On The Brink with Castle Island - Julian Duran (Marathon Digital) on Bitcoin Miners and Sidechains (EP.532)

Episode Date: June 3, 2024

Wyatt sits down with Julian Duran, product lead of Marathon Digital's Anduro project. Discussion included: Why miners are strategically expanding and exploring new initiatives New innovation in Bitcoin broadly How Bitcoin today differs from Bitcoin 2+ years ago Where Bitcoin L2's and sidechains are headed Learn more about Anduro

This is Wyatt from Castle Island Ventures, and today on the podcast, I was joined by Julian Duran, product lead at Marathon Digital, a leading Bitcoin mining company. Julian and I chatted about some Marathons' new innovation initiatives and Bitcoin more broadly. It was a pleasure having Julian on and hope you enjoy this episode. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy,

but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. the bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing. You print a couple trillion dollars and all of a sudden people start to worry.

So out of this worry, we have something called the Bitcoin. Bitcoin. Well, Julian, thanks for joining us. Thanks for coming on today. Very excited. First off, to reconnect and chat again. It's been a while. But also, pleased to have you on.

Thanks for coming on today. Absolutely. Thanks a lot, Wyatt, thanks to you. And looking forward to chatting more about Bitcoin. I think just to get started, it'd be good to do some introductions. So if you wouldn't mind, tell us a bit more about yourself and how you got into crypto, the Bitcoin ecosystem. And then for context, Julian works at Marathon Digital, which is one of the largest Bitcoin mining companies. So yeah, please tell us a little bit more about all of that.

My name is Julian, product lead at Marathon. I lead all of our side chain initiatives, layer two, if you want to call it that. But the most important thing we're trying to do is really stimulate new forms of Bitcoin adoption. I think historically mining companies have been in the background, you could say. People just kind of think of them as the hardware dudes that, you know, plug in machinery to secure the network. First off, the hardware is much more fascinating than that. And I'm more than happy to get into that with a lot of cool technology products we release there. But my team and my business unit is really focused on how can we advance the narrative on the utility of Bitcoin into new domains.

So I think Ordinals and Roons are showing early signs of experimentation. How can we extend that? How can we supercharge that? And how can we, I think, really supercharged blockchain innovation, broadly speaking, because that's really what. what's at stake here. You talk about non-Bitcoin ecosystems being active or maybe more active than Bitcoin, and I fundamentally disagree with that. And with Tomorrow, that's what we're all about, make the Bitcoin community more diverse, more expressive, more powerful. I love that you distill the mission into driving more utility to Bitcoin because that's definitely

something that we think a lot about and are passionate about it, because obviously you have the very natural use case that a lot of people are familiar with with Bitcoin being a store of value, but really excited about the ways that we can deepen that and make Bitcoin this multi-utility asset. So with that in mind, it would be very helpful if you could explain what Marathon looks like historically today, sort of the business end-to-end. So we're all on the same page here. I think if you look five years ago, Mara was almost completely focused on Bitcoin mining. I think as the years have gone on, we've evolved and become, now we have a lot of technology products. Some in the cooling domains, we've announced some cool hardware that we've released

there that has applications even beyond Bitcoin mining. But within the world of Bitcoin, we've really tried to get serious about what is the adoption, what is the underlying adoption? And even more than that, what are additional revenue streams we can get from transaction fees? So that's about increasing utility so that more people transact and use Bitcoin. I mean, let's think what a mining company is at the end of the day. You're plugging in hardware to earn fees on blocks that you win, and blocks are constructed off of transactions. So you need transactions and you need more of them to make mining a more profitable industry. And so part of what my team is doing is how can we think about that more abstractly, right? Like, how can we get more transactions in the MEP pool, period? How can we get

more people using Bitcoin? But also, how can we create new channels for transaction fee earnings for miners like ourselves and others? Because really, if you benefit the full totality of the mining industry, we find ourselves benefited as well. More people using Bitcoin is good for all of us and have to keep up that decentralization if we're to see this thing, you know, shoot past its current price targets to put it in normy terms. In a way, you guys become like an outsourced sales team for Bitcoin, just driving more transactions than network. One could make that argument.

What does your day to day look like in that sense? How are you guys looking at marathon and thinking about ways that you can do what you just mentioned, drive more transactions than network and more usage? I'm leading the creation of a multi-side chain platform called Enduro. And Enduro, its entire focus is how can we create stacks that extend the utility of Bitcoin? And so extending the utility is, of course, a massive gray area. I mean, what do you do really to do that? And I've kind of evolved in the role into doing many different things.

