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Charlie Hu (00:00:17):

In the Bitcoin ecosystem, since we are also even compatible, we need web3 infrastructure middleware like The Graph. We're talking to LayerZero. We're talking to a few other along the way as well. They are serving a very important function.

Nick (00:01:01):

Welcome to the GRTiQ Podcast. Today I'm speaking with Charlie Hu, co-founder at Bitlayer, a pioneering Bitcoin Layer-2 solution based on the BitVM paradigm. Before launching Bitlayer, Charlie made significant contributions in other notable projects, including Polkadot and Polygon. I've been excited to interview Charlie for a couple of reasons. First, his insights into business, startups, web3 community, and the industry landscape are incredibly enlightening as you'll soon discover. Second, amidst the growing interest in the programmability of Bitcoin and the rise of Bitcoin Layer-2 solutions like Bitlayer, Charlie offers valuable insights and commentary. And lastly, Charlie provides a fascinating perspective on the evolution of web3 in Asia, which I think you'll find useful in understanding this dynamic region of the world. I started the discussion with Charlie by asking about where his drive for entrepreneurship comes from.

Charlie Hu (00:01:58):

First of all, thank you very much, Nick, for the invitation. I'm super glad to be on the podcast. Hey, everybody, for the people who are listening. My name is Charlie. I originally come from China. I've been an entrepreneur and investor sort of two sides of the table for a while. So my entrepreneurial drive come from, I guess, this early stage when I was a child. I'm a big fan of heavy metal, rock music and so on. So this interesting rebellious energy or vibe inside of my heart is always there. If you want to be an entrepreneur, you need that. For the people who like to obey rules, who like to just follow the discipline and orders and don't like to disrupt things, you might not be the person to actually be an entrepreneur, right? Because you might be a very good corporate executive and climb up the career ladder, which is also fine. We need the people like that working for the government, working for the big corporates.

(00:02:50):

For me, being entrepreneur is about try to fix some things which people think for granted, but doesn't really work in the way you believe actually is the right order. So I think that's that, and the rebellious is actually one side. And I'm a very good disruptor or we call this hacker. I liked to hack things around when I was a teenager. So I win national prize on electronic engineering competition, although I wouldn't say I'm a best engineer. I actually didn't study engineering in my bachelor degree and master degree. I studied business.

(00:03:19):

But I think to have this hustler plus hacker mentality is very helpful to be an entrepreneur, and it's like a natural evolution, right? Eventually you start to learning about all the entrepreneurs. I start following about Elon Musk's story, Peter Thiel's story, all these entrepreneurs' story from Stanford. All these online courses, I follow a lot of them when I was middle school, high school. Obviously, those give me this priority list, right? Every time there's some crazy amazing inspiring entrepreneurial stories, I like to read that and so on.

Nick (00:03:51):

For any listener that wants to be an entrepreneur, you clearly have been one. You've also worked on the venture capital side of things. So you've funded entrepreneurs. What's the one important lesson that you think everybody should know about entrepreneurship before they begin?

Charlie Hu (00:04:06):

So it's really not about you think being entrepreneur is cool and you want to be like one. That's what we call this wantrepreneur. Being an entrepreneur is actually very hard. A great book written by a co-founder of a16z, right? Ben, is The Hard Thing about Hard Things. Starting a company is so hard. You need to chew glasses. You need to do a lot of things. The revolution is very lonely, and you need to fix a lot of stuff, right? So it's not that cool. It's not like a rock star on a stage or whatever. Not at all. There's like 99% of the time actually a lot of tough stuff to work on, right? You need to work overtime. A lot of people actually say that. I agree 100% as well, which is there's no such a thing called a work-life balance.

(00:04:47):

So for the people who wants to be entrepreneur, had never done that before, and who think that being entrepreneur is so cool, I just want to manage the expectation a bit, right? For the people who really driven to be entrepreneur, who wants to solve certain interesting problems and important problems, actually create impact for the society, for the world, I think it's about finding the inner drive, right? Something really make you feel itchy, like you want to fix that. That sheer drive of fix that problem and help people or help certain things to make it better, cheaper, faster, in certain ways, move the needle, and that drive can give you this kind of fun. It's more than just making money. I think that's very important. Without that, it's actually very difficult to justify. You are working overtime, you sacrifice your life quality, you don't actually have the work-life balance. So sometimes, you need to sacrifice friendship. It's a lot of friendship. When friends ask you to go out for a party or whatever, you have to say no a lot of times and so on. Does it worth it?

