Bitcoin and Beyond EP4: CoreDAO's Native Bitcoin Staking Architecture

Transcript

[Music] [Music] [Music] welcome back to bitcoin and Beyond today we have Rich ryes a contributor at cordal to talk about core and their consensus model their liquid Bitcoin staking and more Rich welcome in thanks

so much for having me really excited to chat with you both again really enjoyed these in the past so happy to to Dive Right In so core is a Bitcoin powered L1 blockchain that's fully EDM compatible trying to unlock the trillion and a half dollars of trap Bitcoin liquidity went to mainnet Via Fair launch in early 2023 now it's get this community of millions of folks all around the world and have some really you know novel Innovations to to kind of chat through as we walk through this deck uh a little bit about me uh so I'm initial contributor at core prior to that I was a coinbase for three and a half years let all money movements engineering before that some other crypto companies as well as started a bunch of startups I've been a zero to one guy my entire life um diving in I

gave a brief kind of overview here there so much trap Bitcoin liquidity here today people want more we've seen whether it's with ordinal brc2 now runes like Bitcoin is back and we're really outside of the shadow of the block size Wars for the first time since 2017 lightning really isn't you know kind of the bless scaling solution anymore people are hungry for for more options here and that's a gap that corsaw even before kind of Bitcoin came back into Vogue but it's amazing to see all these teams trying to launch Bitcoin l2s centralized applications Bitcoin is now once again cool to develop on which is so awesome to see as someone who's been in the space now for 11 years with all that goodness you know there's challenges to building stuff on bitcoin

right there's no native staking yield there's no smart contracts there's no native Financial Primitives and it's it's not scalable core changes this it gives all these opportunities to be able to do more with your Bitcoin really trying to separate the Bitcoin asset from the Bitcoin rails that doesn't mean that you Bitcoin itself like isn't valuable or important it's this really Harden secure settlement layer it's just now the ability and this is like kind of the the new mindset of getting more of your Bitcoin might involve bridging or htlc Atomic swapping over to higher throughput low cost ecosystems like core that's really kind of the problem statement that that core was here uh to solve um diving in a little bit more um

so Bitcoin itself is still easily the largest crypto asset by market cap this Cy this could even grow you know the past few Cycles we've seen it shrink is like all these new protocols all tell ones things have launched but still easily the the dominant asset and this this separating from the rails is so important because Bitcoin itself again has this super secure proof of work that balances all these different economic actors but because it's so slow and costly to use when you try to make Bitcoin do things it's not meant to do the chain itself doesn't work really well right we've seen all the fees that were and how expensive like the runes mint were right after the happing it's amazing to see all this economic activity and maybe Bitcoin longterm

lives as like this decentralized minting platform for a lot of these new assets but then maybe once these things are minted they go into these other ecosystems where they can be lend and borrow they can have kind of these additional utilities you know built on top of it and and this again is what we' refer to is like separating of the Bitcoin asset from the rails is if you can get your Bitcoin in a safe way which is really important because you shouldn't get involved in any ecosystem if you don't know what the risks are and what the trust assumptions underlying uh that bridge or that swap are you should not use it um but if you understand you are comfortable with those things then being able to go into these new ecosystems that have you know this hot of Define other activity is really an

exciting exciting place um happy to keep going or maybe pause there yeah I mean I think the general trend is like all right so there's a couple forces at play here right where the the way proof of work works and the the general uh shift away from some of the pure maximalism uh of kind of the vibe of Bitcoin uh keeping the the core ethos and core principles for the long-term kind of sustainability and protocol Dynamic but like we need to like take this idea of like this hard money and maintain that but then as you're saying the network itself like let's figure out a way to make to fulfill the promise of

this hard money by giving by creating the a network of value a top of the kind of L1 and we we were thinking about originally calling this series Bitcoin goes modular even but I think that's it's almost what we're kind of getting at here yeah yeah I think that's oh sorry go Robbie I I mean I'm just gonna Echo like uh like Andy's Point here um there's a few different ways to look at it but like ultimately doesn't really change like what's going on which is that Bitcoin is now getting separated from its from its rails as as you mentioned it's going modular it's scaling horizontally and this is an experiment that ethereum has set out with their rollup Centric road map and I I tend to think of ethereum as kind of

like a an experimentation field for Bitcoin it's proven successful in ethereum world and and now let's see uh let's see if it translates over to bitcoin man I don't want to get into the L2 debate here no I'm kidding um but in terms of uh in terms of the comments you guys both made around scalability I think it's a really good point and I I talk about this kind of from Like A og Bitcoin perspective is Bitcoin was meant to be money originally right and we've kind of settled a store value for you know the last 10 years but ultimately that the real Vision at the beginning was to be money and to do that you just can't do it on bitcoin I one right it's too slow it's too expensive it is this perfect settlement later digital goon of itself was a use case that I don't think

was you know for fully envisioned at the time but it's incredible that that it's there and that it exists but in order to fully realize that you know we need to be on these cheaper faster rails whether they're side chains or or l2s um but totally agree with what you guys both said I also love the experimentation layer for Bitcoin I wasn't going to be the one to say that but but I view it very similarly you better watch out those core Maxis are gonna come for you I'm worried about the eth Maxis not the core Maxis um but uh awesome well thanks uh thanks so much for for uh kind of comment here there um so yeah as I was kind of briefly summarized earlier again we identified some of these these things with Bitcoin

