E156: Boarding the Ark with Alex Bergeron - Ecosystem Lead at Ark Labs

Jacob Brown (00:02.216)
Alex, how you doing today my man?

Alex B. (00:05.631)
Doing good, doing good, yourself.

Jacob Brown (00:09.547)
I am also good. Excited about this one for a bunch of reasons. think ARK has been announced a while ago. Something in Barack I think announced at BTC Plus a while back. And now you guys have taken the torch. Was I wrong on that? It seems like you're...

Alex B. (00:26.286)
Yeah, I'm not sure. mean, I don't know if it was a... Yeah, I think the paper at least like kind of like a draft. I don't know if you could call it a paper. I think a draft had been going around for some time. But yeah, this feels like ancient...

times almost. Yeah, I think the landscape has moved quite a bit since. So yeah, super excited also, long time coming also to be on the pod with you. So looking forward to this chat.

Jacob Brown (00:56.45)
very excited. yeah we'll talk a lot about orc a lot about off-chain you're kind of like one of the most vocal guys on twitter about off-chain stuff ecash, Ark a little less on lightning but we can cover all these kind of in tandem but real quick i want to get a brief background because i'm a newer-ish bitcoin 2021 vintage and when i look at you it's like you're kind of a shit poster you're kind of a

You're a technical mind, but not technical. And I've heard snippets that like you're kind of an OG and you were like very vocal against like block stream back when it was not cool to be anti block stream, for example. So like, give me some color because everyone sees you on Twitter, but like who the F is Alex. Give us a brief overview of kind of like some of your journey.

Alex B. (01:47.694)
Sure. I got into Bitcoin around 2013 and just, I think, consumed a lot of the content, the few of the content that was available back then. And given that there was so few content, I was all about sort of like jumping onto Bitcoin Talk and getting into the thick of the conversation after I kind of like managed to catch up on, yeah, most of the stuff that was available online. So Bitcoin Talk and...

Reddit was really kind of like my stomping grounds. That was my way to obviously engage with Bitcoiners because certainly, you know, I'm from Canada, small city. mean, I'm from Quebec City, Canada. There's not a whole lot of Bitcoin action back then at the time. so, yeah, obviously it got...

you know, just fell into the rabbit hole as corny as this might sound, but eventually led me to kind of like participate in some conversations around technical stuff. Mostly I feel like I touched a little bit of the every basis of Bitcoin early on trying to get into the cannot mix of it and you know, the political aspects. But it was really so like the technical stuff that drove me to

I think, engage with the people in the space. so that eventually sort of led me to become very active, yes, during the scaling debate, even very early on.

And that led me to basically develop relationships with some of the people, developers that were active at the time, and even people from the original Blockstream theme like Greg or Adam as well. They were sort of like an outlet for me to be able to validate some of the intuitions that I have from technical perspective and kind of like...

Alex B. (03:46.694)
cover some of my blind spots when things were a little getting a little too much into engineering and through those relationships with them eventually me to kind of meet them in person. I participated in the first scaling Bitcoin conference in Montreal back in 2015 was it and eventually as the

tensions ramped up for the whole block size war. I eventually joined Blockstream as sort of the person to...

interface with the community at large in the industry. They had a lot of people that were, you they had a solid engineering team, but they didn't really have someone that was able to properly, or at least had not done the work to be able to properly communicate, distribute and document what was happening in Bitcoin at the time. You know, I think there's a lot of catching up that people had to do just in terms of understanding how far Bitcoin had come

from early Satoshi code base to the state of the network back in 2014, 2015. And the amount of work that had gone into just making sure that Bitcoin at one megabyte block was not breaking. And this is some of the stuff that we take for granted back then, but it was kind of like an educational phase for everyone. And even for me really, to be able to go back in the archives and sort of dig

up every single piece and there's still some articles that I wrote from back then on like bitcoincore.org which no one really uses anymore but it's some website that was created at the time to sort of like dispel some concepts around Bitcoin scaling.

Alex B. (05:39.726)
So that was kind of like the first phase of my interaction with the industry after Blockstream. Once the block size debate concluded, I left the company and kind of like went on a bit of a sabbatical or whatever. I had moved to Asia just a little while before and decided that I was going to move there permanently. Still stuck around.

Jacob Brown (05:47.334)
Thank

Alex B. (06:04.492)
never really did much of anything that was notable in the industry before up until maybe when I joined, literally fast forward to early last year, chatting with my boy, Mark Goodwin, who used to be chief editor at Bitcoin Magazine. wanted someone, needed someone to kind of cover, select, know, technical space and some of the things that were happening in around the industry. And, you know, I hadn't been wanting to kind of like get involved perhaps a little more tighter, closer to the industry.

find a way for me to start writing a little bit again which is something that I had done quite a bit earlier on in my career and eventually took a role as the L2 person was the role at the time. It a good experience. I enjoyed my time there quite a bit. Honestly, I gotta say they get a lot of shit but the Bitcoin Magazine team is just like...

All studs. I have nothing bad to say about them. And, you know, they've been killing it the entire year. And I'm super excited about what they're going to do going forward. But obviously, you know, I think just it's perhaps inevitable that me getting closer to people in the industry and having conversations with entrepreneurs and builders.

I started getting the hitch of basically doing a little more than just covering the space, but getting actively involved. I thought like I was at a point where, well, if I found the right opportunity to really drive my energy behind a single project. And I think, you know, it's one of those crunch time for Bitcoin as well, in a bit of the same way, but for different reasons than it was back in 2016, 2017 when I was with Blockstream, right?

One thing led to another. I met with Marco, the co-founder at Ark Labs, who I had known and followed for quite some years. yeah, I I've been excited about Ark since it was released last year. And so I think it was for me to see Marco and them kind of like really say, like we're gonna like... Yeah, the important thing for me was like...

Alex B. (08:23.404)
this whole conversation around Twitter and the industry about designing for Softworks and all of that stuff. But in the meantime, really nothing gets done, right?

I'm exaggerating of course, there's quite a lot of people that have been building in the trenches and probably don't get appreciated for all that they do. But I saw ARK and I still continue to see ARK and I want to promote ARK as this sort of outlet for everyone that is eager to like bring new things to Bitcoin, for them to actually put things into action and start contributing to change. That is potentially I really believe is perhaps one of the key to unlock, you know, the future phases of development that might involve, you know, future software.

forks and whatever.

Jacob Brown (09:06.262)
Yep, okay. Don't thank you for the cool trajectory that you've been on and Now let's jump into the deep end I will say one thing that's nice about You you and Shinobi at Bitcoin magazine was dope to see because you guys are like very good minds I think there's something about what I like about you is like when you post a mental illness tweet, it's funny, but it's also like

Alex B. (09:30.956)
Hahaha

Jacob Brown (09:32.006)
You're calling out something in culture that I should be tuned into because part of Bitcoin is fucking stupid and it's hard to suss out easy what is the dumb shit and what is something worth giving your ear to. So first of all, I appreciate you for doing that. It's subtle, but I tune into the frequency because I respect your opinion.

Alex B. (09:54.742)
I mean, Bitcoin is counterculture and I think people tend to forget that quite a bit. They have more so the sort of tendency to join the flock and become single-minded. I think one of the best approach that you can take with learning and sort of just sticking around this industry is to have...

You know strong opinions, but like I like loosely held, you know, I'm the first one to change my opinion Literally, you know, I say this all the time, but one one month I'll be extremely bullish on on

project and the next month I think it's a waste of time. And it's quite volatile and I think I am being very hyperbolic at times about whatever is on my mind. But I like to kind of like shake trees a little bit, get people to bring attention to things that are being overlooked or get people also to stop having sort of like this one track mind.

Jacob Brown (10:58.126)
Well then, yeah, let's jump in on that topic of, you know, people kind of putting things to the side. know, sidechains are a hot topic, L2s, whatever that means is a hot topic. But off-chain scaling, in kind of the lightning fashion, has been out of vogue for a little while. And you're probably the strongest opponent I've seen for bringing it back, whether it's ecash style or it's what Ark is doing too.

