The Case for a New Bitcoin Execution Layer with Eli Ben-Sasson

Transcript

If folks are building infrastructure that's actually great, they should benefit from it. They should also pay us. What are some of the use cases that they're trying to do? Maybe generally it's yield, but what what maybe more specifically are you hearing from these companies? Where you guys are at with bringing native Bitcoin on onto Starkware uh integrations with different yield products. Welcome back to the Rowup. We are your hosts. I'm Andy. I'm Robbie. And this is your home to learn from the biggest guests, the brightest minds at the tip of innovation. Our goal is to help spread the collective knowledge of everyone in our community. We are breaking crypto out of its echo chamber and taking it to the real world. Sit back, relax, and

enjoy a quick word from some of our awesome partners who make this show possible. CryptoUx broken AI can't trust it. Let Magic Newton set you free. It puts your onchain transactions on autopilot. does all the work for you 24/7 so you can go do what you want. The vision of Magic Labs, the creators of embedded wallets used and backed by the best. See for yourself. Simpler crypto UX, verifiable AI agents, newton.xyz. [Music] Introducing Summerfi, one of Defi's oldest and most battle tested platforms.

Summerfy automates your exposure to DeFi's highest quality yield so you can sit back and enjoy this summer. Deposit stable coins at USDC or USDT and let Summerfy route your funds into optimized lowrisk lending strategies. With over a 100 million in instant liquidity and support for over 34 protocols across Ethereum, Arbitum, and more, you always stay in control. Choose from a wide range of curated strategies reviewed by independent risk experts all in just a few clicks. So why work hard for your yield when you can be lazy? Start earning now at summer.fi, the home of the lazy summer protocol.

Up next we got our guy Ellie here to good to see you. Please for covered from the dinner last night. Yeah, it was fun. We were we were going back and forth with uh Hib and Ken from a a Bitcoin company building on Starkware. Bunch of good faces there. Xverse. That was Xverse. He's coming out tomorrow. I I believe so. Excited for that. Um let's talk about the foray of Starkware into Bitcoin. Yeah. Yeah. I mean, come on. All I think you're getting a little bit of push back from the Ethereum people, huh?

Um I'm not even sure about that. like uh I would say that um you know part of the Ethereum community is happy with that part of it maybe is unhappy with that but uh certainly I think well okay I'll start like it is very much in our vision to go there you know I started my journey into crypto in 2013 at the Bitcoin conference and when I presented there I basically said look guys uh you know with the ZK stuff um we can do things better and scale Bitcoin and offer it privacy. That's how I, you know, co-founded Zcash. That's why Starkore exists. It's for these things.

So, for me, it's been a 12 year old dream to bring this stuff onto Bitcoin. So, you know, and anyone who understands that must be a supporter. And those among Ethereum folks who understand it are supporters. Yeah, man. And we're closer than ever, right, with the Covenants coming. I mean that that core developer there last night. I'm I'm I'm bling on his name. Jeremy Rubin. Jeremy Rubin. He mentioned that that you're like almost a month away from covenants on Bitcoin which has been the the big thing for OPCAT for all these upgrades.

Yeah. So I I'm not well it will be a weaker form of covenants because right now a lot of the excitement is about this upgrade called or soft fork that is called CTV and CSFS which together first of all help lightning really greatly and all kinds of protocols similar to lightning which is really great because uh those are the best kinds of uh you know privacy preserving uh cheap payments uh without uh overloading bitcoin and I'm a big supporter of them. Uh so that's very exciting. I'm also very excited just to see that the core developers and the protocol developers are you know coalesing around something that's amazing news um in terms of uh helping things like starknet it will help a little bit because you can get

the bitm more efficient so that's also great I I'd love to hear the story and you mentioned privacy is so important and sometimes a controversial topic maybe it shouldn't be why in in your view is privacy so important and why has it been such an integral part of your journey through Zcash, Ethereum and and now ultimately Bitcoin. So privacy for all of us is extremely important. Like I do my almost all my consumption um day-to-day consumption using uh the metal card uh by Arjent to you. Yeah, you guys should also get it.

