Bitcoin, such a viable asset, such a strong security source, is totally isolated from the proof of state world, which is exploding. Is there a way to combine the two together so that the whole crypto system can benefit as a whole? And that's where the idea of Babylon comes from, which is to share Bitcoin security with proof of state networks. And we came up this concept of
Bitcoin sticking. Although Bitcoin does not support smart contract like Ethereum does, there are still a lot of smart things you can do around it to make things work without a software. Oh, but the bridge over liquidity is the key to the story. Welcome to Epicenter, the show which talks about technologies, projects and people driving decentralization and the global
boxing revolution. So my name is Brian Crane and I'm here with Sebastian Couture course Epicenter and we're here today with David say, who's a professor at Sanford and he's also the founder of Babylon. Babylon is, you know, very interesting project that's using Bitcoin security and Bitcoin staking to basically secure additional networks and services. And that's gotten a lot of fraction over the last year. So really excited to have that
David on today. And just before we get in with David, a few words from our sponsors. If you're looking to stake your crypto with confidence, look no further than Chorus One. More than 150,000 delegators, including institutions like Bit Gold, Pantera Capital and Ledger Trust. Chorus One with the assets. They support over 50 block chains and are leaders in governance on networks like Cosmos, ensuring your stake is
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Gnosis leads innovation with Circles, Gnosis Pay and Metri reshaping open banking and money. With Hashi and Gnosis VPN, they're building a more resilient, privacy focused Internet. If you're looking for an L1 to launch your project, Gnosis Chain offers the same development environment as Ethereum with lower transaction fees. It's supported by over 200,000 ballot errors, making Gnosis Chain a reliable and credibly neutral foundation for your
applications. Gnosis Dow drives Gnosis governance, where every voice matters. Join the Gnosis community in the Gnosis Dow forum today. Deploy on the EVM compatible Gnosis Chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at gnosis dot IO. David, thanks so much for joining us today. It's a pleasure to have you on. Great to be here, Brian. The question we'd love to start this show with is just what's
your crypto journey? How did you get it first? Interested in crypto? Yeah, so, so my background is a researcher. So in my early days of my career, I was doing research on wireless communication, how to make cell phones work. Back in the day when I started, only 1,000,000 people have cell phones around the world, and now everybody has cell phone. So there was a revolution going on, and my research contributed to that revolution of making
cell phones more efficient. So now we're forward, we're at 2018. So at that point, this mobile wireless revolution has already quite mature. And I was looking for a new research area and I came across Nakamoto's white paper. And that was my first exposure to crypto. And I read that white paper and I got completely blown away by the beauty and elegance and the power of the ideas. And I started a research group at Stanford devoting exclusively to research in crypto.
And I'm the at this point, I'm still the only research group at Stanford exclusively focused on crypto research. Crypto as in blockchain research. Yes. Oh, that's interesting. Yeah, yeah, 'cause I mean, Stanford has a long history, right, with blockchain research. I know there's like Dan Bonet, I think who is early on and I mean a lot of things that came out of Stanford know that's kind of blockchain related. Yes, correct. Dan Bonet is of course one of the world's famous cryptographer.
His group however, is very broad, focuses on cryptography and blockchain is one of his applications. I would like to distinguish in our group the focus is exclusively on blockchain, so all our research is driven from blockchain. OK. And then how? How did that evolve into Babylon? Our journey our research journey started with Bitcoin, right? Nakamoto's white paper.
However, what happened in the past few years is that the research and the development has entirely shifted the energy into proof of stick networks, which kind of left Bitcoin in the dust in terms of technology development. However, Bitcoin remains a very valuable asset at this to this day is 50% of the crypto market, more than 50% of the crypto market. And it's security is unparalleled compared to any other block chains.
And so the idea we had at some point was, hey, Bitcoin, such a viable asset, such a strong security source is totally isolated from the proof of stake world, which is exploding. Is there a way to combine the two together so that the whole crypto system can benefit as a whole? And that's where the idea of Babylon comes from, which is to share Bitcoin security with proof of stake networks.
