Bitcoin Summer Recap : Day 5 — DeFi on Bitcoin
This is the final recap of the week-long Bitcoin Summer conference in Montreal, hosted by Bull Bitcoin. For this fifth day, the theme was “DeFi on Bitcoin” where the presentations were expected to be heavier on the technical side than they had been in the previous days. Scheduled to present were Veriphi’s Gustavo Flores, Dr. Maxim Orlovsky from Pandora Core, Matt Black from Atomic Finance, and Coinbeast’s co-founder John Stein.
We had a very interesting set of presentations planned for the day, mostly revolving around sidechains and second (or even third) layers, like Blockstream’s Liquid Network and the RGB network project from Pandora Core, but also on Discreet Log Contracts (DLC’s) and Atomic Finance.
Discussing sidechains and layers on Bitcoin is an interesting topic and has been for a while. Those are not new technologies, especially when comparing with alternative blockchains that already advertise turing complete systems. However, Bitcoin is a different animal altogether, and that’s alright. It is often disregarded as “old and slow” tech by critics but one can argue that these same people fail to recognize that this is a feature, not a bug.
Bitcoin’s immutability inevitably leads to the longer development of projects. There are ways to scale Bitcoin but it takes time to safely and securely develop upgrades and implement them to the network. SegWit, and lately Taproot, are good examples of updates (soft-forks) that help scale the network.
So, for DeFi on Bitcoin day, we looked at the existing sidechains implementations and/or projects (other than Lightning) that are currently being worked on. Let’s take a look!
Liquid Network Masterclass by Gustavo Flores
If you’ve browsed Veriphi’s blog before, then you will know that Gustavo & the team over there have researched the Liquid Network, they’ve tested it, used it, and are in a prime position to talk about it. So, for Gustavo to title his presentation “Masterclass” is not an overstatement.
Liquid is a sidechain, meaning; it runs as an alternate chain to Bitcoin’s. It is effectively a settlement network where users can lock their bitcoins, much like Lightning in that sense, and use them in a faster manner than they could on the main chain while maintaining security and trustless operation.
One of the ways the network differs from Bitcoin is that it doesn’t use Proof-of-Work but rather employs a set of federated functionaries, whom are responsible for creating and appending blocks to the chain every minute. It is definitely not decentralized in the way that Bitcoin is, but that is not the point. It proposes different use cases with features such as confidential transactions and assets issuance, and is primarily promoted and used as an inter-exchange settlement network.
Liquid is a worthy tool for traders as well, since it supports the popular stablecoin Tether (USDT) as well as a version of the canadian dollar : L-CAD. That relates to the Asset Issuance feature of the network.
Gustavo wrapped up his presentation with brief overviews on other projects that are surfacing across the ecosystem. The RSK sidechain (Rootstock) : a smart-contract chain and open finance platform, CommerceBlock : sidechain infrastructure to be deployed atop existing blockchains, and TDEX Network : a decentralized digital asset exchange protocol.
Safe to say, anyone looking at Bitcoin from the outside and classifying it as obsolete is utterly mistaken. Evolved projects keep popping up and one can’t help but feel practically powerless when attempting to diligently follow and document the advances in each and every one of them.
RGB LNP/BP Masterclass by Dr. Maxim Orlovsky
We grabbed lunch after Gustavo’s presentation and upon returning were then joined by Dr. Maxim Orlovsky. In all honesty, I was unaware of the existence of the RGB project prior to this appearance, which is a shame because it has been in development for about four years now.
If you have not heard of Dr. Orlovsky, then I will refer you to his Twitter profile where you can find a list of his projects : RGB, LNP/BP Standards Association, Pandora Core AG, MyCitadel.io, and BICA Labs. Enough said.
Dr. Orlovsky proceeded with his fascinating presentation of the RGB network, from its history & roots to its core details. I had to watch it a second time to begin to understand and assimilate the structure of RGB and what it entails. This is not to diminish Dr. Orlovsky’s presenting skills, quite the contrary ; the quality level of the content was fantastic and I am blown away by the vision he and his team bring forward.
