#678 Smart Contracts on Bitcoin w/ Muneeb Ali

Dr Muneeb Ali is the co-founder of Stacks, a platform to build smart contracts on top of Bitcoin. In this conversation, we discuss bitcoin, smart contracts, decentralization, financial services, MiamiCoin, and why distributed networks are so important. ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com. ======================= With 10M+ users, Crypto.com is the easiest place to buy, and sell 100+ cryptocurrencies. The Crypto.com Visa Card gives you up to 8% back instantly, and 100% back on Spotify and Netflix. Also, Crypto.com lets you earn up to 8.5% p.a. on BTC, and 14% p.a. on stablecoins. Get $25 when you download the Crypto.com App with code "pomp". Download the App now: https://crypto.onelink.me/J9Lg/pomppodcast2021 ======================= LMAX Digital - the market-leading solution for institutional crypto trading & custodial services - offers clients a regulated, transparent and secure trading environment, together with the deepest pool of crypto liquidity. LMAX Digital is also a primary price discovery venue, streaming real-time market data to the industry’s leading analytics platforms. LMAX Digital - secure, liquid, trusted. Learn more at LMAXdigital.com/pomp

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Dr. Muneeb Ali is the co-founder of Stacks, a platform to build smart contracts on top of Bitcoin. In this conversation, we discuss Bitcoin, smart contracts, decentralization, financial services, Miami coin, and why distributed networks are so important. I really enjoyed this conversation with Muneeb, as always, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Circle. Circle's a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce, and financial applications

• 0:47Anthony Pompliano?

  worldwide. Circle is also a principal developer of USD Coin, or USDC, which is the fastest-growing, regulated, fully-reserved-dollar stablecoin in the world, now standing at more than $30 billion in market cap and adding nearly $300 million of net new digital dollars in circulation every single week. The free Circle account and suite of platform API services bridge the gap between traditional payments and crypto for trading DeFi and NFT marketplaces. You can learn more by going to circle.com. I've had Jeremy Allaire, the CEO of Circle, on the podcast numerous times. I'm a big fan of their vision, and you can't deny how fast that USD coin is growing. So go check them out at circle.com and let me know what you think.

• 1:30Anthony Pompliano?

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• 2:10Anthony Pompliano?

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• 2:54Anthony Pompliano?

  Leveraging LMAX Group's liquidity relationships and ultra-low latency technology, LMAX Digital is the market-leading solution for institutional crypto trading and custodial services. They feature a central limit order book, streaming spot Bitcoin, Ether, Litecoin, and Bitcoin Cash, and it's all paired with US dollars, Euro, and yen. LMAX Digital, the number one institutional crypto exchange. They're secure, they're liquid, and they're trusted. You can learn more at LMAXdigital.com/pomp. Again, LMAXdigital.com/pomp. All right, let's get in this episode with Munib. Hope you guys enjoy this one.

• 3:31Speaker 01

  Anthony Pompliano runs POMP Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of POMP Investments. You should not treat any opinion expressed by POMP or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 3:54Anthony Pompliano?

  All right, guys. Bang, bang. I've got Munib here with me. Thank you so much for doing this, my friend. Always great to chat with you, man. Of course. Let's just jump right in. There's plenty of people who have heard of smart contracts on Bitcoin, decentralized finance on Bitcoin, city coins on Bitcoin, all kinds of stuff that now seems to be being built on Bitcoin, all being empowered by Stacks, which is a platform that really has

• 4:20Speaker 02

  Brought smart contracts to Bitcoin and kind of empowered this entire ecosystem. So can you start with just reminding everyone what Stacks is and how exactly this works? Yeah, absolutely. So I think Stacks is smart contracts for Bitcoin. And when I, when I use the wordings like for Bitcoin, like I use it very carefully. Because uh, these are not smart contracts literally built on Bitcoin. Everyone knows that Bitcoin has a limited scripting language. And making changes to Bitcoin is something that uh, the community doesn't like. Or it's not a good design decision anyway, because you want your money there to be very stable, very durable. And you want it to have a very small attack vector.

• 5:03Speaker 02

  You actually don't want the fully expressive uh, smart contract uh, languages on the Bitcoin there, right? So Stacks is a separate layer. Uh, some people think of that as almost like a layer 1.5. Uh, it's not really a, a full layer two. It's not really a separate layer one. Uh, it's, it's a very unique design. Think of that as a blockchain that's kind of like connecting to Bitcoin. And it has consensus between Bitcoin and Stacks. So really like you can simplify it as a smart contract layer. Uh, where these contracts can uh, read state from Bitcoin. They can, they can react to that state. You can write interesting applications where, you know, part of your application is running a Bitcoin. Part of it is using the smart contracts on the stack side.

