Focusing on full-chain liquidity, how does StakeStone expand into the BTC ecosystem?

How will StakeStone expand into the BTC ecosystem? What is StakeStone’s airdrop plan?

Moderator: Peng SUN, Foresight News researcher

Guest: Blue Wharf, core contributor of StakeStone; Jeff, founder of Merlin Chain

Around March 25, StakeStone It was announced that it has received investment from Binance and OKX, and has recently launched an airdrop activity, which is extremely popular. At the same time, StakeStone also announced a strategic cooperation with the BTC Layer2 network Merlin Chain to release interest-bearing BTC "mSTONEBTC" and officially incorporate BTC liquidity into its full-chain liquidity distribution network. Foresight News invited StakeStone core contributor Blue Wharf and Merlin Chain founder Jeff to talk about how StakeStone will expand into the BTC ecosystem and about StakeStone’s airdrop plan.

Moderator: First, please introduce yourself and your respective projects.

Blue Wharf (StakeStone Core Contributor): Hi, I’m Blue Wharf from StakeStone. StakeStone is a full-chain liquidity distribution protocol whose main service is liquidity, including major liquid assets in the market. Before the rise of the Bitcoin ecosystem, the main liquid asset on the market was Ethereum. Then during the development of the Bitcoin ecosystem, we recognized the potential of BTC as a new liquid asset. Based on the vision of liquidity distribution, we chose to invest in Bitcoin. Coin assets are fully compatible and supported.

For Ethereum assets, the structure of our entire protocol is very clear. Users hand over liquid assets to us, and we continuously distribute them to the transition layer to obtain risk-free returns. We support many consensuses, such as PoS, retake, AI, RWA, etc. We are not an LP, ETH is one of our underlying consensus assets. When more consensus appears in the market, we will also support more consensus-based underlying assets, because consensus-based underlying assets are basically risk-free.

Of course, in addition to consensus assets, if there are further underlying assets with risk-free returns similar to RWA in the market, our protocol can also support them. Because each underlying asset is a strategy, and this strategy is pluggable, our entire protocol architecture is to distribute liquidity to various risk-free underlying assets. Then after interest-bearing assets appear, they are distributed to each chain and the application layer of each chain. Together, it is a set of liquidity distribution protocols based on mainstream assets.

As the Bitcoin ecosystem grows, we realize that Bitcoin has the opportunity to earn interest for the first time. It is possible for the first time to make Bitcoin an interest-earning asset, then distribute liquidity downwards, and then distribute it upwards to various and ecological application layers. At the very beginning of the whole thing, in line with our vision of a long-term liquidity distribution agreement, we officially announced the interest-bearing asset BTC "mSTONEBTC" for the Bitcoin ecosystem.

Jeff (Founder of Merlin Chain): Hello everyone, I am the founder of Merlin Chain. We have developed and constructed many protocols on the Bitcoin layer since last year, and then launched Bitcoin this year. Capacity expansion solution Merlin Chain. We mainly hope that Bitcoin assets can be minted at one level, with smart contracts, and in a very efficient and low-cost environment, have better liquidity, and at the same time facilitate access to more applications. , such as DeFi, games and social networking, etc.

Since its launch in February, Merlin Chain now has nearly 2 million active addresses, nearly 40,000 BTC and a large number of native Bitcoin assets such as ORDI on the chain. This time we also officially announced our cooperation with StakeStone, hoping that through cooperation we can ensure the decentralization of the entire network, and then allow Oracle on the entire network to undertake more data verification and network security maintenance.

Moderator: What is the core narrative and positioning of StakeStone?

Blue Wharf (StakeStone core contributor): In April last year, we had some in-depth exchanges with large liquidity players. We found that it was difficult for these large liquidity players to use native Ethereum to provide liquidity. It is supplied, because native ETH has a pledge income of about 4 points, the settlement method is ETH, and the interest is settled in ETH. At this time, if a public chain absorbs ETH liquidity, it will face a 4-point PoS opportunity cost. Don't underestimate the opportunity cost of 4 points, because it is settled by Ethereum, which means that if you use a public chain token, such as Manta, it will need to use 10 points of Manta tokens to cover these 4 points. opportunity cost.

If it is a project in the Manta ecosystem, an annualized rate of return of perhaps 20 points will be used to cover the PoS cost. We believe this is a huge industry contradiction and an irreconcilable contradiction. When LSDfi became a hot topic in April last year, conflicts first surfaced during Shanghai’s upgrade process. We feel that from that point on, the history of ETH as a liquid asset will begin to change.