In the early days, I thought of it in much the way that I think the current array of layer two think of, which is, all right, we need to buy infra, we need to buy integrations, and we need to show TVL commitments. I've since evolved on that strategy. I think that that's helpful for a certain type of defy. It's helpful for a certain type of layer two use cases. Where I spend most of my time nowadays is really thinking, all right, as a NASDAQ listed company and a team that are Bitcoin experts, but not necessarily

blockchain Web3 experts, or rather, it's not that we're plugged into that community of bringing out the retail use cases. We're also constrained on the regulatory front. How can we move forward the question of adoption? And I think that comes down a real world adoption and institutional adoption. And so where I really, really focus my time on is how can we solve real world business problems using blockchain solutions, Bitcoin being specific to those. And so it's a lot about pitching to real-world asset businesses, real-world businesses, broadly speaking, following narratives like real-world asset tokenization, a little bit of payments, loyalty, marketing, these sort of things deepen as well, and really furthering out those pilots. In the same time, you know, we're also building the side chains as part of Enduro that are themselves going to serve as the infra layer for all of these use cases when they hit product market fit. But you could say it's somewhere in between layer two stack builder and incubator. That's

really the space that I find myself in. And internally, how do you guys measure or score institutional adoption or progress when it comes to driving the outcomes that you want more institutions using Bitcoin in different ways? There's really no score, and it's really difficult to quantify because I don't think anybody's done it at scale. I get a lot of people who retort to that as, oh, well, what about Salana, Visa integrating Solana, right? Isn't that a metric?

Well, I mean, inside intel that I have on that is that really isn't that. impactful of a partnership, and it's not as big as people claim that it is. Then you have the other proponents to talk about ripple and how it's solving cross-border payment needs everywhere, really, because I think there are fintechs, like the company I used to work at Airwallix that are still posting billion-dollar valuations on the promise of cross-border payments, and they have nothing to do with crypto. So you tell me where all of that innovation is going. I think really it's a blank space at the moment. I think marketing is one thing. I think reality is another. And when it comes to real-world adoption of digital assets, I must be honest to say there's a lot we

don't know. There's a lot I don't know. And so it's a lot about being a typical entrepreneur at it. You know what I mean? Spilling up apps, spinning up some Figma screens, maybe some early pilots, pitching to partners, seeing if there's that product market fit. Oh, there is. Oh, there isn't. Pivot, pivot, pivot. That's my approach. So one of the things I love about, I feel like you get the large companies in crypto. There's still a real streak of entrepreneurialism amongst them, which I find exciting. Circling back a little bit. Tell us a bit more about Enduro. What is Anduro, why is it important? Why are you guys looking to build Anduro? Share more, please. The genesis actually for this project predates me. The whole idea behind Enduro is let's make side

chains that actually benefit the main chain. And by that, I mean specifically create side chains where transaction fees are paid in a Bitcoin denominated asset, because if you create a new native asset, you create a whole new set of economic incentives, a can of worms, I'd put it. But also, if you create a Bitcoin denominated asset and you link proof of work to be at the heart of consensus, now you actually have a way to inherit at least some part of the decentralization, the incentives behind Bitcoin main chain. And we know that as miners. We know what miners think when it comes to integrating a new chain. I hear every single layer to pitch me on, oh, well, you know, integrate our chain, like merge mine or hold our token or this and that. It's not even just a philosophical

issue, which there are many and I can get into that. But it's also just an operational one. You know, our custody partners, public, right? We have large-scale. custody partners, Anchorage as an example, or like fidelity for that matter, like, these guys aren't just going to hold any token. And it doesn't matter if your token is SEC registered or whatever, if it's a fringe asset and these existing custodians don't support it natively. It's kind of a non-starter. Why would we go through the operational hassle to support some new token? So one of the biggest focuses early on was how can create a stack that inherits as much Bitcoin decentralization and security as possible, while on top of that really extending the utility and new directions?

And I think the choice of going with no new native asset, having a Bitcoin peg native asset, and having proof of work at the heart of consensus, amplifies the potential for this thing to go to market. Why do I say that? A lot of people think I'm crazy for thinking that. Well, Julian, you don't have a token. There's no incentive for builders to build on your chain. Well, actually, there is. It's solving problems.

There's this crazy thing in FinTech. With FinTech, startups, unicorns, they're not reinventing currencies. They're finding new ways to use existing currencies. And that's really what we're all about. And so, Anduro, the focus is increase minor transaction fee revenue, protect the incentives behind proof of work, create a side chain layer two ecosystem that actually benefits the main chain that doesn't cannibalize Bitcoin and that credibly extends blockchain into new adoption matrices.

