E160: BOB - The Hybrid Bitcoin L2 with Co-Founder Dominik Harz

Jacob Brown (00:02.154)
Alright cool, then we'll jump in. Dom, welcome to the show my man, how are you? How are you?

Dom | BOB (00:08.627)
I'm very good. Thank you very much. Thanks for having me. How are you?

Jacob Brown (00:12.594)
I am fantastic. Very, very excited for this conversation. I this is going be a fun one. just to jump right in, let's not leave the viewers hanging. I'd love to get a little background on you, people who don't know you and maybe in a roundabout way, give us a brief background. Cause like there's, there's like accepted Bitcoin, especially preordinals. There was like accepted Bitcoin and it was kind of adjacent Bitcoin, but you were still Bitcoiners.

and there's a lot of us that kind of fit in that kind of like adjacent category. And I would put interlay very much in that category. So yeah, just to be brief, because there's a lot to touch on here, but I'd to get a little bit of your background and then touch on what you and Alexei were working on with interlay, it'd be great.

Dom | BOB (00:55.723)
Yeah, right. I got kind of started in Bitcoin or in crypto more generally in 2016. I was super curious about hating the banks in organizations. I was doing kind of my masters in distributed systems during that time. And then I threw some blog posts and stuff I read about this idea about the DAO, which like you could invest in like companies all encoded in cool smart contracts and then

learn about Ethereum that way. And then the DAO got hacked, Ethereum forks happened. And I was like, wow, this space is so cool. I need to work in this space. And then right after that, I kind of decided to start a PhD. That's where I met Alexei. And he was working on Bitcoin. He was the way more hardcore Bitcoiner than me. was already working on.

Merged mining and kind of extending Bitcoin, scaling Bitcoin. And we started working together on a thing called Exclaim, which is like a protocol to bridge Bitcoin over to other chains. And well, we were the first two guys in that lab at Imperial College, the cryptocurrency lab doing our PhDs. And Alexa was like, hey, don't you know how to write smart contracts on Ethereum? And I'm like, yeah, I can do that.

He was like, okay, I'm building this exclaim thing. Could you help me write like a prototype for that? And then we started working together back in like 2017, early 2018. And then we actually got together and flew to Financial Crypto, which is like an academic cryptography kind of conference. There's a lot of Bitcoin researchers also going there.

And then we also went to scaling Bitcoin in Tokyo in 2018, which was really cool. Back then, everything was still like scaling Bitcoin only with lightning. And we got one of the last talks on the second day about the wacky other ideas. Actually, I think right before us was the introduction talk for a group called BitGo had just developed WBTC. Yeah, and well.

Dom | BOB (03:12.864)
Now things have changed a few years later, but that was kind of the early start and then really actually got me into the Bitcoin side of things. But I was always interested in kind of expanding it beyond its kind of limits. And that's kind of where the whole interlay journey then started. So Web3 Foundation reached out to us and they're like, we read your exclaim paper and wouldn't you want to build that?

Polkadot. And back then, it was quite interesting. Polkadot was built on Rust. I was quite... I love Rust. It's cool language. So there was a cool opportunity to build it. And I think the original vision of Polkadot being solving interoperability was quite nice in a way. And we aligned with that. So that's where we started the Interlay project. So basically bridging Bitcoin over to Polkadot and the...

the long-term thing was like, OK, let's get interlays like IBTC, the asset, and let's bring it to all the chains via Polkadot. And then a few years later, was like, OK, Polkadot still doesn't have the full-on interoperability that we wanted it to have, like connections to Ethereum and other chains still kind of lacking behind. And then, last year, we were thinking about, we still started with this idea.

bring Bitcoin to the world, to any chain? And what was the reality? Like last year, had everybody using centralized versions of Bitcoin on Ethereum, mostly, like RAPTC. TPTC is doing quite well, but it's not at the scale yet. And then we kind of reevaluated, you know, in which direction should we go and learned a lot of lessons when you build a startup, right? About, you know, kind of building in a niche.

where you actually find adoption and then that being worthwhile to then solve these hard problems around decentralization. So we kind of decided, okay, let's build something new. Let's make it easier for other people to build on Bitcoin. then I guess if you ask Bitcoin maxis, probably they hate a little bit what we're doing, taking the OP stack, launching on Ethereum initially, and then solving the hard problems along the way.

Dom | BOB (05:32.065)
But that was kind of an important and actually quite conscious step for us. We wanted to launch something that people can use right away that is, to a certain extent, is secure enough, maybe. You can totally debate me on that. But at least there's a bunch of other companies that launch with the same model, like Arbitrum and Base and Optimism.

And yeah, then solve BitVM, actually bring in Bitcoin security, work with companies like Babylon to bring Bitcoin the asset as a security mechanism to BOP. yeah, I'm very happy to deep dive on all of these. This is already a very long introduction, so I'll kind of stop it here. But I'm very excited about scaling Bitcoin and allowing people to use Bitcoin the asset and Bitcoin the chain. I think that's quite important.

Jacob Brown (06:15.872)
I love it.

