Unlocking BILLIONS with Bitcoin Staking (CoreDAO)

Welcome guys back to Box Mining and today we have Rich here from CoreDAO and I'm very excited because we're exploring the Bitcoin ecosystem and not just the Bitcoin ecosystem but bringing smart contracts, unlocking a lot of capital on Bitcoin. So I guess let's go through basics, you know, why kind of look at the Bitcoin ecosystem and why grow from there? Yeah, so the Core team's been in Bitcoin since 2013 and no one was trying to scale Bitcoin when we really got involved. We said, hey, if no one's gonna scale Bitcoin, we should do it ourselves. We should really try to build something that's Bitcoin aligned, something that really helps give back to the Bitcoin ecosystem. We call that Bitcoin alignment. And the way that Core's consensus works is it's actually an L1 blockchain. So it's a full ecosystem, but it actually gives rewards to Bitcoin stakers as well as to Bitcoin miners and then also to the Core holders. It's currently about 50% of the Bitcoin hash rate currently secure in the Core chain and there's already 500 BTC helping to secure the network through Bitcoin staking with much more to come on both sides. And the idea is to set to scale Bitcoin, we actually have to separate Bitcoin, the asset from Bitcoin, the slow settlement layer. Okay. And really keep that just for high value transactions. But for these other things that need cheaper, cheaper fees or higher performance, they should bridge or swap over into an ecosystem like Core, where there's this huge ecosystem of emerging Bitcoin decentralized applications. So it's really trying to move Bitcoin forward, if you will. And that's very exciting because you see all this happening on Bitcoin, we've got the ETF already underway and there's a lot more interest into Bitcoin right now. So all of a sudden, there's this explosion of growth, right? So initially, a lot of Bitcoin holders were just holders, right? Like we see that meme popping up where Ethereum guys, they can start looking at staking and smart contracts and everything. And Bitcoin was just like, okay, I just huddle and you know, stay there for a while. But now you're bringing that kind of excitement. So basically, a whole entire chain and whole entire ecosystem and then unlocking that capital, right? So do you see a lot of positive traction these days? So like, you know, do you see a lot of growth in terms of Bitcoin going into this network? So far, it's been pretty, so we launched Bitcoin staking at token 2049 or like a day before. So again, but 500 BTC that's currently come online through our institutional partnership with Valor as part of that yield bearing ETP, there's already another 100 million committed. So there's quite a bit of Bitcoin that's looking for yield, right? Like you were saying, like Bitcoin in a way has been digital gold. And by being digital gold, gold pays no yield. Right now, Core is actually functioning essentially as the risk free rate for Bitcoin holders. And then, and that's going to power a whole new wave to centralized applications like Ethereum, what you mentioned, when they shifted to proof of stake, that's when you saw Lido, you saw kind of the DeFi wave really pick up and take a next leg. Because when you have a risk free rate, it opens up all of these new opportunities. And I think people forget that Bitcoin is like a trillion dollar asset. So there's just so much potential here. And so many people that have been just sitting on it, like you were saying, just holding when there really is just this whole wave of what you can do with Bitcoin, whether it's passive staking, which is a totally fine place to start. Or if you want to go into full, you know, BTCFi or Bitcoin DeFi, you can do both on Core. Mm, I think, and I think that's the largely unforgotten part. I think there's like a sudden rediscovery of Bitcoin. And this sudden explosion around that. And we've seen a few projects even in the Bitcoin system going like say 100 or 1000x because of that sudden realization, oh, shit, Bitcoiners are very rich. Right? It's almost like that situation. And yeah, you see exactly what you're saying. There's nothing unsophisticated about trillion dollars, right? It's a very attractive amount of money. And even if you get a small portion of that, even if you get like, even if you got say 10% of the Bitcoin market cap, you are in like the stratosphere, right? So I think that's that's one of the most exciting things about everything that's being built on here. And just one thing to add to that. So we, you know, kind of talk to you all the time is, if you look at Ethereum, it's like a $250 billion asset, roughly 200. Bitcoin is five times, six times that amount. If only a fraction of the Bitcoin comes into these DeFi applications, you're going to see a totally different DeFi. Like it's totally going to change because the scale is just so much bigger. And the Ethereum comparable is like 10 to 30% of all Ethereum is in DeFi. Imagine if 10 to 30% of like the entire crypto landscape will change very