The Evolution of Blockchain Infrastructure and Revenue Models with Velar
Summary
TLDRIn this discussion, Julian from Marathon's innovation unit, Duro, interviews M from V, the founder of Val, about the challenges and dynamics of building a Layer 2 (L2) solution for Bitcoin. M uses the analogy of the evolution of web infrastructure to explain the shift towards L2s with native revenue models, criticizing Ethereum's inability to scale due to power dynamics. He advocates for a user-centric approach where L2s act as supportive governments to applications. The conversation touches on the importance of community, the influx of builders into the Bitcoin ecosystem, and the technical requirements for L2s, like low latency and reliable oracles. M shares his journey, the challenges of funding, and offers advice for new builders to stay true to their vision and be prepared for the right timing in the crypto wave.
Takeaways
- 🌐 The conversation revolves around the development of Layer 2 (L2) solutions for Bitcoin, emphasizing the importance of infrastructure that can scale and support a growing ecosystem.
- 🚀 M, the founder of Val, discusses the evolution from Web 1.0 to Web 3.0, highlighting how infrastructure protocols now have the ability to generate revenue through native coins.
- 💡 M uses an analogy comparing the power dynamics in Web 3.0 to those in traditional business, suggesting that L2 infrastructures should act as a supportive government, not controlling entities.
- 🔄 M criticizes Ethereum for its inability to scale due to power dynamics where infrastructure controls the narrative, leading to isolation and lack of user focus.
- 🏦 The discussion points out the need for L2 solutions to be agnostic and user-centric, integrating multiple infrastructures seamlessly to provide a good user experience.
- 🤝 Julian and M agree on the importance of building products with genuine community engagement and the challenges of finding builders truly committed to the Bitcoin ecosystem.
- 🌱 M reflects on the rapid growth and trendiness in the Bitcoin space, noting the influx of builders looking to catch the wave, but also emphasizing the need for a community-focused approach.
- 🛠️ Technical aspects of building on L2 solutions are discussed, with a focus on the need for low latency, reliable oracles, and stable coins to support yield-bearing products.
- 🔮 M shares his journey and the challenges of fundraising in the crypto space, highlighting the importance of having a clear 'why' and being prepared for the right timing.
- 🌟 The conversation concludes with M's bold prediction that by the end of 2025, Bitcoin DeFi could surpass Ethereum, driven by a strong community of builders and believers in Bitcoin's potential.
Q & A
What is the analogy M from V uses to describe building a layer two?
-M from V uses the analogy of the evolution of the internet to describe building a layer two. He explains that during the web 1.0 era, infrastructure protocols like HTTP and TCP/IP laid the foundation without direct revenue streams. However, with the advent of web 3.0 and platforms like Ethereum, infrastructure could generate revenue through native tokens, which was a significant shift from the past.
Why does M consider Ethereum a 'failure' in the context of scaling?
-M refers to Ethereum as a 'failure' not because it is inherently bad, but because it has not been able to scale effectively due to a power dynamic issue. He argues that Ethereum's infrastructure has controlled the narrative and isolated applications and users, which has hindered its ability to scale.
What is the vision for layer two scalability according to M?
-M envisions a future where layer two infrastructures act as a supportive government, while applications are the businesses that provide services to users, who are the true decision-makers. He emphasizes that applications should integrate multiple infrastructures seamlessly without user awareness, similar to how applications like Instagram are available across various platforms.
How does M perceive the current state of Bitcoin DeFi compared to Ethereum?
-M believes that the Bitcoin DeFi ecosystem is moving very fast and has the potential to surpass Ethereum by the end of 2025. He notes the rapid development of products and the commitment of Bitcoin builders, which he sees as a significant advantage over other ecosystems.
What is M's perspective on the role of infrastructure in the Bitcoin ecosystem?
-M sees infrastructure in the Bitcoin ecosystem as a service provider to applications, which in turn serve users. He stresses the importance of infrastructure being agnostic to specific layer two solutions and focused on providing a good user experience and stability.
Why is the community aspect important to M when discussing Bitcoin DeFi?
-M emphasizes that builders in the Bitcoin DeFi space should be community-focused, listening to their needs, and building products that cater to those needs. He believes that this community-centric approach will help filter out projects that are not genuinely committed to the ecosystem.