So before we jump into Ark and like dance around different specific topics, how do you see the current landscape of the kind of like triad that is lightning, eCash, and Ark?

Alex B. (11:37.452)
Yeah, well, I mean, I think it's been.

think it's, you know, for lightning, it's been a huge year. you know, I have been bearish at times and bullish again about lightning this year. And I will say that the more I look at it, and obviously at Ark Labs, we're starting to do some things around lightning that I think will be very interesting and very beneficial for the network. But...

preparing for this has led me to go back and have a closer look at the lightning ecosystem. I have to say it's incredible how vast...

and under looked it is. People don't realize the infrastructure that's behind lightning at the moment. It is pretty massive. And you know, we've been spending almost a decade now kind of like laying down those pipes. And certainly people, some people are going to argue that, well, you know, some people are gonna say that no one's using it. That's just blatantly false. I think there's...

a lot more action happening on Lightning than is sort of like perceivable. Because also, we're looking at the metrics and the scoreboard, which is like the data that we have access to. But essentially, I think you got to realize that a lot of the activity happens in between private channel and Lightning as well. So it's hard to really like get a, know, a current picture of what's happening. But what we can see for sure is that,

Alex B. (13:22.264)
the economic activity has seemed to, you you look at certain metrics and it seems like they might have stalled, but I think what's happening is there's a lot more efficiency around the system. You know, I think people who used to throw like liquidity around and lightning in channels and whatnot, they had no good reason to be there. And so it's easy to make the case that while, you know, the TVL or whatever you want to call it hasn't like climbed through the roof over the years, but you got to realize that the TVL is here at the moment, the value in lightning channels that's here,

the one that's advertised in public channels, is definitely, if it has stuck around all of those years and if it's, you know, there's no more sort of like, there's very little of the hobbyist type of people that are just showing nodes up for nothing and just to be playing around. So a lot of that inefficiency is gone. And so what you're looking is, I think, a lot.

bigger, more professional players, institutions, and all of this infrastructure is now there to start potentially then think about how do we actually, because this is the one big lesson around Lightning that we're still kind of like jostling with, and I think we're starting to appreciate a little more is, okay, well, it's there. It's obviously just an essential piece of Bitcoin infrastructure, but how can we actually leverage it best? And there is certainly not this sort

like one size fits all approach to using Lightning, which used to be what was sold to people, right? It's all gonna be Lightning wallet, non-custodial and whatever. We know that that's not the case, obviously there's custodial, but Lightning is going to plug into all pieces of the Bitcoin economy and the Bitcoin financial system. And it's still finding its place, but I think like...

I think fading lightning at this point is just completely ridiculous. So big year for lightning. And I think if we truly get into a hotter market next year, lightning is gonna really shine. And so as far as the other off-chain stuff, well, I mean, you could also make the argument that it's a year of eCash as well, at least just in the sense that it went from this curiosity to,

Alex B. (15:46.01)
having captured a pretty significant amount of mindshare in the last year. Obviously, it was just like the eCash, biggest eCash conference ever. I don't know, maybe the only eCash conference ever in Berlin last week. And people are starting to realize the power of eCash is sort of like this.

this true cash equivalent on the internet, this sort of like string of text, this bearer asset that is able to be again, plugged into all types of infrastructure around Bitcoin and around the internet. And when you're talking about like optimizing for sort of...

velocity and privacy obviously lightning I mean ecash and I'm starting to see some very interesting things I actually had someone that tipped me just yesterday about some stuff that's happening where you know you're having people in discord servers starting to kind of like send themselves boardwalk

So like Boardwalk type, eCash tip, the stable channel based, which is one of the things that yeah, I'm pretty excited about. So, you know, it's hard to juxtapose, you know, off-chain scaling solutions and payment focused scaling solution with the appetite that other people have for, you know, more.

fancy smart contracting platform and all of the DeFi stuff and this entire like Bitcoin season two narrative, which has been to try and bring back a lot of the applications that have gone popular on other networks over to Bitcoin. And, you know, that's been an interesting journey and to kind of...

Alex B. (17:43.726)
have this renewed interest and energy around a lot of this stuff, I think has been extremely, extremely important because you have people that are willing to use Bitcoin in perhaps more creative ways than they have before. And that's always necessarily going to lead somewhere, even if they fail their first attempt or whatever it is that they choose.

to do is probably not in the most case the first time the right approach. I think it's just, yeah, it's just going in the right direction. so, dude, I'm sorry, I have to stop there because it's gonna get dark and I have to turn on the light. So you're be able to cut this. Yeah.

Jacob Brown (18:29.733)
do it, do it yeah you're good

Alex B. (18:36.64)
Thank

Jacob Brown (18:43.908)
Good call.

Jacob Brown (18:51.921)
Cool, do you want to finish your thought or?

Alex B. (19:02.722)
Yeah. Okay. let me see how it can-

Alex B. (19:22.064)
Okay, yeah, so basically, wait, where the fuck was I? It's just like talking about like the idea, but I remember, I remember I'm trying to see how can loop back into it.

Jacob Brown (19:29.617)
turned it over myself.

Alex B. (19:48.482)
Yeah, so...

Alex B. (20:02.355)
Fuck, okay, I did ecache. I think I'm just gonna tie back arc into it.

Alex B. (20:13.994)
Okay, no, I got it. Okay. And so one of the interesting, I think for myself, experimentation that people have been doing is I think through the, know, so like derived from, I think it really came out of like, so like the ordinal action and people playing around with PSBTs and things like this.

One thing that I think is pretty cool is this sort of new trend of trying to build like this on chain, it's more like this bridge-less implementation that are like meta protocol based, where you don't attempt to necessarily create yet another copy of like an AVM side chain. You see if there's a way for...

you to kind like have people interact with those contracts, even if they're executed in a more trusted environment, try to have people interact with those contracts directly on chain. I think that's so like an interesting twist that's been appearing over the last months. And obviously this is not something that can, well, this is not something that's gonna scale. so, but I think,

One of the promising thing and why I'm so pretty excited about Ark is I think Ark brings a lot of the off-chain properties that we know and are familiar with because of lightning. So like this unilateral exit and sort of this sort of like trust minimize features.

I think Ark is potentially able to bring this security template over to use cases that have more expressive functions than payments. And I'm not going to say that we have it all figured out. And I'm not even going to say that this is necessarily something on our end that we're going to focus on.

Alex B. (22:19.01)
This is one of the reasons why we're pretty excited about ARK, is that it's open for everyone to kind of decide whatever it is that they're going to do with.

and you know, we can talk about this some more, but you know, Ark has been, you know, labeled as so like this, this, this layer two and, promoted, you know, even early on as a replacement for lightning, but it is so different and in the way that it can serve different application and in the way that the whole thing is architectured, that it's going to lead, I think to a lot more opportunity for experiment, which I think aligns with what a lot of people

have clearly an appetite for. And so if we're able to allow people to build systems that are more secure and perhaps more Bitcoin aligned through these new technologies, it's going to be very, very interesting. And I think people are going to realize that those come with potentially much better trade-off than whatever.

side change and bridge bring us. feel like that's kind of working. As far as I'm concerned, the reason why I'm sticking to those systems and insisting that people should focus on them rather than the whole layer two parade of new protocol is that those things feel like working backwards. At the moment, it feels like a lot of people are just building models of...

systems that have been tried on other platforms and other networks and have not really shown anything for themselves and in fact have

Alex B. (24:10.508)
pretty catastrophic. I mean, it's been kind of like a complete failure as far as I'm concerned in how those types of protocols have performed and the result, like I think a lot of the unwanted result around fracturing of the network effect. But that's probably getting into too much details, but yeah, that's where I'm at as far as the tension between those types, those two different types of architectures.