And we came up this concept of Bitcoin sticking, which is to convert this one point, this point, I don't know, 1.51.61.7 trillion asset to thinkable asset. And that's where Babylon arise. So I was in 2017 right as COO of Tiananmen to the company that started the Cosmos ecosystem. And I remember hearing about Babylon like some years ago.
And I think the way I remember it back then was the idea that you could take these proof of stake block chains and they could basically use Bitcoin as a sort of time stamping server or a time stamping place, right, where you put the sort of a hash
of the block block in there. So then if someone joins new right, some, some proof of stake networks, they could sort of go to the Bitcoin block chain and, and make sure that, you know, it's really the authoritative chain that they're talking with it. Was that the original idea or or how did this kind of evolve? Yeah, Babylon has a interesting story from in the point from point of view of evolution
technology. So the North star of Babylon has always been sharing security from Bitcoin to approval of tech networks. That's always been our focus from day one. However, the means and the technology and the protocol by which it does have gone through an evolution. So the our original idea was actually an idea of Nakamoto which is called merge mining. So merge mining was an idea that was invented by Nakamoto in
around 20/10/2011 time frame. The idea is that Bitcoin miners can simultaneously mine on another proof of war chain, and we were using that idea to see if we can share security proof of state networks. And then we turn out that we find out some security issues with merge mining. And so we moved on to this time stamping protocol. That was our second invention. That's what, Brian, that's what
you talk about. Time stamping is basically sending a hash of the signatures of the validators of the proof of state networks onto Bitcoin so that you can have a time stamp on these blocks and it gives you Bitcoin security. However, time stamping has one drawback. And the drawback is that because Bitcoin is so slow, time stamping is a very slow process. So this scale security is very
slow. And as you know, one of the strength of proof of stick networks is that you get very fast confirmation, a few seconds as opposed to Bitcoin which is minutes or even hours. And so time stamping doesn't really give us that fast confirmation strengthening of proof of stick security. And so our third idea was to use the Bitcoin, not the chain itself, but the asset to provide security. And that's what Bitcoin sticking
came from. And because you're using the asset now, you can keep the fast confirmation of proof of state networks, but strengthen it by increasing the amount of capital, by adding the Bitcoin capital to provide a security. Yeah, it's, it's really impressive to see Babylon's evolution since those early days when you guys were working on
time stamping. I, I did a podcast with Fisher at, at Cosmo versus Medellin. And you had just announced this, this Bitcoin time stamping mechanism that effectively as a product would allow the alligators on proof of stake networks to, to withdraw their capital faster, which was like a really interesting idea in itself. But then this proof, this, this Bitcoin staking idea emerge from
there. I wonder, you know, coming from the research side of things and, and specifically, you know, as a product that aims to, I mean, effectively turn Bitcoin assets into a derivative that would then secure other networks and everything that that implies, you know, what was the reaction?
What has been your interaction or your reaction with, you know, the the Bitcoin community, which typically is a little bit more conservative and you know, from from my perspective, perhaps a little bit more closed off to those ideas? And how has that conversation changed over the last two years as we've seen more and more Bitcoin L twos and more things being built on top of Bitcoin? Yeah.
So when we started with this Bitcoin sticking idea, when we, it was about 2023, about summer of 2023, that's when we came up with the light paper for Bitcoin sticking and we start talking to various communities and indeed the Bitcoin oh geez, supposed to be quite conservative. However, I must say, overall we find a reception pretty good and I think we're helped by a few
external forces. So if you remember earlier that year or notes started or notes started and that was sort of a mindset change to Bitcoiners that hey, you know what, Bitcoin has more use cases than just Hodo and a payment system. And I think that was a very important time change for us. And as you mentioned, at the later part of that year, Bitcoin
L2 start emerging and so forth. And I think we kind of helped by that broader movement of sort of a new way of look at Bitcoin, we call it Bitcoin Renaissance. And I think we became sort of a leader of that movement because we started doing this research a
few years back. And I think the timing was the helpful to us. So in this discussion right on Bitcoin and sort of what is enabled on the L1 and you know, should there be some kind of upgrades that allow more expressivity more, I don't know, some kind of minimal smart contract better bridging has been there for a long time.