• 5:46Speaker 02

  And uh, the mainnet for Stacks went live in January of this year. And I think we have seen a tremendous amount of like interest from uh, developers. I think there's something like 30 independent companies and startups, but very, at various different stages. They're now building uh, the ecosystem. You mentioned, you know, city coins. The city of Miami has actually accepted. Uh, a treasury of a new type of a asset called Miami coin, which is, which is built on top and was launched in a. In a, in a pure mining launch. Uh, there's more than $500 million of uh, value locked in a smart contract. Uh, yeah, in, in one of the smart contracts on, on Stacks. So I think it is relatively early in terms of traction.

• 6:30Speaker 02

  But I feel like for the six, seven months that uh, the network has been live after mainnet. We have seen tremendous growth as well.

• 6:38Anthony Pompliano?

  One of the parts of this that's so fascinating is the idea of expanding the Bitcoin economy. And I think historically, people have thought of Bitcoin as a decentralized digital currency. And there's an importance to all three of those words, right? Decentralized digital and a currency. But you've got this point around most of the financial services or the infrastructure around Bitcoin is centralized. So you essentially have a decentralized currency with centralized infrastructure. You and the rest of the folks working on this seem to be trying to change that. So maybe describe how you look at this and then what exactly it means to expand the Bitcoin economy.

• 7:17Speaker 02

  Yes, so I think like I'm a I'm a really Bitcoiner. I kind of like entered the space in 2013. And in one way or the other, I've been actually building on Bitcoin since then. We've tried building applications directly on top of Bitcoin. We've experienced firsthand some of the scalability, stuff that people talk about or why Bitcoin is designed the way it is designed. So Stacks is actually a result of like years and years of work and actually actually building interesting things on on top of Bitcoin. And the motivation for a lot of things that we've been doing is driven by exactly what you mentioned. That we view Bitcoin as the best money layer. It has all the right properties, like people know the exact supply. We know the supply is not going to change.

• 8:00Speaker 02

  We know that it was launched in a fair mining only launch. It has a grassroots community. It has a big kind of like, you know, a brand and recognition around the world. And it is viewed as this hard asset, right? Like it's like the decentralized money there. But interestingly, you would want to use the decentralized money in all sorts of decentralized applications or even have trading. Let's let's take an example. Let's let's look at, you know, some of the trading volumes for Bitcoin. You go to CoinMarketCap, you try to take a look at, you know, where does Bitcoin trade? It would be Binance, Coinbase, FTX, and some of the highest volumes will be against stable coins like.

• 8:45Speaker 02

  Like, you know, USDC or Tether. So that that is, that actually like feels strange, but a lot of people have just gotten so used to it. That I have my decentralized money. And the way I'm going to trade it is against an asset on a centralized exchange. Whereas if you had smart contracts around Bitcoin, you could have things like USDC. By the way, USDC has announced that they are coming to the to the stacks there. Meaning that you will literally have USDC available on stacks. And developers have built native swaps. Meaning that you could do a swap between BTC and USDC by sending a pure Bitcoin transaction.

• 9:30Speaker 02

  So my question to Bitcoiners is that, do you think that swapping into USDC is better? If you can do a multi-sig transaction on your, from your hardware wallet as a pure Bitcoin transaction? And then get USDC versus for sending your Bitcoin to a centralized exchange? And then trading it there and then withdrawing your funds from a centralized exchange? I think most people or Bitcoiners would pick that. No, I I love the decentralized way of doing it. I don't have to go to KIC. I don't have to take any, you know, third-party risk of there's a custodian or there's an exchange that can get hacked and so on and so forth. But like, the interesting thing that I've noticed is they're intellectually aligned.

• 10:13Speaker 02

  Their their their values are aligned with this type of decentralized infrastructure. But we don't see a lot of kind of like momentum or development in the Bitcoin community to actually build these services. Right? Like, there obviously are some projects, but in the grand scheme of things, most of these DeFi primitives are actually being built outside of Bitcoin. And I think that's the thing that motivates us, like people in the Saks ecosystem. That we want to bring like all those primitives directly to the to the Bitcoin ecosystem.

