Video transcript
Hello, everybody, thank you for having me on. And thank you to the Bitcoin Magazine team, this has been an incredible event. So I want to do two things in the next 20 minutes to explain to you guys number one, what we're doing when it comes to layer two building and number two, why it's important. Alright, so if I do those two things, I have succeeded.
Anduro, for context is a vision itself, it is a vision for multiple sidechains that exist on top of Bitcoin incubated by Marathon Digital, and most importantly, something that extends the utility of the Bitcoin ecosystem.
So we believe sidechains are the best option for doing this. And sidechains are not new, obviously, there have been a lot of sidechains in history, and a lot of them have, you know, had big promises and ended up in nothing. But when we began this project about, you know, a couple years back, and when I started about a year, year and a half ago, the whole idea was, alright, let's reevaluate. Let's see what options exist for extending Bitcoin utility. And on the basis of that, let's move with conviction. And so we ended up with sidechains, in large part because I've studied very heavily and had my team studying very heavily, these three different approaches, and all of them have some drawbacks.
So what are those approaches, I mean, meta protocols like Ordinals, this is obviously one of the biggest topics and, you know, obviously, today's conference, and also just, you know, generally the side events. ordinals are a great use case and a great expression of the importance of Bitcoin and of course of Bitcoin as a data availability layer. But the biggest issue with any meta protocol that's built on Bitcoin be that a roll up be that anything is mainchain fees, right, the second that you depend on Bitcoin main chain, to perform any sort of transacting, you're going to have to pay a main chain fee.We know that because while we're one of the largest Bitcoin miners, of course, we know that fees are an issue, latency being the second one, you want to defi application, you want to create sort of lending protocols, you're gonna have to wait on the mainchain to be able to process those transactions.
So no matter what meta protocol, there is, a lot are very compelling, a lot of very interesting, but for the sort of use cases that I'm going to talk to you guys about later in this presentation, the fees and the latency are massive stoppers.
With layer twos like lightning, you have a similar situation, right? Your opening and closing channels, you have the same problem of Alright, well, at the end of the day, I'm going to have to pay a bitcoin miner, and that tends to be expensive. In fact, just take a look at you know what just happened with the old Runes craze. You had miners making a lot of money after the halving. We were very grateful for that. But at a certain point, you know, what cost $50 to send, you know, $50 on on the Bitcoin main chain. So that's, that's just unworkable.
And then when it comes to consensus changes, not to say any of the consensus change proposals aren't good. I'm also not saying any of them are bad, very agnostic toward all of that stuff. But it is a politically it is a costly and it is a divisive process. I'm not going to get into the history of the block size wars, but I think all of you guys are familiar with that sort of change.
And so what we came down to is, all right, look sidechains, you're making a trade off, when it comes to centralization, there's no question and you're making the trade off when it comes to the permission-lessness of what you're building. But the benefit of sidechains is that you can guarantee these low fees and low latency, you can actually create opportunities to build layer twos on main chain at a much more scalable level lightning being a good example. And you just can experiment, right? That's the biggest I think the biggest thing, keeping the Bitcoin defi ecosystem for matching that of other ecosystems. It's the experimentation potential, and hey, guess what? To experiment, you actually need to deploy things. And so to deploy, things need to work. And so those were our big priorities. When we started this whole effort.
Now, we quickly realized that one sidechain was not going to be enough. If you do one sidechain? Well, I'll explain why. But number one, amongst them is there are many different frameworks for building applications for building out programmability. Again, as miners approaching this whole question, we thought, Alright, look, our expertise isn't deciding between these different frameworks. And frankly, there aren't really that many layer two side chain teams that can say definitively one of the frameworks is going to take the bag, right? It's it's a little bit uncertain.
With these different frameworks comes different learning curves. So what are you doing when you're building a side chain or layer two, you're creating a community. A lot of people ask me, oh, wow, it's really great, the technology effort that you guys are leading, and I tend to correct them and say, we are leading a technology effort, there is a technology build, we have, you know, 50 or so engineers, but it is, in part technology, and in part ecosystem development. And when you're thinking about this question of ecosystem development, guess what your customer is not necessarily a user, and your customer is not yourself, that customer is developers and to learn a new framework entirely, is quite a difficult scenario.