quickly. Exactly. And it's like, it's like you imagine like, would you rather have one in Bitcoin or one Ethereum, right? So I tell people all the time, and it's similar, we like, I think you're right, we're rediscovering is that Bitcoin is different than Ethereum. People like Ethereum, but they also like USDC, it's much more focused on accumulating more assets. Bitcoiners just want more Bitcoin. That's it. It's a very different like mindset and kind of structural approach. And we think this is one of the best ways for these Bitcoin holders to go out and do what they do best, which is to get more Bitcoin. Exactly. That's very, very interesting. Okay. So that's a Bitcoin narrative coming into play. Now, people are rediscovering the Bitcoin narrative. People are looking to use that for DeFi. Now, how does Core work? Because you talked about one call to action, which is for people to kind of time lock their Bitcoin. So like almost like Ethereum staking, but the user actually keeps the Bitcoin, right? So can you tell me a little bit about how that is and just the call to action for that? Yeah, great question. So how it works is it's truly non-custodial Bitcoin staking. So when you actually do the transaction on the Bitcoin L1, you retain custody the entire time. And that's super important because as a Bitcoiner, the last thing we want to do is give up custody of our Bitcoin or lend it out. That's the greatest way to lose your Bitcoin. That's when the system was being designed, we had to make sure it would work from the smallest Bitcoin holder all the way to the largest institutions and meet their different standards. Right, right. So when you time lock it, you just encumber those assets on the Bitcoin chain for some period of time. The minimum right now is about 10 days, but you can lock it, you know, as long as you like. Okay. And the idea there is it never leaves your wallet. It's just a transaction to lock it and then one to bring it back afterwards. And that would be one of the calls to action is like staking your Bitcoin. It's now risk-free yield on top of Core. How much do you expect to get right now in terms of the APY? So the APY varies. As of now, I think if you look at stake.core.org, it's around 20%. Okay. Okay. It won't stay there. Yeah. If more people join, it's the same floor. Forever. But the way to think about it that is different is Core has 81 years of block rewards, which is very important because if you look at a lot of these other systems, it's more like temporary. Mm-hmm. And 81 years, really long time. And the idea is it's actually part of our consensus. So those are sustainable rewards for the long term. And if you look at it, like into the, you know, billions of Bitcoin, it still is a healthy rate, you know, even as you extend it out, but it won't be 20% forever. But, you know, getting in and, you know, participating early, obviously there's higher yields. Got it. Got it. And I think that's really exciting because that's something that I'm going to immediately jump into after meeting you guys. I was like, okay, I'm going to activate some of that Bitcoin value, right? And it's actually interesting because it's unlike Ethereum where you give your funds to a smart contract and technically speaking, that smart contract is holding your funds, which is, makes you vulnerable to hacks, et cetera. But a time lock in this case, you are still the ultimate custodial. What it means is that I just can't spend it during this time, right? I can't say, I can't double spend. I can't go, right. Oh, you know, I want to spend it on a new, you know, car or something like that. I can't do that or can't just take on another protocol. But at the same time, it's just locked and I still have full custody. At the end of the lock, still mine. Correct. Right. I think that's a very big difference that we want to make a distinguish here in terms of the Bitcoin DeFi. So I have a few questions about that too. And I think I want to explore what you guys are building and what value that provides. So you're talking about a new layer one, right? So it generates new blocks, but it also rewards Bitcoin miners. Can you tell me how like the whole infrastructure is set up? Yeah, really great question. So Satoshi plus consensus is what is the consensus mechanism of the core chain. There's three parts. There's core stakers, there's Bitcoin stakers, and there's the hash delegates from the Bitcoin mining pools on Bitcoin. Okay. So when a Bitcoin mining pool produces a block, they add a little bit of data that says the validator on core they want it to go to, as well as where they want to receive their reward. Okay. And that's all fully auditable on the Bitcoin chain. So you look at Bitcoin block, again, roughly one of every two will have that data in it. And that's similar to what the Bitcoin stakers do as well. When they do the time lock, they just say, here's the validator, here's my reward address. Again, all auditable and verifiable in the Bitcoin chain. And what these folks are doing is they're