• 10:43Anthony Pompliano?

  When you think about building decentralized infrastructure around a decentralized currency? Is that the only way that this will all be successful? Or is there a world where you Could have decentralized infrastructure and a centralized currency. Uh, or you could have a um, a decentralized currency and centralized infrastructure. Like, does it have to be decentralized vertically integrated infrastructure and currency? Or is there another path that uh, that may also be successful? Like, how how exclusive is that uh, strategy?

• 11:13Speaker 02

  Yeah, I I do think that uh, what we're seeing right now is uh, decentralized uh, money, Bitcoin. Working on centralized infrastructure. It's kind of like working for the most part, like working quite fine. Obviously, there are problems with exchanges and people kind of learned their lessons and so on. And interestingly, then we're seeing use cases, and I wouldn't name name projects, which are more centralized. With these decentralized infrastructure. And that's actually leading to some new types of use cases that I would love to see happen in the Bitcoin ecosystem. So I think those experiments are actually uh, showing the path to what's possible.

• 11:55Speaker 02

  If you enable kind of like more decentralized type of services, like a good example would be, you know, do you want to put your Bitcoin as collateral? For some sort of a stable asset? And actually, you know, you you center transaction, you put up your Bitcoin as collateral. And you can uh, mint some sort of a stable currency and then go and use it. Like, that's like saying, don't sell your Bitcoin. Uh, use it as a collateral to get a stable asset that it can use and and and do that way. I think, again, Bitcoiners would be uh, they would like it in theory. But for several reasons, like this idea of actually building this stuff natively in the in the Bitcoin ecosystem. Uh, doesn't get enough uh, enough attention.

• 12:38Speaker 02

  In terms of like what's better, I definitely think that uh, if you start with a centralized layer. It's very hard to build decentralized components on top of it. It kind of like, you know, defeats the purpose. But if you start with a decentralized layer, then you can keep adding more decentralized building blocks. And you can always build more centralized services on top. And that's that's why I get attracted to building a Bitcoin. Because let's say for some reason, people want like faster transactions or whatever. You can add a layer like on top of stacks even. Uh, so tax is a more decentralized smart contract layer that gives you faster transactions and people uh, can use it if they if they want to. Right? But you can't go the other way around. You can't start off with a centralized base layer. And then uh, you're limited, you can't, you can't build a more decent.

• 13:23Anthony Pompliano?

  And so when you think about this, there's a couple of different ways that smart contracts can work. One of them obviously is the on-chain smart contracts that most people are familiar with from the smart contract platforms. The other is something that's more akin to an off-chain type smart contract. Maybe give us an overview of what are the two different types, how they work, and what exactly Stacks is doing and why that's important.

• 13:51Speaker 02

  Yep. So I think the way to think about this is the on-chain contracts are effectively something that are literally running at the blockchain level. So these things are always online. Anyone can can interact with these contracts whenever they want. And they they are almost like networked together, right? So they are they are like these Lego blocks that people can use to build other services as well. Right? So I'll give you an example. If there is a Uniswap, which is like a, you know, it's an automated market maker. Most people think of that as a decent as a change. It exposes a certain functionality and then people can use the that functionality automatically in other smart contracts.

• 14:34Speaker 02

  To then glue together the functionality and build other interesting things. Right? So for that, you kind of like need to be on-chain, you need to be networked together and be global. So these are kind of like the smart contracts that most most new blockchains, like I know there are a bunch of like new layer one blockchains out in the market now. They when people talk about smart contracts, they're talking about these on-chain, fully featured smart contracts. And then there are, obviously Bitcoin has a more limited scripting language. It's on-chain to Bitcoin script. But it is fairly limited for security reasons, right? So people have come up with this second form of smart contracts, which are off-chain.

• 15:14Speaker 02

  Meaning that a lot of the state is off-chain, or maybe you need to talk to people before doing a transaction with them. You have to basically coordinate with them, set up a transaction. So the examples for these types of languages or approaches would be DLCs that are actually quite. Quite popular in Bitcoin communities, at least the idea of it. And RGB, which is a project in the Lightning community, which is also approaching smart contracts from a off-chain component. And I think the main reason these approaches are off-chain is because you can't modify Bitcoin. So if Bitcoin has a more limited scripting language, you're trying to add this functionality in an off-chain manner.