Jacob Brown (24:38.611)
Interesting. Now that's helpful. It's also interesting because a lot of

A lot of what's kind of like pushing this current narrative is looking at VC funding and like I'm in that space and a lot of a lot of VCs aren't really like traditional VCs in the sense that like they're not really being super risk on they're kind of exploring territories bring down over there and it's they just kind of extrapolate to like yeah put each shit on Bitcoin gonna be bigger because of market like whatever they do some kind of basic calculation. So like more frontier tech is

Scarier for VCs nowadays. I think they've also been spoiled by tokens. That's another whole separate topic Another thing I want to like double click on just for the audience is that you mentioned That it's hard to track lightning's usage because it's so much off-chain and private and so the main metric people really focus on is like TVL locked on the network like 5,000 BTC is my network. Look how it's stagnating. It's not going anywhere

Lightning is dying and it's like first of all don't see the transaction so it could be massive AF and you would never know that's one and then two is what you mentioned about efficiency which is that the network can get more efficient with capital so I think this is part of why people are fading lightning is because of those two metrics go together of like can't see transactions so I can't track you know 1 million blah blah blah in the past whatever and TVL not going up which are the two main drivers people track

So you don't have to comment on this. We'll jump straight into Ark. I just want people to deprogram their dumbass brain that like that's why off-chain is going to be so different. And Ark is going to fit in that same area, which is that it could likely be huge and you would never know unless they want to reveal some of those details. So with that.

Alex B. (26:30.382)
Yeah, mean, got to people like just to like close the loop on this. mean, I think people just need to stop looking at lightning strictly like as a payment network. I mean, a shift to a settlement network. I mean, it can be used, lightning can and will perform and...

be very useful as payment infrastructure but as a settlement network and in the context of like okay well looking at Bitcoin becoming increasingly recognized and you know the price appreciating and being increasingly more like it is you know I think that the Lightspark people have been kind of like

promoting this idea that Bitcoin is the most liquid asset that is exchangeable and tradable 24 seven across the globe in every single countries. And the benefits that this creates in terms of creating inter institution settlement network is vastly, vastly, vastly underrated. I think I...

mentioned exactly this on Twitter a while ago, which is that it's very much likely that the product market fit and where lightning starts eating a lot of share of the market of a market is in those types of applications and payment, you know, will kind of like come down later down the road.

Jacob Brown (27:55.446)
interesting okay well then let's let's let's jump straight into arc and let's start high level so like people have heard about it it's this off-chain thing but what is what is Ark

Alex B. (28:09.551)
Yeah, million dollar question. mean, ARK is basically just a multi-party contract that allows a bunch of people to effectively

to effectively condense a lot of their Bitcoin operation on chain into single UTXOs. I've been playing around with the idea that ARK is basically like a chain of UTXOs basically. And in the same way that with Bitcoin, we put a bunch of transactions into block and we chain them together, and ARK, we actually put a bunch of transactions into UTXOs and we do actually also chain them together through what is called connector outputs.

is basically that, well, if we get 50 of us together and wanna collaborate into making a Bitcoin transaction, normally what we'll have to do is that we'll have to create different outputs going to every one of us, right? Think of like a coin join or something like that.

But what we can actually do through the magic of Taproot and MuSig is that we can collaborate to craft the single output where you will have then a...

tree, a Merkle tree, and the distribution of the Bitcoin is not going to happen through different on-chain output, it's going to happen within this single UTXO by enforcing how this single UTXO can be spent. So that we can say that, well, there's one UTXO on-chain, but you can only spend it by sending, you know, half a Bitcoin to Jacob, half a Bitcoin to Alex, half a Bitcoin to Alice, half a Bitcoin to Bob.

Alex B. (29:56.706)
And the way we do this is obviously we need to basically enforce that transaction on chain by crafting these conditions, these spending conditions and having everyone sign them.

So this is kind of like where covenants come in also, right? Because originally the proposition when ARC was announced was that, well, this is exactly what covenants do, right? They allow us to enforce different spending condition on a UTXO on chain so that whenever someone goes and actually wants to spend it, they can only spend it according to kind of like the script that's there. And...

And so obviously we don't have covenants, there's a very simple way that we can basically achieve the same result is that we have every single person that's involved in this transaction actually sign this spending tree. So we look at the list and we say, okay, this checks out, my name is on there, but you also got a sign for everything that is in the tree. And then you put this transaction on chain.

That transaction is coordinated by a server. The server is basically the one that is fronting the liquidity because remember we need to put, we want to put a single output on chain. We don't want to split it into a bunch of outputs that'd be extremely expensive. And so the server is the one that sort of batches all of these signatures and puts this output on chain.

And we use the server as a way to be able to do atomic swaps between whoever wants to participate in the ARC, basically. You don't have to be inside the ARC. don't have to be... It's basically we use a server to be able to further than spend what we call those virtual UTXOs, right? So those fractions of the original UTXO that is on chain, we call them virtual UTXOs and what we can do

Jacob Brown (31:36.248)
you

Alex B. (32:04.384)
is that we can swap them to someone else into a new shared VTXO.

without having to trust the person that's paying for this UTXO on chain. So what we do is, this happens through the magic of the connector output. The connector output is really the secret sauce of ARC. It really is, and people that are familiar with BitVM will also recognize connector output. It is actually fundamental also to the construct of BitVM. And connector output are actually pretty simple as long as you're kind of like a little bit familiar with

know, transaction graphs on Bitcoin or just like inputs and outputs. And the way it works is that if I have a virtual UTXO in ARK and I want to send it over to you, Jacob, I don't actually send you my virtual UTXO. What I do is I tell the operator,

the server is saying, I'm gonna forfeit my virtual UTXO to you if you can show me that you put a new transaction on chain that gives the equivalent to Jacob. And normally you think, you'll have to trust, you kind of like have to trust him to do that. But no, what connector output do is that,

you create this transaction, again, those are all pre-signed Bitcoin transactions, right? And so you create this transaction where I'm going to forfeit my virtual UTXO to the operator, but I tell him,

Alex B. (33:41.484)
I want you to use as an input to this transaction a new output that you'll have created that is in the same transaction where you give the Bitcoins to Jacob. So by putting the new output on chain, by creating a new on chain transaction that includes one spending condition that goes to Jacob, and also includes a single output with kind of like a dust amount of Bitcoin.

we can use that new output on chain, plug it into the transaction where I give my Bitcoins to the operator and tell it, basically enforce it through the transaction and say you have to use this output as an input to our transaction. So if that transaction on chain doesn't exist, meaning if you never paid Jacob,

the transaction where I give you the Bitcoin is never going to be confirmed. And so you get this atomicity between the two. And ARK basically therefore allowing all of these constructs really...

is a way to be able to scale Bitcoin horizontally, right? It's kind of like this almost sort of like this UTXO rental service. You have someone that funds an on-chain output and you obviously ARK comes with certain fees to be able to hold this virtual UTXO and to be able to transfer it. But you have someone that puts on-chain output and for a little fee, you're able to have your little room, your little apartment in this UTXO that you can do

whatever it is. And most importantly, you know, when I was talking about spending conditions, one of the important spending conditions is, of course, that if you want to...

Alex B. (35:26.222)
Get rid of the relationship that you have with the server you want to unilaterally control this output Then you can just bring it on chain pay some fees Fees might be expensive, but we don't have to necessarily to get into that there But you and in the same way that you do it lightning you're left with a fully on chain UTXO

And so it can be used to scale payments, of course, which is originally what it's kind of like pitch as, but we really believe, and I've become increasingly convinced lately that you can use it to scale pretty much any Bitcoin application that requires more expressive scripting operation. you know, we last week,

announced that we were going to integrate with Bolts, which is the sort of like non-custodial swap providers that are providing swaps currently between Bitcoin Lightning, Bitcoin Liquid and Liquid and Lightning. And what we're able to do there with Bolts is that we'll be able to provide submarine swaps, so non-custodial atomic swaps between ARK

and lightning and that is done through virtual HTLCs. So HTLC is a construct that exists on Bitcoin already in these use in lightning and so why I bring this up is again so like every smart contract primitive that is able to be you know enforced on Bitcoin you can pretty much I mean there's some caveats there but you can pretty much enforce the same type of constructs on ARK so therefore if you get very creative and I think you know we're gonna find out that

I think we don't have quite an idea at the moment of what people are going to end up doing with this. But if you really think about it, anytime that you have sort of like a recurring service that...