I'm curious, can you talk a little bit about, you know, the technical challenges because I mean Babylon, because I think so far still like the and not a lot of upgrades have happened in Bitcoin and it's still like very limited. So how did you guys manage to re enable that staking
functionality in Bitcoin? Yeah. In fact, when we were discussing about Bitcoin staking, one of the early idea we had in fact was the through discussion with Sunny Algo while you're talking about the Cosmos ecosystem. So in fact, Sunny came to me and one of the you you remembered at the Cosmo verse in Medellin, Sunny talked about mass security, mass security, and that was the security between Cosmos blockchains and E Denver, which was in 2024.
Very early. He came to me and said, hey, wouldn't it be great to do mass security with one of the producer security as Bitcoin? That would be great. And so the initial idea we were discussing with Sonia, I remember, still remember very, very vividly was, hey, would it be great if we can bridge Bitcoin to one of these Cosmos chains like Babylon or Osmosis and then share security through
the mass security network? OK, So that was our sort of our initial thought, but then we had a problem because bridges from Bitcoin to any chain is well known to be very hard to build, to be secure. And to this day there's no secure Bitcoin bridge beyond just like a multi state bridge. And, and then we went back to history and we noticed that in 21 five, there was an effort called drive chain, which is to upgrade Bitcoin to enable such a bridge to happen.
It's called draft. You can look back. I think the first proposal came up around 2015 type frame. But then I, I, I talked to Stanley. I say, you know, Stanley, there's a problem here because today we are 2024 and this proposal was issued in 2015 is still not passed yet. So I don't think we should wait for this drive change to happen because this is 9 years down the road here. And who knows, we may have to
wait nine more years. And so we start thinking so, but after this discussion was suddenly we, I came back to the team, we start discussing very actively and what we figure out basically to achieve Bitcoin sticking is really a way to sort of bypass this smart contract limitation and still enable Bitcoin sticking without any soft fork.
And so sort of one of the key sort of new ideas this past year from a research point of view is that although Bitcoin does not support smart contract like Ethereum does, there are still a lot of smart things you can do around it to make things work without a soft fall. And so that has been sort of our sort of drive to accomplish that and for Bitcoin sticking, we
accomplished that. And you also you may also know like new ideas like bit VM bridge for example, that is another way of sort of trying to accomplish that a different functionality bridging in that case without soft fork. How, how important is this, this opcat upgrade and maybe for perhaps would be helpful to provide some context here as to what that upgrade enables and why so many projects building on Bitcoin are just like waiting for that to come online.
Oh, so opcat is actually a very powerful thing. Opcat is basically concatenating 2 strings together. Sounds like something stupid, something very basic. But yet Bitcoin scripting doesn't support that. And in fact, it was in the original version of the Bitcoin scripting language by Nakamoto, but it was deleted by Nakamoto himself. And so the effort here is to
restore that that OP code. Now, one it, it can accomplish many things, but one thing it can accomplish through some trickery is this notion of covenants. This notion of covenants, that is you can write a Bitcoin script to define how you spend the money. In other words, you can't just spend the money by signing and then send it to anyone else. There you you can put restriction on where and how and how much to spend to who.
That is not possible in the current Bitcoin scripting language and enabling that turns out to be rather powerful and it could make many things much simpler and significantly cheaper in terms of transaction fees. In other words, when instead of writing a lot of code and having to allot a huge script, you can get by with a much more compact script, and that's what opcat enables. Does it also enable multiplication? Is is is it useful in the ability to do proofs on chain as
well? Yes. So there's a lot of effort by Stocknet and a few and a few teams to do so-called a ZK proof verification on chain using OPCAT. And I'm not an expert in that area and my research does not cover that problem. But I do believe it does help with some field multiplication. I think the stock, the virtual stock is called Circle, circle stock and that enables some multiplication, but I'm not an expert in that area. So yeah.
