#1490 David Tse | How To Safely Get Yield On Your Bitcoin

David Tse is the Co-Founder of Babylon Protocol. In this conversation he explains two use cases for bitcoin, why he is trying to build a third use case, staking in the bitcoin network, and what David thinks the future looks like. =======================This episode is brought to you by Bitdeer (NASDAQ: BTDR), a global leader in Bitcoin mining and high-performance computing for AI. Led by a seasoned management team, Bitdeer is driving innovation with its proprietary SEALMINER ASICs for Bitcoin mining and has a massive 2.5 GW power portfolio across three continents. Learn more about Bitdeer at www.bitdeer.com=======================Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at https://meanwhile.bm/ to join the waitlist for a policy and to learn more.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today we've got a great episode with David Say. He is the co-founder of Babylon Protocol. In this conversation, he explains the two native use cases for Bitcoin, why he's trying to build a third native use case. He explains why, given all of his academic background and so much research history, he chose to focus on Bitcoin over every other

• 0:47Anthony Pompliano?

  technology that he could right now. And then we get into staking and why using a Bitcoin secured network is a new way to think about this, and how driving self-custodial staking may actually change the way people think about finance and think about Bitcoin. This conversation is fascinating. There's a lot of R&D going on here. There's a lot of vision for what it could be in the future. And then there's a lot of conversation about what are the big questions? What are the risks? And how could this team possibly mitigate it? I hope that you learned something if you listened to the full conversation that I just had with David Say.

• 1:15Speaker 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.

• 1:38Anthony Pompliano?

  Today's episode is brought to you by NASDAQ listed Bitdeer. They trade under the stock ticker BTDR. They're led by a seasoned management team. Bitdeer is a global leader in Bitcoin mining and high-performance computing for artificial intelligence, and they are backed by technological innovation and a massive 2.5 gigawatt global power portfolio. Recently, Bitdeer launched its own Bitcoin mining ASIC named the Seal Miner to target what Wall Street analysts project to be a multi-billion dollar annual market. Their proprietary Seal Miner ASICs are redefining efficiency and performance, and they are backed by the industry's most advanced chip roadmap, with two more groundbreaking models set to launch in 2025. To learn more about Bitdeer's cutting-edge technology and business,

• 2:21Anthony Pompliano?

  visit their website at bitdeer.com. That's B-I-T-D-E-E-R.com. Go check out Bitdeer today.

• 2:30Anthony Pompliano?

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• 3:13Anthony Pompliano?

  Visit their website, meanwhile.bm, to join the waitlist and to learn more about the world's first Bitcoin life insurer. Again, that's meanwhile.bm. Go check them out today.

• 3:25Anthony Pompliano?

  All right, David, I thought a great place to start this conversation is Bitcoin is something that you've worked on, but you've also worked on some really, really important things. You've got this storied career, you're Stanford professor, you've got a background in genomics, in a ton of different technologies. And when you look at this, why not work on AI? Why not work on machine learning? Why not work on so many of these other technologies that are out there? Why choose to specifically focus on Bitcoin?

• 3:50Speaker 02

  Yeah, so I started my career working on wireless communication. That is a technology that went from 1 billion cellphones to 10 billion cellphones within the span of 20 years. And I was participating in that at the ground level. So what I see with blockchain is a new generation of infrastructure that enables people not only to communicate, which is what cellphones do do for us, but also to decentralize and distribute it and to make. Interaction permissionless and that is really the next frontier and I really want to participate in this at the base level, basement level, where this all got started. That's why I chose this topic in the past six, seven years. That's what I've been working on.

• 4:36Anthony Pompliano?

  Got it. And so when you look at Bitcoin today, really, there are kind of two native use cases and you guys are creating what you call a third native use case. Talk about what you think the two native use cases are and then why you think there's third one is so important?

• 4:50Speaker 02

  Yeah, so Satoshi Nakamoto invented Bitcoin to solve one problem, which is a payment system, a decentralized payment system under no control of government or any organization. So the first use case of Bitcoin is a payment system. That's the first use cases. The second use cases is people basically figure out, hey, you know what? Bitcoin has a value, so you can store value. So both these use cases are very native to Bitcoin because it does not involve any third party to participate. You only have to trust yourself and the network. Other than those two use cases, there are no other use cases until

• 5:32Speaker 02

  we came up with Bitcoin staking. And staking is primarily a trustless activity happening on other chains, proof of stake chains. For example, in Ethereum, when you stake a ETH, 32 ETH to secure the network, you don't trust those 32 ETH to Vitalik. You don't give the 32 ETH to Vitalik and let him take care of it. It's a trustless through the protocol.