Alex B. (37:25.23)
moves a lot of Bitcoin around on chain or does a bunch of different operations, whether it's PSBTs, we can have virtual PSBTs on ARK. We can have virtual swaps. We can have virtual channels literally. So the versatility of ARK is I think one of the most underappreciated aspect of it at the moment. There's been obviously as there always is in Bitcoin, a very, very strong

strong focus on payments. But I think it's the tip of the iceberg for Ark. So I'm super excited to start exploring with the team and I think engage with other people in the industry to see how, because this is again why I said, Ark's been referred to as kind of like this layer two, the scaling solution.

I mean, it's debatable whether or not it's a layer two. A lot of people like to think that it is because it has those unilateral properties. But I choose to see it in a different light because I believe that it's kind of like this. Again, I want to bring it down.

to a sort of like primitive tool, so like something in our toolkit that we can use to integrate with all parts of Bitcoin infrastructure. So I don't necessarily see it as kind of like this overlay thing because there's going to be different ARK servers, different ARK implementations, doing all kinds of different things. And I think the novel part of this is, know, well, it's, you know, it's not a blockchain. We're not trying to scale with blockchains here.

And so obviously, I mean, obviously there's some restrictions, but who knows where we can get with that. I was telling about earlier, people doing like the whole slow-fi trend where people are building meta protocols that you have like contracts being called through on-chain Bitcoin transaction and execution happened in a more, again, trusted environment. But what if you're able to actually do that on ARK?

Alex B. (39:29.506)
You know, what if you're able to batch all of these operations on ARK so that, you know, whatever it is that you do, it's not even a matter of like whether you end up spamming the chain. It's just a matter of, well, you know, like everything that you're building, if you're serious about whatever it is that you're building, your intention is going to want to have this be robust against a high fee environment in Bitcoin.

and a lot of the things that are being built right now, that's not the case. And it's a question whether or not they're sustainable at all in sort of like the economics of it. But that's not of my concern really. All I have to say is that whenever you, think people are going to find out that Ark fits within their infrastructure, there's a place for it. yeah, looking forward to find that out myself.

Jacob Brown (40:22.021)
First of all, pause. We can let that breathe for a second. Now, everyone knows now that that is what ARK is. It's tricky to pin down, first of all, a couple things. The bolts announcement is super hype, and the HTLC sounds super exciting. I also can kind of start to see what you mean by being able to extend Biquin script in very interesting ways. That's very cool. I want to circle back for a second, though, because my audience is

Middle curve to left curve. So, you know, we're we're we're a little on the dumber side and I understood most of what you said because I read the docs I spent an hour understanding it and but like there's I want to give people some mental models and then pull apart some of this so that they ignore me to understand this so For off-chain things a good mental model is something like a bar tab, which is like you don't go settle on chain

Alex B. (40:52.877)
Yeah.

Alex B. (41:01.026)
Hahaha.

Jacob Brown (41:19.986)
Or selling on chain is like paying a bar tab. You go and you pay what you're owed. In the interim, you can accrue transactions, buying a beer, whatever, and that is kind of like locked in this ledger, this off-chain ledger, like a bar tab. With ARK, there's something like a digital bank, which is the ARK server, and it prints IOUs, which are representation of the money you're putting in. And...

Alex B. (41:34.424)
Mm-hmm.

Jacob Brown (41:49.522)
Then you have this thing called the the you guys have it labeled as boarding the ark which I like And you can think of it as you're getting on the boat and there's a two-way path to get on one is you at an htlc Which is a time lock that's the unilateral exit you're talking about so I can exit the boat whenever I want after a certain time period The other spending path is you and the server agreed to be a 202 multi-sig and spend that as you go That's boarding the ark and then

When you're on the Ark, can kind of think of it like an ASP is something like a mini boat operator. So you're on their boat, even though there's like a bigger protocol. And then there's this idea of rounds, which we'll get into too, but rounds are kind of like you're boarding the next latest crane or latest Ark to keep everything kind of fresh. That's what I've kind of grok from the docks. And I want to kind of like...

Don't push your heart on anything I said was wrong yet. But let's go back to the top, and I want to make sure that people understand this IOU digital banking, and let's ease into the boarding the ARC piece, which is going from on-chain to off-chain, and the two kind of expending conditions. So break those down a little more in layman's terms so that people can understand those first two pieces.

Alex B. (43:10.05)
Yeah, I mean, I think you're referring a little bit to like this check analogy where yeah, you make a deposit and this deposit will lead to the server creating a new place for you, a new virtual UTXO for you in this shared output that is on chain, right?

Alex B. (43:36.552)
And so I think the one thing that needs to be clear here and where I feel like there's the most confusion a lot of the time is that this shared UTXO is not being rolled into a fresh one all the time. Meaning that it's not a fixed set of participant into an arc where we all shared a single UTXO and we update it.

on every round, right? That's not the case. It's just like you have, again, you have your check, you have your spending rights to this virtual UTXO that exists within the ARC. And then yes, you can do whatever it is that you want with it. You can use it to pay a lightning invoice. You can use it to...

exchange it to someone else, send it to someone else, and this is where the rounds kind of like, this is where you need to involve a round because that person, once they receive your check, the way that we've built and I think all implementations are working forward is that what you actually do is you co-sign the check with the bank or the server

you know, the ARC operator and you say, okay, let's sign so that Jacob can now actually spend this check. But this check is not truly yours until you actually settle it into a round. Because me going to the server and saying, okay, we can sign so that Jacob can also spend it does not remove the spending conditions where I can spend it.

And so if the operator is malicious, I can say, okay, forget about Jacob, here's this new transaction going to Alice. And if the operator is malicious, he can double sign this check and therefore Alice will be the next one to be able to spend it.

Jacob Brown (45:30.712)
Mm.

Jacob Brown (45:53.346)
Can pause there for a sec? I make sure that I'm trying to, I wanna, going back to this bar analogy. In the bar analogy, there's the tab, which is like the, the, the, amount they're being tracked. The bartender is the server in this case. And what you're talking about right now is like me and you are at a side table and I'm like, Hey, I got the next round. And so we've kind of committed, but we haven't gone into the round, which is to go back to the bar tab and say, Hey bartender, Hey server.

Alex B. (45:54.925)
Yeah.

Jacob Brown (46:21.528)
Update this. Is it kind of the right analogy?

Alex B. (46:24.876)
Well, not really. That's the thing. I don't think that the bar tab is the right analogy because it more so is effective when talking about lightning and when you're talking about having this bi-directional sort of like...

balance, right? Where you choose to update your balance here and there. Here, you're really just talking about, just as you have on chain, an output that can be spanned in different ways. And this is where you were saying, I can take the check, this output, and I can just cash it in on chain to bring it to an output where I have, it's a single,

it back to a single C.

when it's within the shared UTXO, it's kind of like a two of two with the operator, but with different spending conditions and time locks, right? And so now what you do if you wanna spend your virtual UTXO, like I said, is you have the concept of forfeiting that VTX, that check. You say, wanna, you're forfeiting the,

the VTXO to the operator and you say, want you to, you say Jacob is gonna come in.

Alex B. (47:49.184)
and he's going to kind of like cash it in for himself. So I just sign it over. I say, Jacob can now spend this, but you need to go to the operator and say, okay, let's settle this transaction. And that's where the round comes because what you need to do is you need to put your on-chain signature into this new output that goes on-chain. The money is never...

laterally yours until you are part of this

Covenant basically, right? You need to be enforcing the spending conditions on the virtual UTXOs that you own and you can only do that by putting your signature on it and it needs to be your signature on chain, meaning you've signed the spending tree and you have your name there and you're all good. And this is where, again, it's not a covenant, it's just an N of N, literally like an N of N multi-sig that involves everyone that's participating, every other Jacob,

and whatever that comes around the same time at the bank and say, I have this, I don't want to call it an IOU, but I have this co-signed check, I want to cash it in. So everyone comes in at two o'clock and there's a round that happens. operator is like, the other operator basically says, hey, I'm doing a settlement transaction.