• 15:56Speaker 02

  And what a lot of people don't realize, and this is where I wish that, you know, people can be better educated about these things. Like personally, I think these approaches are great and they're they bring, you know, new use cases to Bitcoin and they should definitely be explored. But we should realize the limitations here as well. You cannot build a full-fledged DeFi ecosystem using these approaches because they're very limited. You can't, you can't have smart contracts that are online all the time that you can interact with in a permissionless manner. Like some of the UX of using a DLC actually looks like you are coordinating with the with the party you want to transact with offline. You're signing like ten different potential transactions or maybe there's an oracle involved.

• 16:40Speaker 02

  And then you're manually broadcasting them. It's very clunky. And I think you, you, you can't expect the type of functionality from a modern smart contract language and confuse that with with a DLC or or RBG type approach. So what we did at Saks is like our, our motivation was to bring fully featured smart contracts as people have have come to experience them in the, in the previous years and try to bring that functionality to Bitcoin. And to do that, that's why Saks is a separate smart contract layer. It's almost like a, like a blockchain itself, like call it like layer one point five. And you get the full featured smart contracts there. People can build the, the automated market makers, the lending protocols, NFTs,

• 17:25Speaker 02

  like all these types of different features that you've seen in crypto. Now that's possible because of the fully featured smart contracts that Saks has. Bringing, uh, bringing to Bitcoin.

• 17:37Anthony Pompliano?

  When you think about what this empowers, obviously DeFi on Bitcoin is a huge component of it. Do you see this being able to create feature parity between the smart contract platforms and now on top of Bitcoin? Uh, or would there be some difference in functionality or, or features?

• 17:55Speaker 02

  Yes. So I think when we were starting off, uh, so obviously we, we, uh, we wanted to be very careful about security. Uh, we were dealing with some unique type of, uh, uh, constraints because you can't change Bitcoin, right? So we had to make all the changes on the, on the stacks there. And we came up with this programming language called Clarity. Uh, it's not Turing complete, like, like the solidity language that has been used on Ethereum, uh, mostly for security. Right? So think of that as a slightly limited subset of a full Turing complete language, but it gives you a lot of security benefits. Uh, and interestingly, so far, uh, working with like a ton of developers and so many startups that are building on stacks.

• 18:34Speaker 02

  We haven't encountered a single use case that you can't implement with clarity on stacks that you can implement on, on Ethereum. So in terms of like, uh, uh, feature parity, it's literally like anything you can do on Ethereum. Anything you can do on another, you know, newer L one blockchain, you can literally implement that, uh, in, in this smart contract layer, which is, which is amazing. I was actually, uh, quite pleasantly surprised to find that because I thought maybe clarity would be limiting in, in certain ways because we focus so much on security. But it turns out that it's basically a decidable language, meaning that if your, uh, if your program is decidable, like you know what the program is going to do. You can express it in, in the language.

• 19:18Speaker 02

  And, and, and by the way, it's a good thing. You should know what your program, what, what your program should do if you're writing a smart contract, right? So, uh, that, that, that. Turn out to be a really, really good feature.

• 19:29Anthony Pompliano?

  When you think about clarity, is this something that most developers can immediately just pick up and start to code in? Or is it something similar to solidity where they actually have to go and become somewhat specialized in it?

• 19:41Speaker 02

  Yeah, so I think there's always a learning curve, right? So if you're, if you want to write a smart contract and you're a developer, there's always going to be a learning curve to understanding. I'll separate those things into two. One is, one is the syntax of the, of the language, like, you know, how JavaScript has a different syntax from, let's say, C. But then the other thing is the new concepts that you have for smart contracts, like how you interact with the blockchain, how you have these unique type of things that only smart contracts have and not normal programs don't have that. So I think clarity has both types of learning curves, right? You are learning about smart contracts and how they work, but you're also learning and use syntax as well. And in clarity's case, the syntax is actually very similar to Lisp.

• 20:26Speaker 02

  So a bunch of people who are, who like programming in Lisp, like they're diehard fans of it. We mostly did it for, for security reasons. I think our lens on all of this is that the number one feature you should be optimizing for is safety and security. Like it's not about speed, it's not about ease of programming. It's mostly about how secure your, our smart contract is going to be. And in our case, you can have mathematical proofs of correctness that the program is only going to do what it's supposed to do and it won't, it won't do anything else.

• 20:57Anthony Pompliano?