Jacob Brown (06:24.718)
Now this is, I you opened up 17 can of worms, this is great. I think, one thing I wanna touch, well, this is just like a footnote, but I've heard those early scaling Bitcoin conferences were just like iconic. Everyone talks about them in like this kind of like nostalgic view. There's a lot of cool shit going on back then. You kinda had to be kinda diehard Bitcoin, but also somewhat technical to go to those it sounded like.

Dom | BOB (06:28.116)
Yeah, you're welcome.

Dom | BOB (06:53.301)
Yeah, I think actually there were, at least my experience was like, they were extremely open if you're working on technical things. I really loved them for them being very, very tech heavy. But a lot of people, like six, 700 people showing up for extremely technical talks. That's quite rare. And if you come from a techie background, that's your paradise. Building in like not.

caring so much initially about product and just about technology is fantastic. And it was actually super open for people like me who was just doing their PhDs. Like there were even grants to travel there and stuff like that. So it very welcome community.

Jacob Brown (07:35.16)
Very cool.

And one of things I want to pull on that I've seen with a decent amount of founders that are doing cool shit is they'll sometimes start in academia and then they kind of get burnt out by like just being in the theory land and they want to go build cool shit. And a lot of them also have technical backgrounds. So they were writing code, then they have a CS degree. And then as they become founders, I assume you guys are writing very little code and you're just kind of like high level vision. like, is that roughly correct of like theory to practice and writing

code to vision.

Dom | BOB (08:09.62)
Yeah, I think that's fairly accurate. I think the hard part in moving over to building a company is that product and actually the business side becomes so much more important in academia. Your sales process is like writing a paper and then getting reviewers to eventually accept that. you never actually really, well, you never talk to them. You can't talk to them.

only way to interact is that you get like a review and then well if you have another chance to rewrite your paper that's okay but I think it gives you a very unique opportunity though to work very deeply in a certain area. That's why I think a lot of people come out of academia and then start their own company. I think especially people that did their PhD if they finished it or not.

But I think most people in the cryptocurrency lab at Imperial that I worked on have started a company. there's the gyro stablecoin, Omnithairn that came out of the lab. And know some people from Cornell. Obviously there's a lot of people from Cornell that's actually a company in the blockchain space. There's this whole IC3 conglomerate basically. There's like a Greek academia mafia as well.

that are involved in a whole bunch of different crypto companies. This whole Stanford Crusoe is kind of... I think it's a really good opportunity, but there's a ton of learning. When you come from academia and suddenly build a product, it's a very, very different game than the academic world. But yeah, it's cool. I like it. I like both. I prefer building a company, to be honest. Writing papers is my favorite thing in the world. I write the...

build products and see people actually use stuff. It makes me more happy.

Jacob Brown (10:05.782)
Makes sense, makes sense. Cool, and then yeah, I wanna jump into what Bob is, and this is kind of a pin for people to think about, because as I'm listening to you talk, this idea of building practically keeps coming to mind, and this is something I've been kind of thinking about, of like, a lot of Bitcoin's been so decentralization maxi, trust mobilization maxi, and so they don't use anything that isn't perfectly trustless, and we're seeing a lot of those like, cracks break.

or just adoption is super difficult. And so I think that what you guys have done, especially coming from Interlay into the way you've built your roadmap for Bob, is exactly that. It's building practically and evolving into the thing. So this is more of a call to action for the people to keep this in mind as we listen to the rest of your, as we go through Bob. But yeah, give us a brief overview and then we can get into the weeds on what is Bob.

Dom | BOB (11:02.836)
Yeah, let's do that. Right. So when we set out to build BOP, were like, of, Ordinals were just on the rise last year. And suddenly, there was this new interest to build things with Bitcoin. And I think, yeah, Ordinals and Teprids kind of kicked that whole thing off. But if anybody that ever tried to.

build more complex protocols using Bitcoin script, they will likely tell you that while it's possible, you can program stuff on Bitcoin. It is very, very hard to do, and you quickly run into a lot of limitations. So we said, OK, if we want to scale Bitcoin, there's probably three key problems that we want to solve. A is you want to have Bitcoin security. That's the most important.

It needs to be rooted in Bitcoin security eventually. But it's also the hardest problem on the technical level. Alexa and I have been working on that since I started around 2017, Alexi, before that even. There's techniques like merge mining, whatever not. until BitVM came about, there wasn't really good way to solve that. But we said that's not the only problem. If you want to build a

scaling solution, you also need to solve two other problems. One of them being like the actual ecosystem that you're building up. So you need a bunch of builders and they need to have opportunity as well. And this is where kind of this practical approach comes in, but it's also connected to the third thing, which is like, okay, you have ecosystem, you need a bunch of builders, and then you actually need the third thing is like the whole users plus liquidity. need people that actually use these products and use the things that

ecosystem builder is actually built up. And I think, roughly speaking, there tends to be two different kinds of projects. There's usually the pure ecosystem users liquidity play, no care for technology whatsoever. And then there's the pure technology plays. I think Intelli is a bit more in that direction, or used to be in that direction, quite very technology heavy. We were building and building and building.