It's free for you know everyone can get one now. So this uh beauty is like a I don't know credit card by um Armster Beauty. Yeah. Today's stream is is is sponsored by Etherfy. We are promoting their cash card their direct competitor. Okay. The recomdial usage of crypto on chain, right? Yeah. Yes. It's we're not using centralized exchange cards, right? So, in terms of privacy like uh I don't want everyone to see all my transactions, right? Um so, you need that. The problem with privacy is really a matter of UX. the ZK technology to provide it exists there, but it's uh pretty hard in terms of the UX experience and hopefully we'll solve that as well.

So, part of Starkware's new idea here is is this kind of Bitcoin unleashed vision, right? We were speaking about it last night a bit. um you know let's get up to speed about the latest developments of where you guys are at with bringing native Bitcoin on onto Starkware uh integrations with different yield products and really like what you're seeing the demand for uh kind of like Bitcoin fi if you will is who's using it why what do they want to do uh let's just get all caught up here yeah so I would say that there are broadly um well maybe three um two main use cases and one kind of funky use case so the funky use case. There are all of these Bitcoin um indexer based assets like runes, BRC20s, you know, all kinds of meme

coins and stuff like that, you know, doggo to the moon and others. Um and there for that we have uh a runes bridge that was built by Jeremy Rubin's team. Char already exists and you know people are just uh bridging over to Starknet getting a better UX. It's uh we also used the bridge in the other direction. So we minted for the very first time you can now have USDC in runes form which you can access on you know Odin.f fun and on uh magic Eden and traded with respect to the other runes. So a little bit of you know wild you know more speculative um den kind of stuff. That's the funky but uh you know less institutional side. Then the big word is

yield. people are, you know, you have Bitcoin, it's this amazing asset, but most of its value is unleashed. Sorry, it's leashed right now. And on Starknet, we want to help unleash that value to put it into use. So, for instance, you want to borrow stables against your Bitcoin without leaving custody of that. You want to do it safely. That's one thing we're going to offer on Starknet. We would like to secure Starknet with Bitcoin, right? To have the set of operators include Bitcoiners. So you're going to have yield both for BTC staking uh on starknet and you will generate yield while you're doing defy you know borrowing participating in purpose exchanges and stuff like that on starknet and what are some of those ecosystem

projects that that you're particularly excited about that are you know helping to pioneer some of this movement so I'm very excited about well there are three different sectors that are thriving on starknet and each one of them has probably the most innovative you know kind of uh stuff on there we don't have that much usage but I think Bitcoin will help unlock that. So one sector is of course DeFi. You know the very best AMM out there hands down is called it Kubo. It's now also on Ethereum but it's you know home base is on starknip. Um Moody is great. Did a podcast with him. Co-founder of Uniswave V3 and was the original in inventor of concentrated liquidity as I know.

Yeah. Moody. Yeah. And and now correct me if I'm wrong there's a lot of crosschain volume that's also happening for Rubo and and Aubo of course started on Starknet. So yeah. Yeah. So, so uh you we have like amazing DeFi protocols like Aubo Avenue aggregator. We have pay masters uh that abstract all the fees away. Then we have uh things like lending protocols like Vzu um over the next two weeks extended which is uh Revolute backed and you know XR revolute folks. Per exchange is coming onto starknet that's uh you know big news. is going to be added to the existing per including uh layer Aira and um uh Remis decks and then um that's the DeFi sector. Another amazing sector is

the consumer app sector where we have things like focus tree which is an app that you know kids and teenagers and university students use to focus. They don't even know that it's on starknet but it already has an integrated wallet. You know 500,000 uh monthly active users on it just amazing. And then you have uh you know just yesterday uh Argent which was a you know still is a wallet rebranded into ready and is now opening a neo bank which again is based on starknet. So we have the consumer app sector. Finally we have the gaming uh which is uh you know centered here in Brooklyn with the amazing amazing cartridge team games like Eternum uh Loots Realm and all kinds of others fun stuff.