Now I know what some of you guys are thinking, okay, he's gonna pitch me an EVM chain. I will shortly but EVM doesn't dominate the eco- doesn't dominate this whole narrative 45% of web three contributors to like GitHub repo open GitHub repos, actually don't contribute to EVM repo. So the whole question of oh, well, you know, if we're just going to cater to all developers, we should build EVM chain Etheruem compatible chains, for those not familiar with that acronym, that's actually not the case, right? Ethereum might have the spotlight when it comes to the press. But there's actually a lot of different programmability frameworks.
And so when we came down to thinking, Alright, what exact chains are we going to build? What side chains are we going to have? We thought number one, we got to cater to diverse audiences. A lot of people are here pitching Bitcoin layer twos and side chains, but they only have a single programmability framework. And that's a massive issue, you need to cater to different audiences.
And so to take a step back and think of the history of development, or just how the Bitcoin ecosystem developer system looks, right, it's one in which you do have some developers that are very ideological and really want to build on a Bitcoin script like stack want to be as native to Bitcoin as possible, and we want to cater to them. But at the same time, you have developers from other ecosystems. And we have a lot of examples at this conference, in fact, that want to get to know Bitcoin and want to get to know what exactly is going on in this ecosystem, you have to cater to them too.
The second thing is we need to empower builders, right? Like, we have a lot of different app ideas and a lot of pilots that I'm going to talk to you guys about very soon. But fundamentally, I cannot just be somebody who's building out 50 different business lines, right, you have to empower a lot of builders. And that leads me to the last point, you have to invest big.
Going back to what I said about building layer twos and side chains. It's in part a technology effort. It's in part an ecosystem development effort. And guess what, building an ecosystem costs a lot of money, 10 million, 5 million, these aren't enough. There aren't enough dollars, really to build that sort of ecosystem. So you need robust backing.
And so that comes to our multi chain strategy, what are we doing, we have two side chains that are going to be ready at launch mainnet, hopefully, in the summer Coordinate is one of them. It's a UTXO base side chain, this is built to basically activate the dormant base of Bitcoin developers that want to build cool applications, but cannot on mainchain, again, because of the fees, the latency, some of which might be in the Ordinals community, some of which have been disengaged for, you know, half a decade, right. So we want to activate them with Coordinate.
ALYS, an EVM chain where the whole idea is, let's create a solution that can plug into existing custody, and plug into existing infrastructure as easily as possible. That's that and many, many more to come lot of offers about, you know, Move and SVM. And anyway, we'll see which let's build two first and then I will talk about the third.
The other second point I want to mention to you guys is this effort has strong robust backing. And I don't just mean that from dollar standpoint, I mean that there's no VC behind this. There's no token raised behind this, I get asked this a lot. They're like, you know, when's the Anduro when's the Mara token coming up? There's none of that. There's nothing to do with no token, no, ICO none of that we're not seeking any fundraise, right? We have plenty of backing as it is.
Supported by one of the largest miners, which a lot of Bitcoin layer twos and side chains, the question people often have is, well, what's going to be the support from the mining community? Well, you know, one of the largest miners is incubating this project. So you fill in the blanks.
And then the last thing is, what is our goal? It's not for TVL. It's not for a key KPI? What number of wallet addresses, not these vanity metrics. It is for transaction volume, we only succeed with this effort, if people are transacting and if miners are making transaction fees upon it. So it means our North Star is a lot more credible, I think then than perhaps most others.
So I'm going to talk to you briefly about Coordinate, I'm going to spend most of the time on ALYS. Coordinate here is we're building technology for technologists, right. And at the end of the day, let's take a step back again in history and think how did ordinals get started? Was there one if you know, foundation or corporate, you know, behind ordinals and supporting all of these use cases? No. Right? At the end of the day, cool technology was put out there and builders came and followed. Right? So that's what Coordinate is all about. It's a of a hybrid consensus model that involves proof of work at the heart of it, you have a Bitcoin peg Native Asset. Again, no ICO no token, none of that Bitcoin script as the scripting language, no smart contracts because of that.
