The Breakdown - Summer Startup Series on Bitcoin Builders

Starting point is 00:00:00 What's going on, guys? It is Wednesday, June 28th, and that means I am traveling in Europe right now. Now, as I have mentioned, the breakdown is off for the next couple of days. However, if you want some delicious Bitcoin content, I highly recommend you go check out the summer startup series on Bitcoin Builders. On Tuesday, Wednesday, and Thursday of this week, I am hosting a different interview with one of the companies that went through In Wolf's clothing first accelerator cohort. On Tuesday, my conversation with Neil from Dust Up came out, discussing Bitcoin and gaming, and basically why Bitcoin is such a great currency for a global market. Today, I'm talking with Philip from 10101 about bringing Bitcoin values to Bitcoin trading. And tomorrow, I have a conversation with Evan from Zeus, discussing what they're building

Starting point is 00:00:45 as well as developments in Lightning more broadly. So again, go check out Bitcoin Builders if you're not subscribed yet. You can find it by searching Bitcoin Builders or just go to Breakdown. network for a direct link. Here is a little preview of my conversation with Philip from 1010.1. Hope you guys enjoy. I guess broadening it out, you know, what was the motivation and how do you guys think about the importance of defy on Bitcoin?

Starting point is 00:01:11 Ooh, that's a personal thing. I got hit by an exchange hack, so I lost some money on an exchange. And that made me build my mission to really remove the risk of that. of trading so that when you trade, you can focus on what really matters on the exchange risk, and not on counterparty risk. And we have been doing this ever since we've been starting with atomic swaps in 2018,

Starting point is 00:01:38 where you can trade from one chain to the other. And one of our biggest achievements was actually more narrow, where no one thought that this is actually possible because neither Monero, no Bitcoin have a powerful scripting language. But it never felt really right. because you always leave the safe haven of Bitcoin. So if you want to trade, then you suddenly hold this other coin and that you are in this not that trustless environment anymore,

Starting point is 00:02:07 not that censorship resistant. So we said we really have to bring defy. I don't want to use this word anymore because it has like this negative connotation from Ethereum, but we really want to bring decentralized finance to Bitcoin so that people don't have to leave the safe haven of Bitcoin. Bitcoin, but they can still speculate and trade and bet on any exchange rates as they want to. So a couple dimensions of this. One is the, you know, being able to stay within the Bitcoin ecosystem, but then two is

Starting point is 00:02:40 sort of expanding the trading products available. So what are the trading experiences that are available or that 10101 is working to make available for, you know, around Bitcoin? Yeah. So what's available today? If you want to trade anything with Bitcoin, you have to leave Bitcoin. If you want to trade trustless, decentralized, you have to go into another chain and rep your Bitcoin into another rep token. And you can trade there.

Starting point is 00:03:06 That's not how we want to do it because then you accept other risks. So we need to build on Bitcoin and we are limited with what Bitcoin offers today. So there are no real tokens on Bitcoin, R-TB and Taproot. asset will change that. But the only real trading experience we can build on Bitcoin today is derivatives, to be precisely derivatives which are settled in Bitcoin. Some of your listeners might be familiar with Bitbacks, how they started, where they offer perpetual futures, and you can bet on any exchange rate, but they're all settled in Bitcoin. We do offer exactly the same thing, perpetual futures and settled in Bitcoin. So you can bet on the Bitcoin price,

Starting point is 00:03:51 against US dollar, but the trade is settled in Bitcoin. And so how does the experience of 10-10 work? Because I know this is a project where the output of there being a type of trading product available is, or I guess the inputs of what the actual experience is and how it's executed are as important as the outputs is maybe a way that I would say it. Yeah, totally. I totally agree. Like we can only compete with centralized exchanges if the user experience is awesome.

Starting point is 00:04:21 So how does it look right now? You download an app on your phone. Right now we only focus on iPhone and Android. Once you start that phone, once you start the app, you have your Lightning Note and you have to fund your Lightning wallet. And you can do that just as convenient as paying a Lightning invoice. And for that, we run an LSP and we open an inbound channel to you and you have immediately the money available in your wallet.

Starting point is 00:04:50 And from there, you have a very simple trading interface and you can trade. And then what's going on in the background to make it actually work? So, you know, how does it differ maybe even from sort of perpetual swaps for what other people might be used to? Yes. So the financial instrument is actually a perpetual swap. But the technology we use is not like a centralized exchange, just a database. But we use a concept called discrete log contracts, which were initially proposed by TAT, who's also a co-author of the Lightning Network.

Starting point is 00:05:23 And we moved those DLCs, which were initially only on-chain, into the Lightning Network, so that you have instant settlement into the Lightning Network and a very low fee. So if you trade on 10-10-1, what happens is you collaboratively engage with someone else and collaboratively execute a cryptographic protocol, the DEC protocol. All right, back to NLW. Once again, if you want to hear the rest of that interview, go check it out on Bitcoin Builders. We'll see you there.

The Breakdown - Summer Startup Series on Bitcoin Builders

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