It's awesome. I'm I'm curious from the consumer apps perspective, you know, there's a thriving ecosystem here. Is there an app that you sort of have in the back of your mind and maybe if you weren't so busy you would build it yourself, but you'd like to see get built using all the existing infrastructure that know you've put forth through privacy, through Starkware and Starknet. Is there an app that you you'd like someone to come out and maybe if someone doesn't you build it yourself? Call to action here. Well, first of all, I'm extremely bullish on the two existing consumer apps. Um, uh, so ready, which is a neo bank, but in which, um, you know, you truly own your assets in a way, you know, you don't get a call from your bank. You can just, uh, in a, you know, in five minutes on

board, you have your checking and saving accounts. You're going to have, you know, you can pay into, you know, wire transfers. You have an iban. You know, you have like a, it's amazing product. And you, you know, you have your credit card. I just showed it. all of that stuff. That's amazing. Um, I also really like these just consumer apps where, you know, you truly own your reputation. So, Focus tree is one example. You know, something we need people to own more of their reputation as opposed to rely on whatever credit ranking um, you know, agencies. And the way to do it is just bring more of your life onto the blockchain. And then you can attest, you're the only one attesting truly to your, you know, uh, reputation.

Yeah. Interesting. That's one powerful application of ZK proofs that I love. I love to talk about because it's so intuitive. You know, we go to a bar, we need to show our ID, prove that we're 21 years old here in the States. Well, why does my ID need my address and all of these other things? And and especially when, you know, social security numbers are involved in all these things when I can just do a ZK proof. I can prove that the thing is true without giving up the real information. was filling out something with my social security number yesterday and it was I it I still have that feeling when I input it in where it there needs to be a better way and there is a better way and I think you've p you've done a lot of work with ZK and Starkware and Starknet as proponents of

the privacy elements we talk a lot about the succinctness of ZK proofs and the scalability that it it it does involve and and not so much about the privacy elements that are just as important. Yeah. Yeah, I agree. Yeah. So, yeah, Ziki can do a lot uh in terms of privacy and also scalability. Yeah. Going back to the Bitcoin guy. Yeah. Yeah. So, there's this So, obviously there's these Bitcoin treasury companies and we had we had the question last night about what people are bearish on and several people said the blow up of these treasury companies. Ironically, Pete Rizzo, the you know, podcast host and OG Bitcoiner was he's bullish on them. He's like, "It's going to blow the thing up." Uh very bullish. Either way though, there's what's been happening is that these companies have basically been

like effectively far like harnessing retail with a a price of this equity that's higher than the nav of the holdings of Bitcoin. And then retail has been buying the stock and kind of been been allowing them to refinance debt, buy more. But that's basically going to slow down over the next six months as you know that there's more and more of these uh and people get a little bit more you know smarter and sophisticated. One thing that those companies are then going to try to do and already trying to do is returning to finding yield as a way to provide a differentiated offering to their investors and to main that kind of like Yes. Exactly. So there's there's a lot of competition for who's going to be able to get that kind of Bitcoin. How is how is Starknet how are you guys going

to go and and focus your institutional efforts with some of these companies to get to be the yield provider for some of those uh treasury companies? Right. So, so of course uh people will be able to stake Bitcoin and get yield. The main differentiator for Starknet there is that we are you know the biggest in terms of the ecosystem, the number of real applications that people are already using, right? At the end of the day, right, you want the network to offer intrinsic value to users, right? If if it's just about farming some token with, you know, a promise that someday something will happen, it's okay, but it, you know, doesn't uh doesn't really cut it. And we've seen some of these, you know, schemes recently and they don't do too well. Starknet has a

thriving ecosystem of visionary builders building everything from games to consumer apps to DeFi to payment systems, things that people actually need with a best UX, best privacy, best, you know, everything. Best smart contract language, best ecosystem. So when you are getting uh you know when you are staking and supporting this network it's a little bit like you know mining bitcoin or uh staking on ethereum you are doing something that is part of an ecosystem that actually a offers value to end users. So that's I think the biggest differentiator. Um we also pride ourselves for being like you know we invented I mean I invented you know co-invented zcash zk starks the standard technology. We have the best team. So

many of the things that others are implemented uh implementing, we invented them. So like you know it's just like you don't go wrong with IBM, you don't go wrong with uh Starknet and like it's and and safety matters a lot when you think about Bitcoin or you know your digital assets. So that's another differentiator for us. Innovating finance global institutional and onchain deep liquidity to drive capital efficiency. Now, maximize yields on institutional grade liquid staking with M.

