Pioneering DeFi on Bitcoin: The Velar Journey

Summary

In this insightful presentation, the founder and CEO of Valar, Mill of Valer Mik, discusses the evolution of Bitcoin's ecosystem and the challenges of unlocking liquidity. He outlines Valar's journey from its inception, through building foundational DeFi products on Bitcoin's L2s, to their vision for a decentralized future where applications seamlessly cater to diverse user needs without infrastructure isolation, aiming for a scalable and user-friendly Bitcoin economy.

Takeaways

• 🚀 The Bitcoin ecosystem is currently in a nascent stage with significant growth potential but has not yet reached 'escape velocity'.
• 💡 The speaker, Mill of Valer, is an early Bitcoin ecosystem founder aiming to provide a framework for understanding the current state and future trajectory of Bitcoin.
• 🏦 The demand for yield on Bitcoin has traditionally been met by centralized exchanges, but trust issues have arisen, prompting a shift towards decentralized solutions.
• 🔄 The lack of programmability and limited block space on Bitcoin L1 has led to the exploration of L2 solutions and sidechains for building applications.
• 🛠 Valer's journey is divided into three chapters: the philosophy of why they started, what they have done so far, and the future direction of the Bitcoin ecosystem.
• 📈 The company began with a hedge fund offering Bitcoin-denominated returns and evolved to address the need for yield on Bitcoin in a decentralized manner.
• 🌐 Valer built on Stacks, one of the early Bitcoin L2s, due to its larger user base and TVL compared to other available options at the time.
• 💼 Valer Dharma focused on creating simple D5 protocols and products to test the viability of the Bitcoin ecosystem for scaling applications.
• 🌟 Val ARA aims to kickstart the economy by building goods and services, with the world's first perex on Bitcoin being a key initiative to drive yield and price discovery.
• 🔗 Valer has built a Launchpad, a bridge for liquidity, and a platform for creating meme tokens without coding, all to facilitate project launches and community building on Bitcoin.
• 🌐 The speaker envisions a future where the Bitcoin ecosystem offers a multitude of applications and yield opportunities without the need for users to be aware of underlying infrastructures.

Q & A

What is the current state of the Bitcoin ecosystem according to the speaker?

The speaker describes the Bitcoin ecosystem as being in an interesting position, having taken off but not yet reaching escape velocity. There is a lot of interest from builders and investors, but the ecosystem is still in a middle stage of development.

What was the speaker's previous role before founding Val?

The speaker used to run a hedge fund that provided Bitcoin-denominated returns, trading perpetual inverse contracts, allowing Bitcoin holders to earn more yield on their Bitcoin.

What fundamental change occurred in 2022 that affected the crypto space?

In 2022, there were failures of centralized custodians, leading to a loss of trust in them. This event highlighted the need for decentralized solutions where people could earn yield on Bitcoin in a secure, native environment.

Why did the speaker choose to build on Stacks initially?

The speaker chose to build on Stacks because it was the bigger L2 at the time with around 5,000 monthly active users and a few million dollars in TVL, and it aligned with their vision for building on Bitcoin's native infrastructure.

What is the philosophy behind building a perpetual exchange (perex) on Bitcoin?

The philosophy is to have the price discovery of Bitcoin happen on the native Bitcoin ecosystem itself, rather than on centralized exchanges. A perex is seen as crucial for kickstarting the economy and providing yield that can be utilized across various DeFi products.

What is the significance of the Valar Dharma phase in Val's journey?

Valar Dharma was about building simple products to test the viability of the Bitcoin ecosystem. It was the first phase where they focused on creating protocols and products that would allow them to understand if the ecosystem could scale and work effectively.

What is the purpose of the Val ARA phase mentioned in the script?

Val ARA is aimed at kickstarting the economy by building goods and services on top of the tested foundation from Valar Dharma. It's about creating more advanced products that can attract a larger user base and make the Bitcoin ecosystem more appealing.

What is the speaker's vision for the future of the Bitcoin ecosystem?

The speaker envisions a future where the Bitcoin ecosystem offers a multitude of applications and ways to earn yield, with a focus on not fragmenting liquidity or isolating infrastructures. The goal is to create a seamless user experience where applications can cater to various user needs across different L2s and infrastructures.

Why did the speaker mention the importance of not isolating infrastructures in the Bitcoin ecosystem?

The speaker believes that isolation leads to fragmentation of liquidity and hinders the growth of the ecosystem. Instead, there should be collaboration and interaction between different L2s and infrastructures for the overall benefit of the Bitcoin ecosystem.

What are some of the products Val has built or plans to build to support the Bitcoin ecosystem?

Val has built a simple AMM, a Launchpad for project creators, a platform called mem stack.com for launching meme tokens without coding, and a bridge to facilitate liquidity transfer between ecosystems. They are also working on a perb deex and are focusing on expanding their products across multiple L2s.

How does the speaker view the role of applications in the future Bitcoin ecosystem?

The speaker sees applications playing a crucial role in catering to users by providing the best user experience and choosing the most suitable L2 or infrastructure for their needs in real-time, based on various factors such as security, latency, and transaction speed.