that it maybe doesn't you know fully meet kind of the new demands that are placed on bitcoin and that's ultimately what what core is is here to answer and I gave a brief kind of over the beginning that core came to mainten that in early 2023 so it's been live now for you know almost 18 months but it was important to kind of talk about some of the origin story of of how kind of core came into being and core was really reactionary in a way that when looking at the kind of problem statement Bitcoin holders have been largely like left out of you know kind of the last let's call it five plus years you know of scaling in crypto Beyond just you know kind of sitting on their Bitcoin and there needed to be this alignment with these nextg scaling systems had to actually

bring the Bitcoin holders and also the Bitcoin miners into consensus in order to align everyone and we call that Bitcoin alignment and now it's a term that's getting popularized by more folks out there and that's really important because by having this this Bitcoin alignment you actually have the option to meet maybe some of the issues that the Bitcoin network is facing and like one of the classic examples there is whether or not the Bitcoin network will be able to survive just based on transaction fees that's always been kind of the question with the hard ratchet nature of the monetary policy again one of the more beautiful aspects of Bitcoin but there's always been kind of that doubt around it and and with that course consensus mechanism actually reward Bitcoin holders through Bitcoin staking and then also Bitcoin hash delegates

it's really designed to to Loop in all the the different aspects of Bitcoin it was also important that for those Bitcoin holders that there were products built for all of these different holders because if you think about it bitcoiners are commonly lumped into one group like on Twitter right like people like to summarize Bitcoin as like laser rde Maxis and that sort of thing but in reality that's not true and we've seen so much of that over you know the last you know 18 months or so since like uh ordinal you know first came into being there's people who want to use nfts that want to do tokens that want to earn yield there's all the different use cases it's important that in order to unlock the full 1.5 trillion you have to have solutions for everyone otherwise like the identity doesn't hold and it's

important that we don't leave folks behind because that's how we create these um create these unbalanced ecosystems that are maybe good at one thing but not truly like L1 generic and then finally it had to be a fair launch and that was very important because if you think about one of the reasons that uh Bitcoin became so popular it was because the holders of Bitcoin were the early Network participants and those early Network participants um became the underlying constituent base of the network and that's very different relative to most any to most other chains that came into existence over the last let's call it five to seven years was really this insiders versus Outsiders Dynamic and trying to ensure

that the holders were the early users really is important for the long run it's one of the reasons the C Hoshi Community is so strong I put them right up against the link mares or you know any other the really notable crypto communities now on to some of the technical bits and I know this is what you know y all wanted to to really kind of dive into and I think this is a great part and I assume there'll be some questions uh on this one as well but this is uh kind one of the more special aspects of core is Satoshi plus consensus and the idea ofi satosi plus is is actually like three different parts on one side you've got the delegated Pro of work that's the Bitcoin miners producing blocks on the Bitcoin L1 and delegating those into cor's

consensus then there's the Bitcoin stakers who lock Bitcoin on bitcoin L1 to help contribute to the economic security of the network and then finally you have the core holders who lock their core tokens and the way to think about it is you get this mesh of different ingredients in your depa soup in terms of trying to attack the validator set each one adding some amount of security relative to the uh security that it's bringing to the network but it was a novel mechanism uh that we've again recently added to with with Bitcoin staking and hopefully we'll go multi-chain later this year early next year yeah I just want to double click on uh Satoshi plus here um and so I love the idea of a DEA soup uh delegated

proof of stake made up of each of these components and so we can think of okay so so first zooming out a little bit you know we have crypto economics security like proof of stake networks which is pretty much everything except Bitcoin and then Bitcoin which is made up of more cryptographic security which is and uh you know more mathematical and more uh you can almost think of this as like I don't want to put say ZK proofs but like it's more cryptographic right um so so that that uh cryptoeconomic security we we would consider core chain in that in that camp right the cryptoeconomic camp because it mixes maybe maybe it's a mix of both actually

as as I'm thinking about it now because we do get this delegated hashing power that's cryptographic and then we also get the economic security of Bitcoin and core that is staked into the network could you just kind of like I know that was that was sort of a brain spill but could you kind of pull all all all of that that together for us totally it was actually pretty pretty on point I think when you think about it um so we actually refer to as a hybrid B mechanism to to your point so it's like you get aspects of these different consensus mechanisms and it's important also I'll do one more zoom out as you mentioned to think about why the system came into being this way and when we like when the system was originally being designed like most original like