What challenges does M face as an L2 builder in finding product builders like himself within Bitcoin?
-M finds it challenging to find product builders within the Bitcoin ecosystem who are committed to building sustainable products and have a robust community. He notes that many builders are transient, focusing on token raises rather than creating valuable products.
How does M view the importance of oracles in the context of his company's products?
-M considers oracles to be critical for his company's yield-bearing products, as they provide real-time price data from various sources to ensure accurate trade execution. He highlights the need for multiple, reliable oracles to maintain a good user experience.
What advice does M have for new builders entering the Bitcoin ecosystem?
-M advises new builders to keep their intentions right and focus on building for the community rather than chasing trends or quick profits. He also stresses the importance of being prepared to ride the wave of opportunity when it arises, rather than trying to create it.
What is M's prediction for the Bitcoin DeFi ecosystem's growth?
-M predicts that by the end of 2025, it's very possible for Bitcoin DeFi to surpass Ethereum in terms of growth and adoption. He bases this on the rapid development and the strong belief of Bitcoin builders in the ecosystem.
Outlines
🚀 Introduction to Layer 2 Scaling and Bitcoin Ecosystem
The conversation starts with Julian and M discussing the evolution of the Bitcoin ecosystem and the challenges of scaling. M draws an analogy between the early days of the internet and the current state of Layer 2 solutions on Bitcoin. He explains how the infrastructure layer, which once had no revenue model, now has the ability to generate revenue through native tokens. However, M criticizes the power dynamics that have emerged where infrastructure layers control the narrative and isolate applications and users. He sees Ethereum's inability to scale as a failure due to these dynamics and advocates for a model where infrastructure serves the users, who are the true 'king makers,' and applications are built on top to cater to their needs without them being aware of the underlying Layer 2 complexities.
🤔 The Challenge of Finding Genuine Builders in the Bitcoin Ecosystem
M shares his perspective on the difficulty of finding builders within the Bitcoin ecosystem who are genuinely interested in building for the community rather than just chasing trends or quick profits. He observes a trend where many builders are just trying to catch the wave of new opportunities without a deep commitment to the community's needs. M believes that over time, the crypto ecosystem will filter out those with bad intentions, leaving behind those who are truly dedicated to building for the community. He also discusses the differences between the Enduro team and other L2 builders, highlighting Enduro's commitment to listening to and addressing user issues as a key differentiator.
💡 Technical Requirements for Building on Layer 2
The discussion shifts to the technical aspects required for building yield-bearing products on Layer 2. M emphasizes the need for low latency, reliable oracles for real-time price fetching, and stable coins to ensure a smooth user experience. He uses the example of their product Perex, which is an AMM liquidity pool-style platform, to illustrate how oracles are used to optimize trade execution prices for users. M also touches on the importance of having multiple oracles as backups to ensure reliability and a good user experience.
🌊 Navigating the Crypto Wave and Building for the Community
In the final paragraph, M reflects on his journey as a builder in the crypto space, emphasizing the importance of having a clear 'why' and staying true to the community's needs. He shares his experience of going from being an outsider to a recognized builder in the Bitcoin ecosystem and the challenges of securing investment. M advises new builders to stay focused on their mission, not to chase waves or narratives, and to be prepared when opportunities arise. He also shares his optimism about the future of Bitcoin DeFi, predicting that by the end of 2025, it could surpass Ethereum in terms of adoption and innovation, driven by a community deeply committed to the success of Bitcoin.
Mindmap
Keywords
💡Layer Two (L2)
💡Bitcoin Ecosystem
💡Infrastructure Protocols
💡Revenue Streams
💡Community Control
💡Oracles
💡Stablecoins
💡Yield Bearing Products
💡Decentralized Applications (dApps)
💡Proof of Work (PoW)
💡Bitcoin Finality
Highlights
Discussion on the evolution of web infrastructure and its impact on application layer funding.
Analogies drawn between web 1.0 infrastructure protocols and web3 native coin funding models.
Critique of Ethereum's scaling issues due to power dynamics and control over applications and users.
Vision for Bitcoin layer 2 (L2) ecosystems where infrastructure serves users rather than controlling them.