Nick (00:05:47):

Let's put on your venture capital hat here, but you've got entrepreneurs showing up in front of you. They've got ideas, they've got visions of the future. You've seen a lot of them. What's the two or three skills that you're looking for in an entrepreneur? What do they need to be good at? It may not necessarily be the very thing they're working on. It might be skills that support that. But what's your perspective on that?

Charlie Hu (00:06:07):

I'll put that into two categories because I worked in Web 2 kind of a entrepreneur and also VC cycle before my crypto journey around 2011 to 2013. I worked in an accelerator in Amsterdam. During that period of time, I get to know a lot of Web 2 companies, startups. Netherlands was one of the most entrepreneurial country in Europe, probably by top three in the world as well, right? They have a lot of great founders from Netherlands. So I was working there in one of the very famous accelerator kind of rock star. I met a lot of VCs, angels, and founders every day. But that's web3, now web3 founders, right? I didn't enter Bitcoin or web3 until 2015.

(00:06:49):

During that period of time, I think very important for founders to understand, and a skill set is you are able to find interesting insights. You need to be able to find signal when there's a lot of noises there, right? The noise from the propaganda, from the media, from lot of he said, she said kind of rumors, right? There's people give you all kinds of free talks, right? They like what you do, but actually it's just for the sake of making you feel good. But if you really do the marketing insights like research and actually ask people what you're willing to pay for that, the reality is most likely people actually don't want to, right? Things like that.

(00:07:24):

So to be an entrepreneur, you need to be very brutal, honest to yourself and to the society, how certain things work, how the system works and so on. So we saw a lot of entrepreneur actually got some good ideas. They are always very protective, right? They want to protect the idea because they don't want to share, but eventually the idea was not validated, right? There was a lot of cases in Web 2 world. Certain startup wants to build an app. They think this idea is great because certain people like that, but they didn't have a very scientific research around it. And then they start working on that. They actually spend time and money, pay some developers work on some apps, which actually validate the idea. So that's the whole philosophy or methodology of [inaudible 00:08:07] startup, right? To really get the idea out, actually start validation in a very low cost, very fast way, and iteratively actually work towards a real product market fit, getting a prototype down, and then you start pitching to the real investors.

(00:08:24):

So when I was working [inaudible 00:08:26] accelerator, we saw a lot of rough ideas. Great founders, great passion, but the idea was simply wrong because of the timing was not ready. There's no product market fit. Certain things just doesn't really work in the logic. So that was there a lot. On the crypto side, so my journey, I bought my first Bitcoin in 2012. I get to know Ethereum when I went to Berlin in early 2015, especially the Parity team who were building Ethereum wallet and Ethereum clients. So Gavin Wood, who was CTO of Ethereum, was the main leader on that. I started following him about what is web3 since then and so on. And he left Ethereum, started Polkadot, right? So that was the journey.

(00:09:01):

Early, Ethereum was interesting, exciting early stage. A lot of developers, very smart people who actually know how to do code like C++, C, and Solidity, they started talking about the future of finance, future of society, and all kind of things, right? The programmable money and so on. So Ethereum was a very interesting, this kind of infinity garden. They attract a lot of interesting developers with a lot of great minds, right? So that was early days.

(00:09:28):

If we talk about entrepreneurship on web3, the difference is that it's a very philosophical mindset driven space in early days, meaning it's not just about a product. It's not just like if you have a product market fit, you could get it. It's really about do you actually have interesting narrative and actually a community that actually like the philosophy? Right? So it's a bit more abstract. Compared to Web 2, I would say web3, in the early days of starting a company or starting a project, is very culture mindset or community driven. Ethereum was not the best product market fit in the early stage. It was really just because they had the best community of builders who actually get along very well. In the beginning, they had a shared mindset. Vitalik was very visionary, and then Gavin and a bunch of other people actually picking up, started working on that together.

