Transcript 0:00 [on-hold music] Welcome back to Bitcoin Season Two, the weekly live stream. 0:39 We do two streams every week. One is on Mondays where I cover news and metrics and topical stuff, and Thursdays when I do a more deep dive, uh, podcast interview type. 0:49 Still in the middle of releasing a bunch of content from Bitcoin 2024 Nashville, so be on the lookout for that. 0:56 I've got some great- a great interview with David Say, um, Zach from Ordio, um, Mike Hamilton of Mutable Trees. So that's, uh... I'm really excited for that content to keep coming out. 1:07 Um, but yeah, Bitcoin Season Two, produced by Blockspace Media. Make sure you check out our other media products, content, Gwork show, Mining Pod. Go to blockspace.media to see all of the content we put out. 1:18 This is a live stream, so I'm gonna start out with some runes and some ordinals data, some, uh, Bitcoin metrics, and then I'll get into this topic today of Bitcoin Fi. It's a broad emerging concept. 1:31 Um, I'll probably, uh, bias towards some of the more degen topics. 1:35 And then we'll, uh, bookend this at the end with a conversation with Matt Luongo of Thesis to talk about the wrapped Bitcoin news, the W Bitcoin- WBTC news, which I think is interesting. 1:46 Not a lot of the Bitcoin, uh, podcasts are covering it. So without further ado, let's just get into this. So, um, not a lot has changed as far as, like, activity on-chain in the ordinals ecosystem. 1:58 This Dune dashboard from Data Always shows that basically since the halving, you can see that, uh, or new inscription activity is anemic. There is very little going on. 2:12 Um, now when I flip over to runes, you can see there is... there are, like, runes activity, runes mints, that's fun. But, uh, new inscriptions are down bad. The only other, um, 2:24 two things I'll look at is we've seen, uh, two hundred and seventy-two million dollars in fees attributed to inscriptions so far. And, um, 2:35 then also we can see, um, my other favorite chart, which is the monthly inscriptions share. So we can see, like, what types of inscriptions are, uh, being u- uh, being put on-chain. Are they JSON? 2:50 Are they these net or protocol ideas? Are they, um, images? Are they text, BRC20 transfers? 2:56 So still basically confirming what we saw initially is that whenever fees go down, the ratio of JPEGs to the other types of inscriptions goes up. Let's look at the market data. I'm gonna kind of fly through this. 3:10 This is Domo's dashboard. We can see that overall volume by marketplaces is still very anemic. Let me switch to my other screen. 3:21 [chuckles] Okay, we can see that, uh, here on this, uh, this is just overall volume by marketplaces. We really just peaked this past spring and March and April. 3:33 So not a lot of transaction activity on the marketplaces, on secondary marketplaces. Um, again, you know, I'd love for my bags to go up, but this is the reality. We see this to be kind of a cyclical behavior. 3:46 Um, I will, uh, make a point to note that if we look at the seven-day chart in Magic Eden, the floors of all of the top ten collections, except for No Ordinary Kind, are up pretty significantly on the week. 4:02 Node Monks, Puppets, Cats, Runestone, OMB, Peasants, Ninjas, and RSIC hit a multiple X bid. So, um, yeah, this is fun. This is exciting. We're still, uh... maybe that was the peak or bottom. I don't know. 4:15 I'm just reeling what is happening. 4:18 Um, the other, uh, metric I'll look at is from Alchemia's dashboard, where we can see basically since the halving on April twentieth, nineteenth and twentieth, about a third of all transactions by um, by number on-chain are, uh, runes transactions. 4:36 So, uh, runes, depending on the day, will sometimes be the majority of transactions by number on Bitcoin. Uh, they still take up a little under a third of the blocks by weight. 4:50 Going over to runes again, uh, we see, uh, Casey Rodarmor is very sad. He may have to commit seppuku here. 4:58 This is a joke referencing that if, uh, that if the total market cap of runes was under a billion dollars, Casey would have to take drastic action. So it's just been down and to the right. 5:07 Runes re-continue to not catch a bid. Um, they have demonstrated a little bit of recovery in the past couple of days, but still not looking very optimistic. 