Everyone that wants to cash in can like settle their check, registers their check, and we create a new output with a new tree. The person that wants to cash in their check, they check, they see if everything is all right, they sign it, and then boom, we put this transaction on chain, and now you have full control. And so...

Alex B. (49:40.238)
Obviously, this requires your signature and it requires for it to go on chain. But again, the benefits of it all is that rather than putting outputs for every signer and every participant on chain, you're just putting signatures on chain of every participant within the same UTXO. So this is where you get this whole, this is where you get everyone to be able to share a single output.

in a transaction rather than split a transaction into a bunch of outputs and have them be on chain and have to pay the cost. I don't know if this got any more simple for your audience but yeah we'll work them through it.

Jacob Brown (50:17.178)
Got it. Okay, yeah.

Jacob Brown (50:23.273)
debatable Yeah, debatable the way the thing that comes to mind. It's kind of like it's very true because there's definitely multiple layers of abstraction kind of here and like the mental models, but the the the signing piece is it right to think of it something like you know First of all is it helpful to keep in a mental model that the server is kind of like a digital bank Or does that break a bunch of stuff?

Alex B. (50:34.413)
Yeah.

Alex B. (50:48.302)
I mean, you could call it a bank. I wouldn't necessarily call it a bank in the sense that it never really has custody of your funds unless you kind of let them expire. Now, I don't know if we need to go into like the whole expiry thing. If we touch on liquidity, we can talk about it, but you are essentially, the server and that...

I again, I want to keep this as simple as possible. So yeah, you could absolutely call it a bank or service provider. We kind of prefer maybe to steer away from those terms because they have certain implications. Because in reality, you're talking about just a server. What he does is he creates...

those templates, Those spending templates, which I'm talking about the Merkle tree, right? And so you have a Merkle tree that spends from an output and that creates a list of beneficiaries of this new UTXOs and how the money should be spent and go to them.

And then you can even divorce those two functions. So can have someone that creates this template and you can have like almost like an open market of people that actually compete to offer their liquidity to be able to put this template on chain. So, you know, you can have like, it's almost kind of like a Ethereum style. like,

like a proposer builder type of like concept, right? You have people that are building the transaction, you know, the block templates. In our case, they're building the UTXO template. And then you have people that are putting them on chain by effectively lending their liquidity.

Alex B. (52:46.062)
Because that liquidity, they're going to get it back eventually. When everyone has spent their money out of the tree, then the operator or the bank or whatever you want to call it can then take that Bitcoin to fund another ARK round.

So, like I said, I don't know what the best mental model is. I've had a lot of good results with some people that are more familiar with other networks, effectively drawing the analogy to roll-ups. The server is basically like a sequencer, and he's taking all of these requests for basically swaps, and he's collecting them, and he's creating this...

Again, he's creating these pending conditions and he kind of like regularly just puts them on chain, periodically puts them on chain, which involves creating a new UTXO.

A lot of, again, for some people that was kind of like the unlock. I don't know if that's going to be the case for your audience. But I think, yeah, the biggest hang up there is having people understand Merkle trees and this idea that you can split. We use output as a word, but you can just say like we split a single Bitcoin.

and we say this Bitcoin can only be spent in such a way and this way is a list of recipients. And by enforcing those actions, you make it so that you don't have to trust anyone. you're part of that...

Alex B. (54:32.832)
output if you're part of that multi-sig that created this output on chain, you don't have to trust anyone. You know that your keys are there and they can use these different paths to spend those bitcoins. And then it becomes a question, okay, again, do you want to spend them collaboratively? And if you do spend them collaboratively through the other members, I wouldn't say even call them members, anyone that

wants to join a new ARC transaction on chain, all you need is a server to coordinate all of that and you get the benefits.

Jacob Brown (55:14.115)
Okay, TBD if my audience won't understand that, we'll check in the comments. I think we can move on. One interesting thing is that people don't understand lightning in the sense of like almost no one's actually done like a channel open. They just kind of like get sats from someplace. So when it comes to boarding the ARC, when you're going into the protocol, in the docs you say you spin up a

Alex B. (55:31.276)
Mm-hmm.

Jacob Brown (55:42.667)
an ARC address funding address and that has some spending conditions. But say a little bit about like the onboarding flow that people can roughly expect when this is live.

Alex B. (55:54.86)
I mean, honestly.

I think we should probably skip the exact mechanics of onboarding on chain because that's going to confuse people even more. But the reason I say that also is that the ideal onboarding flow is that someone just sends you on chain, sorry, ARK, ARKBTC. Whereas, you you don't have to have this process of bringing your Bitcoin. And this is, we actually expect a lot of ARK implementation and service and whatever is built on it to actually

not even necessarily leave open the opportunity for people to bring other than perhaps like infrastructure providers, service provider to bring their bitcoins onto the art because the UX is not necessarily the best. I think it really is not too bad but I think we envision more so like a future where people are just you

you can have something that we like to say is like ARK is kind of like a virtual account. So imagine you have a model where you have a Bitcoin broker's website that uses ARK and is therefore able to batch all of their withdrawal requests into those sort of nested virtual UTXOs. So what you end up happening is you kind of like have this relationship where

you're never hitting directly the chain unless you wanna get out of the arc. And especially if you're DCAAing, like if you're buying smaller amounts of Bitcoin where it never really makes sense to withdraw all of that on chain and create like those small UTXOs, right? Because in high fee environments, it's gonna be extremely expensive for you to spend them. Well, what you do is you accumulate virtual UTXOs, which are just as good as normal UTXOs in terms of your ability to, you your sovereign country.

Alex B. (57:51.52)
of those UTXOs, but what you might want to do is you accumulate them. Okay, maybe when you want to go and move them to cold storage, then you batch them out of the arc and you create a single UTXO that's much larger and is not going to create dust output issues in the future.

And so we really anticipate people to onboard and kind of like start interacting with ARK by directly receiving ARK, know, Bitcoins from people, whether it is the place that they're buying Bitcoin from or other services.

Jacob Brown (58:29.929)
Okay, that makes sense. It's going to be very similar to how lightning is used today which is that you just happen to get lightning sats and it's just a separate kind of balance and when you need to When you need to on the arc because of the way the protocols written cryptographically you can always go on chain Exit the arc get your on chain Bitcoin if you so please

Alex B. (58:36.746)
Exactly.

Alex B. (58:50.582)
or even like a simple swap through Bolts. We're gonna have Bolts integration. So someone could very much just swap their own chain Bitcoin for ARK, for like a virtual UTXO.

Jacob Brown (58:53.608)
Mm.

Yep.

Jacob Brown (59:06.534)
That's okay. Yeah, I'm actually it's still it's still dawning on me how big of a partnership that's gonna be because most people haven't used bolts but bolts is fantastic for going from lightning to Bitcoin to LBTC currently which is liquids Bitcoin But they're gonna become the provider for like swapping Kind of like the most what you want to call it non custodial is self sovereign versions of BTC as you bounce around Bolts is the place Okay, that's that's great

Alex B. (59:30.764)
Yeah, I agree. They're a fantastic, fantastic team. Yeah.

Jacob Brown (59:36.456)
Yeah, Kaleon and team are based. Okay, give us some color on ASPs. I think for most of my audience, they may have heard of LSPs on Lightning, which are people that kind of like custodial services make it easier to manage channel liquidity. I almost understand ASPs in this context.