• 5:59Speaker 02

  This is much more difficult to do on Bitcoin because Bitcoin does have a smart contract. But we find a technology to enable to do this in an equally trustless way as in Ethereum and other proof of stake blockchains.

• 6:11Anthony Pompliano?

  Now, one of the things that you've said before is like, why trust humans when you can trust code? And do you think that the rise of AI agents, this idea of, you know, trusting the Bitcoin code, this is all part of a big trend in society where trust in institutions, trust in other humans is actually decreasing and the trust in code is what has been increasing?

• 6:33Speaker 02

  Yeah, that is in some sense the vision of Nakamoto. And we are here just to fulfill that vision and push it further and further.

• 6:44Anthony Pompliano?

  Explain a little bit more in terms of what you mean that is Satoshi Nakamoto's vision.

• 6:48Speaker 02

  So Satoshi Nakamoto basically invented a payment system whereby there is no central authority. Right? So we have, we look at a payment system right now that we use. We always trust some central intermediary like a bank or something else or PayPal or whatever payment system is created by a company. That is a central organization that you are trusting your money on too. Satoshi Nakamoto invented Bitcoin precisely to overcome this problem of trusting humans, trusting organizations more importantly. You know, organizations, humans can be trusted at some point in time,

• 7:32Speaker 02

  but in the future it may not be trustworthy. You can never trust someone all times. And so Satoshi Nakamoto's vision is to remove that trust. And in some sense, here we are just enlarging the class of applications beyond payment for which this trustlessness is still possible.

• 7:52Anthony Pompliano?

  You've previously said that Bitcoin was the original meme coin. Can you explain that?

• 7:57Speaker 02

  Did I say that?

• 7:58Anthony Pompliano?

  Yeah, you were talking about Richard Dawkins and how he was actually talking about meme coins and carrying, you know, units of culture.

• 8:08Speaker 02

  Yeah, yes, so that's right. So Bitcoin, right, if you think about it, has multiple facets. It's a technology, it's a blockchain technology. It's the first protocol that invents this new technology, number one. Number two is an application, as I mentioned, a payment system. But third, third, it's also a new idea of decentralizing, of removing or reducing trust on humans and organizations. So in some sense Bitcoin is a meme coin because Bitcoin is a symbol for this new idea, new movement. So it is a meme coin.

• 8:49Anthony Pompliano?

  And when you think of what you guys are doing, you are trying to introduce staking. Obviously, there's a lot of people who say, hey, if I hold Bitcoin, has no cash flow, I don't like Bitcoin. Or if I hold Bitcoin, I can't do anything with it other than hold it or spend it. Where did you get this idea for staking and kind of yield generation, but done in a self custodial way, right? Which I think is kind of a key part here is still staying true to the kind of components of Bitcoin, but introducing staking.

• 9:16Speaker 02

  Yeah, so how did we come to this idea, right? So first, we studied staking. Okay, this is a new thing that emerged in Web3 in the past five or six years. We realized that staking relies on two things. Okay, one, capital, loss of capital. The more capital, the more the security. This is the nature of proof of stake. Replace capital, replace work by capital. Okay, that's number one. Number two is locking. That is, to provide security, you have to lock the capital. Okay, now then we realized, okay, what's the biggest form of capital in Web3? Bitcoin.

• 9:58Speaker 02

  What is the capital that people hold and don't do anything with anyway? Bitcoin. So therefore Bitcoin is actually the perfect asset for providing security, because people are holding it anyway, they're not doing anything with it. So might as well just lock it and provide security.

• 10:15Anthony Pompliano?

  And right now, how does this work in terms of it is secured by Bitcoin's network? Describe a little bit kind of the relationship between the staking and the actual Bitcoin security of the network.

• 10:27Speaker 02

  Yeah, so you can think of Bitcoin as like an engine, which has input, energy, miners do work, and the output is the asset Bitcoin. Okay, so a lot of energy have gone in to generate this asset, which is very secure. Okay, now, right now, this asset is only people hold it. Okay, and what we're saying is that, hey, why don't we create a new use value for this asset to provide security to other blockchains? So you can think of the sequence. First, miners do the work, create this asset very secure. We use this asset to further create security for other blockchains. So that's sort of the sequence of logical flow.

• 11:14Anthony Pompliano?