Because ETH is no longer the most suitable asset for capital efficiency, that means that someone must step forward and make a new liquidity asset carrier. The new Ethereum asset is equivalent to a new liquidity standard that replaces the liquidity attributes of ETH. Then all opportunity costs are covered, and each public chain and other talents will continue to carry out necessary ecological development at a relatively low capital cost. We believe this is a huge problem and opportunity in the industry, so StakeStone was born in April last year. In fact, when we first started talking to many chains and projects, people didn’t particularly understand this matter. It was not until later that Blast was the first to stand up and be a Layer 2 with the ability to generate income, exposing the biggest problem to the entire industry.

At that time, we were the only solution provider in the industry. Manta was the first to adopt this solution. Our cooperation with Manta meant that we not only raised questions, but also because Blast took three months to complete. There is a solution, and we paid attention to it and solved it 7 months ago, so our cooperation with Manta has been very successful. Since then, projects have adopted new solutions to attract liquidity flows. We don’t really trust any underlying asset on the chain, because the underlying assets on the chain in this industry are constantly changing. Therefore, StakeStone was designed as a protocol compatible with multiple underlying assets, just because the largest risk-free underlying asset is Ethereum. But if it is iterated after a few months, everyone will realize the significance and significance of StakeStone as a liquidity upstream protocol. It’s valuable.

The same logic is about to happen in the Bitcoin ecosystem. We will continue to use our protocol. This does not mean that a single code will not be changed. We will still do some customized development for BTC to solve problems like The problem. For example, now he must have a Bitcoin carrier to help everyone solve the opportunity cost of BTC. Our long-standing positioning and vision is to distribute the entire liquid assets to improve the liquidity efficiency of the entire Web3 industry.

Moderator: What are the strategic considerations for entering the Bitcoin ecosystem this time through interest-bearing BTC? What is your approach to working with Merlin Chain like?

Blue Wharf (StakeStone core contributor): It is difficult for us to predict that the Bitcoin ecosystem will explode in the state it is today. Our first simple idea was that in the early days of the Bitcoin ecosystem, the scale of Bitcoin’s liquidity was much different from that of Ethereum. Therefore, the Bitcoin ecosystem also needs a more liquid and better asset as the corresponding settlement asset.

So when we first started working on the Bitcoin ecosystem, we cooperated with Merlin Chain to provide interest-bearing ETH. With the development of the Bitcoin ecosystem, we feel that simply using interest-earning ETH to provide liquidity for the Bitcoin ecosystem is no longer enough to meet the needs of the Bitcoin ecosystem. This is why we want to go one step further and do interest-bearing BTC. There are currently two options for interest-generating BTC. One is similar to the one adopted by Babylon, which is to timestamp another chain and then find someone to issue notes on the chain. The other is to issue tickets directly on the Bitcoin chain.

Option 1 looks very Crypto Native because its assets are pledged on the public chain. However, a big problem with this matter is that Layer1 itself does not have the ability to generate interest, so those who do Option 1 , we must seek the real source of interest, and then it itself does not have the ability to generate interest. It must come to make an interest-generating chain. At this time, we will encounter a contradiction. I have generated interest, why should I distribute it to a third party? Such a sharp contradiction.

If Ethereum did not have PoS first and then Restake, but had Restake, no one would care about it. In fact, Restake's main funds today are still supported by Ethereum PoS, and it is difficult to rely on pure AVS for support.

We believe that in fact, the first thing the Bitcoin ecosystem needs to solve is the PoS problem, rather than the problem of shared security. I have to have a security mechanism myself first, and then a third party says that I can help you share the security. It cannot be said that a third party provides all my security. So the core part of the complete set of security is PoS, so we think the second option is more important. We think we should first serve the Merlin Chain, and then make the PoS matter perfect enough, instead of saying that we build a shared security on it first. , and then provide shared security for Merlin Chain.

Moderator: How does Merlin Chain work? How is it different from other Bitcoin Layer2?

Jeff (Founder of Merlin Chain): In fact, before February this year, everyone had a very confusing understanding of BTC L2. A considerable number of people felt that BTC L2 was a pseudo-concept, including today I believe There are also many people who feel that BTC L2 is a pseudo-concept, and its definition is also very confusing. Everyone is relatively confused about the entire Bitcoin expansion plan, and it is also a state of contention among a hundred schools of thought. I think all projects today are constantly exploring, and we are very happy to see new Bitcoin expansion plans coming out, whether overseas or in Asia. In fact, everyone's route is the same as what we said a month ago, and it is getting closer.