5:17 And then the last, um, on the ordinals runes Bitcoin metrics is, uh, this dashboard on Genie data from Poshi to, uh, show that runes daily mints remain pretty consistent, ten to forty thousand mints per day. 5:35 Mints are still the... 5:36 If you look at this, runes transaction distribution by type, mints are still the overwhelming number of transactions in this category, meaning that people are just mainly speculating and not really trading as much on secondary. 5:49 So runes still in the, uh, throw shit at the wall, see if anything sticks, uh, period. [clears throat] Okay, so Bitcoin Fi. I see this term now emerging. It's pretty hot. I... 6:03 We've heard people try to introduce terms like OrdFi, meaning like ordinals type DeFi activity. Um-Um, again, this is DeFi given a broad ambiguous definition just like, um, DeFi in the, uh, broader crypto ecosystem. 6:20 But now, um, people are figuring out how to, uh, leverage assets against each other, whether on Bitcoin L1 or off-chain. 6:29 Bunzy had this great, uh, tweet, which I think summarizes like this particular narrative going on, and I will try not to nitpick it too much, but he says, "Bitcoin's programmability race is heating up. 6:40 Which approach do you think will lead the pack? Arch Network, Opcat, Fractal, Opnet?" I think it's int-interesting here because I voted on this. 6:48 I voted Opcat because, uh, I don't think Opcat really fits into the category here. 6:53 It's not-- these other types of things are like meta protocol schemes and, um, Opcat is a software proposal, and really I don't think it's, it's, uh, it's main, uh, I don't think its main pitch is that it's-- it allows Bitcoin programmability. 7:09 I think this is where the, the two camps in the Bitcoin degen crowd or the Bitcoin like, uh, development crowd separate in that like Opcat enables a lot of things, specifically covenants and vaults 7:22 and trustless in and out from Bitcoin. 7:26 But that said, [clears throat] there seems to be a certain type of narrative emerging among the, like, let's program stuff on Bitcoin, um, from the Arch Network, Fractal, and Opnet camp. 7:36 This is like the, the kind of-- the growth out of the Ordinals discussion, where a lot of these folks are folk-- are like talking about these types of things. 7:45 I'll try to briefly race through what they are just so that we have them on record, so you have them on your radar. Um, and so I'll track these as these kind of come out and develop. So 7:56 first was Fractal Bitcoin, brought to you by Ordinals Titan and the dominant company in Ordinals, Unisat. Um, Fractal is basically just a merge mine side chain. There's nothing new. 8:08 There's nothing really like innovative going on here. It's a side chain, merge main-- merge mine side chain with a twist. 8:15 Not the-- the documentation's not fully out, but it is pretty interesting because Unisat led the like, you know, eighty percent of all the, uh, new inscription activity on Bitcoin through their inscription tool and is the definitive like BRC twenty, uh, place to go, uh, to trade and mint and all that stuff. 8:34 So Fractal Bitcoin basically just says, um, "We're going to occasionally, uh, uh, post something to Bitcoin, and then we're gonna add some blocks in between." It's basically Bitcoin with a faster blockchain-- block time. 8:47 Um, they post, uh, you know, a root state to Bitcoin occasionally, and that's the basic idea. There's not a lot of differentiation. 8:57 I understand that they may be adding Opcat on this, but that's, you know, we've seen BSV and BCH and Liquid, uh, have Opcat. 9:06 And so I don't know if it'll like reveal anything novel about this particular opcode, but this is pretty interesting. This is a bit of the thesis for why BRC twenty might come back. 9:16 Because if Unisat is capturing the minds and hearts and, uh, degen speculation of the Asian crowd, this is a very compelling thesis. It's currently in testnet for delivery, quote, in-- on mainnet in September, I believe. 9:31 The next one is Opnet. And I think this is kind of hilarious because everybody thinks that I'm behind it. This is like an inside joke because it's from the CBRC twenty guys. 9:39 Um, so basically, uh, this is a little bit differ-different scheme, and I think it's kind of interesting. It's kind of novel. I go back and forth personally on like what [chuckles] I think about it. 9:49 They're basically posting, uh, commands to an off-chain indexer with its own smart contract logic. 