Emphasis on the importance of user experience and application layer independence from underlying infrastructure.
M's perspective on Ethereum as a 'learning tool' rather than a failure.
The challenge of finding builders within the Bitcoin ecosystem who are committed to community needs.
Observations on the transient nature of many builders in the Bitcoin space and the focus on quick token raises.
Discussion on the importance of listening to user needs and the role of L2 builders in the Bitcoin ecosystem.
Insights on the difference between L2 builders from Ethereum and those native to Bitcoin.
Technical requirements for yield-bearing products on L2 platforms, such as low latency and good oracles.
Importance of stablecoins and the role of oracles in providing real-time price data for trading platforms.
Advice for new builders in the Bitcoin ecosystem, focusing on having a clear 'why' and building for the community.
Reflections on the rapid change in market sentiment and the importance of timing in the crypto industry.
Predictions for Bitcoin DeFi to potentially surpass Ethereum by the end of 2025.
The unique passion and commitment of Bitcoin builders as a driving force for the ecosystem's success.
Transcripts
all right I'm joined here by m from V
founder of Val and a good personal
friend and my name is Julian uh leading
here at Duro an innovation unit within
Marathon so Mell let's just have a
conversation uh you have an amazing
analogy about what it takes to build a
layer two and I would love for you to
repeat it here hey Julian it's it's
always good to see you man uh yeah we
have been talking about this for almost
a year now um and it's it's great to see
how how Bitcoin ecosystem has panned out
in last one year you know uh by the the
first question you asked it's it's it's
a very long answer I I'll have to start
with a monologue go for it the
monologues Are Much appreciated see the
thing is um how I feel so we'll have to
we'll have to go 20 years back when web
1 happened uh there were there were
infrastructure protocols that were
building up the Bas info of of the
internet we see today like www TCP I uh
you know sgps but at that time this
infrastructure wouldn't have a way to
make Revenue so the infr layer wouldn't
make Revenue but then the application
layer came like Google Microsoft who
would literally uh fund this
infrastructure and while building the
applications but when web3 happened what
happened was that this infrastructure
now had a way to make Revenue through
their native coins so when in when
ethereum
came uh they had a native coin through
which they can build a community build
uh revenue streams so this was great
that for the first time in s web 1
infrastructure could make Revenue but we
got overboard when this infrastructures
started to control the narrative and
started to isolate themselves into
Community by controlling users and
applications on top of them so the power
Dynamic that uh we saw in web 3 on
ethereum D5 in last Almost a decade was
that there were a lot of l1s isolated
and they would control the applications
they wouldn't they would isolate those
applications and also they would uh
control the users so it that's why
didn't it didn't scale so according to
me ethereum is a failure for the only
reason that uh it couldn't scale def5
because of this power Dynamic issue
that's why I call ethereum as a tnut I
don't I don't call it a tnut because
it's bad but because uh we have to take
a lot of learnings from it so what we
are going through now is we are going
through the cycle of the Advent of D on
bitcoin and I think if we want to scale
Bitcoin D5 we have to break that power
Dynamic where infrastructure are in the
king makers users are the king makers
applications are below uh in the below
layer would cater to the needs of the
users who are the king makers with a
good user experience and the application
layer would have multiple infrastructure
integrated without the user even knowing
about it it's the same way as when you
use Instagram Instagram doesn't decide
to be only on app store or Play Store or
Windows or Linux you know they are on
multiple infrastructure so the so the
thesis behind uh Val also is that we are
L2 agnostic we are more we are merried
to the concept of Bitcoin finality but
we are uh not married to a single l so
how I see infrastructure and
applications working together in the
Bitcoin D5 space is that this L2
infrastructures they work as the
government and uh government of the I
and uh and applications are the business
running on top so it's not government's
job to take care of users it's a
business's job to give good user
experience to users to give uh good
services and products to users while
working with the government and
government taking care of the businesses
to make sure they have good inra they
have uh you know good land uh and they
provide good Services you know so this
is what I think about Bitcoin and we
really need to uh we really need to I
think if you want to scale as Bitcoin
defy it's very important if uh if we
break the B dynamic in E that we had and
and I hope it happens and that's how we
work towards it I completely agree with
you but one thing that I would ask is I
mean you're obviously a Founder within
the Bitcoin application space and you're
one of the few that is actually Building