Unlock trillion dollars of capital via F Bitcoin. All of this secured by Mantle's treasury of billions in stables and ETH capital pools. This entire ecosystem is coordinated by a vast network of seasoned VCs that are aiming to create the next generation of banking and financial technology. This is Mantle. Are are you speaking with maybe it's not Micro Strategy or those sorts of Bitcoin treasury companies, but maybe it's miners, maybe it's centralized exchanges, these these large pools of Bitcoin. What are some of the use cases that they're trying to do? Maybe generally it's yield, but what what maybe more specifically are you hearing

from these companies? Okay, I'm hearing the yield word a lot, but I think they all understand that yield just in the sense of farming or you know some points reward or something is not what you want. Many of them are looking for they understand I mean they look at the Ethereum ecosystem right it's amazing the DeFi there it is offering real use cases you know borrowing against your assets investing them you know doing all kinds of things they're saying hm you know we should have something like that somewhere that it's more natively connected to Bitcoin and I think there's a list of Bitcoin L2s I think were pretty well positioned to be you know the best the first the safest um so I think those are some of the discussions we're having with uh you

know these uh you know whales uh mining pools um institutionals. Yeah. And they don't want to sell either, right? They want to borrow against. Yeah. They want to borrow against they want to put it to use. They want to unleash Bitcoin's value. They want to unleash the Yes. That that may answer the question from earlier about like what is the potential application here? Well, it's like a Bitcoinbacked stable coin. We see everything and all the movements happening around stable coins. you're right that these institutions don't want to sell their Bitcoin, but they want to unleash the capital and so therefore USC, but then they don't get Bitcoin exposure. And so if you already have Bitcoin exposure and you want to try to unlock more capital from collateralizing the Bitcoin, Bitcoin is I've heard it

called the best collateral in the world, and I I think that's the case. It would make sense a natural, you know, progression of that would be then collateralize the Bitcoin and unlock stable coin liquidity off of it. Yeah. Yeah. Yeah. Yeah. But you just borrow USDC or USDT against it. Like that's what people would want to do more than anything. Yeah. Right. Yeah. And whether that's fun natively or intrinsically with the Bitcoin, you could do it in a money market. You can do it a variety of different ways. I I think that may I I think we may see one of those maybe on Starknet here, you know, coming up soon as more Bitcoin liquidity comes into Starknet.

Yeah. Yeah. What's on the what's on the horizon covenants? You know, some small uh you know changes, not the big one maybe that you guys had been pushing for. I I know you've been a big advocate. What's the next three months look like for uh Starkware and Starknet? Um you know, Bitcoin looks like it could go to all-time highs here pretty shortly. Yeah, mania could continue. H how are you going to capitalize? Um okay, we're going to continue building uh this uh home for good applications and you know just yesterday uh ready announced their neo bank which is on starknet. That's amazing news. Uh over the next two weeks extended which is an XR revolute team uh is launching their pers exchange on starknet. You

know, I think it's has a chance of getting h giving Hyperlid a decent run for it money. Huh. Yeah. Run for its money and offering something that is going to be far more decentralized and better UX and hopefully also, you know, better trading experience. Uh that's like over the next two weeks. Later on through the summer, we are um going to be starting first of all a lot of integrations with on and off ramps. Um you know, some big names. I don't want to announce them till they're ready, but like some of the, you know, blue chip kind of uh stable providers and on and off ramps are going to be launching on Starknet hopefully very soon. Um then we're going to have a BTC which is basically getting you know um getting extra STRK for uh putting uh

Bitcoin liquidity into a whole bunch of protocols, DeFi that we mentioned. And then later on in the fall, we're going to have uh BTC staking. Uh so that's what roughly the three months uh ahead look. Awesome. And and looking a bit further out. Um how what what do you think about the sustainability of Bitcoin the asset the security budget is is part of the vision for Starknet to generate some fees for Bitcoin network? I hope so. Yeah. Well, I mean for that for that well it really depends on Bitcoin like and I don't want to decide for Bitcoin, right? There are those that argue strongly that you do not want to put any more activity. You know, the anti what's it called? The filter boys.