OK, got it. I mean, are you, are you aware of any of the current attacks and and presumably like the ZK proof that was done on chain by the Bitcoin OS team and some of the work being done over by by the Bitlare team to do a proof on chain? So to be clear, to be clear that these efforts are not doing proof on chain. The proof is generated off chain.
And so the challenge here is to verify whether the proof is a correct proof on chain so that you can tell Bitcoin to spend the money in the appropriate to the appropriate person. Yeah, my statement was was inaccurate, right? You want to verify the proof on chain. Yeah, because proof generation is typically a very expensive process, and so there's no way you can do that or check. But the verification typically is much cheaper than proof
verification. But for Bitcoin, even that proof verification is very tricky to do because of the primitiveness of the Bitcoin scripting language. And so all these efforts are trying to do that. So, so here there are two efforts, two types of two approaches to solve this problem. And one is, as you mentioned using. Assuming OP can't is passed, then you can implement more efficient, say multiplication that you mentioned. OK, so that's one effort, but that effort has a problem
because it assumes OP can't. And I don't think we're close to seeing OPI cat pass at this moment. And so the other effort is not assuming OP cat, but using an approach called optimistic verification. Optimistic verification which means what? Which means that in optimistic case you don't verify anything, you just assume that the bridge operator is correct in the assertion, but only when you are challenged by an external challenger, then you do the verification.
And that verification you can do cheaper because the challenger can pinpoint a specific part of the computation or the verification is like, hey, you know what, I think this part you've cheated. Please show me the correct your verification of this part and I can convince Bitcoin that you're actually wrong. And so, and this is a bit like
the Abatron type ideas. And I think that approach is in some sense more practical because it doesn't assume, oh, we can and I'm I myself is doing research in that direction. So can you talk a little bit about how the Bitcoin staking works like right now? So if somebody says, hey, I have some Bitcoin and I want to, you know, basically deposit this in Babylon and stake the Bitcoin, what actually happens on technically on the Bitcoin chain?
Yeah. So very importantly, Bitcoin sticking is a completely native Bitcoin use case. So it's direct interaction with the Bitcoin chain. So what happens here is that if you have one Bitcoin, your one Bitcoin is held in a so-called UTXO. UTXO, OK, so now you create another UTXO yourself and you send that Bitcoin to that UTXO still under your own custodian now, but that utexo has a few special spending conditions.
Spending conditions. The what for one is that is a time lock, is a time lock that locks your Bitcoin and you cannot withdraw it until a certain time or until you send another request, which is like in the Cosmos chains, an unbounding request. So there's a time lock
mechanism. 2 is that there is a slashing mechanism and that's this is the crucial part of how this Bitcoin can provide security to a say Cosmos chain or a roll up is that this slashing condition is activated with associate with a what we call finale provider or in more standard proof of stick language, a validator. This valid is in charge of securing a proof of state chain or blow up and the contract here is that as low as this value is honest, this slashing condition
is never activated. Never activated. However, if it does something bad, then this slashing condition can be activated and your fraction of your one Bitcoin can be spent through the slashing and sent to a burn address. So this is roughly how it works. So you as a sticker has to pick one particular phonetic provider that you stick to, and it could be yourself. Can you tell us a little bit about, so now someone is staking the Bitcoin and then we have these Bitcoin secured networks,
right? So these are some networks that now are relying on this Bitcoin security. How do the Bitcoin secured networks work? So just to clarify, we are right now in phase one of our main net launch, OK, the Babylon protocol is launched in Phase 1. So in phase one only staking only locking of the stick occurs and there are no Bitcoin secure network yet. Oh, in phase two and three, we'll launch a more we'll launch
Bitcoin secure networks now. So so example of such networks could be, I don't know, osmosis or roll up like this this this world called corn that we work with. So how does it work? OK, so there will be daily right now on our network, there are 200 around 200 finale providers. OK. So Figment and P2P etcetera or Cosmo station etcetera, these are finale providers.