9:56 Again, hand-wavy smart contract logic, where like you just give instructions to an off-chain indexer through your Bitcoin transactions. Um, so, uh, I think it's pretty interesting. 10:09 It really caught virality and fire this past week, really the past two or three days. And, um, they again are in testnet. These guys are very good at marketing. 10:18 Um, I think the main compelling like near term product or dapp you might as a user see on this is either their MotoSwap, which again is kind of coming back, gonna be one of the early dapps supposedly launched on this, and, um, the Op.fun or Opnet.fun, I forget what it's called, but it's basically the pitch is pump dot fun on Bitcoin. 10:40 You love to see it. Everybody's been saying this has got to happen. I mean, so here it is. It might be on Opnet. 10:47 I anticipate having all of these different folks on Bitcoin season two sometime, hopefully kind of as they near launch to mainnet. I just wanna interview and like talk through how they're building things. 11:00 Um, and I also want to ask some critical questions because I want to-- I wanna be, uh, neutral and challenge these folks to really justify their product. So Opnet, um, very interesting. 11:12 Um, you'll see me in the Opnet chat asking questions and, uh, participating in the conversation. So-- And the other one again from the Bunzy tweet is the Arch Network. 11:21 This is basically a similar type deal as Opnet with a, again, a little bit different, um, component to it. Arch, um, basically posts state to Bitcoin in the UTXO. 11:34 They basically use an ordinal-- an inscription envelope to say, "Here's the current state of this particular smart contract." 11:42 And they will, quote, chain states, which then have an SVM, the Solana Virtual Machine, off-chain coordinating and referencing this on-chain Bitcoin state. If you didn't understand or follow any of this, that's fine. 11:56 I'm trying to breeze through it. I'm, I'm being reductive. Also, a lot of these, it's not entirely clear how they work. Um, they-- we, we still need to see. 12:05 I need to dig into the implementation, and the implementation, uh, sometimes is, uh, confusing because some of the documentation is not.Fully out there. 12:14 And these do not comprise the entirety of what I would call the Bitcoin Fi revolution. This is just, like, the br- near term degen stuff that people are talking about. 12:23 There's an entirely other category of, uh, like, yield on Bitcoin-type products. Some of them are, like, very simple. 12:33 Lock your Bitcoin up in a multisig and get a comparable, like, pegged token in some capacity on another chain or network. This is also, you know, I would say falls under the broad umbrella of Bitcoin Fi. 12:46 Why am I talking about this? Because I think this is a major narrative, and Bitcoin Season 2 is gonna cover this. [clicks tongue] Um, the... Oh, the other thing I was... 12:54 I gotta, I gotta- uh, I'm gonna get crucified if I don't talk about Tap or Track. Um, this is another thing. It's kinda thrown, you know, from back in the fall when some of these tokens were launched. 13:04 It's- I would- You'll hear a lot of pitch, you know, pitch and discussion about this, but it's basically, like, I would just honestly call it, um, BRC-20 with different rule sets and a different indexer set. 13:15 Um, this is also in the category of Bitcoin Fi. They have really owned the term Ord Fi. Again, what do these things mean? 13:25 A lot of this is branding and trying to lure people in to, like, get excited about these types of assets. And we're gonna run back a lot of the DeFi mechanics of last cycle. Um, to what end? We will see. 13:39 I want to be discussing this, um, from the perspective of someone who's pretty engaged in the world of Bitcoin. So anyway, I've got Matt Luongo in the, uh, on, in the backstage. 13:51 I'm just gonna bring him up here, and we're just gonna chat. Matt, welcome to Bitcoin Season 2 [laughs]. Hello, sir. Yeah, the water's warm. Yeah. 14:01 I mean, thanks for, uh, hanging out in the background while I speed through all the Bitcoin Fi stuff. No, it's good. It's good. You're keeping closer track than I am on some of these, so it was handy. 14:11 It's a full-time job, man. Um- [laughs] It's so, it's so much work. And, um, I thought, you know, you'd be a useful person to talk about one of the other most... one of the more interesting news events. 