Products that people are using there's
organic following on your Twitter um you
know you're somebody who wants to bring
something live you want people to
actually care about it I have got the
sense as an L2 Builder that trying to
find more Founders like yourself has
actually been pretty challenging within
Bitcoin you know there's a lot of people
that are coming in for like a fleeting
second and you know they're doing a a
brief token raise and moving on they're
not trying to build a product they don't
have a very robust Community but they're
here just kind of like throwing on apps
and you know open sourcing the GitHub
repo and hoping that people come and
follow is that your perception as well
do you feel like you're one of few or do
you feel like maybe they this might be a
place to actually go see SC those app
developers and other communities that
you're seeing as a Tesla what do you
think this is a controversial question
because I can say good I can say the
truth uh which might also not be uh not
be very well received and I can lie but
that's not a good thing I I genuinely I
but I'll say it to you because you're a
friend I genuinely think uh I think we
are moving very fast as Bitcoin
ecosystem and it's a trend it's a
narrative it's a trend so whenever a new
trend comes up a lot of uh a lot of
builders that we see and that that's how
crypto Works 90% of Builders are just
trying to catch a running bus are just
trying to catch the wave so yes it is
difficult to find good Builders who
really care for the community who really
work towards listening to what the
community needs and building products
for their needs so genuinely there are
few in in Bitcoin as of now but I think
we will go through this W of cycle where
a lot of products a lot of projects that
are building just for for the sake of
catching the wave will fade and uh and
crypto has its own way to filter out I
think crypto is a huge filter where of
course it allows a lot of people to try
but in in coming years it will filter
out a lot of people and Builders with
bad intentions with people who are not
who are not building for the community
but just building to make quick money so
I think we'll have to go through this
cycle as well well look and to be fair
to builders in Bitcoin I feel there is
also a similar Trend with L2 builders in
bit point where there's a lot of
transient teams that come and go and
they're just focused on the token raise
and they're not really trying to cater
to these Builders and there are others
like you mentioned that have this bit of
a power Dynamic I guess what do you see
differently with an Enduro and it could
be you know a negative answer could be a
positive answer but um you know from our
conversations in the past year what do
you see in this community in this pot
this you know early stage community that
that could be different from these other
l2s out
there I I think it's it's already
different because the way I I mean I
have been speaking to you for you know
since September last since IM 249 so uh
most there are a lot of Els in the
market I'll not name them of course but
they still have and they are coming from
e space or I don't know why or
traditional Finance space they they they
are they still live in this bubble of
the power dynamic they are not listening
but while I talk to the Enduro team
while I talk to you you guys listen and
because we are because we we work with
because we work directly with users the
problems or the issues we are facing are
users issues when we come at it's like
it's like when businesses who are
catering to uh catering to their
customers when they go and talk to uh a
government uh these are users problems
because businesses are just trying to
optimize their business for the users so
they can grow the business but there are
l2s in this space who think they have
the right they know everything and they
have the right decision- making power I
think that's the difference between a
lot of the l2s and Enduro that we can we
can just genuinely talk to you we can
talk to you about our problems about
scaling issues about the problem users
are facing I think it's it's this one
small thing but it makes a huge
difference in the long run I completely
agree I want to double click on a point
that you made that a lot of the l2s
coming into the market and Builders
generally they're not natively from
Bitcoin um you're obviously somebody who
I you know I know your entire you know
personality is Bitcoin Centric what do
you feel about builders that are coming
in that don't have that deep Bitcoin
expertise and I'm not trying to be
critical toward that because I feel the
only way the Bitcoin ecosystem grows is
by bringing Builders from other
communities but you know what what
advantage do these you know Bitcoin
novices have what disadvantages do they
have do you feel like a lot of Builders
are both Bitcoin Natives and not or you
think we're just moving into a direction
where the Bitcoin ecosystem is going to
be filled with unfamiliar faces to
General so I come from a non-bitcoin
ecosystem as well I I mean I was my
first business in crypto was uh running
an audit company for evm projects so uh
so but that gave me an advantage you
know because I even if I when I started
in Bitcoin I didn't know anybody in the
Bitcoin ecosystem like 1 and a half year