So what is this route? The first one requires a decentralized consensus mechanism to ensure the security and anti-fragility of the entire network. This is a core reason why we are cooperating with StakeStone today. The second is to allow your most native transaction data to be shared with a third party, so that everyone, all nodes and all users can participate in the maintenance of the entire data. The third is to explore anti-fraud mechanisms at the Bitcoin level. For example, a purely one-layer mechanism like Babylon uses timestamp scripts to achieve safe and stable staking. But when it comes to the second floor, it is actually difficult to do this, because the user's money will be consumed on the second floor, so if the money on the first floor is only locked through a script, it will actually appear double on the second floor. flower.

So today, in fact, these projects on the second layer of Bitcoin are also exploring anti-fraud mechanisms on the first layer of Bitcoin in the future. So these three things are what all BTC L2 must consider doing today. It does not mean that it is enough for you to do any one of them well. If you are purely doing PoS in Bitcoin, you may be questioned that the network security of the first layer of Bitcoin is not highly bound, but if you want to be able to slash on the first layer and do anti-fraud and rollup on the first layer , In fact, since the Bitcoin network itself is not a Turing-complete environment, it has no way to achieve this.

So in fact, everyone is constantly wandering between reality and ideals. Everyone will try security in various dimensions and network node mechanisms in various dimensions.

The interest-generating BTC we are doing now is to maintain the decentralized Oracle network and maintain the security of the entire simulated network, whether in the form of an agent or in the form of direct user participation. The nodes on the Merlin Chain actually need to do a lot of work, such as data compilation, including zkproof circuit compilation, uploading to and verification on the Bitcoin main network, and multiple verifications between Oracles. It also includes the final generation of the Bitcoin layer signature, as well as zkproof settlement and final certification, etc. These tasks require Oracle in our network to implement them.

These Oracles themselves need to pledge a lot of BTC, because they pledge BTC to maintain the security of the entire network. That is to say, if there is fraud or dishonest behavior, then they will be slashed to compensate for this. The loss caused by a transaction to the user. In their role as network maintainers, they will of course also enjoy the fees of the entire network and the network's governance token incentives. Ordinary users can gain benefits by participating in this plan and then joining different nodes.

After the interest-bearing BTC is minted, it can be used again in different projects on the Merlin Chain, thereby obtaining multi-layered financial returns.

Moderator: So how does the full-chain liquidity protocol StakeStone empower the Bitcoin ecosystem?

Blue Wharf (StakeStone core contributor): I just mentioned the entire liquidity distribution structure. First of all, we still think that liquidity should be used for PoS-related functions, because the PoS function currently seems to have the lowest risk. The only risk-free and long-term sustainable source of income. First of all, liquidity must be distributed to the consensus layer. After mint comes out to generate interest in BTC, if the consensus layer is perfect enough, it can actually continue to distribute to Layer 3, or more application layer protocols can then distribute it. Reduce everyone’s capital costs.

The overall structure is actually the same on BTC. The only difference is that the entrance to liquidity is actually moved from the original first layer to the second layer, because BTC L2 actually corresponds to the role and function of Ethereum. layer. Because it is difficult for the BTC layer to execute more commands.

Jeff (Founder of Merlin Chain): The Bitcoin asset has been a neglected asset in the blockchain wave in the past many years. It is more considered to be digital gold, but there is not much practicality. effect. Ethereum has actually reaped dividends during the wave of the past four years. Of course, this does not make Ethereum's market value higher than that of Bitcoin, but there is no doubt that Ethereum is favored by more users, and ETH assets can better participate in various ecosystems.

Just like I asked many friends in the United States, when they first came into contact with Web3, they only had ETH, not even stablecoins and BTC, because they needed to use ETH to create small pictures, so the bonus period is actually very obvious. . Now we have actually seen the opportunities of the Bitcoin ecosystem, including the fact that the capital volume of Bitcoin itself is enough to cause a larger ecological opportunity than the Ethereum ecosystem.

Under this premise, the properties of the Bitcoin asset itself need to be reconsidered. In fact, when StakeStone talked to us about this matter, we were still very excited, because our own PoS network needs to use Bitcoin to ensure network security. Simply put, let more people participate in network maintenance. Once In the event of transaction failure or transaction fraud, these nodes need to bear the user's losses.

When interest-earning assets appear, they can actually be used in more ecological protocols and ecological projects. Users holding Bitcoin will not just wait for it to rise, but will have more application scenarios. Whether it is participating in ecological applications, maintaining the network security of Merlin Chain, or using interest-earning assets to participate in more projects, its financial attributes will become higher. This will actually attract more users to hold Bitcoin and attract more users to participate in the Bitcoin ecosystem. This is the core value of the full-chain liquidity protocol in my opinion.