14:23 And I'm surprised, like, this wrapped Bitcoin, the WBTC news, has mainly only been talked about in, like, DeFi and E circles and not on the, the Bitcoin circle side- Yeah, it kinda-... 14:34 because it's really- It, it, it shows the, the culture and the, and the, like, community drift. Yeah, totally. Yeah, but can you just, like, summarize for me- Yeah... what's going on? 14:43 I'll just throw some questions at you after that. Yeah, yeah, yeah. So, um, so, you know, caveat emptor, I don't, I don't have a bunch of special knowledge here. 14:51 And, and I have a, a competing project, and, and yada, yada. Don't worry, you'll hear about it. But, um, yeah, so, so here's what's happened. Um, a lot of Ethereum's Bitcoin flavor DeFi is built on WBTC. 15:05 Um, it's maybe $9 billion. Right now, I think it's 153,000 BTC under management. And the way this project came about is kinda interesting, right? 15:15 Because it wasn't like someone had a master plan, and they were like, "We're gonna bring, uh, Bitcoin to Ethereum." 15:20 What happened was that, um, the folks at BitGo realized that people just needed a solution, and so they kinda, um... and I mean this in the nicest way, they kinda slapped one together. 15:30 So they said, "Okay, we're a custodian. Uh, we're good at that. So if anyone wants to hold WBTC," and, and you mentioned bridges like this kinda earlier in, in, in the, in the, um, in the stream here. 15:41 "If anyone wants to, um, uh, have this token on Ethereum, what they can do is they can send us, uh, Bitcoin to a trust," which is, you know, this, like, legally kinda protected structure in the US. 15:54 And, uh, and they'll do KYC. And then once they do that, uh, there's a, there's, uh, this idea of merchants. And what these merchants can do is basically say, "Yeah, let's mint WBTC, uh, on Ethereum." 16:06 And so it's this process where it's not just BitGo, but it's kinda just BitGo, right? Because, like, they ha- they have the Bitcoin. Um, but, but, but a well-respected custodian. And I can, I can vouch. 16:20 I mean, I like the team a lot. Uh, we've worked with them on, on projects over the years. Uh, and, and they're great at what they do on the custody side. Uh, but here's where things got a little shocking. 16:29 Uh, and I'm [laughs] I'm gonna try to get a little bit less salacious because, uh, you know- Go for it. Uh. I, yeah, I invite you to- Right? Yeah, 'cause it, it's- Yeah... 16:35 it's hard to be apolitical about this because it's a- It is... it's a very hot political button right now. Yeah, yeah. 16:40 I mean, uh, uh, yeah, I'm gonna, I'm gonna pull my punches probably more than you might expect, right? Like, h- Okay... here's what I saw happen. I didn't even see the original announcement from BitGo. 16:49 What I saw happen was MakerDAO announcing that they're basically, uh, well, you know, that they would like to delist, uh, WBTC. 16:59 And so to give you an idea of what that means, so first, there's an entire governance process. This proposal, though, came from a very OG, uh, like, uh, uh, person at MakerDAO, Monet Supply, uh, could follow on Twitter. 17:12 And, you know, the thing you need to understand is WBTC is 10% of the backing for Dai. So this is a lot of money, um- The, the stablecoin from MakerDAO, yeah. That's right, yeah. Yeah, so this is a lot of money. 17:24 And, uh, and suddenly, you know, because MakerDAO and Dai, it's really one of the first DeFi projects on Ethereum, every other DeFi project is like, "Wait a second. 17:35 They're slow, and if they're responding this way, we, we need to do something." 17:40 And so [laughs] from my perspective, what I saw is I saw this MakerDAO post, and then I got 300 DMs about, like, "Jesus, we're looking for another solution." Like, "We're all very uncomfortable." 17:49 And so since then, so, so why? 17:51 Uh, so if you go back to the MakerDAO post, um, the concerns are that Friday, which typically is not when you wanna announce good news, that's typically when you're trying to announce bad news, um, we learned that, uh, that, you know, perhaps BitGo is going to be transferring its custody to a joint with, uh, Justin Sun. 18:09 And so, yeah [laughs]- Justin Sun again, yeah. I mean, if you don't know who Justin Sun is, he is the iconic, uh-Head of Tron. 18:19 Uh, and he's a very controversial figure, and has a good history of, um, acting in his own self-interest, um, at the, uh, expense of the ecosystem, and he's made a shit ton of money doing it, and he's a, he's a... 18:33 Yeah, he's not a weal- He's not a, he's not a res- He's not a positively respected figure in the or- in the broader crypto space. You know, I'll, I'll give him, I'll give him probably a little bit- Okay... 18:43 more respect than a lot of people will, which is, uh, Tron has the most USDT of, of any chain. 