  When you think about the DeFi capabilities, I think the promise of decentralized finance is that you can do obviously transactions in a decentralized manner or payments. You can do buying and selling on decentralized exchanges. You can do decentralized lending. You can do pretty much anything you can do in the legacy financial system in the decentralized manner now. Is that ultimately what can get accomplished here? Like, do we think we can reach a fully decentralized financial system where the infrastructure is built on top of and around Bitcoin? Or will we have to rely on other blockchains or some sort of?

• 21:36Anthony Pompliano?

  Our operability, like how do you view, um, you know, the, the, uh, kind of dependence on other things versus the ability to build a fully decentralized financial system exclusively on top of and around Bitcoin?

• 21:48Speaker 02

  Yeah, let me, let me separate two things there. So one is about the decentralized economy itself. And sometimes like I, I'm talking to my friends on Wall Street. And the way I describe this is, uh, what if I tell you that I could give you better insights into the type of risk that exists in the various systems that are hooked up on Wall Street? Like, the answer to that is a thousand percent yes. Every single analyst, every single trader wants to know the type of risks that they're trading against or, or the products that they're, right? And the superpower of DeFi is that that risk could be fully transferred.

• 22:31Speaker 02

  Meaning that you can actually analyze every single collateral, every single assumption, every single piece of code, uh, that is there. And I think that's, that's kind of like the real superpower of DeFi. And we have actually seen it work. Like, uh, imagine that, uh, let's say four or five months ago, when there was a thirty-eight percent correction in the market. The DeFi protocols actually worked as expected, right? Like people were liquidated, like those liquidations closed. Uh, obviously prices came down, but it wasn't a catastrophic failure of the system where the system just came to a halt. Which is what would happen on Wall Street if a correction like that was to happen because there are so many black boxes.

• 23:13Speaker 02

  There are so many kind of like human relationships. Like if you talk to some of the Wall Street insiders, they would tell you war stories about, you know, the market crashed like six percent and how they were making phone calls to cover like their, their friends', uh, uh, investments and whatnot, right? Like none of that exists in DeFi. Like you, it's all automated. It's all computer code. Uh, it has full visibility. So I think in that sense, like this is purely from a risk, uh, perspective and transparency perspective, a strictly better system than what exists in Wall Street. And I think like that is. It's just open source code and it is evolving so quickly, like it's it's pretty much like writing is on the wall that this is gonna happen. And then the question becomes like, uh, what role is Bitcoin going to play in this, right?

• 23:58Speaker 02

  And I think Bitcoin has a huge role to play here, like Bitcoin obviously is the best, uh, most secure, uh, financial asset. Like it's the it's the store of value that you it's the durable store of value that everyone can really depend upon. But you you you want to make Bitcoin productive, meaning that uh, like if you think about uh, traditional assets, the the dollar has value because the dollar is the thing that everything trades against, right? The dollar is the thing in which people wanna put up their collateral. And I think uh, Bitcoin community should actually think of Bitcoin as that asset, that it should really power uh, the the the world of DeFi, like in the sense that assets should trade against Bitcoin,

• 24:42Speaker 02

  because any value that these assets have, uh, it should be measured against Bitcoin. Like if I'm if I'm trading something against Bitcoin, then it then it Bitcoin is the unit of measure, right? Bitcoin is the reserve asset against which everything trades, Bitcoin is the default asset, uh, where where we use it for putting a collateral and so on. And interestingly, like Bitcoin obviously is such a a powerful asset that people are trying to pull Bitcoin into their ecosystem. And they're trying to do that uh, by uh, wrapped assets, which could be custodial or could be a little bit more more decentralized, uh, a way of like issuing these assets as well. But that's not native to Bitcoin, right? Like you're effectively taking Bitcoin and you're issuing some sort of a derived Bitcoin asset on another blockchain.

• 25:26Speaker 02

  And you're inheriting all of the potential security issues of that separate system versus bringing the ability to have DeFi uh, to Bitcoin directly. And I think, by the way, it's not just DeFi either, like smart contracts enable uh, any type of applications that people might be interested in. And I think NFTs could be a great example because they took off recently. Like imagine what's the what's the value in an NFT? I'm not gonna get into the debate and debates about, you know, you can copy the JPEG or something. I think people have exhausted all of that, but. If you look at fundamentally, why an NFT has value, it has value because you can prove the ownership.