Moderator: How do you think interest-bearing BTC will reshape the Bitcoin ecosystem?

Blue Wharf (StakeStone Core Contributor): I think there will be a lot of BTC L3 coming soon. For L3, the emergence of interest-bearing BTC is very important, otherwise the capital efficiency structure of interest-bearing BTC will be very low, so interest-bearing BTC is very much needed to solve the connection problem between L2 and L3, which will bring great structural changes Change. From the perspective of applications on the entire chain, the emergence of interest-bearing BTC will reduce the cost of funds on the chain. Today's Ethereum L2, many chains have almost no ETH, and they are all interest-earning ETH to replace Ethereum as the main asset for ecological construction.

In fact, the interest-generating BTC may also go to other chains, which is another important thing that StakeStone is doing. We are a full-chain liquidity distribution, which not only means that our vertical structure distributes to the bottom layer and upwards, but also includes horizontal liquidity distribution, so the entire liquidity is a full-chain structure. Interest-bearing BTC may also be like this in the future. When the mBTC asset volume is large enough, more BTC Layer3 or other networks will be connected in series to provide a full-chain liquidity distribution structure.

Jeff (Founder of Merlin Chain): Everyone is talking about Bitcoin Layer 2. In fact, if you look carefully, you will find that various projects are actually working on Bitcoin’s Ethereum. . Because Bitcoin itself is not Turing complete and cannot do what smart contracts can do, in fact our expansion of it is equivalent to making a large and comprehensive Ethereum. For Ethereum, network security is the core, which will also cause its performance to encounter bottlenecks, and then a variety of chains will be needed to make up for its performance problems.

These Layer3 are actually a consensus formed based on the security of Merlin Chain. We are all working on Bitcoin's Ethereum. I think everyone will gradually understand this.

Some traditional Bitcoin financial services require an independent network environment to implement. For example, in traditional Bitcoin finance, the demand for lending and pledging is very high. In fact, these scenarios are not so easy to run on the second layer because its ledger is a CeFi ledger, but it needs to be on the Merlin Chain. Running the DeFi model actually cannot satisfy its own fund security and funding rate issues.

Simple understanding, after they decentralize the ledger, they can carry out CeFi business at low cost and high security, but at the same time, because it shares liquidity with the second layer, they can actually share it with the second layer. Layer the DeFi demand of the actual user group, and the demand of DeFi is much greater than that of CeFi. For example, in CeFi, the income of 2-3 points is already very high, but in DeFi, users may borrow coins for up to There is a demand of 10 points or even 20 points, so it is equivalent to a CeFi chain itself and shared DeFi liquidity. Then the actual volume of this business is not only 10 billion US dollars to cover, this is a very large volume of traditional Bitcoin funds, but of course it is still very chaotic today. In fact, I think the words Layer2 and Layer3 themselves are not accurate enough. I think the role played by Merlin Chain and the role played by our chain are actually more like the first and second layers of Ethereum.

The asset attributes of BTC itself are relatively fixed, and everyone’s expectations for it are also very high. So on the basis of strong consensus, it will bring some financial possibilities to it and bring it Come to some possibility of earning interest. The current market value of Bitcoin is about 1.3 trillion. With such a large amount of funds, if it brings any small part of the interest rate increase expectations and empowerment, in fact, its development of ecological applications, including the entire network The prosperity and construction of the country have a very big impact.

So I think today is not actually discussing how it will reshape the Bitcoin ecosystem, but more like discussing what will happen after opening up the possibilities.

Moderator: Let’s ask Wharf to introduce the StakeStone airdrop activity.

Blue Wharf (StakeStone core contributor): We will probably have three parts to complete the entire airdrop plan. The first part is actually designed to be a no-barrier event that anyone can participate in. In the second part, we will cooperate with many chains, and each chain will have its own basic activities and ecological incentive plans. We will not issue activities, but we will empower the activities carried out by each public chain. What we do is liquidity distribution, so the second part mainly reflects the distribution mission. Some tasks are relatively hard-core and have certain thresholds.

But in fact, a small difficulty encountered now is that there is no time weight. Many large investors feel that there is no difference between depositing on the first day and depositing on the second day, so they are all waiting, and a gaming dilemma arises. So we added the time weight again and reorganized the rhythm. The third part is that we have a lot of communities, including mBTC, and we have cooperated with a lot of media. We will give consolation prizes to the media and reward behaviors that have interacted with StakeStone in history. We will add time weight first, and then introduce assets like mBTC after adjustment.