And now when these BSNS, Bitcoin secure networks are launched, some of these finale provider will choose to secure these networks, OK. And to secure these networks, they will sign some special signatures to certify these blocks as Bitcoin secure. And their job is to make sure they sign only one block at every height to make sure that you have a linear blockchain going. And so their slashing capability is to make sure that they do
that. In other words, they cannot double sign two blocks to try to fork the chain. And this is where the security comes from. So in so when a client in one of these networks sees many these finale providers signature, then they know, wow, this block is really super secure and I can trust this block and I can trust the transactions in these blocks.
And then let's say if we take the Osmosis example, I mean Osmosis has its own staking token, OSMO and it has, you know, a significant number of validators already. If that now becomes Bitcoin secure network, then like how does that interact with the existing security system that that's already there? Yeah. So that's a very good question. That's right. Osmosis already evaluated signing the blocks. So why do we need these Bitcoin secured signatures?
Well, so you can think of a good analogy, AUS analogy would be like a House and a Senate. OK, so legislation avoided by both the House and the Senate. Very American, sorry, very American example, but I do live in the US. So so the same similar system would be happening in the osmosis case. So the osmosis validators would sign on the block as the first committee.
And then on top of that, there's another committee, which are these Bitcoin secure signatures because the finale provided signatures that signs a gain on top of this block. So a client we'll check both the Osmosis interest and the finale provider signatures and see that, OK, both committee have signed. And so this block is now getting you can think of additional security.
So think about it, I don't know Osmosis security could be say 300 million worth of osmosis, I don't know what exact number today, but example 300 million. On top of that you have another, I don't know, 1 billion of Bitcoin stake security. Well then you have a total of 1.3 billion worth of security on top of osmosis. Much stronger level of security than just the Osmosis stake by itself.
What what's the utility? I mean like you know, for, for chains with like arguably good security like Osmosis or the Cosmos Hub that are secured by like large amounts of stake, what's the tangible benefit for users to have that additional layer of security, you know, purely on the security side, I, you know, I understand that there is like implications here in terms of having the ability to bridge over liquidity etcetera. How does that play out?
Oh, but the bridge over liquidity is the key to the story. So, first of all, the security should be proportional to the amount of liquidity that you maintain on the chain, right. So you want to have a lot of liquidity, a lot of asset on the chain, then you should have corresponding amount of security to protect that asset. So therefore the value of for osmosis of increasing the security is precisely to absorb or to attract more liquidity, to attract more liquidity into the tax etcetera.
Now actually there's a very tangible way. So this sounds like very abstract, right? So how do you get more? You get the fact that you have more security doesn't mean you have more liquidity is a necessary, but not sufficient. However, in the case of Bitcoin sticking, there's actually a very tangible way of these chains getting liquidity. And that liquidity is precisely because of a very recent development, which is all these liquid sticking tokens on top of Babila.