• 26:04Speaker 02

  And you can prove the provenance of of that asset, that here was it traded at this price, at this day, and here's the full history of it. Like, what is a better source of ownership and provenance than Bitcoin? Right? So if you're minting these these NFTs on Bitcoin, and they they don't, you don't have to store that data in Bitcoin. Bitcoin is just seeing hashes when people are doing things on on stacks, right? But you can actually mint interesting artwork using Bitcoin Bitcoin block data. Uh, there's even a video game, people who go check it out, it's called Moon Ray, where uh land in in the game is actually defined by the scarcity of the Bitcoin blocks.

• 26:45Speaker 02

  And you can have these uh generative art uh that is created within a game based on Bitcoin blocks, right? And imagine how rare a Bitcoin block is. And if you're trading artwork inside a video game that is based on a particular Bitcoin block, the Bitcoin block is never gonna uh repeat again in history. So just as a historic historical artifact, that that art generative artwork is going to be valuable. So I think time all this back to the abilities we already have uh with Bitcoin actually makes use cases like DeFi, like NFT. Even better than what we uh see out in the market.

• 27:25Speaker 02

  And obviously, it expands the Bitcoin economy because then Bitcoin will be used to do auctions of these NFTs to to uh support kind of like, you know, secondary markets for these type of assets. The more application people are able to build around Bitcoin, the more valuable Bitcoin is going to be, right? And I feel like for some reason, or the past uh couple of years, I've been in the Bitcoin community long enough that I think back in two thousand thirteen, two thousand fourteen. People are actually much more open to building more applications on Bitcoin. I feel like during the ICO craze of like twenty seventeen or so, we've just developed like such a negative reaction to all types of applications. That the narrative has somehow become leave Bitcoin as a store of value. Uh, we don't care about any applications, no DeFi, no NFTs.

• 28:10Speaker 02

  And I think that attitude in in the Bitcoin community uh can can result in kind of like not unlocking the full potential of Bitcoin. Which, in my view, we unlock that by building like all sorts of applications and all sorts of different innovative things. Directly in the Bitcoin ecosystem.

• 28:27Anthony Pompliano?

  Talk to me about city coins. That seems like another really interesting kind of use case here where for those that don't know, city coins essentially is the idea that a local municipality is able to leverage this brand new type of mechanism and generate yield for themselves that they can claim. And the city of Miami recently is the first city to go ahead and say, yes, we would like to participate in this. They received, I believe, over $5 million from the Miami coin, which is one of many city coins and appears to kind of continue to be working for them.

• 29:08Anthony Pompliano?

  So maybe just describe, you know, how it works and then what you think about something like that being built on top of Bitcoin.

• 29:14Speaker 02

  Yep. So I think, so let me, let me first describe Stacks and how it links with it. Right. So Stacks, the asset is a gas asset. So it doesn't compete with Bitcoin, actually can't even exist if Bitcoin doesn't exist because the consensus works only with the Bitcoin blockchain itself. And even Stacks has value because it is a Bitcoin yieldingness. If you hold the gas token, which is Stacks, and you kind of like lock it up in a smart contract, you can earn Bitcoin from the protocol, right? And those earnings are around like 10%. And people are actually getting real Bitcoin transactions on the main Bitcoin chain as your world.

• 29:55Speaker 02

  And I think that's, that's, that's like one of the native features of the gas asset that it has a Bitcoin yield that has to. And, and this idea of city coins, think of that as like a public-private partnership that the, the city, because the city of Miami has now officially accepted the treasury. Like obviously, you know, people can assume that they're taking this project more seriously and they would be willing to engage more with it. Right? So the people who call it like, you know, the community of Miami, it doesn't, you don't have to physically be in Miami, but have an interest in the city. And you hold the, the token that represents, you know, the community of Miami. And then there can be all sorts of different use cases of it, right?

• 30:39Speaker 02

  Like, for example, if, let's say, the mayor of Miami is making really good policies for the city, and the city is actually growing, maybe there's more interest in Miami coin itself and people are actually buying it. Worse is, you could short, like, an SF coin if every time there's a bad kind of local policy decision. So it can almost work like as a futures market for that, for that city, or that's kind of like my lens on it, like, not, not the official thing. It's a very community-driven project. And I think the, the way the, the City Coins project community kind of like described it, that it's really a way for the, the people to partner with the government, right?