Dom | BOB (13:23.888)
realization we had is like, we actually need to do kind of both at the same time, be quite technology driven, but also pragmatic in a way that you can actually deploy your stuff. You can have users, you can have liquidity. then we thought about that. Okay. If we want to reach that from first principles, how would we want to go about that? And that's where we made that weird decision to like do this. being a hybrid L2. Let's say, okay, where do we actually

If you have Bitcoin, what do you want to do with that? Usually a lot of people want to have more Bitcoin. So they don't want to sell it. So what do a lot of people do? They borrow stable coins against their Bitcoin to take out a loan or they want to stake their Bitcoin. And then we looked, okay, what's the place with the most stable coin on the market right now? That's pretty much a theorem. And then we were like, okay, can we connect somehow to both?

So we looked at the different kind of options. then OPStack is for the people that aren't too deep in Ethereum scaling, which I can understand. roughly, there's OPStack and Arbitrum Stack, and there's the StarkNet Stack and ZKZinc. There's all these different stacks. OPStack has this nicety that it's very close to the ETH2 architecture. So it's very modular in a way.

plug-in things and take out things. So it allows you to modify the software easily, or at least you can modify it in a way that you only need to modify certain components, but you still have to stay compatible with components that are developed by other companies. you kind of, you make use of that network effect, even on the base, like the roll-up stack layer essentially.

So we kind of decided, OK, let's use the OP stack because apart from optimism, Coinbase was investing heavily in its engineering. Then there's also RiskZero and Sucsync that now build ZK provers on top for OP stack. So there's a lot of innovation happening where we didn't actually need to build things. And then we said, OK, let's roll up to Ethereum first so we get access to stable coins and we get access to Bitcoin liquidity.

Dom | BOB (15:48.661)
that is already bridged over to Ethereum. And then Alexei, I mean, he's one of the co-authors on the BitVM2 paper together with Robin. And basically, okay, let's work in parallel on solving this hard Bitcoin security issue while we built up a community and an ecosystem. And let's also find other partners who have that same vision. And that's where kind of the Babylon came in that had this kind of solution to...

to one very particular engineering problem that we are facing is, if you build a secure bridge to Bitcoin, how do you actually verify that BOP itself is correct? And you can use BitVM, can use MerchMining, or you can use of Babylon proof of stake. And there's different kind of trade-offs between that. And for us, kind of the Babylon model made the most sense. So that's where we are working towards that.

final solution. yeah, in the end, I think it's the three important problems, Bitcoin security, you want ecosystem and you want to have users and liquidity. And we said, let's build something right now and be on the journey with us to solve this Bitcoin security problem.

Jacob Brown (17:02.094)
Very cool. We'll touch back on most of those real quick though. Is there, for the people in my audience who are not played with Ethereum much, myself included, I've dug deep and I kind of know what OP stack means, but is there...

Is there corollaries in Bitcoin to this or is Bitcoin so new that like, you know, in my mind you have like the L1 of ETH, which is like slow to upgrade, long roadmaps, and everything settles down to it. And then you have all these different kind of like well-funded entities trying to build L2 solutions like Optimism, Arbitrum, ZKSync. And they do different ways to kind of optimize for ecosystem and building easily. It's too early in Bitcoin. There's no corollaries really to that.

something that kind of they can have in their mental like that kind of looks like.

Dom | BOB (17:52.917)
Yeah, I think it's kind of close to probably what Alpen Labs is doing with Strata, having kind of more of own stack and then the way Chainway and Citrea are doing with their stack. But yeah, it's way earlier. They're all kind of relaunched right now. There's also kind of, yeah, it's not 100 % comparable.

I guess also Lightning isn't a good comparison because Lightning is mostly off-chain. You want to process your transactions off-chain where you just want to go on-chain when you want to close a channel or close a channel or there's a dispute. But by default, you want to be off-chain. Whereas the L2 is on Ethereum, are off-chain from the perspective of Ethereum, but you still have a chain running with smart contracts. There's just an L2.

So I think Bitcoin is still early in that sense. And it's mostly also because, for eBitVM, nobody really knew how to build a roll-up on Bitcoin. And there's still a few open problems that need figuring out in the practicalities of it. How do you keep your operator set fresh? And how do you actually implement the...

the common committee to work around this lack of governance in Bitcoin. How do you actually, well, I mean, how do you do in practice? Well, you get a committee together, but then, you know, how does it operate actually securely? There's a lot of open problems still that need solving in the Bitcoin world.

Jacob Brown (19:37.794)
Got it. Okay. Yeah, I do want to touch on these. You have these three goals. BigQuery security, big ecosystem of applications, and then users. And users probably has a couple of pieces. It's like easy UX and useful products bring in the users. And ideally you get this kind of like flywheel. But those seem relatively obvious. Not to downplay anything you're saying, but like...

I think most Bitcoin project founders would say that's kind of our North Star. But you guys still came around in this very interesting, like no one, you guys are very unique in what you've built. Bob is kind of a one of one in construction. So I'm still kind of curious and I wonder if it comes from building Interlay and seeing how difficult it is to kind of like attract users even if your tech is best in class. So yeah, I'm just curious on some,

a little deeper on this topic because it's saying first principles and these three goals, you still ended up in a very different place. So enlighten us, yeah.