But with coordinate, you could actually build cheaper lightning channels, more efficient lightning networks with coordinate, you can even port over ordinals and have, you know, the same app, the same stack that you have a main chain, ported over to coordinate have lower fees, lower latency, but the most important thing with Coordinate is we're just trying to stimulate an ecosystem organically, right? We do have some cool app ideas. We've been experimenting with a little bit of an NFT marketplace that has a tinder like UI for like social validation. More on that information to come. And also a launchpad. I mean, every new to you know, a chain needs to have a launchpad for tokens. But the whole point with coordinate is what can we do that just activates a developer base. And let's see what the Bitcoin developer community likes.
ALYS, on the other hand, as opposed to Coordinate, ALYS is thesis driven. So the whole idea here is we have conviction over different things, different use cases that Bitcoin can serve the Bitcoin ecosystem, and we're gonna go try and build them. Here. The focus isn't Oh, there's this sophisticated, amazing technological, technological stack with a new developer framework, and it's better in all ways, shapes and forms. No, ALYS is EVM is the easiest to plug into custody networks. Alright, if you're going to do any sort of real world adoption, anybody here building a layer two who's curious, oh, how am I going to onboard institutions, make sure the custodians are going to support it make Sure the exchanges are going to support it. And I've had conversations with all of these custody providers and all of these exchanges. And if it's not EVM, it's not going to work.
So number one, it's Ethereum causes smart contracts, so that the existing infrastructure from other ecosystems can easily port over. It's not a political point. It's just a realistic one. Bitcoin peg, native asset, again, might be an EVM stack, but that doesn't mean ETH is at the heart of it, it doesn't mean that there's new tokens. It's still a Bitcoin peg Native Asset for transaction fees, and all of that sort of stuff and hybrid consensus where again, proof of work is at the heart of it. Right. The whole goal with this is we want to build side chains that reward the main chain for inheriting its security and decentralization. So that's what we want to do with ALYS.
Now I'm going to jump ahead a little bit because I think the real cool part here is to talk to you about some interesting things that we see being built on Anduro and built on ALYS, specifically, I think here we have an opportunity, a lot of the narratives about Bitcoin sidechains, and layer twos tend to center around technological debates, things like well, you know, this has, you know, the best roll up and this one's the best side chain. And this is the best, you know, form of consensus. I really think a lot of these debates are important, but they need to be matched in importance and match in time, to the amount of effort we talk about what's our digital assets being used for specifically, why are people using Bitcoin.
And so one of the first theses that maybe some of you who saw me at ETHDenver, I was talking about was bringing RWAs to Bitcoin, bridging that real world asset, the real world, bridging the real world to the digital world. Okay, and I have a few cool pilots to talk about in relation to that one is a whiskey tokenization pilot. Now a lot of these projects are in stealth. So I unfortunately cannot give too much information about exactly what's going on there. But just to give you a taste of it, what's the interesting thing about whiskey aside from the fact that it's great alcohol, it's also a bit of a stranded asset, right? If you wanted right now to invest in a whiskey company, maybe some of you guys are kind of connesuirs, and you know exactly where to go. But for the lay man, there's not as much of that it's not as easy of a sector to invest, and you want to invest in oil easier, right? You want to invest in, I don't know, the financial sector of the US easy. But whiskey and these sorts of assets presents an incredible opportunity for digital asset tokenization, because you're talking about a relatively less liquid financial market.
And so what we've been seeing is actually, you know, on the ALYS stack, and on this Anduro vision for a broader Bitcoin ecosystem, Bitcoin has an opportunity to bring real world assets on chain that are historically difficult to finance. And we've actually found that with our network, and with the different people, we've been engaging in TradFi in these traditional organizations, people are very willing to consider a tokenization pilot. Why? not because of the tokenization? Not because blockchain is some like very credible thing, but because Bitcoin is behind it, because when I'm pitching to a decision maker, somebody who is not that familiar with Blockchain, but who knows whiskey very well, their number one thing they're asking is, how does this benefit my business. And if they're being pitched to by somebody from NASDAQ listed company, it becomes a little bit of a different conversation, as opposed to me pitching a solution on say, a chain like polygon, which we all might know very well. But to most decision makers, that's just a shape. And a shape isn't as compelling as Bitcoin.