Because I think that's really when you're talking real world problems, you're talking real world decision makers and rear world decision makers tend to be normies. I had a member of my team who was just at the DC blockchain public policy summit or something in DC. Yeah, he was just debriefing with me a couple hours ago and mentioning a lot of the people at this summit, you know, a lot of big company execs are here, a lot of politicians. They're not talking layer two. They're not talking ZK. They have no concept of this. They're literally asking questions of what Bitcoin do for my business. And I think for Bitcoin insiders, we can maybe condescend to those sort of questions. But actually, that's what 99% of people are thinking. And so that's what Enduro is all about. It's a vision for multiple side chains that solve real business world problems and that extend Bitcoin into new directions. People in the industry will talk about Bitcoin layer twos, and you can almost distill that down to

make Bitcoin faster and create new use cases. It's important to put in those terms. If you're looking at the larger roadmap, where do you hope to see Enduro in four or five years and where are you guys headed? So the current state of things is we have two side chains. One of them is coordinate. It's a UTXO chain that's a Bitcoin core software. You can consider this one as solving future problems and activating the somewhat dormant base of

really Bitcoin experts that, you know, for one reason or another, got disengaged. And this is the stack for them to really build UTXO assets, you know, new native asset, non-native asset issuance, things like ordnals, things like Roads, things like lightning even, but build it on a stack that's faster and cheaper. That's kind of the promise of coordinate, private test net at the moment, heading into the public test net when the white paper is released. You could say the developer's dream in Bitcoin. We have a lot of experts that have decade plus of experience in Bitcoin, mind building that chain and really thinking through all right, what can we deliver to the market that will start some important technical debates that are going to go beyond the surface?

Because right now, the technical debates are, well, Opcat and ZK rollups and Trust is bridging, all of which are just, Opcat is the only one of those that isn't impossible at the moment, but it's highly improbable since it requires a consensus chain. Coordinate is supposed to be the place where we can experiment with those things and we can extend Bitcoin as its stack currently sits into new directions. The second side chain that we have, it's also in private test net. We're awaiting a public test net when we announced some of these pilots, and I'm talking about that I've alluded to RWA tokenization and loyalty and DPN, et cetera.

But that chain is called Alice. And we're actually building in a conjunction with the Bob team, really great team. I think one of the few credible voices in the Bitcoin layer two space being totally honest with you. But the whole idea with Alice is go to market there, solve real world problems, have apps that and other ecosystems that another blockchains don't exist. and really develop a narrative around this is the new direction Bitcoin can go. I think Bitcoin is more global. I think Bitcoin is more mainstream. And I think Bitcoin is, let's say, more palpable to the everyday listener. And so because of that, and we're already seeing signs of this, pilots are much easier

to build. Celebrity fan loyalty, cross-border and new parts of the world, restaurant marketing, hospitality marketing, all of these domains, we're seeing that there's elements of blockchain that could be applied. And I'm not some guru, right? There's a lot of VC firms in the ETH and Solana worlds that are spinning these narratives that I think are very compelling for the next wave of crypto adoption, but they're building this on stacks that I don't think are that credible. And not even that I don't think. Most people, a polygon is a shape. It isn't a stack. It isn't a chain. They don't know what that is. And so that's kind of where Endura was at at the moment. It's private test net two chains, waiting on the white paper for the technical focused one and waiting on some of these pilots to

reach a little bit more validation to announce the open test net period. We're hoping to hit both sometime in the summer, ideally July at the latest, and then really hit a main. net release later down in the fall when the audits are ready and when we have, you know, kind of how base had the on-chain summer. We wouldn't have something similar. I haven't yet figured out the branding. So I'll let you know when I do have that nailed down. But the idea is to test, get the community engaged and then go out with a big main net release

later in the year. And is the best way to think of Anduro as a chain that will mostly serve marathon clients? Is there an element of private or permission blockchain to it? Or is it meant to be more trustless and permissionless? or who do you look at as being the users? We want to stimulate permissionless innovation. That's the core of what Enduro is about. And just a quick clarification,

Enduro is itself the vision, like the optimism, super chain vision, and then the different layers. So one is coordinate, one is Alice. There may be a third, there may be a fourth side chain as part of it. I think really the goal there is more toward the permissionless side. That's for sure.

We have toyed with some use cases that may be more on the permissioned angle, but it just doesn't fit with the narrative of Bitcoin. I think the narrative of Bitcoin is open permissionless, money, what is it, the shitty wizard meme, right? Like magic internet money, that's the ideal we want to strive toward. Again, not just philosophical. It's also really just operational. What is the big value at, I think, that crypto can provide to the world? It's provide a more trustless ledger for transacting, for storing data, et cetera, et cetera. Will it be trustless?