Bitcoin side chains use merge mining it comes all the way from Satoshi he hypothesized this way to you know secure other chains get more rewards that there was kind of this like it's a long I think it was like 2014 or no maybe 2010 I think like it's very early bitco when like merge Min first came into being then there was like this initial wave of merge mind chains and then you eventually got to like root stock and some of these other things um and merge mining is amazing in some ways right you get to reuse like the existing uh horsepower that you're adding to to the Bitcoin chain however you get some of these negative externalities that folks don't often talk about which is you have these really high powerered instances that can take over your network if they don't like you and it it kind of creates

these weird balances where the economic alignment between the mind miners in the chains might not actually be aligned and that was something that we had studied and thought really deeply about which is like Hey how do you blend these two things without maybe sacrificing you know some of your own security of your network and that's where kind of this delegated proof of work came into play where the miners receive rewards help to secure the core chain but they have no incentive to sensor blocks or to go against the core Network and that was super important if you look at some of the other you know like now called l2s and that sort of thing they had issues with with miners in the past who censored their blocks because it's actually in their economic interest to actually be Banting to some degree and

that was really important to to get correct and on the like delegated normal like delegated proof of stake side that's kind of more classic if you will hey you're you're a core token holder you then delegate to a validator in the network the Bitcoin staking really came into play and this again we announced this token 249 so a little over a month ago um by the time this airs they'll be over 2,000 Bitcoin Stak which is pretty cool it's like 150 million USD and there's a bunch more on the way it's also powering the first yield bearing ETP with Valor and the idea here was hey we the miners are participating consensus how do we now reward the Bitcoin holders and it was very important when this was being designed that it had to be riskless and that's

very important you think about Bitcoin holders they don't want to do things that are risky or they might lose their Bitcoin and Bitcoin is very special in that their ultimate goal in life typically is to go earn more Bitcoin it's not like ethereum people want more cash that sort of thing bitcoiners want more Bitcoin so they can make them part with that you know comes with a lot of concern and that's where the time lock comes in so if you think about improve a stake you lock up those funds typically they're delegating or as part of your valid that you're running if it's more POS on the Bitcoin chain we don't have Smart contracts we don't have that ability but what we do have is Hash time locks check contract verify or check time lock verify Etc and you can actually provably lock up those funds

which gives you a very similar idea under the hood to locking those and when or to locking those on a validator as you would in posos and the way to think about it is we look at these three ingredients of the soup uh which I'm now going to use as my new uh my new thing going forward and that's how the validators get elected we look at these relative contributions of different actors in the network to these different validators then select the top end cryp got it goes strong yeah maybe we can go with I think on the next slide you've got a bit more of like the diagram of kind of how it works under the hood um I think it would probably be uh helpful for for Rob to wrap the wrap his head around kind of

like the hybrid mechanism here and maybe you can just take us through this as well yeah so let me um let me dive into um the Bitcoin Centric side first because again I think that's like the most unique part of the the core system um so if we talk about the Bitcoin miner how are they actually delegating their their hash or the mining pool more specifically well when they produce a block on the on the Bitcoin chain they add some data to the op return field and then as part of that there's an actor in the core system that relays over those blocks there's another actor called a verifier that can flag any mouth Fey like for Block headers that sort of thing and there the relayer is also running an onchain like client for for Bitcoin we calculate that on a onewe

delay because with that it prevents reorg and some of these other like kind of NY cases kind of a Brute Force engineering solution but it's also beautiful and that it kind of solves some of these nastier issues that kind of cause other things issues um and then with that we look at that again on the onee delay and that's like one piece of your hybrid score for getting elected on the Bitcoin staking side you do that hash time lock so you actually lock it to yourself so it's fully non-custodial and it's a configurable time so you can do I think a minimum of 10 days uh and there's no Max I think currently there's no term structures yet in place but that's actually something that's on the road map as well to actually give people different reward rates uh or different

groups I should say for kind of the duration of how long they Lo the Rel layers in that case again also pick those things up and bring that over as part of that validator election and then finally kind of the boring part but kind of the heart of the entire thing if you will is the kind of more classic you know delegated group of stake where any core holder can then pick a validator to go delegate to either directly or through you know the the native LST on the core platform and that's really important as well is like coure has this very e Eagle tarian nature and that's why delegate approv of stake was chosen you couldn't have a high minimum couldn't have anything that would like Rule people out from participating had to make it really easy low barried to entry not just for voting and that sort

of thing but also for participating consensus and earning rewards okay cool all right so that that is a good um like understanding of of how the Bitcoin side works and then kind of tying it into the the core side um and and you know some of those Brute Force engineering decisions uh are are made out of out of highest level of security but also kind of like with with the current setup that you have um you know some like what we're learning through this series like the Bitcoin Network it you have to make certain design choices that you don't necessarily have to always make in other uh networks based on the parameters and

the uh a mutability almost of thin where it's like it's it's tough to kind of change things that are already existing because you know to to kind of keep that uh that hardness of the money if you will um and so kind of coming to that point uh a couple questions about the Satoshi plus here we have a slash module has there been is there slashing active right now on core chain has there been is there slashing that happens regularly or um kind of what is what is the process there and the incentive structure to ensure uh validator uh you know alignment trust Etc yeah so there is slashing of the

validators in core it's happened a few times but due to validators going offline versus like a double sign or something of that nature and those are I believe I have to check the the docs but I believe those are the like easiest cases which really like the double sign then when you're just missing blocks um and then as a result you either lose a portion of your deposit and you get um like jailed for some period or if you commit like a felony or whatever you lose your deposit and you're you know kicked out for a long period of time or potentially forever we haven't had anyone try the latter case but we've had um some you know validator downtime issues or whatever the network itself has never experienced downtime but individual validators have like Mis blocked yeah I uh I remember from the staking Summit uh there was a discussion