(00:10:21):

Even up to this moment, EVM, the Ethereum virtual machine, is still the biggest developer environment for all kinds of DeFi and all kinds of dapps, right? Would you argue if EVM is the best technology in the world? We would definitely say it's maybe not where we have Solana VM, more VM, a bunch of others coming along the ways. But if we talk about adoption, EVM is still the most adopted smart contract environment in the world, right? And actually that was because of the community and so on.

(00:10:51):

So for a founder to try to do something at web3, it's really about three things. One, what's the best narrative? Right? What are the things actually, in this new cycle, creating the best narrative with the strongest consensus? And two is, what kind of assets you can create on chain? Last cycle, in 2021, was definitely NFT, gaming NFT, all kinds of JPEG NFT, or Metaverse, right? This cycle, we could argue is meme coin, we could argue is many other stuff, right? So what kind of assets are you creating? Digital assets is something which is new, which is unique in web3 because in Web 2, you don't create assets. You're creating information, you create dapps. That's pretty much it. And most of dapps is centralized, owned by the big company, right? Well, unfortunately. Whereas in web3, digital assets are owned by the community minted on the network, right? So that's different.

(00:11:44):

The third thing I think is very different on web3 compared to Web 2 entrepreneurship is, are you able to build a community? For Web 2, if you build a best app, you manage to feature it on, let's say, Product Hunt, or very good at doing SEO, on Google. You probably have a company X makes money already, right? Whereas in web3, if you don't have a community, if you never actually be able to build a community, it's very difficult to justify you can be successful multiple billion FTV projects. I barely see anyone like that.

Nick (00:12:14):

Charlie, you have, as you mentioned, a degree in business and finance. You are entrepreneurially driven. You're clearly very smart, very well-read. You could have done anything in terms of your career and profession. You decided, however, to pursue web3 and to work in this space. What drew you into this space? Why did you decide to go here?

Charlie Hu (00:12:36):

In the beginning, it was a bit random, right? I'm a bit rebellious. I like to listen all these liberal, a bit anarchy kind of thinking, right? I went to Netherlands also because of that. Netherlands is one of the most liberal country in in Europe, and also, they're very liberal thinking. Amsterdam is one of the most international welcoming city in the world, right? I got to know Bitcoin was... It's also luck, but also destiny because I was immersed with all the liberal thinking, right? There's a lot of Dutch Bitcoin community there. So it was like that in the early days. At that time, there was no Ethereum even, right? In 2012. I could pick up just join banking company or traditional private equity firm, which I wouldn't say excites me that much.

(00:13:19):

I studied behavioral finance. A lot of my Dutch alumni in my business school, they chose to [inaudible 00:13:24] financial routes, right? [inaudible 00:13:25] route. Whereas me and a few other pretty interesting shop, I would say smart classmates, they all choose to one, working in tech companies or even started their own startups. Some of them actually started doing Bitcoin mining even earlier than me. So if I choose to just double down on mining, I could become much bigger OG in the Bitcoin space. It's unfortunate I didn't go for that route. I'm more on the software side. If I choose the hardware mining side since 2012, I might become a pretty big well in Bitcoin, which is okay.

(00:13:59):

So back to your question, I think it's really just like you being immersed yourself in the environment with the right mindset, right? Eventually leads to this kind of thinking, right? So it's like philosophically, you are average of the five people which is the closest to you. So the people who were very close to me, around me when I was in Netherlands in the beginning of my crypto journey was a lot of the people who like to think liberal, a bit anarchy, who like to think about decentralization, who like the whole philosophy of Satoshi of ultrasound money, which doesn't really belong to the central governments and so on and so forth. That's that, right? And I think that's like just a nature evolution. I like to get immersed with crypto stuff in early days.

Nick (00:14:43):

Before you co-founded Bitlayer, you worked at some of the most well-known protocols and projects in the web3 ecosystem. I'm talking about Polkadot, Tezos, Polygon. I'm curious how those experiences shaped your thinking about web3 and community.