Alex B. (59:58.698)
Right, well mean I wouldn't say that LSPs are necessarily custodial but certainly yes, they are the infrastructure provider that people with Lightning are going to be familiar with. ASPs, I think the name sort of simply emerged from a lack of creativity perhaps from people that were playing around with ARK in the beginning. Like I said,

We're not quite sure that this is the most accurate name because we envision a future where this concept becomes a little bit muddy where you might have a bunch of different, you might, you know, just in the same way that sequence, you know, you have like a single sequencer right now on rollups and people are trying to do like the decentralized sequencer, like an open market for sequencing. I think something like that is very realistic for Ark as well.

probably actually even more realistic than it is realistic on rollups where that's very unlikely to happen anyways. But I digress. mean, ASPs, if you want to call them that, are the entities that are basically coordinating the operations, meaning that they, again, as I was explaining, they are...

processing requests for people to be exchanging their virtual UTXOs to someone else. And basically are the ones in charge of effectively they're kind of like they're almost kind of like the miners in a way. you know, they take in transaction requests and eventually they create new, I mean periodically they create new outputs on chain that batch all of those transactions, that sort of like settle all of those transactions, those internal transfers of

ARC. And yeah, I think the key point here is indeed that they are funding those outputs out of pocket, right? And so this will require some amount of liquidity that is going to be available to them. If you want to get touch on this a little bit, obviously, this is kind of like been the...

Alex B. (01:02:14.366)
This has kind of been the main talking point around ARK, I think, ever since it's been proposed, is that you realize very quickly that, you know...

you have to fund the every output that goes on chain has to be representative of basically the volume of transaction of internal transaction of internal transfers that's been made in between the last in between you know this block this block see

I mean, practically is our blocks, right? But they're UTXOs, this UTXO and the last one. And so we're talking about pretty potentially consequential numbers and this actually can get even worse than the actual amount of transfer volume because you have to account for change also, which you're dealing with UTXO model. So you have to account for change. So the numbers can get pretty large and, you know,

Again, the reason why I think this has been a concern for some people is that if you need a bunch of liquidity to fund a bunch of operation, but you're always able to cycle through your liquidity, it's not so much of a problem. The hangup has been that the original pitch for ARK, the original design for ARK was around...

a payment solution that was native to mobile clients and retail user, meaning that you had to find a way to make it so that users wouldn't end up owning

Alex B. (01:03:56.975)
those virtual UTXOs, they wouldn't end up owning those checks that have an expiry date on it and the check expires, the virtual UTXO expires and then, well, you know.

the service provider or the operator is never gonna run away with the funds or at least it's very unlikely because he's got a business to run and he's ideally making money. But you wanna avoid this scenario. You're using ARK because you wanna preserve non-custodial status of your coins, right? So you wanna be able to make sure that you're...

virtual UTXOs never expire. And what you do is you just refresh them, right? So you can like send them back to yourselves, right? Which is something again, that I think is going to be abstracted in a pretty good way. But nevertheless, you have to do it. And the way that it was originally designed and proposed was, well, since we have to do this, and we are targeting mobile users, we have to give them enough time to come back online, right? This liveness requirement where it's like, well, someone goes to vacation,

with his family and doesn't use their phone or their wallet, they have to be able to get back home the next week and not have their virtual UTXOs having expired on them. And so the original proposition was, okay, let's make it four weeks. Four weeks seems like a decent amount of time where, I mean, if you're not going to be using your ARK payment wallet within the span of four

weeks and you probably shouldn't have money in there in the first place because clearly you don't need to use that money to make payments, right? So that's the main issue is like, you're locking liquidity up. The ASP is locking liquidity up for four weeks.

Alex B. (01:05:54.112)
And there are different ways to mitigate that problem. We can shorten that timeframe quite a bit depending on the use case. This is why I say, you know, like we don't have all of the answers to this. We think that liquidity in and of itself is a complete non-problem. We think that if there's needs for liquidity on the market, people will be happy to lend over their Bitcoin. Michael Saylor is going to be happy to give us a couple of his Bitcoins if it means that we're able to provide him like a quasi very trust-minimized

one of them, like if you look on the risk curve, think lending for ARK is right next to Lightning or even better than Lightning in terms of security properties and the risk of loss. So we think that's a non-issue, but there's also, know that there's a million ways to optimize for this. And again, it comes back to the conversation of like, I think people were sold the concept of ARK and the design of ARK that did one very specific thing. And therefore they have this

framework in head of like, well, this cannot possibly work because this and that, but we're gonna find out that people use it for a bunch of different things. And one of the ways that they can use it is they can do...

transactions that are out of round. When I decided, when we had this story of like, want to send you over the money and I co-signed the check with the server, you don't have to go and settle it whenever you want. Because if you trust the server to say that he's not going to double spend it,

Well, you can do the same, go back to him and say, I want to send money to Alice, can you co-sign that? We add another condition, we say like, Alice can also now spend this check. So you create a chain, right? This virtual UTXO that exists, you create a chain of like spending conditions where as long as no one in the chain tries to cheat the last recipient,

Alex B. (01:08:03.092)
and obviously you need the server to participate in this double spending, well, everyone is good, you know? And so, you know, can absolutely, you know, you can, I mean, just in the same way that Coinbase operates like their base roll up, Coinbase could operate like an ARK instance, right? They could operate their own ARK server and therefore,

you know, like, are you going to trust that Coinbase is not going to double spend transactions on you? Probably, you know. Do I personally want to have to trust Coinbase? I don't know, you know, like, I mean, maybe not, but, you know, I probably, would trust like Bolts, you know. I would be even more willing to trust Bolts or someone else or, and so it becomes a matter of like,

It's nice because it doesn't...

The cool thing about it is you don't try to enforce a specific trust model on people. You are able to leave it up to the user. And obviously, an out of round transaction is going to be less expensive because you don't have to put it on chain. It's going to be less expensive than an in round transaction. And again, because it doesn't go in round, there's no additional liquidity required from the operator. yeah, liquidity,

We see it a lot more as an opportunity. It's a great problem to have. You know, we're a lot more concerned about solving the demand problem, which is not the problem, but you know, it's just like creating a sort of like an environment and an economy around ARK where we are able to make the case that ARK is good enough for a lot of use case. We think it is. And when we get to the point when we start needing a bunch of Bitcoin,

Alex B. (01:09:59.376)
Man, that's going to be great news. And we got a lot of people in our Rolodex that will be way more than happy to be able to provide that liquidity at a fee.

Jacob Brown (01:10:13.356)
Yeah, no, that makes sense. mean the as I'm thinking about it the quiddity thing seems like a big it's a problem But it's mostly a big nothing burger one because it's pretty Assuming there's demand. It's a pretty good way to get kind of like a yield effectively as being a an ASP which plenty of people are hungry for it's like what Babylon's all about. So let's just do it in a better way using something like arc So that's interesting Let's

Go for an hour 10. Let's do like 20 more minutes. It's just rapid fire questions ish Cuz I to cover a bunch of topics one is how? How much do arc and lightning? Play together like is there's is there some? cross compatibility how much they different cuz it seemed like that's a big unlock but

Alex B. (01:10:46.84)
Yep.

Alex B. (01:11:03.958)
It's a, we think it's a massive unlock you know, I think like people don't realize how promising, the idea of, you know, being able to rebalance your channel off chain.

without having to hit the chain, without having to make like a trust compromise where you need to trust like the Liquid Federation. That's a big deal. And this is going to, I think, severely improve the reliability of Lightning down the line and even potentially the cost of Lightning. Because we're again in this like a period where nothing really is happening and the fees are cheap. But remember that like,

in March and April, I have this tweet where I opened my Phoenix wallet and it cost me like $150 to be able to add like 100,000 sets of inbound liquidity to my channel. So there are scenarios where right now, liquid is...

Sorry, not liquid, but Lightning is not an easy option for people that haven't had the opportunity to open all of their channels and whatever. People are always, open your channels when it's cheap. But what if I'm just learning about Bitcoin tomorrow? Obviously I don't have a channel, so what am I, like, shit out of luck because I didn't open channels when the fees are cheap and now it's 500 Sats per VBite? So no, yeah, liquid and, sorry.

Lightning and ARK, I think they have a very, very strong relationship. It's going to be, again, we're excited about the bolts relationship because of that, but we think people will continue to find ways because it is really the first implementation of what people have been playing around, like coin pools and lightning factories.