  And right now, talk a little bit in terms of who are the types of people who are doing this? Is this individuals, is it companies, is it, you know, large financial institutions?

• 11:22Speaker 02

  Yeah, so we're still in the early stage of the protocol. We just launched the mainnet back in August, okay? And we launched it in phases. So in the first phase, we asked Bitcoin holders to say, hey, this is a new use case for Bitcoin. Lock your Bitcoin. So this is the first, so this we call supply bootstrapping, okay? So first, we bootstrap the supply, which is the Bitcoin. So right now, there are 130,000 distinct Bitcoin addresses that are already staked on our mainnet. 130,000, total about 6 billion TVL, between 5.5 to 6 billion, depending on the date of TVL. So this is the amount of Bitcoin stake. So this shows, and who are these people? We have no idea.

• 12:07Speaker 02

  This is a decentralized network. People stake onto the Bitcoin network. We don't track who these people are. However, by looking at the amounts, by looking at the amounts, you will see that there are some very small amount for 0.5 Bitcoin, many, many of them. But then there are also a few very large amount. The largest one is 5,000 Bitcoin, actually that's our maximum value. So you can see that there are whales and there are retails. So right now, I would say those are the two classes. Institutions have not come in in a big way yet, I would say, I would say. You know, institutions are typically more conservative. They went to wait until the protocol is more ready. Also, at this point, so this is where we are right now.

• 12:49Speaker 02

  Now, in the second phase of the launch, we'll launch a first blockchain, a first blockchain that will receive this Bitcoin security, that will receive this Bitcoin staking security. So that's the second phase. We plan to do that in the next few months. And once that happens, then there will be natural staking reward from these chains, from this blockchains that we are launching, to provide a yield or reward to these Bitcoin holders who are staking.

• 13:23Anthony Pompliano?

  Got it. And so when you think about a kind of proof of work of Bitcoin, that seems to be one world that exists that seems to be something that obviously has made Bitcoin incredibly valuable. There's this whole other world of proof of stake, but now it looks like you guys are trying to bring these two worlds together.

• 13:40Speaker 02

  Exactly. So the two worlds are very interesting, right? Because in the beginning, there was only one world Bitcoin.

• 13:48Speaker 02

  Proof of work. Then about six or seven years ago, proof of stick networks started emerging, culminating in the migration of Ethereum from proof of work to proof of stake two years ago. Okay? Now, proof of stake, one of the goal is to replace proof of work.

• 14:07Speaker 02

  Well, so far Bitcoin has not been replaced. In fact, Bitcoin is only getting bigger and bigger. So right now we have a situation where we kind of have a stalemate. We're Bitcoin, but we have proof of stick networks and both are very significant part of the web3. Bitcoin is about 50%, uh, proof of stick is at least 30%, 30, 40%, okay? So what we're doing is that, hey, these two worlds are stalemate. They coexist anyway. So let's put them together in the way that we are proposing.

• 14:37Anthony Pompliano?

  And when somebody does this, what do you think the big risks are, right? Obviously, there's a lot of people who say, hey, even if it's self custodial, are there risks of me putting my Bitcoin somewhere? Talk about how you think about what those risks are. And then also, what are you doing to mitigate them?

• 14:49Speaker 02

  Yeah. So, you know, there's a very interesting development in proof of stick. Okay? Proof of stick, before I go to the Bitcoin, let's say a few words about sort of the history of proof of stick. Proof of stick is meant to be a new security model to secure blockchain, okay? To replace proof of work, as I mentioned. However, it turns out that proof of stick has a second benefit. In some sense, to be a risk minimizing way for people to get reward in DeFi. So staking became a super important activity in DeFi. It's like the cornerstone of DeFi. In fact, many DeFi applications are built on top of the staking layer. Okay?

• 15:34Speaker 02

  So therefore, Bitcoin has never been able to enjoy this staking risk minimizing use case. So in some sense, we're bringing that to Bitcoin. Before, right, you need to get some value from Bitcoin, then you may have to land it out to some third party, or you have to bridge the Bitcoin to somewhere else. And all these are involving much more risk than staking. And so there's a fundamental reason why staking becomes a cornerstone of DeFi. It's because of the risk minimizing, trustless nature of staking.

• 16:08Anthony Pompliano?

  And so when you're doing that, you're obviously minimizing risk compared to a third party. But how do you look at the actual risks of, you know, Babylon and some of the stuff that you guys are building? Are there things that you, you know, think about in terms of, hey, these are the things we've got to do to mitigate this? So this is what we think are the, the most important parts for us to provide that security to our users?