18:50 And if you travel in Latin America and, and Southeast Asia, you'll see that actually people who are doing money transmitter businesses and remittances are using USDT on Tron. So they've got something. 19:00 And, um, and yeah, obviously Justin's usually controversial. I have, uh, I have one selfie with him. 19:06 And for a long time it was kind of fun with Bitcoin maxis to tell Ethereum people like, "Well, Tron's better than Ethereum." So, you know, there's this whole kind of like- Yeah... funny backstory. Yeah. 19:16 All the stables- But [laughs]... are on Tron. It's like crazy. Yeah. It's, it's like it backends the, the... you know, a lot of the, the, like, gray market for dollars out there. That's right. That's right. 19:25 So, so it's got some product market fit, and, and we shouldn't... You know, um, Justin shouldn't be underestimated or, or just, "Well, he's just a this or just that." Like, no, he's not. 19:34 No, he, he's, he's, he's playing 4D chess. And so, like, even if you don't like him, y- y- he des- he deserves a little bit of, like, respect and, and thought. 19:42 But, but what I thought was interesting about all this is like, you know, um, you know, I guess one point about, about the Tron stuff, which is just, you know, study HBTC. 19:52 So I think that's what people are concerned about. So HBTC is another, um, supposed, supposedly a Bitcoin-backed, uh, pegged token, and that's Huobi BTC. And it's lost, it's off 50% off the peg. 20:05 And so I think people are seeing that, and they're seeing this as a step towards something that could really threaten WBTC. You know, but my s- my response to all this stuff is like, why in the hell should we care? 20:15 This is a system... Like, I really shouldn't care what billionaire is custodying my BTC. I shouldn't have billionaires custodying my BTC. That's against the whole space. 20:24 So, so yeah, so I mean, obviously that's where TBTC comes in and where we want to, uh, hopefully help. Yeah. So, um, just some like, you know... 20:35 Uh, give me your honest thoughts, like why has WBTC been the clear winner to date? Yeah. Um, so- Like-... why is TBTC not more adopted? You've been around for a long time. Yeah, yeah, we have. 20:45 I mean, um, I could probably make the... I, I would ask that same question about like, why don't people use multisigs on Bitcoin more? And I think, um, ease of use wins. Uh, you know, let's... 20:56 We can have the same question about self-custody, right? 20:59 And, and unfortunately, if you want people to change their behavior, either you have to give them a 10X experience improvement, or they get an object lesson, right? 21:09 And I think what's happening right now is an object lesson. People are freaking out. Um, some people think this is FUD. Uh, sometimes FUD is real, sometimes it's not. I don't know. 21:18 I don't know if this is a real risk to people's WBTC, but it's like, um, you know, in, in the, in the best, uh, the, like, the best version of our space is like this should never happen with your money. 21:28 You should never be afraid of a random counterparty that you didn't even maybe know was there. 21:32 So, um, so yeah, so as far as TBTC's growth, what I've seen is people don't want to bridge their Bitcoin back and forth between a lot of chains. 21:41 What they wanna do is they wanna buy it on a chain and get the economic properties of Bitcoin, and it's very rare that they actually bridge. So that's been my experience so far. 21:51 It's made it very difficult to grow, um, a decentralized alternative to TBT... or to WBTC. Now, obviously, it seems like the tides are turning, and, and, uh, and we'll see what the numbers look like this week. Yeah. 22:03 This is really interesting. This is the first time in years that I've logged onto MakerDAO forum. It's, like, been pretty boring as far as- Yeah... I'm aware. It's not really... 22:12 No informa- Like, no discussions really bubbled up. I see like a Hassu tweet every now and then. Yeah. And then... And yeah, but this like, this seems pretty notable. Um, do you feel that, like, 22:25 like, Bitcoin on other chains is just- Yeah... various types of wrapped Bitcoin, has been a pretty simple, straightforward, uninteresting product, I would say? It's just- Sure... 22:36 been kind of a base asset to be loaned against sometimes. Sure. Sure, sure. Do you think that's gonna change over the next few years? Oh, God, I hope so. 