You need to not be controlled by the who's who of existing power brokers, especially in the emerging world. This is exactly what people are looking for. They're looking for solutions. that are decentralized, that you don't have one puppet maker of sorts. And so we want to hinge in that direction because I really think that's where the value of blockchain comes. Permission ledgers, I mean, they end up being kind of same old, it's a dumber database. You're creating an ultra inefficient database and you're on top of that, making yourself the core admin of it.

It's just, I don't think that's as scalable. And of course, there are people, very smart people who disagree with me on that, but we've done the analyses internally and we've scoped out the market. and it just doesn't seem like necessarily a focus we want to have. This is going more general again, but there are a lot of layer twos or even call them additional settlement layers that are being built on Ethereum or even on other networks used to transact using a blockchain. The argument that I hear from a lot of chains is you can send assets cheaply here.

So at that point, a lot of people become blockchain agnostic. The counter argument is use ETH because there are all these applications here, and the counterargument is used Bitcoin because Bitcoin is the largest asset and the hub of crypto. So how do you compare, let's say, where the usage of Bitcoin Layer 2 shakes out? And will eth transact there too? Like, do you see these assets crossing multi-chain like that? Or how do you differentiate what we do with a Bitcoin L2 versus an Ethereum L2, assuming that that argument stands. Theoretically, you can use a lot of these for anything. But obviously, so you have these different selling points.

Interoperability between the chains is obviously a narrative that a lot of people are trying to further and, you know, what's the future state? I think most Bitcoin layer twos are building toward a world where they take a lot of that eth adoption, a lot of that ETH defy and bring into Bitcoin. I'm not going to be too prescriptive about this, but for us, that seems like the wrong approach. It seems like the wrong approach for a few reasons. Number one, it's you're talking about network effects. I get so many people that tell me, Julian, you're building a layer two on Bitcoin.

Have you talked to Uniswap yet? Well, it's like, what pitch do I have to Uniswap? I have a better likelihood. I'm based out here in Dubai. I have a better likelihood of going to talk to the next generation of businesses that are looking to tokenize assets like ships or equity funds or like private credit, whatever. I have more success pitching them to convert and build on Bitcoin than Uniswap. What benefit do they get for being on this empty chain?

Because they're empty chains or private test net chains. And when they hit Mainnet, it's not like they're going to have the ETH level of activity. I think if we're going to find a new set of use cases for Bitcoin, They have to be ones that are not just copy paste from other ecosystems. Being totally transparent here, it's also a regulatory issue with all of this stuff. Unisop got served at Wells Notice, Metamask as well, and we're cognizant of that. So we don't want to just recreate the same problems and foot a massive legal bill to ourselves in the future. It's really about our, that's the bounds of innovation.

If it's U.S. based, maybe we can focus non-U.S., maybe we can focus more rear world. Maybe we can focus less nebulous defy. I think that's really the approach. So that's number one. I would say that we're trying to recreate, not just repeat what's been going on in these other ecosystems. The second big thing, though, is when it comes to Bitcoin layer two, I think it matters a lot more than in the ETH worlds and the Salonah worlds is the trust assumptions behind the peg, behind the native acid bridge are critical. That's the biggest differentiator that you get with what we're building an endure with anything else. Any Bitcoin layer two, doesn't matter if it's the most trustless seeming ZK rollup that says they're native on Bitcoin.

By the way, there's no such thing. You can't have a CK role of native on Bitcoin. But let's say whatever, these people have that claim. They'll tell you that, right? They'll tell you a lot of things. You're going to have to take your Bitcoin off of main chain. Whatever programmability, you want to put it on an AMM, doesn't matter if you're doing it through Bitcoin or you're doing it through Merlin

or you're doing it through whoever else. You're going to have to take it off the chain. And what we're building is a two-way asset peg governed by a federation of institution-grade Bitcoin thought leader. So Marathon obviously would be one such part of that federation. So too would companies like, top media companies, top custodians, top exchanges. I'm not able to like release publicly yet all the names. It'll come soon. But the sort of people that Marathon would form a partnership with

are the sort of people and different entities spread all across the world are going to be the ones that are securing that multi-sig bridge. That is the biggest thing. And why do I say it's different than ETH? It's not to say people don't value their ETH holdings. But I think the eigenlayer narrative shows that a lot of people holding ETH are down for the casino. People holding Bitcoin are not as down for that casino. A lot of these guys have made a lot of their money already. The price hike has already been enough to make many of the millionaires. So for them to put their Bitcoin into your layer two, into whatever protocol you're asking them to, you got to remember who your audience is. They're a lot more paranoid. They're a lot more attentive to detail. And there are a lot more risk

adverse because all of this stuff that's been tried in other ecosystems, people love to peddle things as new. Ordinals is the first Bitcoin NFTs. No, it's not. All of Rooms are the first fungible tokens on Bitcoin. No, they're not. There have been plenty of other implementations. The key thing I see with a long-time Bitcoin, it's not about how much Bitcoin they say they hold or what car they drive. It's the amount of cynicism. And the top Bitcoin holders are absurdly cynical about the absurd I'm just saying in terms of degree. I'm not saying in terms of logic.