Dom | BOB (20:46.369)
Yeah. Yeah, I think it's the... I mean, I don't know if our whole thing is going to work out. I'm working very hard towards it. But I think the opinion that we have and that's probably different to all of the other Bitcoin projects launching right now their own scaling solutions is that network effects matter.

a lot, I think. And you, I think every, a lot of the Bitcoin L2s that are being launched right now, they're using the EVM, right? So Botanix is using it, Citra is using it, everybody's kind of using the EVM. There's a level though of network effects and not just technology. So if you use the EVM, like anybody can just deploy your contracts so that we're not really that much shift into the other ones.

I think our network effect is more like if you talk to somebody and ask them to bridge over to your network, they will ask you, what's the initial security assumption? you still a lot of, even if you have full BitVM, probably most people will launch with some sort of training wheels attached, where you have some components that are still centralized. So even lightning, in theory, fully decentralized, but in practice, a lot of centralized components still in its usage. Just simplicity, right?

In these network effects on the protocol level, that's why we kind of decided to connect to Ethereum in the first place, because you can easily talk to users and you have a very active DeFi user group. think our, the initial use case that Bob is focusing on is very clearly is like this BTC FI or DeFi use cases. And you have an extremely active community and most big

kind of most users on Ethereum, if they're active in DeFi, usually have Bitcoin. We're all somewhat, or most of us are Bitcoiners. There might be a few eth maxis who really hate Bitcoin, whatever, I don't care. I'm not a maxi myself, neither Ethereum nor Bitcoin maxi. But yeah, I think most people are quite practical about, excited about the cryptocurrency space, know, the blockchain space being big and then like Web3 space being big and they...

Dom | BOB (23:14.312)
They're just not serviced on Bitcoin right now. They are somewhat serviced on Ethereum, but not really by Bitcoin dedicated projects. That's why we said, let's use this market opportunity and let's actually build something that services that community and use that as our initial niche to bootstrap the network.

Jacob Brown (23:34.606)
Yeah, think the network effects matters is I've been trying to think this one a lot Because definitely users are a network effect Ecosystems liquidity is but it's also different in the sense that because these protocols are so open Network effects can move much quicker than in web 2 space. It's it's interesting in that way

But you did mention we're connected with Ethereum and there's other L2s that are using EVM So like the smart contracts, Solidity, and so there's a lot of me too they're using the network effect and the infrastructure that's already built out for Solidity to not have to teach a new programming language That's that makes sense, but you guys are actually and make sure I'm clear on this point. You're actually connected to Ethereum so your EVM

and connected, meaning that people can actually, once they're on Bob, they can actually use products that are connected to Ethereum, the L1, and swap tokens in that way too. So the connection is that close. Do I have that right?

Dom | BOB (24:40.321)
Yeah, so basically, typically a rollup has one enshrined bridge, which is like that's its native bridge to the main network it connects. And we have this unique maybe bit of an odd construction where we say, well, we're not a Bitcoin L2. We're also not an Ethereum L2. We're like a hybrid L2. So we're going to enshrine two bridges into the rollup.

One is the Varenbridge and one is the Bitcoin, Bitcoin bridge that we are working on right now. And I think that's kind of, so this is the current research that's ongoing. There's a blog post, hopefully paper coming out in January on this. The trick is going to be, Bob is going to be settled, like its consensus is going to be settled on Bitcoin using Babylon. And then we're going to generate a proof.

from Bob being confirmed on Bitcoin like a ZK proof, and then we're going to submit that to Ethereum. So to this enshrined Ethereum bridge, that people that want to withdraw to Ethereum, they basically get a proof that Bob was settled on Bitcoin. So you kind of connect the two, both get Bitcoin security, but on both sides you have an enshrined bridge, so you don't need to trust a third party.

bridging provider, all you need to trust is basically that Bob's consensus is correct.

Jacob Brown (26:07.086)
it. That's super cool. And then one thing that think people, this is kind of gotta be in the weeds to understand, where you think about trust assumptions, and there's one for moving Bitcoin into a network and ideally getting it back out without having to trust anybody. That's like the historical peg out problem that Bitcoin can't verify that BitVM is hopefully solving. And then the second one is when you're on the network, you know, it's a

robust enough that it's hard to attack when it comes to transaction ordering and what is canonical truth on that chain. And it's interesting to me that you guys were building a bridge initially to make Bitcoin use cross-chain, but then you launched and you don't have a canonical bridge. You went to outside third parties and then you have, like give me some color here of like that decision. Cause I found that pretty interesting.

Dom | BOB (26:57.909)
Yeah, why? Yeah, right. So Alex and I, we've been working on this bitcon bridging for a very long time. So there's some fundamental problems in bridging operations in general, which is like, the best you can do is you can trust both consensus protocols on two chains. So you want to bridge from chain A to B like,

moment you have a bridge in place if consensus of chain B fails, so like you bridge from Bitcoin to, I don't know, Polygon, Polygon consensus fails, like your Bitcoin are probably lost. There's not much you can do because of all the consensus says that these are not unlocked. You're pretty screwed. But then Bitcoin has a special problem of limited smart contracting ability, no covenants, or only workarounds. can't

No introspection, can't check from a Bitcoin transaction the past Bitcoin blocks. So we were like, okay, one of the key issues when you build a bridge is to bootstrap liquidity. But if you build a new bridge, kind of, there needs to be a reason to bridge over in the first place, like some sort of opportunity. Like if I tell you, there's this new chain, why should you bridge over? you're like, but.