ago but you know now now we have a lot
of friends but the experience I had was
to build products build uh but the
community is same right when you uh in
in the crypto the users of the community
is same so I knew what the users need I
knew how to you know like how the smart
contracts functions and you know like
how how to build products for crypto
communities and stuff so so coming from
E ecosystem gave me an advantage um it
can be different Advantage for people
coming from Bitcoin ecosystem because
they might already know uh the movers in
the Bitcoin space it took us over a year
to build relationships with with a lot
of uh Bitcoin people because I had
relationships in the e space but I was
new to bitcoin space as well so I think
it's I think you have to I think it's
it's a matter of time you have to
understand your strength and weaknesses
as a builder and just act on it act like
push your strength forward and act on
your weaknesses yeah absolutely going on
to the technical side of things because
you I've met a lot of your team and you
guys are just hyperfocused on bringing
products to Market what are certain
technical Frameworks that you look for
on the stacks that you Deploy on I know
that you're deployed on a number of
other ecosystems but what would you say
are you know some minimum viable
characteristics so to speak that you
would expect to see on a stack that's
trying to stand B uh for sure so the the
kind of products we build are basically
yield bearing um products of course
every yield bearing product comes with a
risk there is no such thing as no risk
only yield product so like full
disclosure uh our products are amm P
taxes and and they need some basic infra
they need a infrastructure which has low
latency because you go through a lot of
transactions and you don't want to you
don't want the price difference to be
high uh you need good oracles so can
fetch prices from the market in real
time you need good stable coins uh so we
can uh cater to users without them
worrying about the stable coin daging
like these are some of the things that
all l2s should focus on before they
start attracting um apps as well because
or all all should work with apps and and
attract the infrastructure as well you
know I mean that's the challenge we're
facing is that you know when we when we
began this project a year plus ago the
thought was okay well we could just
build technology and when we have that
ready the builders will just come and
then we realize no actually there are
certain key Primitives you need stable
coins being one the Oracle point is an
interesting one because that's one that
the deeper I got the more I realized wow
that's almost as critical as the stable
Point itself could you explain and you
know now I want to give you an
opportunity to explain more about B but
how do you guys incorporate oracles
where does the stable points come into
bid you know you said it's amm per de so
I'm assuming the stable points are part
of the pools or part of the tradable
assets but how do you guys incorporate
ticals and maybe give me a high level
look at like the technical framework
behind Val and how it works sure so I
I'll give example of our perex which is
right now on testet on like multiple
chains and we are going live with main
net very soon uh in our perex it's it's
a it's a it's a it's a amm liquidity
pool style P so people there is a big
liquidity pool for a pair for example
it's a BTC usdt pan uh and that
liquidity pool uh basically consists of
a lot of LPS liquidity providers and
then there are uh and then people trade
on that pair on Leverage uh and when
people trade on that pair we have to
fetch prices from the market because if
you just fetch if you if you see a
normal amm where there is liquidity cool
rebalancing it might it might take more
time for the liquidity pool to rebalance
so you can't just rely on balancing the
price of the uh of of the execution of
that trade based on the liquidity pool
rebalancing so what Oracle does is
oracles are basically basically fetches
prices from multiple uh you know
multiple sources including centralized
exchanges decentralized exchanges
platforms like coin Geo and coin market
cap which which already uh they they
they cater to a lot of data from a lot
of resour from a lot of sources so what
it does is it tries to optimize the the
execution price for the trade that goes
through for the user you know so so
oracles are very important in that sense
and and good Oracle stable oracles and
backup oracles as well so you need
multiple oracles as well you can't just
rely on one Oracle because there is no
such product in the world which has 100%
uppr even Bitcoin Bitcoin has probably
the best like
99.9995% but like oracles have 98 to 99%
uh so you need backup or just to make
sure the user experience is good for the
trade for the traders who are executing
the trades you know so like that's how
it works yeah that makes sense what
advice kind of abstracting a little bit
what advice would you have for newer
builders on uro otherwise you know but
remember when we first were talking you
were at a much earlier stage with B I
mean I was a much earlier stage with
this um yeah for the journey any ways
that you think that other new Builders
could do it better than you did or you
know can get to product the product