There are many DeFi big players who like to stack, but in fact, the more layers you stack in the market, the higher the rate of return. This is a big misunderstanding. We will not stack the number of layers, and ordinary users will not stack too many layers. We will lock the position until the end of May, so only stacking one layer can explain everyone's capital efficiency.

One of the most important things about airdrops is withdrawal. Saving money is very easy and can be done with any agreement. But withdrawing money is not the case. Withdrawing money is a great test of the protocol's ability, and withdrawing money greatly affects the rate of return. When we make things, we tell you very clearly when to withdraw money, but there are many agreements that don’t tell you when you can withdraw money. During our cooperation with Manta, the block stampede was very serious within the first two hours of withdrawing money, and two transactions would appear in the same block. Because Ethereum blocks every 12 seconds, the block trampling phenomenon is very serious. Under normal network conditions, block trampling will not occur. Block trampling will only occur when a huge TVL needs to exit in a short period of time. Stampede.

In order to prevent block trampling, we need to build a queuing system. Engineers may have to stay awake for 22 hours to temporarily build a queuing system, and human flesh is doing the queuing. During the block stampede, if a person fails, his money will not be withdrawn, but he will have to pay a very expensive gas fee. If 10 people submit in the same block at the same time, and 9 people fail, all 9 people will have to pay Gas. Therefore, we also built a queuing system specifically for this matter.

Moderator: Where is the future of interest-bearing Bitcoin? Will it be implemented on the first layer or the second layer? And can additional full-chain liquidity infrastructure help Bitcoin become more liquid?

Jeff (Founder of Merlin Chain): Babylon does timestamps on one layer, but under their path, there is actually no way to do Restake later. If it passes through the second-layer protocol first, it first pledges the funds to the decentralized network, and then adds the timestamp. It is actually a two-way interest-generating mechanism from the second layer to the first layer.

I personally think that interest-earning BTC will definitely occur on the second layer, because the Bitcoin network only requires miners to mine it. It is a PoW consensus, not PoS, so it does not require your Bitcoin to do anything. , or in other words, if you want to do other things with Bitcoin, you can’t do it.

The source is most likely to be these applications, protocols and new networks in the ecosystem. Then you provide liquidity and security for these networks, and it will give you corresponding incentives. So in fact, the source of these financial returns actually comes from the ecology. Today we are talking about the Bitcoin ecosystem. In fact, this ecosystem refers more to the second-layer applications.

Blue Wharf (StakeStone core contributor): For example, one person works on the first floor, but the labor itself does not generate income, while another person works on the second floor, and his labor is BTC It has brought benefits. At this time, the people working on the first floor did not directly contribute to the creation of benefits, but they tried to take a large part of the profits from the people who made contributions. I think this is unacceptable.

We firmly believe that interest-bearing BTC should first be born on BTC L2. But Jeff said another very interesting thing. If you pledge mBTC on the second layer, in fact, the real native BTC can be stacked in Babylon on the first layer. In this way, you can not only get the Babylon airdrop, but also After getting the income from mBTC simulated PoS, and then after you get the interest-bearing BTC, you can make applications and distribute to get income again. We believe that the combined income structure is the most reasonable way for mBTC holders to earn income.

Moderator: Restaking is essentially a nesting doll game. Where do you think its risks lie?

Blue Wharf (StakeStone core contributor): EigenLayer actually made a middleware for the liquidity distribution of the consensus layer, and then each future AVS will run its own client. In fact, one AVS will be issued on one chain. A PoS client will be released, which is equivalent to the operator running the client for iOS. EigenLayer's main innovation comes from his belief that one Ethereum can provide shared security for multiple clients, which leads to one Ethereum owning AVS1, AVS2, AVS3, etc. In fact, it is theoretically a collection of the income of AVS(N) .

What are its risks? That is, the more N levels you bear, the greater your risk of slashing. As long as any one of them has a slash, the series will all be slashed. If there are 100 AVS, can you run all 100 AVS? Can you use one Ethereum 100 times? The service capability that can be used 100 times actually means that the operator has to run 100 clients. Those 100 iOS clients may be upgraded to A this week, B next week, and C and D together next week, so this becomes an operation and maintenance job, and the income from each AVS is actually very low. of.

Moderator: What should I do if there is a run?

Blue Wharf (StakeStone core contributor): Because our underlying assets can be completely restored, there is no run on it, it only has the problem of queuing for withdrawals in a short period of time.

The above is the detailed content of Focusing on full-chain liquidity, how does StakeStone expand into the BTC ecosystem?. For more information, please follow other related articles on the PHP Chinese website!