There's no use case there. Even if there's close to zero trust assumptions, there's never zero trust assumptions. In the end, also, unless you're a very good software engineer, you're not going to verify that the code is all correct, even if in theory the protocol is perfect. So to tackle that trade-off, we said, OK, let's use what's on Ethereum and acknowledge that that is not the end goal.

wBTC or even if it's cbBTC or whatever people's favorite or least favorite version of Bitcoin on Ethereum is, isn't the end goal? We need to get to a stage where we have a proper bridge. right now, and the time when we launched Bob and wanted to work on this problem, BitVM wasn't yet around. then even until a few months ago when BitVM 2 was actually finalized and Robin came up with this idea that we can just

Dom | BOB (29:26.292)
verify SNARKs in BitVM instead of generic computation. And the most important thing is actually SNARK verification. It wasn't really clear how to properly solve the problem. And yeah, so we kind of decided, well, if you don't have to bootstrip a whole bunch of liquidity for a bridge, and you can just use wBTC, TBTC, and CBBTC, and LBTC, and SolveBTC from Ethereum, and you actually don't need to ask these.

bridging providers to bridge it above because you can just enshrine it onto the native bridge and allow people to move it over, then that's really easy to bootstrap an ecosystem. Yeah, so that's where the, I guess, the of the difference came from. On that note, like I think Interlay is still like, it's a cool design with having over collateralized Bitcoin. So the bridge from a security perspective has a lot of economic security, but it also has scaling issues, right? You always need more

collateral, then you're actually bridging over and there's some... We found that in practice, there's not a lot of people that want to put up that collateral. So it has some sort of limitations on how many people do actually want to have a fully decentralized version of something. you think about, just to draw an analogy to stable coins, right? If you think about early Dai Maker DAO,

stablecoin, which was single collateral only ETH. Everything was like 150 % collateralized in its very first iteration. I think that was the threshold. And then the market cap to USTC and UCT is like, DAI has its place in Ethereum and it, well, not a bunch of changes, but still like the market cap and the volumes of USTC and UCT is just so much larger.

It's very hard for overly collateralized protocols to compete. that's where, to go back to the Bitcoin bridging example, that's where BitVM is so much better because it's not rooted in this economic security. It's rooted in proper cryptographic security with a little bit of economic incentives that you need to run.

Jacob Brown (31:41.644)
Yeah, I mean it's yeah the this kind of for me goes back to this building practically thing which is like, you know maker sounds cool die sounds cool Just a centralized stable coin. But again because it's so Inefficient capital E I mean 90 something percent of the market is in two stable coins that are fiat backed and centralized and they have like a small You know single digit even though they're the biggest out there of that type And

Let's see here. I had a question then I lost it. I might have to pivot.

Jacob Brown (32:21.506)
Yeah, we can jump in then. Do you, we covered a bunch. What do you think, what is the like the single most unique thing about Bob in your opinion? Cause there's a lot of like those UTXO bases, EVM, off chain roll up. with this kind of L2 boom this past year and we had L2 mania a year ago, just everyone's launched an L2, including you guys. What compared to the rest, like the landscape.

What is most interesting that you think people should know?

Dom | BOB (32:55.147)
Yeah, I think it's this being connected to both Ethereum and Bitcoin. I think that's the one thing that makes us extremely unique. We think that through kind of combination of the two ecosystems, you get something that's kind of big and is actually beneficial for both sides. And the unique thing is that

I think nobody so far has done is to use another chains in our case Bitcoin security to secure a roll up on another chain. I think nobody has upgraded, upgraded anything or roll up with Bitcoin as the security thing. And that's what I'm extremely excited about for getting out of the research phase and into production and to main it next year. And yeah, I think that's

That's a thing. Like, nobody has done that. I'm excited about it.

Jacob Brown (33:52.334)
You guys just launched something I think this morning, so we're recording this on Thursday the 19th, and you just put a tweet out around this Bitcoin secured network, you have this partnership, I don't know if you'd call it, with Babylon. Say more on that. I read the Cliff Notes, but I'm too left-curved to even know what I'm reading, so please enlighten us.

Dom | BOB (34:17.14)
Yeah, right. we have, you know, on this like BitVM, Bitcoin security journey, there's kind of two important partners that we're working on with right now. One is Babylon and the other one is Fiamma, who are part of the BitVM Alliance. There, for the BitVM bridge, and now I'm getting a tiny bit technical. So to secure bridging with BitVM, the really complicated or the

The thing where things can go very wrong is on the withdrawal. If you go back from Bob to Bitcoin or you go back from any other chain back to Bitcoin using BitVM. You need to basically prove that on Bob or whatever chain you're using to a BitVM instance that the bridge tokens were actually burned and the person who bridged over

received also Bitcoin, like there's this operator entity and they basically, they, let's say, you bridge back from Bob to Bitcoin and I'm the operator, then you would basically tell me, Hey, I'm, want to, I want to leave Bob now, give me back my Bitcoin. I would send you the Bitcoin and then I go as the operator, I go to this BitVM instance and actually claim back the, the Bitcoin from that BitVM instance that you originally deposited.