about like these two slashing conditions and why it it is like much less egregious to just go down like if there is any potential like risk of safety or making a double sign it's better to just like turn your validator off uh than commit some sort of like unsafe action to the to the network um so that that makes a lot of sense um on those two conditions um I did have a question okay so uh you know when we were talking about the delegated proof of stake there was two economic components and then that one cryptographic component um it makes sense that when we're talking about the the economic components of core and Bitcoin uh the validators are

putting up you know these these economic assets those would be the the assets that get slashed if they commit one of those two infractions in the cryptographic sense what gets slacked if a validator commits you know some sort of like faulty hashing power or something or you know what what is the mechanism there that enforces slashing for the cryptographic component yeah so you've got a couple couple different checks and balances so one on the the relayer would have to commit a bad action in that case like imagine they're bringing over bad block headers or something of that nature the relayer would would have their deposit slash for doing so anyone can act as verifier that's kind of your check and

balance on that side but that's orthogonal to like validator slashing if you will on the validator side it is deos in depos it's important to like kind of zoom in on this in deos you are not bringing your own Capital you can do that as optional but it's these other people that are providing that Capital to you and in this case those other people actually aren't doing anything wrong right like it's the validator in this case that is actually the one that's being malfeasant because they're choosing double sign or to do something similar so at least in our Viewpoint like because they're not actually doing anything bad they shouldn't be penalized for doing so that's a hotly debated topic if you will right like there's there's some folks that think slashing

shouldn't be used at all like you know maybe you need to go all the way down to individual delegates kind of like a caval like system there's no like tried or true thing there but in the core system we try to punish those that are acting Byzantine whether it's a relayer or a validator in that case not their delegates that thumbs up emoji thing was super cool I have no idea how you did that yeah that was the all good um appreciate the uh the the in-depth take um yeah awesome um cool we already talked a bunch about that um I did miss one

important thing thank God we have the slides there um yeah we're about 50% or a little over 50% of the Bitcoin hash that's currently securing the core Network which is pretty awesome I think we set out to you know kind of watch this thing and everything else you know early last year we would been pretty happy with you know maybe like 15% at this point or that sort of thing but the adoptions been pretty great which not only helps you know kind of tie in the the Bitcoin alignment but also helps to keep you know the chain safe and secure which we always appreciate we call it the road to 100 we won't be satisfied until we until we get to 100 most folks kind of like stop out around this level but we think there's a prettyy clear path to keep uh keep chugging down the

road to 100 um Bitcoin staking I did a fair like oh sorry sorry I don't want to I don't want to slow your role too much there but I I do think mining like this is still sort of like a like flying under the radar I think for most people like they just don't have a clear understanding of like who the miners are like what the decentralization of the mining of Bitcoin looks like nowadays could you just give us like a status update on like what the state of Bitcoin mining is who are like who are the miners you know and generally also what has your experience been with working with some of these larger mining groups yeah so let me uh let me do a quick quick uh overview here as well so

what's important to understand about Bitcoin that's different than many other systems is you have these folks that aggregate these mining pools who produce the blocks but they are actually not the ones that have the underly hash power they might have their own miners as well but it's actually contributed from all of these other minor so it's actually quite decentralized as a group of people that have machines running but then you have these smaller groups that actually the ones that produce the blocks they they distribute those back to the people that are uh that are actually like doing the computations like that that's kind of the rough way to think about it and Bitcoin sometimes gets critized as like hey look there's like you know eight or nine or like whatever that number is today of like these groups that control

all the hash but that's not really true if these mining pools were starting to do Byzantine things people would just switch their hash over to a different mining pool so it's it's not the same as you're the one that is actually like has the stake or whatever like kind of a proof a stake system right you see those other centralization kind of discussions get brought up with like Lio and some these other things which I also don't necessarily agree with but it's important to know in the Bitcoin system there is like total total separation there um and then in experience we work with several different mining pools a lot of them Bitcoin OG's been in the space for a very long time want to see a very decentralized Bitcoin but are also very aware that this ratchet monetary

policy of Bitcoin is challenging to their business for the long run and that's important for them to look at diversifying additional sources of revenue I think you know some of our friends at at Marathon and that sort of thing who we've been you know friends with I don't think they're I don't think they're on core yet but as part of that they're very very local about how it's so important for this business of long-term finding other sources of revenue streams and they've actually taken it to the extreme of launching their own L2 which is really cool and I think we'll start to see other miners do some of these things as well but um the other cool part about the miners a lot of these folks are sitting on quite a bit of Bitcoin they're getting active in some of these you know Bitcoin l2s uh

whether it's like participating in some of these like yield strategies or other things but I think that'll be a big story of kind of the early folks that were in crypto getting back involved and starting to lead some of the Forefront of this Innovation happy to double click on any all the above but that's a pretty good overview I think yeah yeah that that is really helpful um I think it makes a ton of sense uh one because the Bitcoin miners have a ton of Bitcoin they want to kind of activate that and get some yield or or some sort of active value uh and then two because once these these miners exhaust and the and the network itself runs enough having that there is no more block reward 21 the year 2140 something like that they're totally dependent on