Very reasonable for them to be cynical. They're very cynical about these new sort of protocols. So any layer two, any side chain, anything, Bitcoin is going to have to be locked into someplace, not on the main chain. And that's a massive, massive ask. And I think the only people who are really going to be able to deliver, or rather create that trust for people to actually put it in that multisig is going to be companies like ours, simply put.

Clearly, you guys have the projects that you're working on, which you're public about. And then I imagine there are a lot of very cool other projects that are probably happening in private that are more difficult to talk about. But if you're looking around at the Bitcoin innovation ecosystem that you guys see, is there anyone that you can point to and you say, oh, we're really excited about this innovation that we're seeing? or is there anything that you'd like to see built that maybe we don't see right now or you think there's opportunity?

I think really cool project. And yeah, more news on it soon and its relation to Enduro is a company called Shatoshi. They are basically tokenizing an equity fund that invests into historical assets across Europe. The whole idea is to preserve historical antiquity, preserve culture. Love the value prop as a former brief archaeologist. It's just of interest to me generally. But it's also a very interesting business model. and it speaks to our own approach internally to this whole RWA tokenization narrative.

I think a lot of people are approaching it incorrectly. Let's tokenize real estate. Let's tokenize massive billion dollar bonds. Okay, well, good luck to you. Awesome work, bro. Like best of luck on that. But see, the problem with that is that you're basically trying to force permissionlessness onto companies that benefit from permission system.

So I get some people who ask, well, when do you think the New York Stock Exchange will trade on Bitcoin? Well, why would the New York Stock Exchange do that? they make their money off of being the gatekeepers. So to me, I think what's most interested are stranded assets, places where Tradfai doesn't jump into because the economies of scale don't make sense, because they're just not that clued in, or because the asset itself is just too niche. But with the asset itself could be something that retail, that institutions on Web3 on blockchains are supremely motivated by. So investing into French castles, to put it very bluntly, that's an investable asset. That's interesting. Why? Well, number one, you're talking about

an asset that's highly depreciable. If you're investing into a number of different castles, owning one castle is already a lot of expense on a year-to-year basis. Owning a number, well, now you spread across that cost and you smooth it over across a number of different properties. But who is able and what sort of legal structure in Tradfai exists for me to invest into 20 castles spread across Italy, France, and Germany, not really any. And then add into the fact the international component. A lot of the investors into these castles aren't based in Europe. A lot of them might be based in the UAE, or some of them might be based in the U.S. or Latam, et cetera. And so now you start getting a narrative for tokenization, for rural asset tokenization that is compelling on day one.

Because with RWAs, you get the edge of anybody can invest in anywhere. The on and off ramps are much easier and much cheaper. The overhead is much lower. You don't even enforce minimums. You don't need to enforce. Oh, you need to come from this bank account, that bank account. You can have fractionalization of these specific assets across a number of different holders. And I think more important, you have a more liquid cap table.

So I invest into this castle fund, but then I get fold feet. I jump out and somebody else takes my place. So that's a project that I'm really excited by. I actually met the founder at a Bitcoin party a couple months ago, which was nice, of course. But I think that's really the direction that we went ahead in. Finding ways to apply blockchain solutions where people wouldn't really be looking, but it takes a little bit of creativity and business development to actually go and seek out. You can't just be building a white paper and pitch that to the French government authorities

or to like Castle Equity funds. You've got to be a little bit more creative, kind of think outside the box. That's really where I want to spend my time. I could imagine there's some Ben Diagram overlap. between the hardcore bitcoinsers and the desire to own historical assets across Europe? Absolutely, there is. We even have a member of our team that got super excited by it. And it's not often you get Bitcoiners really excited by these sort of things. But I found even in spaces that I've done, had one with BTC magazine, this was a few months ago,

actually, and Shinobi joined. So we were chatting through how we're guaranteeing MEV resistance on one of our side chains, which was just an interesting technical debate that we could get into. But then at the end, I was talking, you know, I always talk about this. we got to start thinking like, all right, fine, let's have the technical debates, let's argue about the stack. But let's also think what directions we can head this and what directions we can take this digital asset in. And Shinobe gave a really good idea of like tokenizing weed companies because they obviously have very difficult times raising in, you know, Tradfai and there's a lot of bands in certain states or certain countries. And so imagine if you can create a tokenization platform