And for that, I need a proof, like a snark, and that proof needs to cover that while the bridge Bitcoin were burned and that I send you the Bitcoin on Bitcoin.

It's very hard to build this kind of prover without you being able to attack it. And here's where Babylon comes in and why it's interesting. Babylon has this combination of proof of stake with Bitcoin timestamping. BitVM is secure because it is very hard.

Dom | BOB (36:27.486)
it's only secure if it's very hard to fake this proof. And so in the end, the security of the bridge always comes down to how expensive is it for me to attack it. And for pure BitVM rollups, so where your rollup like something like Citroen, Alpen, think, once their final designs are kind of out, if you use BitVM as kind of consensus, as a rollup, and BitVM as a bridge,

then your attack vectors, basically you will need to be mining a private Bitcoin chain. it's proof of work. And the interesting part with Babylon is that you use proof of stake for stakers that basically say, okay, Bob's data is now finalized. So we have a group of people that are staked on Bitcoin and they sign off on the Bob blocks and say, yep, this is now final.

But then you put like the signatures and the state onto Bitcoin and then it needs to be a hundred blocks deep for that to be final. So now when you want to attack something that's secured by Babylon, you need to mine a long Bitcoin private fork. And you also need to bribe all the validators. So you get both kind of the proof of stake and the proof of work security. And you get one added benefit that's very useful. You have a deterministic set of validators.

So you know exactly who should have signed that. And this deterministic set of validators is very useful in BitVM because it's a stateless light client. You don't have state in Bitcoin. And deterministic things are much easier to reason about in code. And if you use something like, if you use Merge Mining or Journal A Proof of Work security, you can also reason about it.

But it's not deterministic, so you have to make a couple of other assumptions that can be like, you have to do some sort of trade-off between security and practicality. So in a very practical sense, for example, you have to make an assumption about the mining difficulty going forward. So BitVM uses the superblock construction, and I won't get into it.

Dom | BOB (38:45.585)
even more technical details. there is, yeah, it's kind of that part is a bit harder. It's not impossible. It's actually also still a bit of a problem for us. But at least the Bob, validating Bob is like becomes a due deterministic problem. And it only needs a Babylon slash Bitcoin, like client in Bitcoin.

Jacob Brown (39:07.182)
Interesting. Yeah, I'm trying to think if we could break this down a little bit for layman so that the idea here is something like the Babylon stakers are putting up economic security and they could be slashed and they're testing to something is true and then at certain checkpoints those are getting pushed in a is a proof in this case that's going on to Bitcoin and that's like a cryptographic

hash or something that says at this time they all said this is true. So if you want to attack Do something frauds on the Bitcoin side You have to also put up enough collateral on the Babylon side to start lying about the past on that side

Dom | BOB (39:51.615)
Yeah, yeah, so it's basically, okay, let me, let's say, I'm saying like this state of Bob is final and I am stakes, I have staked Bitcoin on Bitcoin, actually not on the bottom chain. So and now when I, and you come to me and say, let's, let's steal a bunch of money from that BitVM bridge seems quite juicy.

But I already said this state BobState is final, and now you come to me and try to bribe me. I would need to kind of tell you a competing state, and I would say, for the sake of this little bitVM thievery that we're to do, I'll give you my signature. You just need to pay me. Then you go and try to steal from the bitVM instance. But at that point, I'm

Basically my private key will be revealed when you reveal my second signature, my second state. So I get caught basically in my attempt to steal things. It might still work, but my Bitcoin on Bitcoin will be burned basically or taken away. There's a mechanism in Babylon which basically leaks my private key as a staker.

Everybody can just kind of take that Bitcoin out and I'm losing quite a lot of money. And you as the attacker, you kind of needed to mine a hundred Bitcoin blocks on main chain difficulty, which costs you a lot of money. Plus you need to reimburse me for all of my Bitcoin that I've just lost. So you better steal from a very, very large instance.

Jacob Brown (41:41.666)
it okay and make sure I have a sense of blocks because with roll-ups the blocks are quick but this is in this case we're talking about Bitcoin blocks right so a hundred Bitcoin blocks is roughly a little less than the day if everything is going going according to plan so is this finality roughly takes about a day is that right

Dom | BOB (41:54.784)
app.

Dom | BOB (42:00.435)
Yeah, so basically, boss finality will be roughly around day 18 hours if it's the perfect 10 minute block time kind of thing, which is never perfectly 10 minutes. yeah, roughly around the day is fine.

Jacob Brown (42:18.818)
Got it. Yeah, I think it'll start to come to a close. We covered a ton. You guys are super deep in the bit VM stuff though. like, it's been, white paper was released a while ago. Now we're all waiting, hoping it comes and delivers on its promises. Lots of teams working on it. Do you have any, whether it's alpha or just kind of like people that don't know, like where?

Where's the bleeding edge of BitVM and like when potentially, probably early next year, sometime next year, can people start to like play with this stuff.

Dom | BOB (42:51.445)
Yeah, that's a great question. Let me start with a Play With thing. So we're working together with Fiamma, and they have a testnet out right now, so you could actually try it out now. I think in terms of production,

Jacob Brown (43:07.182)
And how do you spell that so people can find it?