'Cause it feels like it should. Yeah. 22:45 Like, what are we doing with the season two? Like, okay, like, I get if all we're doing is launching new assets and then we're saying they're on Bitcoin, like, come on. 22:53 I mean, I know that's where, like, everyone wants to go, everyone wants to, like, make a buck and fool around, but, like, I'm, I'm much more interested in, you know, if, if you call yourself, like, a Bitcoin L2, and I always say that with air quotes, you know, your base asset should be Bitcoin. 23:08 And so I, I wanna see people using it for gas, I wanna see them use it for lending, but it should also be, it should be the collateral for... 23:14 I mean, gosh, why are pr- why are all our prediction markets not Bitcoin-based, right? 23:18 So, like, we need to see that change, and, and Eth really has a lotta, a lotta power there because it was the choice for so long for all these new products. Yeah. 23:29 That's a very Bitcoin Season 2 type statement in that, like, we've got this Bitcoin asset, it's been kind of, uh, in its own little world, and, um, as the rest of the crypto ecosystem tries to justify its existence, some of it may justify its existence. 23:45 Prediction. I'm glad you brought up prediction markets, because, like, that's the hot topic. Yeah. That's something I've not covered a whole lot here because it hasn't really crossed paths with Bitcoin, but- Yet... 23:54 if Bitcoin does, it would make the most sense to, for Bitcoin to interact with the prediction- Yeah, I think so. I mean, like, look, we're finally seeing all the stuff on Bitcoin talk over the years. 24:03 Like, it's, like, it's actually kinda at the point where the tech is there and the UX is still terrible, but it's getting better. 24:09 And, like, the problem is just like, okay, well, now we just need to bring it back to Bitcoin. So be that a meta protocol, be that a side chain or a bridge or whatever. 24:16 I, I think, um, honestly, anyone who's doing it, I'm all for it. And, um-You know, obviously I'd prefer it be decentralized and censorship resistant, so, like, I think that's important. 24:27 Um, so you know what we're doing this week is, like, okay, how hard are we gonna go right now? Yeah. Because... Right? Because, like, uh, I feel like we haven't had... 24:37 The last time Bitcoin on any other chain grew notably at all was DeFi summer in 2020. That's when WBTC got big. Since then, it's mostly bled. 24:46 And, um, and I think this is an opportunity for sort of like a mass rejiggering of the market structure on-chain, and, um, and that'd be great 'cause I think, uh, you know, honestly, getting people to put their Bitcoin in a safer bridge is super boring relative to getting people who have the ETF to get on-chain. 25:04 Like, that's a really interesting problem. So, like, you know, I'd love to hop over this and, and solve it one way or the other. Ooh, I hadn't- And get to the big money. I hadn't thought about that. 25:11 You've, you've, you've introduced a new idea that maybe we'll, maybe we'll, uh, run it back and talk more about the financialization of Bitcoin- Yep... and the other type of bridge that I think you may be hinting at. 25:24 This is really interesting, Matt. Thank you so much for coming on the show. I know I only really briefly touched on the MakerDAO Wrap BTC thing, but I- Yes... 25:30 you know, you're one of, like, the folks, I think, most prominent talking about the space and building, uh, interesting products. So, um, I anticipate we will chat again on this topic on Bitcoin Season 2. 25:41 Otherwise, I'm gonna take you down and wrap this thing up. Thank you, sir. And hey, if anyone's afraid of their WBTC, hit us up. Uh, DBTC is waiting for your deposits. Cool. Thanks, Charlie. 25:53 All right, thank you so much for, uh, checking out Bitcoin Season 2. Make sure to, uh, subscribe to the new YouTube channel. So we're, we're migrating to our own YouTube channel, uh, so make sure to subscribe to that. 26:05 It's Bitcoin Season 2, Bitcoin, one word, Season, one word, number 2 is the handle. Otherwise, thank you so much for joining, and check out blockspace.media for other Blockspace content. Adios. 26:17 [outro music]