transaction fees and so it only makes sense that they would try to bolster these l2s to generate some more transaction fees on the Bitcoin L1 um that part makes a ton of sense I think may maybe just one question as far as like you know why are these I just maybe don't fully understand like the aggregation model of these Bitcoin like mining pools why are the smaller miners committing their cring power to the mining pools like what is the separation of responsibilities there yeah it's a good question and before I dive into that you talked about 2140 which is when you know goes to zero um there's a lot of people that are worried like two having from now one having from like it's a much more

imminent problem I think than maybe is like kind of commonplace knowledge just because we haven't seen a sustainable source of Bitcoin revenue on L1 from transaction fees we've seen these periods where like wildly profitable right um but you know how long does that stay you know there's a lot of questions there so I think it is like a very short-term thing people are looking to to solve um and then to the um the other question of like why do you use a mining pool um so Bitcoin block product is probalistic so because of that if you actually aggregate you can smooth out the rewards so if you get a bunch of people together and they all have like a good amount of hash or whatever your combined probability of getting a

smaller amount of the block reward is higher and that is very common and I can't remember exactly when Bitcoin mining pools came into place but it became but it's very common for that very reason is a way to just kind of smooth it all out Andy that reminds me of our uh our days where I remember looking at like uh running like some miners allegedly on like some computers or electricity that was like part of an institution and not not maybe my personal ownership of that electricity so that's where it made more sense to like not solo mine a Bitcoin I may never happen to like mine one Bitcoin block but to contribute some hashing power or electricity to a pool and then get like

a portion of rewards from from everyone in that pool so so yeah I remember that from like the 2016 17 18 era makes makes a ton of sense but what is so special about Bitcoin is there is a probability that you would be able to produce a block on your own which is something that no other chain at least to my knowledge has been able to uh to replicate at least at like the smallest scale so awesome so let me dive into um a little bit about um noncustodial Bitcoin stake Gates because this we announced it again a little over a month ago we've seen pretty solid amount of adoption so far thousands of Bitcoin St we think many more are coming online soon we're

super excited about it Bitcoin is now a yield producing productive asset for the first time not only is this amazing for Bitcoin holders that never want to participate in defi which is a huge percent of the Bitcoin folks which is a totally fine way to stop as well you don't have to do things that you're not comfortable with going back into my original piece that I started out with if you don't know the trust assumptions you're not comfortable with it just stay on bitcoin L1 um but with that this this new kind of possibility was Hey how do we solve this problem where you can earn passive yield on bitcoin for the first time and there's a bunch of different ways that you can do that and this has been like a popular thing that people been talking about now it's call it maybe little like the last year people

have talked about Bitcoin staking and you have to ask yourself like what Bitcoin staking means are you actually securing something or is it some sort of actually like Financial product under the hood maybe like a tokenized basis trade or maybe riskier strategies not that those aren't uh like totally viable things that people want but just again understanding where the yield comes from if you don't know what the yield is you are the yield we've all seen that story like multiple times over so this was a product designed for Bitcoin holders a lot of customer development interviews went into it a lot of our own experience and the idea of the time lock really came into place where we ourselves wouldn't be comfortable giving up the keys to our Bitcoin or having a chance that our private keys were revealed as

part of this process again people have different solutions we'll see you know how the Bitcoin eventually flows into all of these there's so much Bitcoin to go around it'll flow into a bunch of different places it's not be want to take all but it was really important that it could be a product that in the large institutions all the way to the smallest Bitcoin Holder will be comfortable using and that was very important to unlock the the total you know Bitcoin asset base and and how it works is you just use a native Bitcoin function which I believe is check time lock verify and the idea is you just lock it to yourself so you're essentially provably encumbering those funds in one transaction for a minimum period of about 10 I think it's 10 days although that's configurable and then after those 10 days you can then unlock

with a second transaction but it's all native Bitcoin didn't re require any soft fork or any changes like that again having been in the space for a long time you have to make things really simple really easy to be able to onboard a lot of folks to it and we've got this nice handy diagram that that talks all about it and then just again the high Lev thing that I just mentioned again this is great for hoteling the your keys your coins and now it's yield producing asset so is it like because there's this locked Bitcoin and wallet B you can you can then call call that smart contract on core chain and effectively add that to the like does does that add to the

the the security and consensus of core as well or like what is having that locked Bitcoin in that uh for for that time period allow you to do from the core perspective to to use that consensus or use that capital and I don't know where this thing keeps coming from the thumbs up everywhere it only works for you somehow um but yeah so let me uh kind of explain it so when you issue that again Bitcoin does not have Smart contract so there's no like you do it on bitcoin and then it like pings us or something else that would be incredible but it would also again cause too much surface area Bitcoin in my opinion um so essentially when you issue that transaction there's this relayer that's again watching the or like overseeing

the the Bitcoin blockchain as it relays that over it then goes into the system smart contracts that then calculate it but there like two um two processes if you will um and then to the question of like what does it actually do for the the core chain so using that like dea soup uh analogy that we we used earlier is it becomes another hardto acquire quantity and that's kind of the way to think about it is like when you want to look at attacking kind of the core validator set it's acquiring like three things that are hard to get a lot of right and that's the idea versus like in traditional Depot if you will you just have have to get a lot of one thing and and that again like Kim be super secure don't get me wrong but the way that we