Dom | BOB (43:10.528)
yes, F-I-A-M-M-A. they're also part of this Bit... There's this BitVM alliance with ZeroSync and a few other companies. So I think they're all working quite hard towards production release. think sometime Q1, Q2 will be the first kind of production releases on BitVM. I think that's a quite realistic timeline. I think probably have some training wheels still in place here and there where...

For this Covenant emulation, for the Covenant committee, there might be some workarounds. There's quite a lot of cost for some of the transactions. So let's see exactly how that's going to go. But I would imagine we'll, for sure next year, we'll have production releases of this. People will be able to test it on mainnet. And we'll probably also find the first proper bugs in the implementation. Yeah.

But no, think, in terms of the BitVM stuff that we're working on and also the problems, so biggest problem right now is the Lite client, specifically the Bitcoin Lite client in BitVM and the Verifier. That's a very tricky one to solve. You need to make some assumptions about Bitcoin's mining difficulty.

If you underestimate, as in the actual mining difficulty is way more difficult than you thought it would be, then the cost to attack the BitVM instance will go down. But if you overestimate it and it actually goes down the mining difficulty, then your funds might be locked in BitVM. Because let's say BitVM assumes a certain difficulty.

that is higher than current Bitcoin mainnet difficulty. Like no Bitcoin miners really mine something that's more difficult than actually mining Bitcoin blocks. There's some probability that they find a block with a higher difficulty. Those are the so-called super blocks, and that's a kind of a construction that's used in BitVM. yeah, mean, people who want to go into nitty-gritty details, the BitVM Telegram group is a very good place for that.

Dom | BOB (45:34.613)
That being said, so yeah, that's one of the big technical problems. And then I actually think, to bring it all back to practicality, there is a bunch of practical issues still need to be figured out. Who's going to be an operator exactly? Because operators will need to kind of, when you bridge out, they will need to.

a big advance on the Bitcoin that they're sending out. So let's say you're bridging out 10 Bitcoin, then I as a operator first need to send you 10 Bitcoin and then I reclaim the 10 Bitcoin from the Bitcoin instance and that will take two weeks-ish. If there's no challenge procedure, challenging also costs a bunch of money. So we'll see who are actually these parties who will act as these operators because they need to have quite some Bitcoin laying around.

I also think that using it in practice, most projects will be something that we do as well, combine it with a mechanism for normal users, for people like me who don't have 10 Bitcoin at hand. I would swap over, I don't know, 0.1 Bitcoin, but that would be an atomic swap. I actually wouldn't, I would swap it to a BitVM.

bridged Bitcoin on Bob. But I wouldn't open up a BitVM instance just because it's not really economically feasible in the sense of the transactions are too expensive from Bitcoin. for around 10, like around 10 Bitcoin is kind of the, yeah, you kind of want to have more than 10 Bitcoin in a BitVM instance. Below that is just not really worth it. So that's, you know.

bring into practice. And then honestly, unrelated to BitVM, interoperability from a UX perspective, I think, needs to be figured out. We use UVM. A lot of companies or other L2s also use the UVM. But the UVM address format is very different. You need to now create a new wallet. That's annoying. Nobody wants to do that. How is that going to look like?

Dom | BOB (47:55.873)
Well, most people are going to use BitVM next year, going to be the early adopters. But then eventually you want to have, I don't know, maybe just you sign in with your email or your Twitter account or something like that, and you have these smart wallets. And I think that's one direction it will likely go. But it's somewhat unrelated to BitVM. still, UX is still big problem.

Jacob Brown (48:19.726)
Cool. Okay, let's do a little bit of rapid fire, like three, four questions. We're deep in soft work debates right now. Everyone's fighting over, is it CTV, is it OpCat? There's this chart going around that's really cool, getting everyone's opinions. What's your take on the current debate? Do you have a favorite opcode upgrade, or are you guys just building in spite of it?

Dom | BOB (48:37.29)
Yeah, yeah, yeah, yeah.

Dom | BOB (48:45.962)
Yeah, I would like to have Tx hash. I think that would be my favorite. Yeah.

Jacob Brown (48:53.804)
Okay, cool. And then, speaking of roadmaps, because I remember at the Bitcoin Renaissance at ETH Denver, or Denver as we call it, Alexei had this cool like four stages of Bob, and I think, did I see that according to, with the new Babylon thing, you guys are now officially in phase two? So like, could you give us a brief rundown of like, kind of like the, what are the phases and maybe a little bit of like a roadmap, what's coming for Bob?

Dom | BOB (49:22.176)
Right now, so we actually reduced it to three phases. with three phases, one is bootstrapping. That's Ethereum rollup, getting the ecosystem. That's done. That's launched. It's live. Second phase is this what we call Bitcoin soft finality. that's having validated it. And if something goes wrong, somebody gets slashed on Bitcoin.

That's the next phase. That's what we're working on with Babylon right now. And then third phase, that's the full on Bitcoin security. So you have Bitcoin security for Bob, you have a production BitVM bridge. So you have an enshrined Bitcoin bridge onto Bob and you use that same Bitcoin security also on Ethereum. And technically you could with this hybrid construction.

you can technically enshrine a whole bunch of other bridges. You could enshrine a bridge to Solana. You could enshrine a bridge to wherever you would want to. You would use the same security. So a buff could become a hybrid between I don't know how many chains we want to add. yeah, that's kind of the, maybe that's the roadmap item 4567. I don't know. Let's see.