where you can invest in like American grown marijuana or, you know, whatever grown marijuana. Interesting stuff, right. That's not something a lot of people are writing about. That's not what talking about. But see, I think these are potential use cases for blockchains. Everybody has ideas, but it's like we just get marred in these technical debates and this like back and forth and the politics and we forget that there's creativity in all of us is what I like to say. Zooming out for a second, I could talk all day about innovation in Bitcoin and New Age Bitcoin, but curious to hear, obviously we've had some very major drivers or catalysts of Bitcoin this year. The ETF and the having are the ones that most people probably hear about. How does

that impact, let's say, an Anduro and just generally the innovative side of Marathons business, how does that impact the strategic direction there, how you guys think about things, if at all? With ETF, what we're seeing is a lot of people, a lot of mainstream people want exposure to Bitcoin. And they want that exposure because they maybe have a lot of thoughts about what the asset could mean, or maybe they just want it because they want to hold it. But the ETF provided one of the easiest conduits to hold Bitcoin. And sometimes people wonder, why wouldn't they just do it non-custodily, or why wouldn't they do it via an exchange? Why wouldn't they do it through XYZ ways?

Why did the ETF have to be the way? That's one of the biggest design principles in all of the apps that I'm trying to further on Enduro is you have to simplify the entry point. And you can't assume that the typical way to calculate stats per V byte transaction fees or that the existing process of downloading a Bitcoin node, running a Bitcoin node in order to like curry the transaction history, you can't assume that those things are easier, those things are just common sense. They take a while to learn.

There's a learning curve. And I think one of the most important things the ETF showed to us is there's massive pent up demand for easy Bitcoin, for like very, very simplified interactions with Bitcoin. And so that's really what we hope to do, one of the core things we want to impulse with Enduro. Now, the halving was interesting in its own right because it came along with the Roons protocol launch. And we saw with Rooms, a lot of interesting use cases, a lot of buildup, some fizzling out, will it come back, will it not? You know, I kind of leave that for the divinators. It's not me. I'm not going to be like guessing over what the future of adoption is. But what I do

know is that people were very, very excited, but a fungible token standard on Bitcoin, that was very exciting to them. The fact that you'd had non-native fungible assets that are linked to Bitcoin, and so that to me is more validation for what we're doing. The market is clamoring for a credible solution. And the only credible solutions right now are those ruins because these are native on the, well, native in quotation marks, right? We can get into that debate, but they're the most native on layer one as possible. Well, if we had layer two's that were credible, that wouldn't be as big of a problem and people would be seeking to innovate in other sort of directions on these other chains. But none of these existing solutions are that credible. And obviously, there are early examples of

maybe new directions, but not as much as we would hope. So that's to me what showed to me in the having. Obviously, the having was a sad day for miners, you know, to have your block reward cut in half. Funny that that came along, literally one of the biggest experimental use case is just rocketing up and us earning a ton of fees on it. So if anything, more proof of what we're trying to build and more proof that we need to drive toward this adoption question. It's interesting in a couple of ways. First off, what you're saying, that ways to make Bitcoin easier to buy for the average person become very important, reducing this friction.

There's a set of business opportunities for that to occur just by creating very simple exchange interfaces and ways to buy. And then with the layer two, it's incentive a line both for users and you guys, because you have a new business arm where you can extract these out of. And then for users, obviously, when we saw the launch of ruins and ordinals, like main net, fees were spiking to $100, something like that from what I can remember. And that certainly doesn't square with reducing the friction of use for users. It makes a lot of logical sense. So your point about fees, I mean, that's the feature of Bitcoin main chain is that the second there's a lot of activity,

it becomes prohibitively expensive. And so it's more proof of what we're trying to build here. And it's why there's like 60, 70 plus L2 projects coming out. It's because everybody sees that. There's these price runs and then there's these mini bull markets. Nobody's able to use these new standards, this new experimental Bitcoin standards, these meta protocols, some people are calling them, that's why you need layer two. But it all comes down to the trust assumptions. No Bitcoin layer two is totally trustless. And so that's why I think that the institutional, the long time Bitcoin or approach really being deeply considered about the resilience of the underlying technology, that's really the winning strategy. Are there any other macro drivers that you think go underappreciated?