Charlie Hu (00:15:00):

Obviously, it was just such a good luck and also great honor to work with all these major protocols. So Polkadot was my major journey, really gets me become sort of financial independent. Polkadot, I made a good bet. I made a huge bet in the first round for two reasons if you ask me why I like Polkadot early days, because that was the first major protocol built by a very solid engineering team lead by this great leader, Gavin Wood, who was Ethereum's co-CTO, who actually invented the whole EVM virtual machine, right? Who wrote the yellow paper of Ethereum. He did a lot of amazing work. So I was following him about the whole web3 journey. I translated a lot of his articles. When they started Polkadot together with Polychain and a few other major VCs backing them, I knew it's going to be huge. So I put a lot of the money I had at that time. Not too much actually, but I just went all in almost as early investors in the first round in 2017.

(00:15:53):

And then because of the whole 2017 ICO bubble, I didn't want a lot of those. It's kind of a short-term, a bit pump and dump kind of ICO crazy mania. I was trying to understand, "So what's next? Right? We have Ethereum, we have a lot of other layer-1 chains. We need interoperability." So Polkadot was one of the best technology on there, and then doesn't have its communities. You still need a lot of developers to work on the Parachain and so on. And at that time, I already see a good momentum. People wants to talk about Polkadot in the Chinese community. At that time, I already came back from Netherlands to China and I was like, "It's time for me to really build a community founded by me and a few other investors who like Polkadot as well."

(00:16:35):

So from 2018, I helped Gavin when they actually came to China. I volunteered to be the interpreter and translator because they actually don't speak Mandarin, and a lot of the Chinese developers actually don't understand the high level of things they want to talk about in English. So through that actually you get access to a lot of developers who needs help from us and then you've just become useful and helpful, right? In the community. You start contributing more and more and I started access to more VCs, more exchanges. I got very close to Huobi from 2018. And eventually, we started a brand called Pokerbase, which is like Solana super team kind of a relationship. So we're trying to work on the ecosystem. We eventually invested around 20 product in Polkadot, and six of them, we advised from A to Z, and three of them listed on Binance. That was a good journey. We made good returns on that.

(00:17:24):

So Polkadot was a great run. And the problem for Polkadot was this tokenomics of Parachain was very expensive. Whereas among the other EVM chain like Ethereum itself, deploying dapps on Ethereum is relatively cheaper, right? Much cheaper compared to Polkadot Parachain slot. So the DeFi Summer came in 2020, and a lot of the blue chip DeFi protocols really become very successful. Aave, Compound, Uniswap, right? So all these getting a lot of mindshare and momentum. So that's why I realized, "EVM got a win. Ethereum doesn't have a huge rally." And that's why I deep dive more on other things.

(00:18:05):

So Tezos was a very short journey. I only worked there less than two months. I got reached out by the head of APAC, my good friend David, and they needed help a bit. So I want to just learn what's going on with other ecosystems outside of Polkadot. So get to know about Tezos a bit. Tezos had one of the biggest ICO in 2017. I didn't say I was a big fan of that. The company structure was very slow. And at that time, Polygon was also growing very fast. I personally own Polygon since one day. It was still MATIC, right? And then their FTV just keep going up because of the whole layer-2 narrative and so on. And then I got reached out by the Polygon team early 2021.

(00:18:45):

So if I say Polkadot really gets me become a semi financial independent and I also learn a lot about building ecosystem, Polygon journey really gets me become sort of well known. I brought around 600 projects to Polygon ecosystem, a lot from China, quite a lot other from South Asia, Japan, and Korea as well, Vietnam as well. But because of the whole gaming rally and also Metaverse rally in 2021, so a lot of good projects, I get to know them, and a lot of the builders, they get to know me as well. The gap between the East and West, I was like try my best to fill the gap. When you're being useful to a lot of people, they remember you, right? And that's pretty much it. So there's a lot of small favor to each other, help each other out. Sometimes even just some shout out on Twitter, people remember you and so on.

(00:19:30):

So that journey was great to help me for Bitlayer because now we are building ecosystem for ourselves, right? On the team. Now we are fundraising, talking to community, talking to builders. A lot of people get to know me since 2021. So it's not like a very cold connection. We just know each other or somehow in an event. They actually know, "I know this person in 2021. He was pretty active on Polygon and so on. My friend's project was deployed on Polygon and this guy actually helped a bit and so on."