Alex B. (01:13:02.13)
and it's one that's available today. So, I'm super excited about it. And even just for the simple fact that obviously you're going to need Lightning to be able to allow different ARK servers and interface and their users to be able to move money between each other, which just plays into the narrative of Lightning right now, which is kind of like this unique, very, very unique infrastructure. Lightning is the only layer two, in my opinion, and it's the only layer two that will ever happen.

will ever exist because it is the only one that has this global network where you have routing involved, you have messaging involved that anyone can plug into. There's nothing like it. Anything else that exists, exists within silos and it's a question of whether or not they're interoperable with Lightning and can use it to move money around to one another basically.

Jacob Brown (01:13:55.808)
Got it. Very hype. Okay, other topic is on opcodes. Opcat, Clark, these kind of things. Like some people talked about... So Clark is covenantless ARC, and then there's ARC with opcode. It sounds like you guys have kind of inverted it to where ARC is what can exist today, and an opcode will make that better, but like give us some color there.

Alex B. (01:14:19.394)
Yeah, no, exactly. mean, we have art today, it works. Again, I think it's just a consequence. I always go back to that, but one of the biggest detriment right now to having...

to reshape the understanding of people around ARK is, I think, the original pitch for it. If we would have said, if we would have, someone else would have created ARK and didn't mention Covenant, I think we would be much further ahead in sort of like the conversation and the infrastructure around it because the reaction around, well, it needs a Covenant, led 95 % in the space to kind of like...

file it somewhere to decide and we'll talk about it when we have covenants. Obviously, covenants are going to pretty significantly improve ARC, especially when it requires a little more scale. And some of the quick reasons why that's that is like when I told you, need to sign that new transaction tree that contains one of your virtual UTXO,

know, if you have 50, 100 people, you're starting to have this very large tree with different spending conditions. And without covenants, need everyone that's in this tree, everyone that's involved in this transaction needs to sign kind of like almost every clauses of that contract, right? You need to sign to check that, this money is going through this. Almost every clauses of that contract, everyone needs to sign it. So there's a lot of interactivity involved there. There's a lot of information being passed around. And this creates a little bit of overhead.

hand and is going to impact the UX for mobile clients. But if we have covenants, then you only need to care about your own clause. You know that like the rest of the script is enforced there and it's embedded, the spending conditions are embedded within the covenant script and all you need is one signature pretty much. And so that's going to...

Jacob Brown (01:16:06.988)
Okay.

Alex B. (01:16:23.948)
clearly improve the impact of, or sorry, the user experience, specifically for mobile users. If you're running a server that interacts with Ark in some ways, you don't really care, right? If the process of getting into a round and doing all this message passing and signature takes 10, 30 a minute, well, you have a live server, that's not a problem, it runs in the background. If you're trying to do this on your phone, and you have to, I don't know if you've ever played with DLCs or whatever and things like that, there's some,

examples of this where like and you know, it's not because of poor engineering It's just like the state of things is like you have to kind of like to wait for like maybe up to like a minute for the thing to finalize and it tells you like don't close your phone because it's gonna it's gonna break, you know So the things like that and then the other part of that is basically like managing liquidity There are some ways to even improve So like the liquidity requirements for art just allow for more efficient management of liquidity for the operators, but the big big big

unlock really and I think what is, yeah, probably the most interesting thing, especially if we start getting...

powerful like introspection opcodes, up cat and things like this is okay. What can we do to actually improve the worst case scenarios with Ark? The worst case scenario be, be being like this, you know, this thundering herd or like this mass exit problem that we have with lightning as well. but on the larger scale with Ark, because then with lightning, it's two people in a UTXO basically, but, and with Ark, it's, you know, potentially a lot of people. And so what happens if everyone wants to go and get, get on

chain, that's going to become expensive. And with covenants, can sort of like allow, with introspection, we can allow so like more, a lot more efficient where you reduce because...

Alex B. (01:18:14.862)
The way it works with ARK is like instead of lightning, you don't put one transaction on chain to get your money back. You may might have to put like three, four, five transactions on chain. So, you know, it kind of like racks up pretty quickly and can get expensive. And I think there are different ways for with covenants to reduce that cost, which is just a matter of like, you know, mitigating the worst case scenarios. Obviously you want to kind of like build systems like ARK, you know, systems like

that system like Lightning are a little bit optimistic in a way, right? You can always hope that everyone is collaborative because it is within their financial incentive to be collaborative. some media might mess up or maybe some servers or a house burns down or whatever happens and people have to go on change. So you want to reduce the cost of that happening. And this is, think, where covenants are going to help a lot. Yeah.

Jacob Brown (01:19:12.81)
Interesting. Okay. Two more questions and we'll close this out. One is the ever important question of when. When will people be able to play with this? What's the like rough VTA currently?

Alex B. (01:19:25.934)
I mean, we're talking about like probably, I think we have a new release coming up in, which is kind of like a code release coming up in a couple of weeks. in, I mean, if you're in, I don't know when this is gonna be out, but if you're in TabConf next week, you're going to be able to play with a on-chain main net ARC wallet.

You're not going to be able to get your money out of it, but I think that's going to be fun. So I'm looking forward to that. And in terms of like our Ark node, which is the product that we're...

Jacob Brown (01:19:54.275)
Thank

Alex B. (01:20:01.528)
looking towards delivering first, kind of like a go-to-market product, that's going to go into testing phase very, very soon with some of our partners and Bolts and all of this. And so I think we'll have infrastructure people in the lightning industry trying that out. And I'm going to remain conservative, but I would say that it's very, very, very likely that we'll be able to ship the ArcNode for the main public.

in like very early Q1 next year, if not before, but I'm going to try and sort of like temper the expectations here. Yeah.

Jacob Brown (01:20:40.605)
under-promised over-delivered kind of thing I get it okay q1 ish very cool and then and what that vm5 loading currently real quick I want to get your take on because one thing I think I've a thread line you've been pulling on it's been interesting is that trust is good now it's not like that it's not like an end-all be-all

Alex B. (01:20:47.948)
before BitVM based protocols, that I can guarantee you.

Alex B. (01:20:57.29)
Yeah.

Jacob Brown (01:21:10.02)
Trust the systems are better for some things, but it sounds like you've evolved your thinking and There's a lot of value in brand and reputation and trust they use these systems work and you said something that was like So it's simple, but it's actually pretty interesting which is like I think you said something like more Bitcoin financial services And I can pass tweet so I'd love you to explore like just

Alex B. (01:21:32.386)
Yeah,

Jacob Brown (01:21:36.384)
on that a little bit because it's very contrarian to like the maxi ethos and I think it's more true it's more right there's gonna be this push and pull of both but please wax point me a little bit before it goes out

Alex B. (01:21:48.896)
Yeah, no, I think, you know, this is probably one of the biggest trends that I'm betting on.

Maybe the cycle, I think actually like some of the first significant players of this are going to show up the cycle, but it's Bitcoin capital markets, Bitcoin native capital markets. And it's kind of like a narrative that's existed and that's, it's been promoted by people trying to do it in a DeFi way, in smart contracting chains.

But what I'm seeing is more serious players trending toward implementing this Bitcoin native financial system in sort of more conservative, with a more conservative approach of not necessarily getting...

you know, intertwine with all of this technology, but more so building sort of solid system based on very concrete primitives that allow, you know, trusted relationships to be made more efficient through the use of the technology that we have. In a way that's maybe more like peer-to-peer, you know, that doesn't, and one good example of that, it's, you know, you've had it on the pod,

It's my buddy Shazan and what he's building at Lava, right? Where you don't need an Aave lending protocol to build like an institutional grade lending, Bitcoin back lending service. You need a DLC primitive. You need a solid infrastructure that you spend more than a year in the case of Shazan of kind of like grinding to make sure that like there's no ways that anything of that can go wrong. And you can almost kind of prove this,

Alex B. (01:23:41.802)
It's just like...

airtight in terms of the infrastructure. And then you bring you on board a bunch of people that will be able to, in this case, serve those requests for loans. And those people are getting matched through a centralized infrastructure, but the execution of the contracts goes on chain. And I mean, this is a very efficient way to do it. It's a way that is based on, you know,

real world trust relationship, obviously like the liquidity provider that Lava is dealing with, they've vetted them, they know that there are people that they can trust to execute if there's high demands of loans and liquidity and all of that and they have the infrastructure, they're serious people. don't let, you have systems like Aave where it's basically, well, okay, I can provide liquidity for loans or I can take a loan.

you get kind of like thrown in thrown into kind of like this this this this environment where

the person next to you, you know, like the person next to you is taking on this crazy risky loan or this lender that's in the same sort of like ecosystem as you is making this outrageously risky loan to someone else. And you know, you introduce like system is risk because you don't know who you're dealing with. So, you know, I think Bitcoin capital markets are going to emerge from the, from a place of, you know, we have tried and true processes.