• 31:23Speaker 02

  Because now the government is getting a slice of, of the treasury, and people can have a say in or start a conversation about what should they do with the funds? Like, for example, this part of the five million dollars that were generated, maybe, maybe people want to see more crypto hackathons. Maybe they want to see that more applications being built or more initiatives that brings kind of like, you know, more innovation to the city. And interestingly, let me tie this back to the, to the yield I was talking about with Stacks. Like, because Stacks has a native Bitcoin yield, this asset that is built on Stacks is built in a way that it can also have a Bitcoin yield by proxy.

• 32:06Speaker 02

  So the city of Miami could actually decide that they just want to park their five million dollar treasury. By the way, this treasury might keep growing, right? Because constantly, when, when mining is happening for Miami coin, the size of the treasury is actually going up. Because part of the mining proceeds are going into the treasury. But they could actually lock up the treasury and start earning a Bitcoin yield on it, right? Which is a very interesting way to introduce Bitcoin to a city government and kind of like put Bitcoin on their, on their balance sheets.

• 32:36Anthony Pompliano?

  What does it look like if they were to lock it up and earn yield? Like, is that yield, single-digit percentages like you would expect in the legacy world? Is it some of the, you know, crazy numbers that we On in from the smart contract DeFi world or somewhere in between?

• 32:49Speaker 02

  Uh, it's 10% right now, right? So people can go to stacking.club to see that how the year has performed over the last uh, six, seven months since the launch of stacks, but it's hovering around 10%.

• 33:03Anthony Pompliano?

  It's not bad at all compared to, uh, you know, buying, uh, treasuries or whatever other options they would have in the legacy world.

• 33:10Speaker 02

  Absolutely. It makes you, it makes you wonder like, you know, after experiencing some of the yields in crypto, like I look at my uh, yields in, in the, in traditional bank and I'm like, you know, some, someone is ripping you off.

• 33:23Anthony Pompliano?

  Absolutely. When, when you think about, um, kind of where all this is going, uh, is it just more and more people building on top of stacks and, and using the decentralized, uh, digital currency of Bitcoin and building decentralized infrastructure around it. And that's kind of the future. And let's just hand it over to as many people as possible and see what they can do with it. Or, or is there some other plan or, uh, hope for where this all goes?

• 33:46Speaker 02

  I think one thing that I've noticed in the last, um, uh, six months or so is that I'm really excited about the interest in the developer communities. Right? So developers are organically coming to this. They're really excited about this idea of making Bitcoin programmable, of expanding, kind of like the Bitcoin economy. They get the value prop of Bitcoin that, you know, Bitcoin is hard money. It's decentralized money layer. And they want to build interesting things around it. I think, uh, the, the, the work that we have done, uh, is resonating with developers. Like I am still, uh, somewhat surprised or, uh, like I, I don't fully get it that in the broader Bitcoined community,

• 34:25Speaker 02

  there is still kind of like resistance to the idea that, hey, what is this separate layer? Why is there a separate gas asset? Even though we have baked in this functionality that people can even just do pure Bitcoin transactions, uh, and pay the gas fee in Bitcoin if they want to. It's, it's, it's available for a subset of functionality right now. But it can be expanded upon so that, you know, if you really want to pay gas fees in Bitcoin, you can do that. It's going to be a lot more expensive because block space on Bitcoin is much more expensive and. You'll have to pay a much higher price versus paying the gas fee in a layer where block space is not that expensive.

• 35:03Speaker 02

  And you can actually pay a cheaper fee, but you can do that. And I do think like, uh, one of the things I would love to see in the coming months is uh, more Bitcoiners kind of like opening up to the idea of applications being being built in Bitcoin. And I think sometimes I see, uh, you know, people criticizing Bitcoiners like, hey, what do you even do with your Bitcoin? I would want to hold it. And the and the reality is you can do a lot of things with your Bitcoin in a decentralized way. That functionality is here. Yes, it wasn't there like three years ago or four years ago, but as of this year, not just stacks. I think there are other projects as well and they're maturing and they're bringing these applications to Bitcoin. And and the community actually embracing the uh, the the movement

• 35:46Speaker 02

  uh, for being a decentralization movement, not that, hey, I'm gonna hold an asset and and basically just sit on it. Like this movement is about like building an entire financial infrastructure or even non-financial use cases, uh, where, you know, you don't want to rely on companies and actually have this self-sovereign software uh, that you use and, you know, you don't need anyone's permission to use that. That's what people got got in into crypto or got into Bitcoin for, right? So I feel like more of these use cases coming to Bitcoin and uh, kind of like people actually utilizing these applications and even poking holes in them or improving them. This all open source software, right? Like, I'd love to see that more in in in the Bitcoin culture.