So Babylon provides the sticking layer. But what happened in the past six months is that several rather prominent projects have built liquid sticking protocol. That is they stick on Babylon, but at the same time they mint an asset. So now that mint asset could
appear on the Osmosis chain. So now Osmosis is getting both security from Bitcoin sticking and also liquidity from the LST and now you get both liquidity and security and now they proportion to each other and that would increase the economic activity of osmosis. Yeah, I, I agree. I think that's really where you have a very big unlock, right? Because I think if you can tell a chain like osmosis, look, you're going to get additional Bitcoin security, but also
Bitcoin liquidity, right? And now, you know, in addition to whatever a billion dollars worth of Bitcoin security, you get like as maybe a few 100 million or something in, you know, Bitcoin liquidity and you can have like really liquid Bitcoin markets on there. I think that's where it starts to become like really attractive is, is this the case then? Because the security can be used on on different chains at the
same time, right? But the liquidity that can only go to one place, is that right or? Correct. Liquidity can only go to one place. Security can be shared and that's really up to the users. So the user takes the one Bitcoin, right. In the example, Brian that you had one Bitcoin, the user can say OK, I want this one Bitcoin to only secure osmosis or it can take this one Bitcoin and do what we call multi sticking or restaking, which is to stick
multiple chains. That's an option entirely from the stakers perfect perspective. The liquidity is directed to one particular chain, correct? So when the user says hey I want to secure multiple chains and and basically restake the Bitcoin or or stake or multi stake the Bitcoin, then would this also involve some changes on the Bitcoin side like some additional transactions or if that happens purely through the activity of the finality provider that the user states
the Bitcoin with? Everything should, everything should be reflected on the Bitcoin chain, right? Because the Bitcoin chain is the final aperture of what happens to the stick because the stick always sits on the Bitcoin chain. Now if you remember, I said that the sticking has a thing called spending condition for slashing. OK. So if you have, if you decide to stick only on Osmosis, then you would only have one slashing condition associated with the finale provider on Osmosis.
But if you decide to stick on two chains, Osmosis and I don't know Cosmos Hub, then you will have two slashing conditions, 1 associate with a Fernando provider on Osmosis and one associate with a Fernando provider on Cosmos Hub. So that's how it's reflected on Bitcoin through having more slashing conditions. And in the scenario of a slashing actually happening, is the Bitcoin basically? Burnt, yes. Not the entire Bitcoin, but a fraction of the Bitcoin. This is this is where I'm I'm
not clear. Maybe you can elaborate here. So as a as a staker, So if I'm holding Bitcoin and I want to stake my Bitcoin with Babylon the Bitcoin, you you said earlier that there's no requirement to send that Bitcoin to a third party address. So because it's it's self custodial, how would those slashing conditions be applied then? It's self custodial, but the slashing condition is associated with the finale provider that you chose. OK, so maybe think of a typical
example. In Cosmos Chain, there's a notion called delegation, right? You delegate your stick to a particular validator like you know, Cosmo station. So in some sense the staker is trusting Cosmo station to do the right thing. It would not double spend and get the stickers Bitcoin or not Bitcoin in that case, that may be Osmo staked a slash. So the same delegation is happening here in our design for Bitcoin sticking as well.
And of course, you can always run your own phonetic provider if you don't trust anyone else to do the right job. And indeed, there are stickers that are running their own phonetic provider right now because they have so much stake. They don't want anyone and trust anyone else. They run for their provider. Right. OK, so basically what you're saying is that the staking rewards are off for slashing but not the original like collateral or like delegated tokens? No, no, no, no, no, no, that's
not true. That's not true. So, OK, let me let me let me make sure the contract, OK, the sticking contract is that your stick is safe except only the condition. Excellent. In the condition that the finale providing you delegate to double sides. OK. That's the contract. You have a double size, you will lose a fraction of just stick and that fraction is a parameter also part of the contract. So that's the promise, that's the collateralization of your capital.
So let's talk a little bit about the Babylon chain, right? Because Babylon also is launching a Cosmos chain, the Babylon chain, which is going to have its own staking token. What's the relationship between your the Bitcoin staking and the Babylon chain and then these Bitcoin secured networks? OK. So yeah, so the Babylon Chain is playing a multiple roles here. So first of all, Babylon Chain will be the first Bitcoin secure network. It's like our dog food Bitcoin secure network that we build
ourselves. So that would be launched in phase two of the project. After phase one, the current Phase 1 is finished. So that's the one number one row. Now the second row is when all the BSNS come online, which is our phase 3. Then the Bitcoin secure, then the Babylon chain will act as a coordination layer, coordination layer between Bitcoin and all
these other BSNS. Because if you think about it, our system is actually the whole Bradburn protocol is a interchange system because it involves multiple block chains. The stick is sitting on Bitcoin, but the finance providers are voting on the BSNS. So to make this whole system works, it requires a coordination between Bitcoin and each of these other chains. And so the Babylon chain serves as a middle layer, a coordination layer to make that
coordination work efficiently. So to give example, you mentioned time stamping earlier, time stamping earlier. And it turns out that for this protocol to work, we need also time stamping between Bitcoin and each of the BSNS.