• 16:29Speaker 02

  Yes, of course. The number one thing for us, right, is that the Bitcoin that people secure the network using our protocol, not using our custodial, using our protocol is safe, right? So we need to make sure that the protocol is to secure, the protocol implementation is correct. And so we've gone through, at this point, four, five, six, seven audits to make sure that all angles are covered in terms of the secure protocol.

• 17:00Speaker 02

  So that's number one thing. Yeah, so that's essentially the only one thing, actually, I should say.

• 17:06Anthony Pompliano?

  And then when somebody go ahead and stakes, you know, I know some of these other platforms, when you're staking, you're locked up for certain periods of time. Some of them are short, some of them are long. How do you think about like an illiquidity component of the staking that you're trying to build here?

• 17:20Speaker 02

  So from day one, our protocol does not lock up people's money forever. It only locks up the money in the following sense. It's saying that you can always leave the protocol, you can always leave the protocol, which is called unbonding. The only requirement we ask of you is you wait seven days. And the seven days is programmatic, is programmed in the Bitcoin scripting language, in the scripting staking contract. It's not something we choose. And once seven days is over, then the money will automatically be unborrowed and given back to you. The seven days is needed for providing appropriate security to the proof of stake chain. Proof of stake chain cannot allow people to unbond immediately. No proof of stake chain allows unbonding immediately.

• 18:05Speaker 02

  Seven days is in some sense shorter than most proof of stake chain. And this is because we have Bitcoin security.

• 18:12Anthony Pompliano?

  Got it. And so is this something where it's seven days from when I first put my Bitcoin in? Or is this seven days from when I say, hey, you know, I'm going to, uh, to take it out?

• 18:21Speaker 02

  You stake your Bitcoin for, say, three months. After three months, you say, hey, I want to use my Bitcoin for something else. You issue an unbounding request. Seven days later, you get your Bitcoin.

• 18:30Anthony Pompliano?

  Got it. So it's almost like when you stake, you can leave it for as long as you want. And then you initiate the, uh, the unbounding request.

• 18:37Speaker 02

  Yes. Uh, we have a, uh, a one little twist to what you said is that we have a duration, a lower overall duration of 15 months. Okay. So in case you forgot to unbound, after 15 months, this money will, the stake will essentially effectively be unbound by default.

• 18:57Anthony Pompliano?

  The, um, the reward, the, the yield that somebody is getting here, what, what does that look like? I'm sure that it kind of fluctuates from time to time, but, but what does that look like since you launched?

• 19:07Speaker 02

  Yeah. So we are in the main net phase one. Okay. So phase one does not get reward from proof of stake chains yet because we haven't launched any proof of stake chain. So right now we are, the protocol is, um, giving points, giving points to the stickers at this point. Okay. Now, when we launch one chain and then we launch many other chains, then these chains will provide reward to the stickers. Okay. Now, what does the reward look like? It's very hard to say because it depends on two things. One is how does the reward come from? And two is how many people are staking. If there's huge number of people staking, then the reward in, in terms of percentage is smaller.

• 19:54Speaker 02

  So we would expect that we will come to an equilibrium where, which give a reward rate. Okay. Which is reasonable to stickers. Now, I would like to emphasize that we should not think of this reward where it's like 10%, 20% type numbers. Okay. These are not the numbers that we are shooting for. We're talking about low single digit, uh, return, reward.

• 20:19Speaker 02

  That would be my guess. We don't have any different numbers yet because we haven't launched the chain. But think of this as kind of a very risk minimizing way of earning reward. And you can, and people are already building protocols on top of the sticking layer, just like Ethereum. People built like Lido and everything on top of it to generate more yield for a little bit more risk-taking activities. So you can think of Babylon as the sticking layer, the lowest risk minimizing way of getting return.

• 20:47Anthony Pompliano?

  Yeah, that makes sense. And really, I guess, you know, you get paid a return for the risk that you take. And so if it's low risk, then you should expect to get a low return. And obviously, things that go up, you know, thousands of percent are higher risk. And, you know, there's people who are looking for that, but they'll find that somewhere else.

• 21:03Speaker 02

  Yeah. And, you know, most people hold Bitcoin because they're hoping that Bitcoin will go up, up and up and up. So I think the return is kind of like, in some sense, for these people who hold Bitcoin for value, it's a nice thing on the cake.