(00:20:01):

Although those are very ad hoc or some kind of very small data points, but those data points matters when you start actually reaching out to a lot of people, right? When you have nothing to really reference, it's difficult to make people trust you. But you have some track record even though it's a very small track record, sometimes people can argue it's a very superficial track record because it's not like millions, even billions of dollars of transactions, right? It's just somehow some simple tweets or some kind of events. Even with that, it can be very helpful to go along the journey.

(00:20:32):

So I think the whole journey of Bitlayer become very fulfilling. And also we had a lot of old friends reunion, right? From different ecosystem. That's been a great journey so far already. We started Bitlayer seven months ago, and a lot of people build on Bitlayer actually come from different ecosystems, from Polkadot, from Polygon, from a lot of Ethereum Layer-2s. Those are some old friends. Those three journeys, I'm working on a major multi-billion, even over 10 billion FTV major platform and gets me pretty well-equipped with the knowledge and contacts.

Nick (00:22:11):

Charlie, when you think about Asia and that region of the world's history and its future as it relates to web3 driving growth, driving innovation, how do you contextualize that? How do you think through that?

Charlie Hu (00:22:24):

Asia is very important always for the web3 internet community. When we talk about mass adoption, a lot of the consumer-facing application is very important, right? We can't just say mass adoption when you have only two or three major corporate users, right? And we could argue most of the web3 active users are now very consumer-facing. When we talk about DeFi or we talk about gaming NFT, a lot of them are very consumer-facing applications now. Then you need users. And our web3 application in terms of the philosophy is about free in terms of liberal, in terms of decentralization, right? A lot of the developing countries, their philosophy, their culture fits into their community demand a lot. China is one example.

(00:23:08):

There's a lot of people who wants to find out alternative solution in terms of how to make money, how to learn about things, how to look for new opportunities. web3 gives them this perfect alternative. When you have a daily job in the Web 2 or Web 1 world, this is actually interesting place for you to tap into, right? If you educate yourself well, you start learning about how to do DeFi, all kinds of things, you actually can make decent income outside of your day job. So that was a perfect, very practical product market fit, right? For a lot of the Asia community users.

(00:23:46):

We were just in GM Vietnam conference last week. We meaning Bitlayer. We hosted multiple events. We were speaker there, we had a booth, we hosted our Bitlayer night. A lot of Vietnamese community member came over. So Vietnam is very important country in Asia as well. They have the highest crypto penetrated rate in the world. Over 3% of their citizens in Vietnam, especially the young population, actually use crypto in daily basis, right? So some of them made generational wealth for them because it's a low cost country. Some of those, the yield they made on DeFi Summer basically changed their life a lot. So there's a lot of interesting story on that in the last couple of years.

(00:24:29):

So I would say Asia is very important because at the end of the day, where everybody talking about changing the world, bring mass adoption web3, we could argue and also criticize, do you know who is a user? Where are your user come from? What is the problem you're solving them? If you don't even understand where are your user, the whole mass adoption chain in the world is become like cliché, because at the end of the day, it's about where the user come from, how to solve their problem, why your product is better than the others, right? For most of consumer-facing applications right now within Bitcoin ecosystem or even outside in the Ethereum, I would say, I could argue almost half of the user base come from Asia, right? A lot of on-chain activities come from Asia. So it's a very important community.

(00:25:12):

For a lot of Western builders and entrepreneurs, the ones actually being very successful, including Polkadot and a few other protocol level projects as well, a lot of them have been very successful finding their product market fit, right? And finding a way to build local community. I will say it's not necessarily our competitor, but some kind of France project, right? Monad this year, they've been doing amazing job in the Asia community. So in Singapore, in Vietnam, in other countries as well. They've been building a very successful grassroots community. That's something billionaires are kicking off. We're trying our best to do that as well.

