise the uh economic security security budget of the Bitcoin chain indeed the one of the original motivation of babblin is to find use cases utilities of Bitcoin and we believe that with more utility of Bitcoin there will be value accured then with the proper incent in incentives all the values will be uh Rec redirect back to the Bitcoin ecosystem our first protocol was uh Bitcoin times damping protocol which times them data to bitcoin which will create transaction fee our Bitcoin staking protocol directly allow the miners to stake their Bitcoin and and yield to cover their security cost so I don't uh feel we are segregating the use case of the chain the the network the for uh work powered Network and the token itself because the token the Bitcoin eventually leaves it and secured by the by the proof of power there yeah so we are trying to find the better way to utilize both yeah so you believe in the integrated story uh keeping the protocol the transaction Network and the unit integrated y y uh Leo moving to you uh you know I think the story man tells is a good one you know moving from the payments focused Network to more richly stateful applications on bitcoin whether it's rollups whether it's reaking uh other L2 structures how do you see this affecting Bitcoin fees are we going to see rollups buying entire blocks you know what does that look like uh what can we expect in terms of the outlook for fees on Main net in the coming years as these projects are built yeah I I think something is better than nothing uh and I think this is whether uh rollups are taking activities away from Bitcoin onto rollups I think this is a very very different picture from what's happening on on ethereum right now so uh for for those who are not familiar right now there's some um pretty severe push back on the rollup Centric uh scaling road map and where uh of course btic said oh this is this has always been the plan but um with 4844 now that U most of these s are not post they're collecting a lot of uh fees cuz they're capturing the me and priority fees but in return they're not posting nearly as much of call that and blop uh onto the L1 so there are researchers that are saying hey um l2s are cannibalizing activities of L1 economic acrs are not happening to e holders anymore which I don't think uh is applicable on on bitcoin because there's no activities to take away from L1 to to rollups uh to start with so I think uh if rollups are able to induce more activities which I not sure how um that's still more than what's already you know currently happening on on L1 which most of the transactions are still simple water transfers this is a backhanded swipe of Bitcoin you just implied that nothing is happening on the Bitcoin main net right now I I mean I think the mle is definitely more full than you know a couple years ago and um we definitely have uh chance of disproving the whole digital goal which is very you know Silly um and I I think it just comes in wavves right it uh for First with you know oros and runes um and the macel doesn't support these kind of like continuous asset issuance uh so uh there needs to be another wave of whether it's happening on rollups that induce activities and and and and post proofs or on onto l1s or they're more um I guess native L1 protocols that that makes um more interesting things happen on on bitcoin itself yeah but I think I think there's a there's an interesting point here about uh Bitcoin being simple it's a simple protocol rollups are much more complicated so they might be a better combination that it's a simple protocol it's not competing with the functionality that the rollup is providing whereas ethereum is a complex protocol that's sort of competing in functionality with the things that you're trying to build on top so they might Clash more versus it might be a better more natural fit on on top of a very simple Bas layer protocol it's interesting to see ethereum fac this possibly existential issue though of of rollups or l2s capturing a lot of the value and not restoring it or you know remanding any of that value to the ultimate blockchain it has been something we've worried about in The Lightning sector but you know people didn't use lighting that much Leo oh can I just um uh wrap up that so when when ethereum first came out right Greg Greg mawell famously commented that like oh blockchain is good for verification it's not good for uh execution doing computes and then um when crypto Kitty happened uh everyone was like oh yeah this this proves my point you know ethereum is just going to die and um I think some some of that was true but some of that was was um definitely underestimated how how how well um uh L1 itself can can scale I think uh Bitcoin changing changing L1 right now is is a little bit uh difficult to accommodate so so I think rollup Centric scaling is by far the most reasonable most optimal way for Bitcoin to to have these kind of more richful uh more Rich stateful activities to take place well I I can add a few points because I've been working on this scaling for etherum for long time for almost like um over eight years since the time around is improve this consensus product for ethereum also applying sharding on ethereum I think since day one when vital Gavin W when they proposed e they wanted to be World computer and so in that case definitely they want all the execution to happen like Bic on ethereum so but gradually when they like had this over 100 different design for sharting right they figure out okay if they want everything to happen happen on e that's very challenging so they propos plasma it's a little bit like this s chain and the state Channel and arage we had this Rolla design optimis Rolla and Z Rolla basically to delegate all the executions to r or to the L2 and then ethereum right now it becomes