And the role of the Babylon chain in this case is to help with this time stamping because Babylon itself time stamps to Bitcoin. And this time stamping is very important because you need to synchronize the timing between a BSN and Bitcoin so that for example, when you unlock we unborn a stick, then the Bitcoin, the valid, the financial provider voting power can be removed immediately on the BSN. So a time coordination is very important in this interchange system.
Right. And then the nice thing is that because the Babylon chain is a proof of safe chain, so it can have very fast blocks. So you can have this time stamping kind of, you know In Sync with the speed of all of these chains for Babylon chain. And then that basically sort of, you know, aggregates and time stamps that to Bitcoin sort of on the like running a little bit behind, but you know, still providing like, you know, high, high degree of security.
Exactly, the aggregation that you mentioned is the most important, one of the most important thing because imagine a world where there are hundreds of these BSNS. If each of these chains have the directly build their own infrastructure, the time stamp to Bitcoin, it's just not a scalable solution to have so many time stamps on the Bitcoin chain. And so Babylon chain serves as this aggregation row so that you only need one time stamp even though you have hundreds of BSNS.
These liquid staking tokens, do you imagine that in the future they will mostly also be issued on the Babylon chain, or could they be issued in many different places? Yeah. So yes, we are hoping to encourage folks to issue their LSTS on the Babylon chain first and then move that liquidity to other chains as needed. So that would be good. So we would like to sort of build our next generation of technology would be some infrastructure to support to do that in a trust minimizing way.
So like taking a step back here, there's been I, I find this like quite, quite surprising actually, But you know, when I was at. Proof of stakes second summit just recently. And there were there were people there talking about Bitcoin moving to proof of stake. And like for someone who's been in the space for so long, I think like maybe to a lot of people that just seems like a very, you know, unlikely sort of scenario. But you know, at this point, how, how do you think about that
idea? And like, what is the likelihood that in some time, what would that look like, you know, Bitcoin moving to proof of stake? Yeah. So just to clarify, right, our research, our, our project Babylon is not advocating to turn Bitcoin into approval stake chain. Our, our, our goal right now is to take this Bitcoin asset to
make it as useful as we can. And the use case we're focusing on is used as a sticking asset to bootstrap or to improve the liquidity and security of other block chains. So that's the that's the focus of the project.
Now, in the distant future, if it happens that this idea is so, so, so successful, so much other block chains, so much of the entire crypto ecosystem is building on this Bitcoin sticking, then at some point Bitcoiners may say, hey, maybe we can also use the security to secure ourselves to improve the Bitcoin security. If that day happens, then it happens. If it doesn't happen, it doesn't
happen. So one thing, one thing interesting about the evolution of crypto is that Bitcoiners often said that all other block chains are test Nets for Bitcoin. OK, So what does that mean? That means that hey, if you have a new concept, you want to test it on other block chains before you bring it back to Bitcoin. And in some sense, Bitcoin sticking is kind of a an example of that thinking, right? Because hey, sticking has been proved to be rather successful in these proof of stick
blockchains. Now we're bringing part of that idea back to Bitcoin and say, hey, why don't we use Bitcoin also as a sticking asset for these other blockchains? So in some sense we go in that direction. And maybe at one point people would think, whoa, this proof of stick idea of using Bitcoin is so powerful that maybe we can use Bitcoin the asset to increase the security of Bitcoin chain itself. That's a long way off though, I
think. Yeah, I, I, I feel like it's a long way off as well if, if it were to happen. But yeah, I find it like sort of interesting that people are actually bringing this up as like as a possibility where, you know, if you would have said this maybe 3-4 years ago, it would have been no, no one was ever considering Bitcoin to move to prove a stake. And now it's actually actually
being talked about. I think like one of the things that's interesting here about Babylon and like generally Bitcoin L twos is that it, it allows Bitcoin liquidity to move into D5 and be better utilized in D5. Well, there's a whole array of chains that also would fall in this category. Many of the top 20 chains, chains like Litecoin, XRP, Cardano, Dogecoin, these these so-called dinosaur chains right where a lot of the liquidity is being held in wallets or on sexes and not really being
utilized in D5 very much. Now over the last couple of months, there's been more and more conversation about allowing that liquidity to more easily flow into D5 protocols. What is your take on expanding, you know, Bitcoin liquid Bitcoin re staking to other chains, perhaps other proof of work chains, you know some script chains or or other chains like the ones I mentioned so that we can grow liquidity and defy using the liquidity that's already on chain?