Market bit faster um or would you just
tell the Builder hey here are the steps
follow what I did you know what would be
your
advice uh so I have been through the
Journey for over 1 and A2 years now and
and and and
brother what a ride we had like for
almost a year we were self-funded uh we
talked to over 80 we says nobody would
invest in us and and then in a month it
flipped in a way that we were 6X over
subscribed uh we closed our round
biggest ever uh investment ground for
Bitcoin at that time with 156 investors
on our cap table like it was crazy so
how so I think I I think from my uh from
my Lookout uh and from my journey how I
I would say a few things for a build
first of all like keep your uh keep your
why very correct like why you are
building it uh your intention should be
right for a long period of time I mean
for the farthest period of time and
things would fall into place in crypto
it's a lot about timing so you can't
it's like you are riding a wave you know
and you have to and you can't generate a
wave so it's like you have to be
prepared to write the wave but you can't
create the wave so but you have to be
ready when the wave arrives you know you
you can't chase a wave as well you have
to write the wave but when the wave
arrives you have to be ready so how I
look at it is that just keep your heads
down keep building for the right reasons
keep building for the community don't
chase don't chase the waves you know
that are coming don't chase the
narratives you have to believe in what
you're doing and you have to do it for
the right reasons and when the time will
come you know you will shine you know no
I totally agree and just to emphasize
your story because I think you touched
on it but it's remarkable how in this
industry a narrative that you just think
is so right so right and everybody tells
you was so wrong can just flip in a
moment's notice and I remember you know
us getting lunch or a dinner somewhere
in Dubai and you know you're just
getting pinged by all these investors
and a month ago right a month before
that you were telling me man like this
is such a bare Market what's going on
it's crazy how that flip happens and and
and we felt it also with with Enduro you
know the funny thing is when I first
started with Marathon we we knew that we
wanted to build side CHS but we didn't
know exactly how we wanted to build them
and we also didn't know how the market
would receive it and so this is like the
early part of last year and I'm you know
talking to different investors not to
invest in the product but mainly
investors are a good channel to builders
so I thought okay why don't we like talk
to these different VCS and the number of
calls that I would get on where they
would just laugh in my face they would
say no Bitcoin infrastructure it's
complete you don't need to do anything
and then all of nowhere we have 70 plus
I heard last night at a dinner 83 l2s
new ones that have come in the past year
just fli right yeah a b flipped like
when we started there was there were
just two so I mean l2s side chains
whatever you call it stacks and root so
and now there are over 100 total right I
mean uh it's it's crazy and and and
that's great but a lot of them are
trying to chase the wave like like we
mentioned Chase The Narrative uh of
course there will be there are few very
good ones uh it's it's it's going to be
very interesting next few years for
Bitcoin as a whole uh with whatever is
happening and I don't I don't get enough
sleep at night this just because I'm so
excited about everything that's
happening in the Bitcoin space you know
me too me too well any closing thoughts
M about the Bitcoin ecosystem big
predictions nothing you know no
investment advice of course but you know
what where do you see the ecosystem
going on your end The broader side um
yeah what's going what do we what can we
expect by end of you by end of so I
think I think end of the year is bit
quick but by end of 2025 I think it's
very possible for Bitcoin defi to flip
ethereum
uh and and I think I think a lot of us
would be you know would play a role in
it and because we are moving very fast
there have so many products coming out
so they're working with so many great L2
Founders I think and I was talking to my
team yesterday I mean I have I was in
ethereum space and I and the difference
between every other ecosystem Builder
and Bitcoin Builder is that they really
believe in Bitcoin it's more than money
it's more than building a career it's
more than even building a legacy it's
for Bitcoin and and I've never seen this
before in my life and I think that's
what will make Bitcoin ecosystem win I
think I think it's not even a prediction
it is just truth it is a fact uh that
will that will happen you know it's a
matter of time well let me tell you
miners would be very happy if that were
the case but we need l2s that are merge
mind because otherwise an L2 that isn't
merge mind doesn't really support proof
of work but anyway thanks so much mental
for your time and thank you audience uh
for listening in I think you can expect
great things out of Beller and hopefully
equally as good things endur thanks very
excited about Enduro and and what we do
together with Val and Enduro uh thanks a
lot Julian it's always fun chatting you
thanks
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