• 21:19Anthony Pompliano?

  That, that makes sense. What's been the biggest surprise since you guys have been building this, right? You know, that there's a lot of people in Bitcoin that are hardcore Bitcoiners that say, hey, you know, we don't need anything that needs to be built on top of Bitcoin. But obviously, there's a lot of people who also say, well, we should try to make Bitcoin as useful as possible. And they're trying to build, you know, as much kind of utility and applications and staking, etc. So what's been kind of the reaction there? And what's your takeaways?

• 21:43Speaker 02

  Yeah. So, you know, I think the, definitely, in the past two, two years, this idea that Bitcoin should be just left unused has really shifted to many different teams, many different projects, thinking about creating new use case for Bitcoin. So I think our philosophy to this is following. We are not saying, oh, Bitcoin, the core protocol should be changed. Okay. We're not saying we should do a software to change it to make all these use cases possible when it was impossible before. We're not saying that. We're saying we take Bitcoin as it is, and we create new use cases for Bitcoin. And for people who wants to engage in these new use cases, they can use it. For people who are not interested in these

• 22:26Speaker 02

  use cases, they don't need to participate. We have two trillion Bitcoin there. We don't. Need every single Bitcoiners and there will not be every single Bitcoiners participating in Bitcoin staking.

• 22:35Anthony Pompliano?

  And then in terms of the people who are building this, what's the backgrounds? Like you have a very kind of storied background. I mentioned that you studied genomics, you studied engineering, you studied blockchains, you know, machine learning, et cetera. What are some of your colleagues? What is their background?

• 22:49Speaker 02

  Um, yeah, so we have a pretty diverse team. Uh, we have, um, so our core expertise of the project is in consensus protocols. Because what we're doing is we're providing security through consensus protocol. So we have a lot of experts in consensus protocol in our team. We have engineering, a very strong engineering team, very strong research team. But we also have a quite a diverse and strong, um, BD team, BD team, which helps us to educate people about this super new concept of Bitcoin staking. So that team involves people.

• 23:30Speaker 02

  So our chief strategy officer, for example, was a co-founder of a very old project called Zillica. I don't know if you've heard of Zillica, but he was a co-founder of Zillica, one of the earliest scaling project, Bitcoin, uh, blockchain scaling project. And we have people who have many years of experience in Figment, for example, which is our head of BD. So we have a very, I think, very strong team with deep, deep experience in staking the industry.

• 23:56Anthony Pompliano?

  You have called this a Bitcoin secured network? Talk a little bit about your vision for what other types of Bitcoin secured networks might show up? Should we expect all of the, you know, kind of R and D that's happening in DeFi and altcoins to kind of migrate over to Bitcoin? And everything becomes a Bitcoin secured network? Or do you think that there is kind of different chains and ecosystems for different applications?

• 24:19Speaker 02

  Yeah, you know, like the one thing about Bitcoin, Bitcoin is like a universal resource for the entire web three.

• 24:28Speaker 02

  So you have many, many different ecosystems, right? You have Solana, you have Sway, you have Ethereum. But no one, no single currency, no single cryptocurrency has this universal value, universal image of Bitcoin. And so we believe, and in fact, we've seen already a lot of evidence that many, many blockchains from many different ecosystems actually interested in participating in this network to become a Bitcoin secure network. Now, I should like to emphasize that the fact that you've become a Bitcoin secure network doesn't mean you sold your soul to Bitcoin and you lose whatever you're doing. No, because our way of designing this Bitcoin secure network is that you can keep your, for example, native asset

• 25:12Speaker 02

  and use that native asset to provide security. But you're adding on top of that more in a modular fashion, a Bitcoin security. And so in some sense, this Bitcoin security provides sort of a connection of this network to Bitcoin as a whole. And in fact, we saw, we have a lot of Bitcoin secure network which are interested in, in addition to getting security, they want to also get liquidity from Bitcoin. Now, we have protocols that build on top Bitcoin staking, liquid staking protocols, basically, that provide such liquidity. So we can, we're seeing both a security connection and an economic connection through our protocol.

• 25:52Anthony Pompliano?

  And when you think about Bitcoin kind of moving forward, obviously, there's been talk of a strategic Bitcoin reserve. When I first got into Bitcoin, I thought that Bitcoin and the dollar were somewhat competitive with each other, but it seems like stable coins have really extended the dollar dominance. How do you look at Bitcoin, you know, and the dollar and that relationship? And then maybe the Bitcoin within kind of the US economy and kind of government apparatus right now?