for mainly for settlement layer the verification for other proof and also da layer to host most of the transaction data from the Rolla um I I think definitely we already achieved the goal this site probably like around like nine years ago like back in 2015 like we really make like ethereum all the transaction super cheap like right now if you do transaction on op arbitrum or if some other l2s the fee can be as low as 1 cent or even 0.01 Cent the super cheap they achieve it but at the same time it's really about the demands like we don't have enough demands or Mass option immediately on crypto right now um why I talk about this because like if we really see Bitcoin has season two or season three right with all different um like l2s right now still not roll out because we couldn't do the settlement on on bitcoin um then we need to figure out like okay what's the vision of like sort of the Bitcoin ecosystem do we really want Bitcoin ecosystem to be World computer or to be like sort of mass adoption for everyone all we back to the original web paper of Nakamoto sat modal like just for peer-to-peer payment so that that's sort of the key factor if we really want it very cheap then definitely we need to make all the rabs and then sort like because for each RAB as Nick mentioned right it become a asol environment you won't really have the transaction fees on bitcoin it's exactly the same situation we have on Ean right now so different rollups they have the fee system themselves They Don't Really contribute much to the parent chain so but at the same time it paves the way for the mass adoption in the future because fee very low through pool not problem you can also customize the roller or change yourself so in so in that case the infrastructure no longer the bottom neck so what we need just more demands but then it's back to the point right for Bitcoin like season 2 we have the restake in basically want to generate extra use for BTC holders uh we have the different l2s uh we want basically have more utility for the token holders so in that case what kind of Rod or road we want to choose do we still want to focus on just like give more activities on bitcoin the mention itself so we may encounter a little bit more High fees but all we should really uh focus on the mass adoption just try to get as many Bitcoin holders as possible just make Bitcoin use everywhere in different stores in different bars in different like sort of scenarios so I think that's the main factor basically uh how we drive the developer community in Bitcoin ecosystem forward for the next few years well it's it's a good point and I think the you know one question that we haven't discussed is are rollups actually practical on bitcoin will we even technically be able to get them do we need a soft fork in order to introduce rollups or will bit VM take us there so I'm curious for the panel's views what is the path forward to actually get rollups on bitcoin arguably we don't have them today fisher maybe you yeah sure so the concept of row up as y just mentioned cames from the ethereum system and is designed for the for the ethereum scalability problem so I don't feel we should just copy paste the ethereum thing apply to bitcoin and hope hope hopefully for it to work Bitcoin is a different Bas it has different character so we need to uh build Bitcoin rups scalability Solutions purposefully so to me I think a Bitcoin rollup Solutions will should truly inherent Bitcoin security so and then you should in uh Bridge the Bitcoin liquidity back to it so to achieve this we will need some sort of smartness on the Bitcoin change such so there are actually currently two directions one is to BU based on the current capacity or capability of Bitcoin to make this happen bobon Bitcoin staking is one uh bit VM is one another direction is to hope for the upgrade of Bitcoin you say like op cat op op CV yeah so these two path they are not uh binary so in the in the near term or midterm we yeah we take what whatever we have and make Bitcoin great again and then once the Bitcoin code developers turn their head around and enable those up the upgrade and actually the upgrade will make the existing utilities that we have already built for Bitcoin even better more performant so yeah I think that's the path forward we need the last word maybe yeah so I think um we can we can take the extreme case that if you can introduce a op code like a op star verifier or op SAR verifier everyone agrees that you know Bitcoin can have rollups and and and there have been op codes in in in Bitcoin in the past that have been disabled re-enabled and so on so there's a path it's going to be slow it's it's going to take a very very long time which I like about Bitcoin like it's not that experimental um but there are other ways like you know with bit VM we might see rollups there are Forks of bit VM coming people are trying to do um almost like zero knowledge proofs on on Bitcoin in with certain C caveats uh it's happening right now so the amount of stuff that's happening today with basically no changes to bitcoin is extremely encouraging that with very small changes but maybe just just opcat or something uh we should be able to make make a ton of progress which is which is which is exciting but um I do think that you know I I have a very strong belief that Bitcoin needs to um uh carve out a very different path from what happened with ethereum uh because I think you don't want to end up in a situation where ethereum is today right and I don't think Bitcoin will but I think we need to be sort of like more mindful of uh how we carefully build build out the Bitcoin ecosystem well uh in the interest of time we're running a little bit over so we're going to wrap it up there gentlemen thank you for your comments today really exceptional thank you