kind of think about it is almost like kind it's like an aggregated deos right like you've got these different ingredients that that make it hard to kind of take over gotcha and and why is this and like why is this method more secure than something like having doing like a Bitcoin then staking it or putting it into like a a different smart contract on core or on a different chain I'm kind of teeing you up here I think I was G I was gonna say the tea is up uh yeah so to kind of go go through it uh so this

is totally non-custodial and that's really important because not your keys not your coins like that's yours forever this is truly passive yield if you think about like bridging or uh or like swapping or whatever which we fully we actually have core BTC and then htlc Atomic swaps will get released later this month those are totally viable options for folks and we don't discourage it they're just for different holders because your your Bridge has some risk involved in it right like it's just how it goes with swapping these Z Atomic swap so again it's a hash time lock there's not risk there but in general people view going from one ecosystem to the other as very scary on some level right and it's important to understand what you're getting into with this it's also important to say hey

where does the yield come from cores Bitcoin say because you're part of our consensus mechanism this is 81 years of sustainable rewards it's not some sort of like yield um like yield farming or something else where like there's this short-termism and really high rates like just trying to draw people in not that that's a bad thing but again go to the mindset of a Bitcoin holder hey they've already been in this you know participating in this thing for 15 years you think about long term right you want things that are sustainable super easy use and it has to kind of remain on the L1 when you get into WAP Bitcoin staking some of these other things yes there are ways you potentially like restake and do some of these things those are like pretty novel at this point but I think

will become a theme that not only we get involved but other folks get involved in um you know later this year but it's important to know that there is some risk involved in that what I do think and we're going a little bit talking about the road mapap we do have you know a Bitcoin LST that's in the works as well and that will take advantage advantage of our native Bitcoin staking and that will help kind of solve some of this where it's okay not only do you have this ability to earn the yield but then you can bring it into Defi and then kind of start to combine those things it's really one of the missing Lego blocks if you will of like Bitcoin defi also something that'll be a really hot area later this year is is the underlying mechanism for that Bitcoin

LST uh essentially you do the same time lock but instead of locking it to yourself you lock it to like an LST provider like a Lio and then they give they issue a receipt token for all the uh Bitcoin that's delegated to that operator so we're going to do a followup and we'll chat through all the details we'll do it with the rollup you guys will get the uh the exclusive on it as soon as we start to talk a little more about it this is just the te's can I get can I get one of those great sounds great how do we it's not working I don't it's not working sounds very interesting though yeah I was I I was a bit concerned whether

there' be demand for this but clearly there is yeah and and I think what we'll give one quick piece of that before I kind of dive over um I think if you look at a lot of these um kind of like Bitcoin l2s that have actually amassed like a a lot of Bitcoin right now um or like has had some point had a lot of Bitcoin a lot of this is actually coming from Bitcoin miners um and a lot of this is again been sitting on this for a long time that wants more that wants more ability to go earn Bitcoin and I think the amount of uptake and and not only cores Bitcoin think but some of these other protocols is going to be a lot faster than than people thought and what's important to think about is just the capital size of the Bitcoin asset

base right like it's trillion and a half dollars today whatever if only a fraction of that comes in like the ethereum proxy is like 10 to 30% you're talking 100 billion plus right like you're you're talking to such bigger magnitudes than we've ever seen in crypto and again a lot of that will stop at staking but a bunch of that stuff will make its way to Defi and like we're g to see some of these D5 protocols that just get absolutely enormous hopefully they've got good risks like you know you you have to worry about like all the bad things the a things get big too quick but there really is this whole unmet demand there and just they very large like the ninth largest you know asset in the world so you think there will be any uh like the defi o G's the the AES the

maker Dows the synthetics that migrate over to the Bitcoin chain or or any of these Bitcoin rollups I think we'll see a lot of that happen just because there's going to be way more Capital at play and if you don't support it you're G to get left out I I think like originally I was pretty anti this view but I'm starting to see it more and more is I actually see a path and like I've talked about this earlier but like it's becoming more of like a theme for me is that I think Bitcoin will become the dominant asset by tvl within like three years I think it could happen a lot faster than that but I think if you compare like Bitcoin and eth and I don't want to start a religious War uh by by talking about it Bitcoin is like this super scarce hard

money that makes this amazing collateral asset there's a little bit more debate in the eth case it's probably the most political way to to say that but I think I can see a case for like a lot of these protocols almost like red denominating in in Bitcoin as time goes on can't give you an exact timeline for it but whether or not that's the OG like D5 protocols or new ones that spin up that one's a little bit harder to tell but I think a bunch of the ogs will add it because they've got amazing products already makes sense um cool cool I talked a little bit about core BTC so we can kind of jump through this uh one pretty quick but so in addition Bitcoin staking we announced

earlier I think it was March uh core BTC and the idea is this is the bridge like kind of the enshrine bridge of of core we do welcome all Bitcoin derivatives we want to be the home of Bitcoin def5 we know it's all not going to be core BTC but we do think a large portion excuse me um can be and this is a a pretty interesting design where you have these these lockers and these Guardians and the idea is it's an over collateralized Bridge again there's no way to do like a fully trustless um Bitcoin bridge and the idea here that you say trust minimized I say wow okay we got a we got a slide edit afterwards but there's no way to do a fully trustless um Bitcoin bridge this is trust minimized and the idea it's over collateralized so if you