(00:25:46):

So being a global project from day one, backed by global well-known VCs with Signal, all those are very important. But at the end of the day, once you're hitting to token launch, product launch when you have actually something to use by the customers, by the average retail, it's all about building community locally, tapping into local grassroots. So Asia community, for a lot of Western founders, has been a little bit mysterious for a lot of Western founders who actually don't bother to learn and actually make their efforts to build a grassroots community. I think one, it's a big mistake. They have to do that. Second, whoever actually can crack their nut in a very good way, working with the local partners fairly well, they can be successful. There's a lot of new data points already, right?

Nick (00:26:36):

Well, Charlie, as we've both mentioned a couple times, we're talking today because you co-founded Bitlayer, and I'm very curious about what's going on there and some of the innovation that's happening in that space. Before we talk a little bit more about that, do you mind just taking us back in time to what the origins are, where the ideas or the seeds for the ideas of Bitlayer came from?

Charlie Hu (00:26:58):

Sure. So I didn't mention too much about my Bitcoin journey, right? I mean, I worked in Polkadot, Polygon, Tezos, all these proof-of-stake ecosystem or Ethereum stuff in the past. I never claim and I'm not a Bitcoin OG per se, right? Compared to the people who co-founded the Bitcoin.com or the other Bitcoin miners. I'm more like an ETH guy. In early 2023, I completely [inaudible 00:27:21] myself. The journey started from the beginning of ordinals. One of my friends was the first person to actually inscribe something. He inscribed the entire Bitcoin white paper on Bitcoin through the ordinals. So I was like, "Interesting." You can actually put data on Bitcoin, on Sats now, all the JSON data and stuff, right? I start following Casey who created the Ordinals Protocol. I also just having a crash course myself to learn what is BIP 439, what is the Taproot Asset upgradation, and so on.

(00:27:52):

So ordinals was basically based on that, right? To bring inscribed data on Bitcoin, on Sats. That's a great idea. And eventually, we have Bitcoin NFTs. And then later, unfungible token and standard BRC-20 on that. We could say last year in 2023, doing this still in the bear cycle, Bitcoin ecosystem has this interesting build culture back, this interesting ICO or small NFT summer. We couldn't call this a DeFi summary because you can't really do DeFi applications because there's no smart contract on Bitcoin Layer-1, right? Bitcoin as layer-1 is UTXO cash system. You can do payments, you can do a lot of transactions. With Ordinals, you can inscribe data, creating assets on Bitcoin, on a network, natively, which is great, right?

(00:28:38):

So the whole narrative from beginning, Bitcoin NFT was more native than Ethereum NFT, which was exciting narrative. That got me thinking as well, right? Most of Ethereum NFT, the JPEG file, it's actually stored by a third party no matter it's IPFS or Arweave or just AWS. Whereas Bitcoin Ordinals, it's actually natively inscribed on Bitcoin Layer-1. It's tamper-proof. It's always there. So that's a very interesting narrative. A lot of people now move back to Bitcoin, "Bitcoin NFT is actually cooler," and all that.

(00:29:10):

So I was part of the journey as that, right? And then BRC-20 token came up. Obviously, that was interesting, right? We started inscribing all the [inaudible 00:29:17] on Sats. And then pretty much the whole BRC-20 summer last year, almost every two weeks, there's some new narrative, right? The whole seven months of BRC-20 summer went through almost seven years of Ethereum, right? So there's a lot of primitive. I was sort of OG, and we couldn't call it OG. It was literally just last year. We were early tapping into all kinds of narrative. So I was trying to be the builder. I was on Twitter space almost three times a day, educating the space, educating in the community I know about what is BRC-20, what is this recursive inscription, what is real assets, what is Bitmap, what is Bitcoin Metaverse, what is this all this NFT about. So all this are very interesting.

(00:29:59):

The idea of building Bitlayer is after September. And by the way, I got invited as a speaker in the September Ordinal Summit. So that's where the place I met Domo and Casey, right? And a bunch of other key builders who basically initiated the whole BRC-20 summer, right? Ordinal summer last year. It was great to meet those people in person. It was great to hear their concerns about the vision, what's next, right? We have all this UTXO generated every day. Some of the UTXO are garbage, right? We could argue that was the reason.