• 26:16Speaker 02

  Yeah, so this question, I guess, is not that connected to what we're doing. It's a broader question on Bitcoin. Yeah, that's interesting, right? Because Bitcoin was invented by Nakamoto as sort of a totally different way of creating a currency, creating a payment system. In some sense, it's a response to the financial crisis of 2008.

• 26:41Speaker 02

  Now, there is a strong clamor for connecting Bitcoin to institutions, to the government, through the strategic reserve. So I don't know. In fact, if I were Nakamura waking up today, seeing this development, I think he or she would find it kind of a little bit funny.

• 27:02Anthony Pompliano?

  Perplexing, perplexing maybe, right?

• 27:05Speaker 02

  Perplexing, perplexing situation, right? I mean, so I don't know. Part of me say, okay, good, connection to institution brings in more capital from a broader set of people. That's good. But part of me also says that, hey, we should keep some distinct identity to Bitcoin.

• 27:22Anthony Pompliano?

  That makes sense. When you look at the current ecosystem, there's a bunch of people who are building, you know, NFTs, etc. on top of Bitcoin. How much of Bitcoin's future success do you think is dependent on people building on top of Bitcoin versus being able to use those first two native use cases of the payment system and the store of value?

• 27:40Speaker 02

  Yeah, that's a super interesting question. So I can't really speak for other people who are building on Bitcoin, right? But in our case, we are basically saying that, hey, Bitcoin has a lot of value beyond the two use cases. And we want to build this third use cases for the benefit of the broader Web3 system. So our point of view is really more of starting with Bitcoin and creating more value to benefit the rest of the Web3 ecosystem. Now, a good thing is that this will only work. You Bitcoiners also provide,

• 28:22Speaker 02

  also get some benefit. So in our system, Bitcoiners get reward. Now, am I going to say that, oh, without this kind of Bitcoin state king, Bitcoin would die? And I don't think I would like to say that. I think is, at this moment, at this moment, I would say is a create a new use cases for Bitcoin, but I don't think it's kind of fundamental to Bitcoins. Existence at this point.

• 28:54Anthony Pompliano?

  And when you think about the future of, let's say Babylon, what does success look like? Is it just as much Bitcoin as possible? Or could there be too much Bitcoin that is actually staked? And you think that, you know, there's kind of a diminishing return, maybe?

• 29:08Speaker 02

  Yeah, so, um, you know, as a protocol, right? What's the goal? What's the role of protocol? A role of the protocol in my mind, a decentralized protocol is to create a marketplace. It's to create a marketplace where participants can participate easily. Okay. So therefore, I don't think our goal is to say, oh, we want a one trillion Bitcoin or we want 500 billion Bitcoin stake on the protocol. No, I think our goal is to allow participants on two sides. Bitcoin secure networks on the one side, Bitcoin on the other side to participate in this protocol. The market dynamics will generate an equilibrium in terms of how many Bitcoin stakers or how much Bitcoin stake and how many networks will participate.

• 29:53Speaker 02

  If there are lots of networks that want to participate, then there will be a lot of Bitcoiners that wants to participate as well. So we'll let the market decide.

• 30:00Anthony Pompliano?

  That makes complete sense. And where can we send someone if they want to find out more about what you guys are building? Or maybe they want to test out the product?

• 30:06Speaker 02

  Yeah, you can go to website babylonlabs.io. That's the website for the project. Uh, and from the website, you can go to the staking interface. And, um, right now the cap is closed. We'll reopen the cap when phase two of the net of the launch starts, which is launching the first, uh, BSN Bitcoin secure network, which is called Babylon Genesis. That's the name of the network that we will launch. Yes, the first Bitcoin secure network, Babylon Genesis.

• 30:40Anthony Pompliano?

  Amazing. Well, I love to hear what you guys are building and it makes a ton of sense to use Bitcoin as kind of a security layer. It is the most secure computing network in the world. And so being able to build stuff on top and then tie it in, I think is something that a lot of people are trying to figure out. And it seems like, uh, you guys are spending a lot of, uh, time and energy on this. So it's very cool to, uh, to see. And I look forward to hearing about, uh, future progress and we'll definitely do this again in the future as, uh, as you guys make, uh, kind of further down your plan.

• 31:06Speaker 02

  Yeah, love to talk to you again, Anthony. Thanks so much for having me here.

• 31:09Anthony Pompliano?

  Thanks, David.