know one of the lockers does ACT wind up acting malfeasant you can always slash them as well and they would pay a penalty for doing so but that's kind of the the way to think about it there's a couple different like dominant you know bridging approaches we've seen this one become a little more common recently and we think that there's some pretty cool like novel Innovations that some groups like thesis and others are working on that are kind of like Insurance markets for these to make them more Capital efficient and we're you know kind of staying a breast of all of these developments because whatever the best technology is that comes out there cor will integrate whether it's some of these more novel kind of insurance markets or maybe eventually we can get to light trust is bridging with bit VM or you know some other you know new

technology there um but that's kind of a quick piece happy to run through the diagram like in more detail is helpful as well yeah yeah just from the diagram uh it looks pretty standard uh lock and Mint type of bridge uh my my question there is like um the uh you know we've seen lock and mintware people lock into a multisig uh are the validators that are securing this this locking are they uh the same validators that secure the network like the whole deos soup it's also securing the bridge or are they two separate validator

sets so it's a good it's a good question it's not the the main validator set of core and it's also not a traditional locking Min um so anyone can act as a locker in this case and the idea is you put up a requisite amount plus the safety margin of core and that will become multic collateral I believe this quarter but the idea is an over collateralized Bridge so that when you are locking you're providing like essentially an insurance policy that you won't then go take their Bitcoin on the other side right is the way to think about it um and then if you act again Byzantine your core gets slashed and return to other folks so that's the that's the way to think about it so I

wouldn't say it's like a kind of a traditional walk in mint if that makes sense but it's like an over collateralized Bridge that's why these like Insurance markets or other things are so appealing because bitcoin's huge right so like you have an over collateralized bridge and especially if it's only core today although it will support more assets soon you're inherently limited by the amount of like Bitcoin you can take on just through this um just through this mechanism but this was chosen because it's trust minimized and like we're big Believers like you know don't trust if you don't have to because your alternatives are like that BTC or something else which are like truly trusted right um so it's again it's as we you I'm like a broken record here but it's all about like

walking that complex ladder and just understanding which pieces you're comfortable with which one you want to go with and then what kind of ultimately matches your needs and then just to followup there why would I commit any Capital to providing this effectively like this loan or this over collateralized or this Capital opportunity for people to bridge like what why would I do that great question you receive fees so I think it's like 15 bips or something like that today um so so it's a decently healthy fee but yes as with all things in cryp if there's no incentive people will not do it so yes uh you receive fees for doing so

cool uh it she see Atomic swaps um this this will get released uh later this month I believe depending on when this goes live um but the idea here is and we've seen this with like groups like you know thorchain and some like hlc which is like not necessarily super new has gotten really hot uh in the last few years because it was traditionally used just for like P2P transactions right and like I'm not sure I'll give you the quick background the idea of like an htlc atomic swap is like essentially like if and only if set of conditions right it's like I agree to send Robbie one Bitcoin if and only if these certain criteria are met there's no flexibility it's like that is it and traditionally

there was a liveness component and that's why it was mainly used for P2P transactions to be like hey meet in person you'd Swap and or like you know something of that nature roughly but obviously that's it's trust minimized which is great but the liveness thing is really challenging right where it's like you have to both be physically like in the in the same location um and I think it was dors swap but it could have been someone else that did it first um they actually came up with a kind of a cool idea which is hey what if you put a liquidity pool in the middle and that helps kind of with some of this uh U this liveness problem right because you actually have like an amm under the hood that allows you to facilitate these things even if you're you not in the

same place at the same time uh and that was really cool thorchain one of the most uh interesting teams in crypto they built so many cool things if you haven't followed up with any of their recent stuff like streaming swaps Etc like really cool definitely check it out um but on top of that um one of the kind of downsides if you will is now you add a centralization vector right like there there's something in the middle there right and again for some folks that's not a trade-off they're willing to make for other folks they don't care you know it's like an understanding what works for you for Kors approach it was all right how do we get some of the best parts without necessarily trying to like centralize so the idea is there's like this kind of Novel like kind of like order order book in the middle that's

like P2P so instead of it being um you know just like for you and someone else some anyone else can kind of pick up on that as long as they meet those conditions still so again not as liquid as a liquidity pool but also not having kind of that centralized intermediary so it's pretty novel interesting from from that design um Atomic swaps though are really cool and then again like because you have this guarantee cryptographically you don't have to trust anyone and that is very cool especially if you're thinking of going from like you know Bitcoin to some other chain with historically has a lot of issues doing things trustless or at least in my opinion is is impossible to with bridging and um what what what do you

expect the use case for this to be um with regards to core and Bitcoin is it just do you just think that your your community is going to want to swap to bitcoin and then that the Bitcoin Community is GNA want to come to core is it I I I kind of view it as mostly like okay we're gonna onboard more Bitcoin to core chain this way yeah that's that's like the target use case I'd say I'd say but there's also other ones like you can use this for like BRC 20s runes ordinals like you can use it it's very generic in that way um it's really designed for the folks who aren't comfortable with bridging if you will and like this is kind of again so core to the core ethos which is how do you have a a product or an offering