Alex B. (01:25:21.09)
that have evolved through hundreds of years of finance. And we're not going to throw this out of the window because we have access to technology and protocols. We're going to plug in the protocol for money, which is Bitcoin, and we're going to plug in specific contracts that are dumb simple, but that can help just kind of...

you know, bring the execution of these trusted relationship to a higher level where you can actually, you know, you can, first off, you can commoditize those services, right? So you can open them up to a bunch of different players and therefore you just generally incentivize better products, better services, better prices for consumers.

And another one I'm super excited about is the people at Roxham. And these guys are effectively building, I mean, it's one part of their massive plan, but they're building a Bitcoin denominated stock market where anyone in the world is going to be able to essentially go and have access to traditional financial markets via their Bitcoins. And the mid-width is going to say, what do I

need that, you know? I don't wanna like buy stocks, I don't wanna buy Apple, I've got Bitcoin, it's the best asset on earth, but the intelligent capitalist is gonna be like, wait a minute, you're telling me that I can short Apple or the S &P 500 with my Bitcoins? And all of that is going to be natively Bitcoin denominated options and derivatives and all of that? You know, people have this confusion that, you know, people with a lot of Bitcoin are...

plenty happy sitting on them and just watching. No, they actually want just more Bitcoin. They always after more Bitcoin.

Jacob Brown (01:27:14.339)
Hmm.

Alex B. (01:27:15.27)
And I think there's different segments of the market where you can see it. Like the Bitcoin season two, you can see it when I was in Asia. People have different risk profiles and you've got whales who are gonna be plenty happy tossing hundreds, thousands of Bitcoins into whatever DeFi protocol, because that's just the way they operate. But when you're talking about like...

I don't wanna be one to cheer for BlackRock and whatever, but these people exist and they are institutional player that own Bitcoin, but they're never going to start fucking yielding like millions of dollars into like obscure DeFi protocol, right? They're looking for yield on their Bitcoin and they wanna have the, they don't care. don't want 10%, 50 % APY, right? They want like 3%, 5%.

because they're dealing with large amounts of money anyways, and they wanna do that in ways that are secure. I think the opportunity for that to happen through a Bitcoin native, Bitcoin denominated stock market is pretty amazing through lending platforms like Shezan. I think this is the big unlock, and obviously you don't want all of that to happen strictly.

You don't want the financialization in the way that people are talking about the ETF and all of that. The exciting thing is this can happen anywhere in the world and it's again, it's all you need is liquidity.

and technology to make it happen. You don't need the same type of banking infrastructure, permits, licenses, whatever, you know, that banking and finance usually deals with. So I think this is going to accelerate. yeah, when I say that we need more, because this is all going to be to the benefit of every single Bitcoiners, we need more Bitcoin capitalists, people that are willing to deploy their capital into the Bitcoin economy to...

Alex B. (01:29:17.518)
You know, like one of the things that the RockSum guys are thinking about is, well, okay, what if we get to a point where we can have people IPO into companies with Bitcoin, right? Build Bitcoin native companies that have Bitcoin denominated IPOs. I don't know how all of this is going to work, but this sounds very, very exciting to me. I want to have this, we need people that have been sitting on, you know, hundreds of millions of dollars in Bitcoin.

to start deploying that and you know, my hope is that this does not just mean you know starting to mint a bunch of runes and ordinals collection like I think there's a you know higher goal here and I certainly I think there are people that are a little more serious than that and I'm seeing that happen. I mean I've gotten to meet a lot of very interesting profiles over the last year and I'm seeing like

Don't call them the ancient Chinese wells, but there are ancient wells that are starting to becoming a lot more active and that's to the benefit of everyone. And yeah, trust, trust, trust reputation. We didn't even get into NOSTER in this conversation. That's gonna be a big part of it.

Bitcoin is going to lead to a much more trusted future for society than we've ever had. I am more confident in that than ever. This idea that we can do that and cannot trust anyone is just a reflection of the fiat system we live in.

Jacob Brown (01:30:56.784)
Yep, it's a very interesting take but yeah, I think I agree with you. It's gonna be that sounds very right Which is interesting because I think a subset of big quarters are gonna put in a holler all the way down while that's working extremely well and that's just kind of like it is what it is It's just hard to it's hard to synthesize where the signal is in Twitter, but that's just the nature of social media. I guess Last last question just to close it out anything. I didn't ask

Alex B. (01:31:21.547)
Absolutely.

Jacob Brown (01:31:26.353)
or anything you want to riff on, any topic at all, before we close it down.

Alex B. (01:31:33.006)
Yeah, I I brought that up earlier, did I? But one of the things that I'm super bullish on lately, putting aside, say, ARK, is stable channels. Is this idea that we can operate a Bitcoin native hedge against volatility. And whether you want to denominate that in US dollar or in

Nvidia stocks or whatever that is, being able to do this by simply opening a lightning channel with a counterparty and settling a balance in a sort of instant, in a practically instant way is something

really revolutionary. It's never been possible before. It's so simple and it almost sounds too dumb to work. And a lot of people already kind of I think dismiss it because it's like, well, yes, you do need some sort of, there is, so to put a little bit of context around.

Jacob Brown (01:36:08.726)
Yeah.

Jacob Brown (01:36:15.414)
Hmm interesting is the I met a guy named Tony I think doing the stable channel stuff was Is he the current leading edge or like where's the leading edge of stable channels right now?

Jacob Brown (01:36:33.984)
Yeah.

Alex B. (01:37:05.038)
I don't know, sorry, it's not a stable coin, just a stable balance really, or a stable note in the case of eCash, but boardwalkcash.com, who's built by Bob, is a really, really, really fucking cool product around it. Progressive web app, simple UX, works really well. I think it's one of those things where, and I mentioned that earlier in the pod, but I saw signs of that proliferating in certain Discord servers where the

the VGENs tend to hang out. And if they get it, I think like it's one of those things that could catch fire because there's nothing like that in all of the internet. This ability to send.

Think of it like even with any stable coin protocol, you're not able to basically gift, you run a Discord server, you want to toss a couple of dollars to your followers or your people in your group or whatever, like a single dollar. You cannot do that with any, it's too expensive to do that on any chain. The UX is garbage because you need the person's address. You need to be able to send the stable coin to someone's address. With eCash, you can literally just fucking throw it over on the internet.

and it's like, it's literally like cash. You can give it to people, whatever. So it has this very viral nature and I think that's going to catch on sooner than later.

Jacob Brown (01:38:29.327)
Yeah, boardwalk cash is probably the easiest way to just give someone some quick stuff with like an email link Yeah, super cool stuff

Alex B. (01:38:36.802)
Yeah, it supports actual Bitcoin now as well. So really honestly, like if you're talking about like custodial wallet where you like even like obviously it's in terms.

Jacob Brown (01:39:16.282)
Dope. Dope. Cool. Well, I think we covered a lot. This was a fantastic episode. Thank you for your time. I won't make you show all the things. I'll have all the links down below. People go hit the description. But yeah, thanks a This has been fantastic.

Jacob Brown (01:39:36.794)
Absolutely. We'll do a round two in a year when ARK is taken over the world. Alright man, thanks.