In short, RGB is a thoroughly robust smart contracts layer to be implemented on top of Bitcoin. Be it over the main chain or the Lightning Network for that matter, both are possible. One could describe RGB as a layer 3 protocol, however Dr. Orlovsky refers to it more accurately as a layer 2.5 since it can be used on any of the existing layers.
The smart contract term is widely known in particular over on the altcoins side of crypto like Ethereum but, according to Dr. Orlovsky, they’re far from what they promise to be and are buggy and sub-optimally programmed for the most part.
Whereas, on RGB, careful deliberation has been put towards the development of the protocol over the years, which reuses the best consensus available today; Bitcoin’s Proof-of-Work. It is uncompromised censorship-resistance, scalability, and privacy.
RGB allows more programmability on Bitcoin, it allows DeFi on Lightning, without the need for utility tokens to be deployed. All it operates with is money (Bitcoin). The key concepts of the project are client-side-validation and single-use-seals.
I will not begin to embarrass myself in trying to explain the details of those highly technical and modern concepts, and I apologize for that. Rather, I will point you towards the presentation itself and let Dr. Orlovsky brilliantly lay out his vision and definition of RGB and smart contracts, which I believe to be nothing short of genius.
A release is expected towards the end of the year, stay tuned for this paradigm shift!
DLCs — Build the future of Finance on Bitcoin with Matt Black
Matthew first gave a little background on his company which, interestingly enough, was operating on Ethereum DeFi initially but pivoted fully towards Bitcoin in August of last year to focus on building Bitcoin-native finance.
DLC’s can be simplified to basically being 2-of-2 multisignature contracts, or at least that is how they will look on-chain. The Oracle part of the contract can be trickier to explain, but they essentially serve as the arbiters of the outcome in a specific contract. It is worth noting that the oracle is oblivious to the parties involved, from a privacy standpoint.
These DLCs allow for products such as financial derivatives and prediction markets, which are highly popular in any DeFi ecosystem, to be deployed directly on Bitcoin. Additionally, Atomic Finance will offer non-custodial (you hold your keys, not a third-party) yield contracts for Bitcoin on their app, which is currently in beta stage.
I found Matthew’s way of presenting Atomic’s mission and its underlying structure to be quite sharp and enjoyable. Watch the full presentation to get a deeper understanding of DLCs!
CoinBeast — Jonathan Stein
Our final presentation of the week was from surprise local guest Jonathan Stein, co-founder of CoinBeast, who joined us boots on the ground to talk about his education-focused company.
Jonathan is a teacher by profession which is what drove him towards creating educational content for Bitcoin after he himself fell down the rabbit hole in 2016. As he underlines, most educational content in regards to economics and finance being currently taught in schools is flawed at best.
That’s where Jonathan comes in. He believes that everybody all over the world, and from all ages, should benefit from learning about Bitcoin and that adoption will come through education.
CoinBeast’s website is loaded with content where you will find thorough reviews of exchanges and wallets, as well as a vast variety of educational blog posts to learn everything Bitcoin. They also offer a service called CoinBeast Connect where you can book a one-on-one call with a selected pro to precisely pinpoint specific subjects you might be interested in.
Bitcoin Summer Conclusion
That’s it for my recaps from the Bitcoin Summer in Montreal conference. I had a blast attending this event and the energy outpouring from the bitcoiners present piled up throughout the week. I met truly great people over there!
The whole Bull Bitcoin & Veriphi team did a stellar organizing performance and the content they brought to the community was phenomenal. I cannot emphasize enough the quality of each and every speaker who presented at the conference. It definitely highlights how Bitcoin is being built by profoundly amazing individuals across the globe. Thankfully, the daily streams are freely available to watch on Bull Bitcoin’s Youtube channel!
Looking back, I can’t help but feel immensely grateful to have had the fortune to take part in the Bitcoin Summer event. Being able to spend five days away from home & family is not a given for everyone at any time and I’m thankful that I could free myself up for this incredible bitcoiner experience opportunity.
We may be living through difficult and uncertain times but Bitcoin allows for the hope of a much better future based on sound money, so hang on tight because we’re still early!