that matches every single person's trust assumption and you know and their their threshold they're willing to take and again like how I kind of think about it is a lot of people stop at Bitcoin stake well there some percentages do nothing then you go to bitcoin staking a lot of people stop there some people then are say hey only willing to swap other people say I'm willing to bridge and then it goes all the way down to like you know crazy levered you know like over collateralized or under collateralized like ordinal trades on a perex you know like who knows how Wild it gets to with like crazy kind of dgen culture on bitcoin like starting to emerge but it's important that you can kind of stop at any path or any any part along that

path Mak sense cool and then I talked a little bit about this already as well but yeah so again so much General market cap in Bitcoin it's so big but it's just such a small part of you know tvl today and there's so few Bitcoin focused daps all that is going to change drastically over the next you know few years there's also some kind of pretty cool protocols that are products that are built on top of core they're also trying to onboard more and more people into this ecosystem in like a web two and a half fashion if you will there's element wallet which is a messenger P2P payments app really trying to be like crypto on easy mode trying

again like we don't have products that can bring in the six billion Web Two users because it's really hard or difficult to use we're just never going to be able to like fully break out as an industry Beyond some of these cases like speculation and speculation itself is you know a wonderful tool in a lot of ways but think about stable coins it's a 100x better solution for billions of people around the world how do we get those into hands has to be super friendly and easy to use and that's really kind of one of the problems that elman's trying to solve is also Satoshi app which is this cashless onboarding platform this way for folks to earn their first crypto which helps kind of solve another big barrier on top of just knowledge is help people get access to this ecosystem for the first time and

then when you can get access to that ecosystem you can start to participate earn yield and then become kind of a full-fledged web through user really trying to solve education problem that we have in crypto that plagues you know so many folks um the other like interesting kind of onboarding mean mechanic that that core is you know trying to spearhead is the institutionalization of this next wave of Bitcoin scaling Solutions and we announced this uh about a month ago but it was the first yield bearing Bitcoin ETP with Valor it actually has since launched in the Nordic regions it's going to be taken throughout the world later this year and then hopefully more products will get developed on top of it but if we go back to that design of uh cores Bitcoin staking where it is uh you

know truly trustless noncustodial it's this amazing product for these uh Financial uh for these Financial products because they don't have to trust there's no risk involved what they can do is they can actually now go stake and earn additional yield to kind of get additional returns for these underlying Financial products that they're offering it's going to be a while before you know they were core chain is starting to power like some of the stuff in the US but there's kind of a whole path there as well and the idea is Bitcoin holders now are not locked out of yield people that are holding you know Bitcoin and yeah you know their retirement accounts or whatever through these etps shouldn't be locked out either and like kind of my view on this personally is like we've unlocked kind of Pandora's Box where

you'll probably see some e ETFs that have stake maybe you know later this year as maybe some of those get announced Bitcoin yeld you know ETFs are coming too and it's we just can't lock folks out anymore people want additional you know sources of returns that are that are safe um and then we also announced that a core ETP is also going to go live later this year which is great for folks who again maybe are aren't comfortable with you know custody crypto assets themselves they'll be able to get that in you know their various investment accounts and Institution buil for State as well so yeah a lot of a lot of work there there hasn't been as much um as much like experimentation on the institutional side I would say from some of these like nextg Bitcoin scaling Solutions so core is happy to kind of

help lead the pack Bitcoin is really the only institutionally accepted crypto asset so there's a lot of opportunity there for folks like core to get involved and then I think I think this is my my last one for you guys um the uh courin ecosystem is growing uh and also for anyone listening to this come come chat with us we're always excited to to go chat with uh with more Builders and there's this whole wave of like Bitcoin specialized apps that have already launched and a whole wave behind them and again these are protocols really that are either like Bitcoin Bitcoin Centric so like nlx is like potentially onchain bit Max so remember bit bitmax was all Bitcoin based so they've got a whole purpose protocol that is actually

Bitcoin based which is super cool there's glyph which is this uh inscriptions amm and Dex coland you know borrow lend Bitcoins there so many things that are either launched or coming coming uh soon but again like this whole next wave of defi I think we'll have this you know Bitcoin Focus behind it and then on top of it there's so many you know amazing infrastructure providers that are helping to provide additional utility and resources for Builders on top of the core chain as well as a variety of different multi-chain daps so I there's about 100 projects that are launched so far we welcome you know all projects to to get involved there's also the core ignition program right now which is an incentive program for both users and Builders so it's a great way to get rewarded for the different you know daily active users

TPL Etc that you bring to the the ecosystem and also for your users for receiving rewards participating you know in your protocol so it's a really like kind of surround sound 360 way to participate and get rewarded then yeah I'll leave it on the uh the QR codes uh for different people to get involved whether that's starting to read about us in Twitter staking Bitcoin or you know downloading element to go uh get involved in the core chain yeah thank you Rich for for coming on and Fielding our questions um and really been a pleasure to watch core grow and you know think about these things from like uh what the Bitcoin Community wants this gradual spectrum of kind of uh risk parameters and desires

for yield um you know and just kind of contribute to the long like to the longevity of Bitcoin um yeah look forward to jamming on some panels with some other builders and getting into some fiery debates about design choices like always so thank you awesome thanks so much for having me guys really appreciate it talk soon thanks Rich