helping to secure the core chain by adding more variables into the mix for security. So you can think about it, it becomes harder to act Byzantine or to take over the validator set, if you will, if you have to get a lot of core, a lot of Bitcoin hash, and a lot of Bitcoin. So this is why it's part of our consensus, because it's actually helping to secure the core chain underneath the hood. Right. And that's why it has this extremely long emission as well. Got it. Got it. So you're kind of using, it's almost like proof of stake, but the staked assets are on Bitcoin. All right. So these funds are being actively being used to generate blocks on the network. But it's not directly generating, it's just proving that, okay, we're supporting this, right? It's voting for validators. It's voting for validators. Exactly. So it's like a proof of stake with multiple different components. Got it. Got it. Got it. That's actually very interesting. So in terms of the chain itself, it's actually a brand new chain, right? And then how does it work? So in that case, how does value transfer from the Bitcoin chain to this new chain? Because that's one thing you really want to unlock, right? Because as you said before, there's trillions of dollars of Bitcoin. But how do you move these funds from Bitcoin over to core? And I should clarify, so like core is a new L1. Yes. We did come to market in early 2023. So we have been live for almost 18 months now. Okay. So like we're old in crypto terms almost, which is crazy, you know? But in terms of like kind of how the value transfers, you've got a bunch of different options. So there's this enshrined bridge called core BTC. It's an over collateralized bridge. And that's live today. Okay. And that's again, for folks that don't just want to stop at staking, they want to get more involved into like BTC phi. That's live today. It's over collateralized. On the other side, what will come out soon is our HDLC atomic swap protocol. And you'll be able to actually go directly from Bitcoin into assets on core, totally trustlessly, which is another nice feature. And how core things about building products is for each Bitcoin that's out there, they have different trust assumptions, different risk assumptions, they're willing to accept. So we need to have different products that work for all these different folks. And those are just some of the core protocols. We've got integrations with portal with Alex and xlink with layer zero, there's a million different ways to get your stuff over to core. And it's all about picking the provider that meets your needs. And then of course, your risk and trust assumption. Mm-hmm. Got it. Got it. Okay. So it's like unlocking funds, getting these funds on, and then growing your ecosystem. Totally. That's kind of the next step, right? Yeah. And it's interesting because you distinguish yourself with BTC phi, right? How does that kind of distinguish, how does that differentiate from Ethereum? You know, like, you know, we have DeFi, we have funds there, I guess, in terms of, you know, what's the big key differences here? Mm-hmm. So the way that I would characterize BTC phi, and I don't know there's a great definition that's out there, everyone's agreed upon crypto, right? But I think it's DeFi for Bitcoiners. And what I mean by that is Bitcoin is the native asset of many of these protocols. Right. So to give you an example, NLX, which is a purpose protocol on core, is essentially on-chain BitMEX. So what I mean by that is like all of the collateral is actually Bitcoin. Right. And it kind of functions similar to a Quanto, like we used to have in BitMEX. And that's just like one example. Other examples are like, and some of the protocols that we're so excited about are like just things that give leverage to Bitcoin holders. What I mean by that is like, think Bitcoin MakerDAO, right? Which is like, you want your upside exposure to Bitcoin, then you want leverage in the form of additional USD. And we're going to see more and more of these protocols that are really focused on Bitcoin specific needs. And that's kind of re-denominating DeFi, if you will, not in terms of Ethereum, but in terms of Bitcoin. We've got kind of a Bitcoin Athena called BTCS that will launch soon. We've got some ordinal stuff. We've got some, what's it called? Some inscriptions pieces with Glyph, some AMM and staking. So it's really trying to like carve out almost like a second DeFi summer, if you will, but with the focus on Bitcoin and for Bitcoin holders. Got it. Got it. And that's actually very interesting because you're activating all these funds and you're introducing a lot of, I think some players from Bitcoin didn't even play in DeFi summer, right? So the people who missed out on that boat can re-jump in and kind of reignite this whole ecosystem, which I think is super exciting. I actually have one question, right? So this is a more general question because in this conference here in Bitcoin Asia, we saw a lot of layer twos being built and a lot of, you guys are more