Bitcoin Is the 'Apex Predator': Stacks Co-Creator

Joining us on first mover is co-creator of Stax Moni Ali Mane. Welcome to the show. It's always a pleasure chatting with you. Thanks for having me. What are you watching in the news this morning? I think one of the news items recently that caught my eye was uh a recent funding round of Eigen. So they raised around $100 million from a 16 Z. I think the thing that interests me about that particular protocol is that it's looking at capital that's locked on it and trying to find interesting use case for it. Like how can you reuse the locked capital? And I'm very interested in seeing these types of primitives uh evolve around Bitcoin as well. We know that Bitcoin is sort of like the apex predator, like it's the pristine asset and these types of concepts coming to Bitcoin could be much more significant because Bitcoin is a trillion dollars in capital. And we are just seeing the start of people locking their B DC capital into smart contracts running on L two S and so on. And I think if we can provide people with increased flexibility where they could lock B DC in a contract, but then potentially reuse it in, in other interesting ways. Obviously, it comes with risks and all. So I think that was, that was a news item that, that definitely caught my eye. E again, layer is a really hot topic lately. Really exciting project that everyone is talking about. Me and you, you're mentioning the latest funding round there. How difficult would it be to bring something like this to Bitcoin? And what kind of timeline would we be looking at uh to see this kind of development in, in the Bitcoin ecosystem? So I think the main difficulty in bringing these types of protocols to Bitcoin have always been at the L two infrastructure there, right? So there are two parts to it. One is, you know, what's the consensus mechanism for the L two? Is it really secured by Bitcoin? That's work that, you know, for example, Stax has done with the Stax Nakamoto launch where the, where your transactions are secured by 100% of Bitcoin hash power. And these, the second thing is how secure it is to move your BT C from L one to L two. And over there, STA has done some work with SB DC but other projects like BIT BM actually reduce the trust assumptions significantly. So I think we are making progress on both those two sort of like critical infrastructure points once that's done. And I think we are very close s not going to launch is only a few months out at this point. Then I think the developers can program anything that they want within the L two environment. So that's sort of like the exciting part that once these infrastructure challenges are behind us, I think we can unlock a lot of creativity by developers using BT C as, as the asset M you just mentioned so many developments for the Bitcoin ecosystem and for so long, Bitcoin was an ecosystem that was relatively unchanged, right? Really slow to move, really did what it did great. But the innovation that we saw, we saw from, you know, Ethereum and ecosystems that were built to challenge them of Ethereum um offerings. So as an OG in the space, I mean, sitting here in 2024 talking about these developments, I I just want to hear, you know, how does it feel? How does it feel to be sitting here and talking about um Bitcoin evolving at such a rapid pace? Yeah, I think, I think that's definitely interesting. I would say that uh from, from where I stand, it definitely took longer than I expected. Uh For example, I mean, we knew that, you know, ecosystems outside of Bitcoin can move faster, they can take more risks and they can innovate faster as well, but you can sort of like watch some of some of those experiments and the stuff that's working out. For example, one clear example would be Stablecoins. At this point, we know stablecoins work, they have clear product market fit people want them, people want to use them. Then, then these primitives would come to Bitcoin. I think that coming to Bitcoin part was slower than we anticipated. Uh But it definitely feels good that it is finally happening. Uh And I think Arnold um and uh and KC, they deserve a lot of credit. Like I, I do think when Arnold started, that was sort of like the spark where Bitcoin culture started changing, the amount of developers and capital coming into Bitcoin started changing. And then some of the OG products like ST and others who were already working, I think they got some sort of a fresh fuel on the fire as well. And people saw that look, a lot of this stuff is already built, are almost there and now developers are getting, getting really excited about it. So I think, I think in some ways, I'm glad that we took the slow and steady approach that we are still around to see the innovation coming back back to Bitcoin. And I think, I think that that's an exciting time to be here. Let's talk a little bit more about stacks. You mentioned the Nakamoto upgrade that's uh coming up soon. Talk to me about your focus for stacks as we move further into 2024 and what we can expect from the upgrade. Yeah, so I think one of the things that as, as, as Bitcoin, uh we, we definitely have like a different set of values. Like there is definitely much more long term thinking, there's definitely a version to taking needless risks. So I think the Stax L two project like basically represents a lot. For example, a lot of R and D work went into designing a really safe programming languages. Similarly, on the consensus side, a ton of work went into reusing Bitcoin's hash power as much as possible or reusing Bitcoin security as much as possible. So I think it definitely sort of like shows that long term thinking. So Dakota launch has been in the works, I would say at this point, almost like two years and a lot of challenges frankly were operating as a decentralized ecosystem. Again, going back to the ethos of Bitcoin, uh the ST L two ecosystem itself is heavily decentralized. I think there are like 10 plus different entities that contributing to some of the core software and they're, they're like 20 or more uh outside of that as well. And