Yeah. I mean, I could see the concept that what it's the pro code that we came up with can be adapted to applied on other particular proof of work chains which use similar scripting language as Bitcoin. Yes, I'm quite sure there are projects probably working on that. Right now our focus is entirely on Bitcoin, Bitcoin. So Bitcoin is a huge enough asset that if we increase, if we get 1% of Bitcoin, there's already quite significant accomplishment. So we just focus laser focus on Bitcoin.
So we talked earlier a little bit about, you know, some of the efforts to have, you know, some upgrades for covenants more OP cat, more exclusivity. Now the way you guys are building, right, you're not relying on that, but you you're building basically on Bitcoin as it is. But if some of those things were to happen, would this change Babylon or would this kind of bring, I know, some new
features? Or is it something where you kind of feel like, no, we can make do of the way it is right now and it doesn't really matter? Yeah. So our technology is entirely independent of soft fork, right. So that was our philosophy I mentioned. So we do not assume soft fork and our technology does not assume that. Now if there is a soft fork like passing some kind of covenants or we can't or something similar, then yes, that would make us to be able to do more things and in a cheaper way.
So right now a lot of the ideas around bit VM is basically to get around this covenants issue. The the consequence though is that there are some costs associated with it. So the transaction fees tends to be a little bit high and so that could be reduced. So I think to me it's mainly a question of efficiency that you can do it at a lower cost, you can do more things at a lower cost.
But for us right now, the Bitcoin sticking core primitive is already very low cost and without this software. So the Babylon ecosystem is really, you know, grown tremendously I think over the past year or so. There's a lot of projects. You know, you mentioned liquid staking assets are being built on top of Babylon, a lot of things happening. What are the most interesting and exciting things being built? Yeah.
So a lot of the innovations right now is really try to figure out how to sort of couple or add liquidity to the base layer of sticking. And I think that's sort of where we try to provide a lot of support as the base staking protocol. So what are the timelines here? You mentioned, you know, phase one, phase two, phase three, Yeah. How do you see? I don't know. What time frame do you see those rolling out? Yeah, we're shooting for right
now we're in phase one. We have opened the cap three times, cap one, cap 2, cap 3 and right now it's closed. We have about 57,000 Bitcoin, 57,000 Bitcoin staked on the Babylon protocol and phase two we are shooting for roughly end of Q1, begin of Q2 time frame to launch the Babylon chain. That's our phase two. And in phase three which hopefully will happen maybe 1/4 after that is we will have a bunch of initial cohort of BSNS, Bitcoin secure networks to
complete the entire picture. So that's the face lodge. Cool, well, thank you so much for coming on David. It's really great to you know, to hear your overview and it's super exciting. I think as as you know, as a long term Bitcoin holder who's helped Bitcoin for a long time and always been like, oh, it would be great to do something with it. I think it's super exciting and of course there's someone you know Sebastian as well as me, you know, they deep in the cosmos ecosystem.
It's it's amazing that here are those two things come together and we've now seen such a vibrant ecosystem emerging around Babylon. So super excited to see how these phases roll out and yeah, how it's going to play out in the next years. So thank you so much for your work and thanks so much for joining us today. Great being here, great conversation. Brian is the best yet. Thank you very much. Thank you.