Obviously, the ETF and the halving are the ones that people talk the most about, but any that fly under your radar? One of the biggest ones that this isn't related to the having work to anything that people really talk about as much right now, but I really think it's the underutilization of emerging markets. There's many more solutions that can be built there. I think Tron is a perfect example of that. I mean, when it became known and people started talking about the statistic that most USDT is minted on Tron, the often thing I would hear within my own team was, oh, that they're frauds. That's not true. But no, now more months are carrying on, more people are talking about it, more people are validating that. Another question becomes, well, what the heck? Tron doesn't have some

like massive like conference series. They're not super present in all of these Web3 discussions. When you have all the heady like VCs talking about where to invest in, people don't talk as much about Tron. Why is that? Well, they were easy to get to market. They are hyper, hyper localized in emerging markets. When you talk about UST merchants that are facilitating cross-border payments in Latam, it's much more likely they're going to work with Tron than with anything else. It's either going to be Tron or Binance. That is a massive. market opportunity that's being missed. And okay, I might not sound like that creative because so many people say that they have a solution for Latam. I know a team in Bitcoin that had a Latam Bitcoin

wallet. It was built on liquid and it was supposed to be cross-border payments and all of that sort of stuff. But then the app itself wasn't in Spanish. You know, you have teams that are pitching these grandiose visions of like crypto adoption in Africa, but the teams live in Dubai or they live in London or whatever. You've got to remember that with anything that you're trying to pitch in new market, you have to be hyper-localized. The design has to be localized. team has to be localized, the pitching, the narrative, all of that has to be localized. And so I think that's a real big opportunity there is building out a use case, building out use cases that are hyper localized.

And there are examples of this. I talked to a Big Coin Layer 2 a couple months ago built on NIR that their whole thing was they're the biggest NFT marketplace out of Indonesia. And now they're pivoting into creating their own L1 because they just have so many users. It just doesn't make sense to be giving away those transaction fees to these random other L2s. I think they might have been on the OP stack, if I'm not mistaken. they made their own layer one. See, that to me is a compelling go-to-market.

They dominated the Indonesian market, 100 million, 200 million people, so this is insignificant. And they go out and create their own layer one on the basis of that. Let's assume I'm wrong about real-world adoption, and I'm wrong about all of these new use cases and institutional applications for Bitcoin. That's really where I'm going to go next, is go full send on the emerging markets,

hire out some local teams, think about what are problems that we can solve in a very, very localized setting, and then build out those organic user base. because it's the people who most need crypto that are in these parts of the world. And so why aren't we targeting them quite as much? Well, it's because we're not there. It's not a priority. And it's easier just to build for our own communities, right? The U.S., Europe, the Gulf, et cetera. Yeah. And like you said, I think a lot of successful products we're seeing in that vein are crucially crypto in the back.

And it's a really strong product in the front as opposed to if you went back a couple years, you're probably getting a lot of the pitches where it's like, oh, we're going to do crypto and we're going to do it here and the product was almost an afterthought. Correct. And I actually saw a lot of this. I think it was front and center during Bitcoin Asia. I was there last week. And I keep talking about not like a spokesperson for BTC Magid, but they, man, they really

killed it. They killed it. They did well. And the way they did well is they finally turned the veil, opened the veil, uncovered this whole mystery behind who's actually using oracles. It's mostly Chinese people. It's mostly APEC users. And it was interesting because you had a lot of these Western Ordinals projects coming and

seeing their actual user bases, maybe for the first time. and getting a better understanding of where this APEC scene of crypto adoption, where it's at, and how it's different from the West. And I think it's when you jump into these other settings and you see places where crypto just makes a lot more sense intuitively, you get a lot more adoption. You don't have to create some massive marketing campaign and fool people with BSTVL commitments. No, you can actually just like onboard users that are just begging for a blockchain solution and are probably currently using workarounds via Binance.

You onboard them, you get them onto your chain and all right, there you go. now you're all set. You can have like an actual organic user base that now you don't have to be fudging numbers. You don't have to be like searching for the stat that doesn't make you look like an empty ecosystem. It's really easy to demonstrate activity. Last couple of questions here. How do you see you guys as well as other core Bitcoin mining businesses evolving? And what do you think the key players in the ecosystem look like in a few years?

Well, I think the biggest thing is that they're going to be driving more and more to innovation. I really think miners have the biggest incentive to innovate across all of Bitcoin. Controversial, weird to say, weird to think. But it's true. It's no secret why Marathon is out here doing its layer two initiatives. And on top of that pumping out a lot of full hardware, you have other top Bitcoin miners announcing OTC desks. I met a big Bitcoin miner. The ones that actually won the HavingBOC via BTC met one of their chief strategists last week.