sometimes there is a lot of overhead and challenges in, in uh functioning as a decentralized ecosystem. But I think it's better for the long term health as well. So with the Sa Nakamoto, I think things are sort of like finally coming together and, and maybe the timing would work out as well. A lot of devs are excited about doing the launch of Nakamoto, which is basically a much faster L two that is secured by 100% of Bitcoin uh hash power and, and so people are looking forward to that and that, that increase in speed and functionality. But the timing might be very interesting because right now it's scheduled for approximately when Bitcoin halving is happening. And I think that would be sort of interesting because Bitcoin, there's a lot of attention on Bitcoin during, during the halving time. And if the, the major L two is doing, doing a launch around the same time, I think that'd be, that'd be very exciting. I think so too. I kind of can't, I kind of can't wait for those two things to, to happen at the same time. So I'll be uh on the edge of my seat waiting for that. Uh Let's talk a little bit about Bitcoin scalability layer two is uh are, are really meant to solve some of the scalability challenges with the network. Talk to me about if that's happening, what still needs to happen, especially as more and more people become interested in Bitcoin in the Bitcoin network off the back of the spot. ETF S off the back of ordinals. What needs to happen? Can Bitcoin um can bit Bitcoin facilitate this adoption that we're all so excited about and building towards. Yeah. So I think over there, I would say uh let's say that at a rough approximation, you know, 100 million people use Bitcoin. I think the numbers are off depending on like what, what data set do you use. But let's say approximately it's, it's 100 million people right now to get to a billion people. We know for sure that it's not going to happen on the Bitcoin out. Like, there's basically no way like they wouldn't be able to own like a UT XL on chain. So we absolutely need these L two solutions. And one of the things that has changed in the last one year is that I think before uh the Bitcoin community was sort of like putting all of the scalability eggs in the same basket which was lightning and don't get me wrong. Like lightning is amazing. I think, I think some of the companies there have done groundbreaking work. Uh they're, they're growing, they're actually getting more nodes online. But interestingly over the last one year, this sort of like uh attitude has shifted to let's try all sorts of experiments as L two s and this is something that happened with Ethereum, right? We, we see almost like 10 to 20 like big projects, but in terms of experiment that people tried, it would probably be 100 or 200 or more. And some of them didn't work out. Some of them sort of like became like bigger projects with more traction and more capital, more developers and so on. Now we are beginning to see that that with Bitcoin there's obviously stacks and root stock which are sort of like the more OGS, but they are a fresh, sort of like batch of new L two S coming up. That, that is very, very exciting because what happens is you let the free markets try different designs and then people are tweaking things. They're trying like different sort of like, you know, uh attrition and remixes of, of different ideas and the probability that at least a few of them are going to work is actually much, much higher than putting all of your eggs in the same basket, right? So I think with that happening, my confidence level that we will have some ludes that are actually sort of like working out commercially in the market and taking a lot of load off of Bitcoin at one where the experience is great. People can do fast cheap transactions and, and infrastructure sort of goes in the background. That's, that's, that's like where we want to be where Bitcoin infrastructure is just in the background, it's reliable. People just can do fast cheap payments and it sort of like works all the time. And I think, I think uh with these new experiments, uh I think some of the l tools would definitely be able to deliver on that. You know, we spoke about ordinals just a few minutes ago and ordinals have really revived the NFT narrative and it's interesting that that came from the Bitcoin ecosystem, you know, it's, if I saw a chart the other day ordinals was like, kind of up here and all the Ethereum Nfts were, um, much lower, especially at the beginning of 2024. Do you think that we're going to see s some of that traction that we saw with Ethereum would come over to Bitcoin. Do you think we're going to see Bitcoin start to outpace Ethereum in other web, three applications that we've seen Ethereum be successful in, in the past as these developments happen um, in the network. Yeah, I think I will, I'll separate out the two things there. One about orals. Um I'm of the view that usually in some, when, when something finds like product market fit, there is like one core property that sort of like stands out and people just get it right, like it's, and, and often it's like something very simple, like for the case of Bitcoin has money. Um, it's 21 million coins. It's as simple as that. People know that there only ever will be 21 million coins and it's durable. It's not going to change and people get it. It's, it's a very simple thing and if you look at Ethereum, they've tried very complicated arguments around ultrasound money and how, you know, supply is changing and this and that and that complicated thing is actually not working. The simple, there will only be 21 million coins is actually what's working in the market. Same with NFTS when I look at it. Yes, there are many other factors but just the fact that with orals, the image is literally on the chain and it's not on any chain, it's on Bitcoin, right? We know that Bitcoin is going to be around. I think that one property just stands out like people just feel that, you know, this is real, this thing is never going to disappear and my digital art is now stored forever and that's it. Like, I