The second big pilot that we're seeing is hash rate swaps. And here I'll just say, hash rate tokenization is an obvious thing. A lot of people say, Well, you're a miner, why don't you just like tokenize? That's a little bit more complicated. And so what we're exploring is, how can you create prediction markets on top of EVM chains that are derivatives of real world assets? And there are many teams that are I've been pitching us different ideas about how this could work a new direction for how one could engage with what one friend called "PoFi". So anyway, a lot of great applications there.
The other big thing that we're exploring is that of loyalty. And so we have a working pilot, it's called Amuse Bouche go to market in, in the UAE talking with a lot of really big, big restaurant owners in the Gulf. And the whole idea is how can you use Bitcoin as an engagement tool? Right? So not thinking just Bitcoin as number go up? But thinking of Bitcoin as a marketing tool for restaurants and a part of the world where restaurant culture is basically all that you do, right? So I'm Amuse Bouche very interesting. app, we see it using Bitcoin to bring it to the masses via a mechanism they already know and love, which is loyalty loyalty points are cool. What if those points were Bitcoin simple.
Another working pilot is out of celebrity fan loyalty, so loyalty for restaurants, easy. Maybe loyalty for top artists, top celebrities, where again, a lot of a lot of information to come here. But the important thing is, you have a lot of these artists and a lot of these social media influencers that want to engage their audiences want to keep them engaged by some way, Blockchain provides them an immutable way to track status to assign rewards to token gate content. And a lot of different ecosystems have tried this. Again, I'm not reinventing the wheel on these use cases.
But the reinvention comes with incorporating Bitcoin again, thinking Bitcoin less of just like some asset that you hold in a wallet and thinking of it more as something exciting, right? Because bitcoin is exciting. It's on the front page of most news, when I tell people I, it's the silliest of anyone. And when I talk to laymen about where I work, and sometimes say Mr. And they're like, What is that I'd say Bitcoin and people are like, well, that's interesting. That's innovative. If I say something like Solana, I guarantee you 99% of people on this planet would have no idea what you're talking about. And worse yet for the layer twos out there. So Bitcoin is an engagement tool. I think it's a really big use case and if you're building in that space, let us know.
And the last bit I mean, there are many other pilots I could talk to, but then I'd be here for two hours, and you guys don't want to hear me talk for that long, is DEPIN. And in many ways, proof of work is like the original DEPIN. But the thing that I want to reinvent with DEPIN is this letter P, the physical, because oftentimes we focus on how can we give crypto incentives for physical infrastructure or for physical contributions. But what is the most important commodity in the 21st century? It's data, right? Data is becoming more important than physical infrastructure. And so what if you created networks where people are providing data and in exchange for their insight, they're being awarded crypto tokens?
And then people might ask, Well, how do you ensure the consistency of the data? How do you ensure that it's valid? Well, you have validator networks, you know, take some principles out of crypto and blockchain and apply them to the future of how people can earn crypto think of it right now people earn crypto by buying it. What if people earn crypto for doing something for providing insights? And so we're seeing some pilots when it comes to community reporting, understanding better how communities work, what's interesting, what's exciting, pitching that to the hospitality industry, we're thinking about climate reporting as another important tool. I used to be a climate researcher in my old life and climate research is plagued by bad data. What if you can incentivize better understandings of how climate and how industry is impacting the world and you know, a lot of communities and remote parts via crypto incentives, which are borderless, immutable, easy things to give out, right? And some upcoming pilots are that of urban infrastructure, just imagine a 411. But you get crypto tokens in exchange, Bitcoin being one of the examples.
And so that's Andrew, those are revisions. And most importantly, I want to stress our unique differentiator is the adoption question. So if you have questions about how the implementations work, more than happy to understand more than happy to explain and answer questions, the biggest thing I want to focus on though is what can Bitcoin be used for? That's the biggest thing we're trying to we're trying to further so thank you all for your time. If you're building anything in these use cases, or you're thinking about other ways to use Bitcoin, talk to me very interested to you know, support permissionless innovation in any different direction be those these ideas, or others that I haven't yet thought of. Thanks a lot, everybody!