You know, don't put anything. Don't give us any fees. Bitcoin should be for very little payments. And the fact that the memp pool is often very empty. They're saying it's a it's a feature. It's not a buzz. Small talkers. Yeah, exactly. I I think they're wrong, but you know, I'll respect, you know, Bitcoin is bigger than my own thoughts. um in that case value will acrue in other ways to the L2s like bit like starknet which is fine. I think the better way is for Bitcoin actually to further unleash its value and allow you know things like um L2s to also keep part of their state on Bitcoin which requires things like CAT and yeah so I

mean there's also another interesting thing there's a lot of discussion of postquantum securities ZK starks are postquantum secure um you can have signature schemes you can basically make all of Bitcoin very postquantum secure If you're if you use Starks, I had discussions with uh many important core developers about these things. I know that Adam back uh Luke Dash Jr. a bunch of others are actually very favorable for um the use of let's say things like ZK Starks for postquantum security even if they don't necessarily want to see more bloating of the blocks and we can live with that as well. a kind of a completely separate question and thought here. If if you were running the EF right now, uh what would you do with

with regards to the relationship between the L1 and the L2 and and and kind of how does that shape your view of Bitcoin and the Bitcoin L2s? I would do something I suggested them a long time ago, but I don't think it's going to happen. I think they need to have more of a capitalist economic point of view which basically says if folks are building infrastructure that's actually great they should benefit from it they should also pay us meaning we should enshrine payments you know some sort of taxation on the L2s that will flow to the L1 so that everyone is happy and enshrine that in a way that makes both of these things sustainable. This

is a very common meme, you know, time- tested for like this whole thing of B just saying everything is just fully open source kumbaya and like uh we don't care is not good and we try to convince you know the EF many years ago that um you know to go down this route in which uh you think also about like u value acrruel and incentives in both directions um but that's what I would advise yeah I mean that was somewhat attemp tempted with like just using Ethereum L1 for data availability, but it was kind of not exactly that didn't really pan out to be What do you mean? They went like with the blobs. The whole thing is, oh, we'll make this cheap, cheaper cheaper cheaper cheaper cheaper. We'll just make it cheap. We're

not going to charge anything for this. We're going to make it much easier for you. But do competitive pressures, right? What do you just like other competitive pressures? Not really. No, I don't know why. I think I I don't think it was a good this kumbaya thing. I don't know. I don't think it was a good choice. I think if I was them, I would say, "Oh, it's really great that actually the fees are going high. It's pushing things out to um L2s, but it's also charging very hefty fees. It's creating more efficiency and uh actually bringing in um money to the um to the L1. And they could even go a step further, you know, require that if you in order to be an L1, sorry, an L2, you're sort of expected to, you know, do some issuance towards Ethereum. And it could also work in the other way around.

they could send uh a portion of the fees acrewed on the L1 to some of the L2s or the applications. I would think in those terms. Yeah. Um sort of like very back and forth rather than this kind of like Yeah. And I want to say more than that. So on Starknet we had right now we basically drove the fees to pretty much zero. So there's no fees really coming in because we wanted all the you know as much traction to be on it. But we had it when the fees were high initially. We had a Devonomics program that basically said the application developers that are building applications that users value they will get a portion of the fees and I want you know once fees go up again and there's congestion which is going to be very hard now from startnet because

we have like you know a thousand plus DPS capacity but I think we'll get there. I want portion of fees to be flowing to the you know the kubos the vzus the applications who are driving demand I want them to get a portion it's good for me I think ethereum should do the same thing again like I feel like as a result of of like maybe like the app chain idea or of like this application specific sequencing idea now these chains are forced to prioritize application builders more than than they were like you know in the last two years.

Yeah. Yeah. What's up, Robin? And Andy, I apologize. I have to jump my screen. Thank you so much. Thank you. Cheers. Thank you. Always a great time.