think that's the base level of property. And then there are obviously other things around it that are leading to a lot of sort of interest there. And I think with, with Bitcoin D five, which is the main thing that gets enabled by L twos, we will gain see like these like simple primitives. For example, one I can think of is a lot of people don't want to sell their Bitcoin, right? So a very simple primitive could be, hey, don't sell your Bitcoin, but lock it in a decent way and get some liquidity, take a Stablecoin loan again, a simple concept that a lot of people get and they can start using it. Like I think that's how you start getting a lot of product market fed. And now coming to your second question, I do think that in the overall industry right now, there's a lot of um sort of like capital and developers who have the model that there will be some alt L one like a Salana or something else. They're going to start eating on Ethereum market share. I think there's some truth to it, Solana is, is, is gaining a lot of traction, it's popular in developers and so on. But I think what the market sort of like is beginning to see right now is that there's much bigger category which is Bitcoin L twos because these Bitcoin Lws can match the Alltel ones or Ethereum uh head to head on every single feature could be speed, could be express and so on, but they can match it. And I think that could potentially be a much bigger market simply because of the fact that they're not starting from zero. Like whenever you launch a new, new project, you're sort of like starting from zero in terms of how much capital there is in that ecosystem. But when you launch a Bitcoin L two, you're launching something on top of a trillion dollars of capital, right? So I think the there's a and there's, there's a sort of like a much easier path to that capital getting deployed and, and Bitcoin L twos as a category growing. So I do think they're going to start giving El twos some competition but uh but even like eel one might start seeing competition coming from Bitcoin L twos, which is something that I don't think a lot of people are talking about besides stacks. Uh what Bitcoin L two. Are you watching? Uh what Bitcoin L two is doing something very innovative that you're keeping your eye on. Yes. So I think the landscape right now what it looks like is uh there are the big fours which is stacks, food stock, Lightning and Liquid. And they're all sort of like very different, right? Like liquid is a, is a Federation. Lighting is mostly like for payments and a peer to peer thing. I think root stock and stacks would qualify as uh what the Ethereum or so on and developers expect from, from A L two, right? So those are the, are the two bigger ones. And then there are, there are new experiments coming. I think Babylon is one. They're doing something very interesting with enabling Bitcoin to be locked at the L one level. And you're sort of like participating in proof of stake on, on other chains. I think that's a, that's a very interesting model. Uh Some people have worked on things called spider chains, which are, which are again interesting trying to the common trend there is trying to reuse BT C capital, they can take Bitcoin capital and participate in becoming a validator on, on, on an L two or some, some other ecosystem uh out there. And I'll come back to the project that I'm, I'm very, very excited about which is bit OEM. It's not a something that is the L two itself, but it's a fundamental building block that can enable other L twos that can even potentially use like ZK style roll ups. But more importantly, I think Bit Me M helps the bridges like the bridges between the L one and the L twos. I think we are maybe like a year out from seeing it really uh working out in production. But now that we have a path that doesn't require any changes to Bitcoin L one like that makes it very, very realistic and practical. Like before that a lot of people would rightly criticize that if your L two requires changes from the Bitcoin one, you're probably never going to get those changes. But with Bit BM or the work that we are doing with SP DC. Um we don't, we don't require any changes from, from Bitcoin. So I think that becomes a much more pragmatic practical solution that people know it's gonna ship, it's gonna work. Um And, and I think that just changes the game we do have to wrap. But I want to quickly ask you this show is for our mainstream audience. A lot of folks are interested in Bitcoin now because of the approval of the Spot Bitcoin ETF in the United States. But what do you think needs to happen to get a mainstream audience more interested did in some of the other facets of the Bitcoin Network? Not just the spot Bitcoin ETF that was recently approved. I look at Spot ETF S as, as um Bitcoins use as a digital gold or a store of value, like you're passively sort of like holding your Bitcoin. And I think for the mainstream users, one thing I would love to see is more wallets like leather or X works. These are kind of like next generation we wallets for Bitcoin, they have big built in support for L twos and I think they can expose people to actively using their, their Bitcoin. So in my mind, the model is that if you're using Bitcoin on the L one, maybe you have a hardware wallet, you are doing self custody or you just buy through an ETF that's sort of like the store of value, digital gold use case. But when you're using your Bitcoin in a wallet like leather or exports, which is like a modern web wallet, you then you're doing interesting things with it. You might be able to, you know, swap against a stable coin or purchase an oral or an NFT or participate in like some smart contracts. And that's, I think the more and more users that we see that are using Bitcoin in that modern way, I think that could be very exciting because once you like use it, you can almost like touch and feel it. And then you get the idea of like how powerful this technology is versus just, you know, passively holding it. Moni thanks so much for joining the show. It's always a pleasure. Thank you so much.