Jacob Brown (50:41.592)
Very cool.

Jacob Brown (50:46.252)
And you just dropped it. Phase one bootstrapping. And it was like a side point. like, ton of work went on to do that. Ecosystem is booming. Give us some quick stats of people who haven't. Everyone kind of has their flavor of L2 and they kind of stay in their pocket. So like, give us some numbers on what's been going on on Bob.

Dom | BOB (50:54.656)
Okay.

Dom | BOB (51:06.656)
Yeah, think we Our main liquidity right now is around the Babylon LSTs actually and and rep BTC. That's like the biggest one I think we're very happy that we have Uniswap on Bob already. So if you want to use a DEX you can use Uniswap We also have sovereign for the rootstock folks that are familiar with sovereign. They can use that that's pretty cool as well

In terms of like, there's a few landing protocols. think Avalon is the biggest one in terms of money market. We have this pre-launch campaign, Fusion, in which you get like our points. Love it or hate it. You also get a bunch of Babylon points now. And we have 550,000 users that qualify for that points program already. So there's a bunch of people that use it.

We got like, I think today it's like 280 mil on chain in tokens and 220 or something in DeFi. So a lot of people use the DeFi thing. One thing that we're quite happy about is that you can onboard directly from Bitcoin. So if you go to the bot page, you have not an enshrined bridge, but it's like an atomic swap. So you can get RAPTC, TPTC on bot directly, or you can stake directly with like...

Solve or other bubble and LSTs. And that's kind of the main highlight. I'm the tech guy. Marketing will know a lot more about the user stats. But I think roughly like 550,000 users and 220-ish mill and TBL. think that's the kind of adoption stats.

Jacob Brown (52:44.046)
You

Jacob Brown (52:51.278)
No, that's... that's huge. And you drop some big names. You can swap Brody Live, which is obviously the biggest swapping provider on ETH. Sovereign, probably, I think the biggest for a while of Bitcoin DeFi that was focused on Bitcoin. I think I saw just on Twitter, you guys put out a temp check for getting Aave on. So I really like this idea of pulling in in a very concise, specific way. Bitcorners, if you can, and then it kind of like...

Bic one defy so new that it's gonna be a slow kind of like bubble but eth is huge so like you can have people just it feels the same and you could end up on Bob without even knowing it. I think that's that's fantastic

Dom | BOB (53:32.021)
Yeah, my personal pet peeve is kind of I want to paint Uniswap orange and Aave orange. the idea kind of in my head is add native Bitcoin deposits to another UI, add like native Bitcoin access to a Uniswap UI and kind of facilitate that through Bob. So we have Uniswap. So now our next step is kind of, can we get them to add support that you can swap?

directly from to Bitcoin. we get Ava to add supports to directly deposit Bitcoin and then withdraw a stable coin to your bank account and pay back the Bitcoin? So it's like get kind of proven projects on Ethereum, but give them the Bitcoin twist.

Jacob Brown (54:21.934)
100 % yes Bitcoin all the things I think last quick question because people have been hearing this maybe they're intrigued what is the Easiest way for somebody who wants to try out Bob What does that user journey look like to go from zero to having some either TBTC or WC on the chain?

Dom | BOB (54:25.706)
Yeah.

Dom | BOB (54:43.252)
Yeah. I think the easiest way if you're a Bitcoiner right now is you go to app.gobop.xyz. Then you'll land on the bridge page. It will start on Bitcoin and then you can connect your Bitcoin wallet right now. We kind of focus a bit more on the, know, Uniset, X-verse, leather, people that use web wallets or OKEx, Binance also works. And then you just swap over a little bit of your Bitcoin. You get it into RappBTC or TBTC.

And then you go onto, there's the next page, is the apps page on the app.gobop.xyz. And then you can find a bunch of apps that are live on Bob. Like Uniswap, for example, is click on the link and then you can try it out. Yeah, do some swaps when you, that's good to know when you swap over from Bitcoin, you also get a little bit of ETH because right now we still use ETH as like the fee currency.

But that's all built into that on-ramp. it's a single Bitcoin transaction. then you basically get wBTC and you get a bit of ETH. And transaction fees are extremely cheap. think a swap is less than a cent. Yeah, and you just go play around a little bit. If you want to stake directly into a Babylon LST, then you go to the stake page on the app side. And then can, with a single Bitcoin transaction, can stake directly into.

Babylon LSTs or enter into lending markets using like the single Bitcoin transaction.

Jacob Brown (56:16.352)
Awesome, awesome. I'll have links below for everyone listening, but man, this has been a great episode. I love what you guys are building. I think we're definitely in the high experimentation phase of Bitcoin, and we need all the of like shots on goal that we can to see what works, and you guys got a really unique take. So yeah, thanks for coming on. Dom, it's been great.

Dom | BOB (56:41.076)
Yeah, thank you very much. And if anyone has any questions, always reach out to us. We're also very open to feedback. And if you want to see something else, let us know and have ideas. Thank you.

Jacob Brown (56:53.358)
All right, we'll call it.