L1. How do you see this happen? Because I mean, this is a very big narrative overall. Do you see all these Bitcoin layer twos, layer ones, do you see them working together? Or how do you think this is going to interact? So as of now, there's a lot of like friendly cooperation because there's a lot of growing the pie. And part of that is like helping to spread the Bitcoin narrative, how to get more people into the ecosystem. A lot of these L2s like, and then core obviously L1, we also have our own Bitcoin derivatives, right? Like we have core BTC, maybe with mezzo you have the, you have TBTC. So like there's kind of this ability to transfer some of your value, even if it doesn't directly happen on your chain as well. So as of now, it's kind of growing the pie, but there of course will be competition. There's only so many developers out there, but there's a bunch of like, all of these things are also not the same, right? There's different trust assumptions, risk thresholds, some have been live longer, some haven't. So like, it's really on the user to do their research to understand kind of what they're, what they're getting into. But I do think many of these Bitcoin L2s will also wind up being successful because the pie is just so large. And I think similar to Ethereum, you'll wind up seeing specialization. And I don't know if we'll see 50 Bitcoin L2s or a hundred, like whatever the current number is, like, I think there will be consolidation, but I do think it's a super exciting time and a great time to be in the building on Bitcoin space. Got it. I definitely think so too. I just see so many different excited people. I think that's the key here for this conference. There's a lot of people, they see the opportunity. Some of them made a lot of money already because in a previous order normal cycle, 1000X was pretty common apparently. So that was quite special, but I definitely see more opportunity here as well. So, you know, ending this, I do want to say, what are some call to actions for people right now? Like if they're interested in Cordao, what is the, you know, what should they do? Yeah. So I think I'll try to take this from like different personas, if you will. So Bitcoin holders, it's a fantastic time to get involved with non-custodial Bitcoin staking. You've got amazing docs on it. You can use stake.cordao.org or kind of build your own transaction. Bunch of different ways to do there. But this idea of like passive yield on your Bitcoin, really exciting. And this is a one of one product. So that's really, really interesting for Bitcoin holders. For Bitcoin holders that want to take a little bit more risk, if you will, because they want to participate in DeFi, Core has a variety of different protocols that are launched by these amazing teams of builders to go get involved in today. You can borrow lend, you can trade perps, you can trade DEXs, there's all sorts of things that are there, new projects launching every day, really exciting time to get involved. And if you're trying to get into the core ecosystem, now it's kind of a special time, because you have the core ignition program, which is actually a user incentive program, as well as a builder incentive program. Okay, so the idea is you get rewarded for bringing TVL into these projects, and then also for participating. Many of these projects will also do their own incentive programs. So double staking, double rewards, triple rewards sort of deal right now. Exactly. And many of these have, again, super, super, super awesome teams. So it's a really exciting time to kind of get involved from that side as well. And that ignition program also has a builder component, which is kind of like the final audience, if you will, maybe as part of this, which is, if you want to, you know, come build on core, we're fully EVM compatible. So it's very easy to bring over an existing protocol. We love native builders that want to launch like one of one products on top of core, we've got an amazing BD grants dev rel team to kind of help you get all set up. And again, you get the ignition rewards on top of it as well. So there's really nice ways to actually get involved and get rewarded for kind of the value you're bringing to the ecosystem. And then of course, digital Bitcoin miners, mining pools, of course, we love you guys helping to see our consensus. So got it, that's, that's quite a lot to do. But I think the key here is we'll put all these things on the links down below. So if you're interested in any of them, just click the link and go for it. Because at the end of the day, if you're not sticking in Bitcoin, what are you doing? Right? So anyways, guys, thank you so much for this next year. And I really, I'm glad to, for you to share it as the Bitcoin narrative, because I do think it's, it is the biggest narrative of this year. So yeah, we'll see what's, we'll see what's next. And I'll definitely want to see more updates on what's core down on this channel. Awesome. Great chatting with you. Yeah, thank you. Thank you, Rich. Cheers.