• 36:29Anthony Pompliano?

  What are you most looking forward to? Like, if there's one thing you're like, hey, I would love to see somebody go build this one thing or or there's some milestone. What what's the thing that you're looking for?

• 36:39Speaker 02

  Yeah, so, um, I had this idea of, um, a Bitcoin lending application where your Bitcoin actually stays on the Bitcoin chain. Uh, so you could put up collateral in a smart contract on on the stacks layer. Uh, whereas your Bitcoin transaction, let's say. That, you know, uh, I wanted to borrow from you. Right. So I would put up, let's say, two hundred percent collateral in a smart contract. You would send a Bitcoin transaction to me. And then a clock starts on, on, on the moon. Let's say it's like, you know, one hundred and fifty box, which is like roughly a day. Uh, and if I don't give you the Bitcoin back plus interest, you automatically get the collection, which is two hundred percent. So you can go and buy.

• 37:23Speaker 02

  I think an application like that could be super interesting because it is a completely trustless, decentralized way of, of lending out your Bitcoin and then earning an interest on it. And you're kind of like, you don't need to trust anyone. Uh, you just need to, uh, verify yourself that this smart contract is going to release the collateral to you if you don't get your Bitcoin.

• 37:46Anthony Pompliano?

  And so when you see that kind of playing out, the whole idea of Bitcoin as pristine collateral feels like that's something that Wall Street has really woken up to. Do you see the institutions coming in and using this? Or is this more focused on retail and, and what I would call it Bitcoin centric tech companies?

• 38:02Speaker 02

  Yeah. So I think right now, uh, the people who are kind of like really using this stuff, like they are early adopters and they're just excited about the idea of, uh, these types of applications around Bitcoin. Right. So there are people in our community. So I think of Stacks community as almost like either a subset or overlap with the Bitcoin community. I think most of the Stacks community members that like self-identify as Bitcoiners. Uh, but some of them are just developers who are here to build stuff and they don't have like strong views about anything. So that's where we are right now. Uh, I do think that more retail use might just naturally come first because these products are built by developers. They might be a little bit more clunky at, at ease initially and so on.

• 38:47Speaker 02

  But I, I do agree that because Bitcoin has such wide adoption in the, in the institutions, that we might actually start seeing more institutional adoption for some of these things, maybe even faster. Versus, uh, compare that to a, uh, separate ecosystem, like they would actually have to. Try and convince the institutions to hold their token, right? Because Bitcoin is already kind of like accepted with so many institutions that you kind of like sidestep that that step, which step might be like, you know, a really big, big roadblock for for more adoption of of these applications in the in the in the wider institutional space.

• 39:29Anthony Pompliano?

  Makes sense to me. I tend to think you're onto something, my friend. Where can people go learn more about Stacks or any of the infrastructure that's being built on and around it?

• 39:39Speaker 02

  So the best place would be stacks.co, which is like a community website for the open source project. It has links to a ton of other stuff. If you want to see like all the all the cool stuff that people are building, there's an independent accelerator that just had a demo day. You can follow them at Stacks Startups and they had twenty five teams. I think I might have mentioned a bunch of them, this this this full RPG video game. There is like very interesting stuff around NFT marketplaces. There are new types of like stable coins that where the collateral can give you a Bitcoin yield. If you want to play around with some of these interesting things being built,

• 40:24Speaker 02

  go to at Stacks Startups and they have a list of like, you know, the companies that just came out literally like last week from their cohort. So that'll be a great place to actually see what what people are doing with the technology.

• 40:37Anthony Pompliano?

  Awesome. And then where can they go follow you on on Twitter?

• 40:40Speaker 02

  So I am at Muneeb, which is my first name, M U N E E B.

• 40:47Anthony Pompliano?

  Got it. Listen, thank you so much for doing this. You guys have made a ton of progress since the last time we did this. And I think that it's pretty obvious the vision that you've had for for this is coming together and people are starting to build on it. People are starting to use it. So it'll be fun to to do this again in the future as you guys continue progressing. And I'm obviously a big fan, so I'll be cheering you on as as you do that.

• 41:08Speaker 02

  Awesome. Thanks. Thanks so much for having me. I'm super excited.