(00:30:30):

Some arguments from the Bitcoin call like Luke and a few other guys, they want to wipe out the entire Ordinals on Bitcoin with the upgradation. So instead of thinking about Ordinals and all that, right? They want to wipe them out with the upgradation on protocol layer of Bitcoin Layer-1. Their thinking after the Ordinal Summit was, "We need to scale Bitcoin. We need to offload all these things either off-chain or layer-2. If we really want to bring mass adoption around Bitcoin ecosystem, it shouldn't be on Bitcoin Layer-1. Bitcoin as ultrasound money, Bitcoin as a network should be like that, which is safe, which is secure, which is decentralized." Bitcoin as a network never design to scale into a suite, Solana, those kind of level, right? It just design in different way.

(00:31:17):

Bitcoin in the past trying to build this smart contract layer on top of it, right? We had a color coin and later on blue stock stacks trying to do that. But after we're doing research, we realized all these semi-failed or didn't really pick up ecosystem on Bitcoin, they don't have the Bitcoin finality, right? Meaning all these side chains, they have to have trust their own node system, right? The security assumption is different. You can't really verify all these smart contract transactions back to Bitcoin. So that's a key difference. If we are able to achieve Bitcoin finality, right? With a scaling solution, that's a key difference to move the needle. Second is what are the solution we can pick up in the space which we can bring the whole programmability from Ethereum back to Bitcoin? Right? Whereas actually have the same access of security level.

(00:32:12):

So coincidentally, we saw BitVM white paper came out, right? It was a research result by this Bitcoin researcher Robin Linus from Germany. He was pretty active on the Ethereum, on the StarkWare ecosystem. StarkWare actually give them a grant as well, and so on. He's a very research-driven academic person. After that white paper in October came out, it gets me really excited about, "This is very interesting," because besides BitVM, there's a few other approach as well like Lightning, Nostra, and the list goes on, right? Some RGB++. BitVM is a very interesting solution that, without actually upgrading the whole Bitcoin network, without actually hard fork or BIP, we could use the existing Bitcoin opcode to verify the state transition from layer-2 and so on. And also, if we're able to build a layer-2, which is the state transition verified on layer-1, which we can basically bring the programmability from Ethereum to Bitcoin, but have the same security level of Bitcoin. So that's actually a very beautiful technical bet, right?

(00:33:20):

So that's why for me, this is something I get excited. That's why I started reaching out to a lot of people I know. I started reach out to my current co-founder, Kevin. We know each other since 2021. When I was in Polygon, he was at HECO. HECO is a Huobi ecosystem chain. The reason we know each other was because HECO chain, a lot of project wants to go global. So a lot of their ecosystem project wants to go multichain. They reach out to me because they want to deploy on Polygon. Both of them are even compatible, right? So it's easy to migrate and so on. And a lot of the HECO projects shared, "HECO as a technology is very solid." So I know whoever built HECO was pretty solid. That's Kevin. We have a very aligned technical vision about how to scale Bitcoin, how bitcoin ecosystem should look like. We have a very aligned vision. That's very important. When we have aligned vision, when we talk about the operational stuff, we get excited.

(00:34:13):

So the idea of Bitlayer came from just doing research about Bitcoin scaling, how to achieve Bitcoin finality, Bitcoin scaling as a research group. We didn't start as a real web3 project per se. In early November, we were just doing research writing articles, and then we saw other projects. Babylon started raising money. Merlin started really become hard. B², and a few other projects started really kicking off. They raised some money. We saw some announcement. Some of them having hard time to articulate what the problems they want to solve, but we see the momentum, right? VC started actually backing on that. For us, it's a great opportunity for us to relay the experience of building ecosystem on Ethereum, but using the new approach without actually asking Bitcoin to do a hard fork on it, building a solution which could scale Bitcoin, right? So that's interesting.