And yeah, they're opening an exchange based out of Singapore. So there's going to be a lot more of that. You're going to see miners playing a lot more. of a front and center role into these adoption questions, they see the numbers behind ordinals. They see the numbers behind Rooms and they're keen to try to accelerate and help further the sort of demand. So look, I don't think we're going to have a big minor, maybe open or start a layer two project quite like ours. If there is and they're thinking about it, come talk to me. Let's join forces. No need to like build an isolate. Honestly, like I could use the help and rapidly

trying to hire and, you know, grow the team and, you know, grow the, there's too many pilots. We have like 50 plus pilots in the pipeline, and we're having to make decisions between them. So the more teams that are interested in that, the better. What I like about the mining industry, and again, I think you know this, but it's not like I've been in Bitcoin mining for the last decade or anything like that. But what I like about the mining industry is these are actually the forefront of innovators. They're one of the few credible innovators across all of crypto. Why?

Because they're investing actual money, capital, energy, research, right, hardware into securing a network. If you're investing that much in it, you must believe in it. the most long Bitcoiners you can find in all of the industry. And so because of that, faced with declining transaction fees and faced with an asset that's facing a lot of regulatory backlash, these are the guys that have the biggest incentives to go out and innovate. They're the ones running this like multi-billion dollar hardware. It behooves them to innovate.

It behooves them to be dynamic. In that vein, who do you think are the winners at the end of the day here? Like, what businesses do you think are in market right now are evolving that you think benefit from what Bitcoin will look like in a few years and who's going to, really grow here. I talked early about stranded finance. I think loyalty, we haven't talked much about it, but we've got a number of pilots there. We're building a restaurant loyalty app here with a go-to-market in the UAE, building out a

celebrity fan loyalty app with a confidential partner there, but let me just tell you the celebrities behind it are pretty freaking cool. This is another domain that fan experiences, loyalty, engagement, marketing. It's an area that, again, people listen to this might be like, what is this guy talking about? Rarable's already doing that, Opensies, already doing that. Well, actually, from all these key, like, high value use cases we've talked to, yes, a lot of these Web3 brands that have been involved in fan engagement and art and culture have pitched these, like Web 2 brands, these like actual real world adopters, these like marketers, their solutions. But oftentimes there's an incompatibility. And the way I had a partner describe it, which I really liked was for the last five years, we've had crypto trying to reel us in.

And we don't want that. We have the relationship with the celebrities. We have the relationship with the real world fans. We have the prerogative to bring crypto in at our behest. And so crypto companies have to think about things differently. It's not about bringing crypto to people. It's not about bringing others to crypto. It's bringing crypto to them.

So it's a different mental model. Beyond the TTS, beyond all of this stuff, Bitcoin can be an engagement tool. Bitcoin can be the trustless ledger for interoperable points programs. It can be the place where you can engage audiences and record customer data in a more anonymized, privacy-centric fashion. All of these things can happen. But again, you need those initial pilots. And you need people who are connected to the celebrities, connected to the restaurants,

connected to the hotels to actually find a use in the technology you're pitching. And we could take a playbook out of Google, take a playbook out of meta in this, where Google doesn't pitch people on the complicated text act. They pitch them ads. They pitch them search. Meta, it's here's a megaphone, a digital megaphone for your business. They don't even know how it works or what's the algorithm. None of that's important.

It's just what is the business deed you're solving. So that's another thing. And the last bit I'd say is just, again, coming back to the, I'd say politically, our world is actually going to anti-globalization, it seems. There's a lot of like right-word candidates and, you know, people aren't as down for the international trade scene as they were before. But that actually presents an opportunity because at the end of the day, you're still going to be buying bananas from Ecuador, oil from the Middle East, silicon batteries from China or silicon wafers for solar plants from China and, you know, et cetera, et cetera. There's still going to be some level of trade. but these different financial systems are increasingly, increasingly looking against each other. They're just kind of like looking in opposite directions.

There's not as much trust. And so I think that Bitcoin plugging in as a settlement layer as like the mechanism of trust between these financial systems, between these major economic actors, that can be very compelling. But again, it doesn't just manifest. I hate it when people are like, oh, well, it's just, that's the manifest destiny for Bitcoin. Like, it's just going to happen one day. No, you need to pitch these businesses. You've got to put on the suit.

It's not just going to happen. I like the point that there are all these directions to go from a consumer use case. For the time being, at least, Bitcoin compared to traditional equities, is a largely consumer product. So it makes sense. You build out consumer use cases around it. Well, Julian, thanks so much for joining us. Really happy to have you on today. And it was great learning some more about what you guys are up to and excited for the next wave of Bitcoin. Absolutely. Same here, Wyatt. Thanks for having me on. Thanks for listening to another episode of On the Brink with Castle Island.

To find out more about Castle Island, visit castle island. Visit castle island.vc. To listen to all of our podcast episodes, please go to On thebrink dashpodcast.com or just click on the tab in our website. Thanks for listening.