(00:35:08):

So me and Kevin, we started really talking about, "We should start our project actually around layer-2 and try to be the first native layer-2, right? With a roll-up model, roll-up equivalent and achieve this Bitcoin finality." So the journey started pretty simple. We started talking to some of the Bitcoin OGs. We started talking to some Bitcoin Ecos and VCs. We pitched to OKX and a few other VCs, eventually backed us. And then I went over to Satoshi Roundtable in Dubai. I went over to ETHDenver. A lot of people started talking about Bitcoin. A lot of people started talking about BVM and everything. And then eventually, we finished the C round three months ago, and the whole journey started really getting accelerated. We started hiring people. We quickly assembled the engineering team. A lot of them actually worked for Kevin before since 2021. So it's almost like a war cry, right? With a great vision. We have an interesting opportunity and a time window to build something, which could be unique. So a lot of engineers willing to take a pay cut to join a team. And so we've been growing a team very fast.

(00:36:15):

So if you ask us how many people in Bitlayer right now, we are one of the biggest engineering team in the Bitcoin Layer-2 space. We have around 50 engineers now, 40 full-time, 10 part-time researchers, and so on. So we have altogether around 70 people now working very actively on the ecosystem. Yes, so it's been an amazing journey. I think we are one of the most active ecosystem in terms of on-chain transactions. We have over 100 projects deployed on the chain already. We're making revenue on-chain gas fee as we speak every day as well.

Nick (00:36:47):

So as you mentioned there, it's been amazing to watch the Bitcoin programmability and all the different things emerge in the last year. I mean, as an outsider, this is something that really just showed up on the scene, something in the bear market. That was incredible to watch. And here we have all these L-2s. Talk about how Bitlayer is unique or different or how it's approaching this scalability issue differently than others in that space.

Charlie Hu (00:37:12):

It's a great question. It's also a question a lot of investors, a lot of developers keep asking. I think two parameters is very important. Where we are on the Bitcoin ecosystem at the status quo right now is a bunch of sidechain, right? The security assumption is the chain needs to be safe, right? Without Bitcoin finality, meaning they don't really let their state transition of the layer-2 eventually verified on Bitcoin, right? So our assumption is we trust Bitcoin, we trust things eventually inscribed on Bitcoin Layer-1 is secure. So how to put the state transition, the layer-2 into our ZK validity proof, right? On Bitcoin is very important.

(00:37:57):

So our approach with BVM is... There's multiple version of BVM, by the way. BVM is not a Bitcoin virtual machine. It's Bitcoin verification to eventually add this verification capability, right? Because Bitcoin as a UTXO opcode network didn't really have the verification layer, right? So all kinds of smart contracts in the transaction happen on sidechain or layer-2. How to verify that on Bitcoin is the key module we're building up. That's the first thing, layer-1 verification.

(00:38:27):

Second thing is trust-minimized bridge. So we have this model we came up with. We use a DLC technology, which is called a discrete log contract, together with BVM to create this decentralized Oracle signer network. So it's a native two-way pack and a multisig. The users have one pair of the multisig. And as long as we just need trust among all the decentralized signer network and in the Oracle platform, one signer is honest, then it's two-to-two packed. The bridge is safe and good to go. Whereas the existing status quo is we have to trust the majority of signers. In the multisignature, in the MPC is honest. So the trust assumption is from majority honest, the existing. To us is one out of [inaudible 00:39:12] is honest, then we are good to go.

(00:39:15):

So we wouldn't say it's 100% trustless, but it's way less trust dependent. That's the model we're going to work on, which is practical, and we are going to deliver that in the next upcoming months. In terms of pure 100% trustless model, that's something we still under the research. We haven't really found that much practical route. And I think making the trust assumption multiple magnitudes lower from trust majority to one out of [inaudible 00:39:43] is already move the needle in a massive way, right? That allow a lot of Bitcoin OGs or whales to consider with the right amount of API or incentive to bridge their native Bitcoin into layer-2 and so on, right? Whereas right now, they have to trust the multisignature, which is centralized and so on, right? So that's a key solution. Layer-1 verification through BVM, trust-minimized bridge through the DLC and BVM to work on that.

(00:40:09):

The third solution we want to build, which make us different is right now, Bitlayer is 100% EVM compatible. So deploying on Bitlayer is exact same experience like deploying on Arbitrum, Optimism, so to speak. We use the complete two kits on web3 infrastructure routes, tech stack, as many other existing battle-test chain, right? Eventually, what we envision is in order to achieve the best developer-friendly, yes, we need to be multiple VM compatible. So we are working closely with StarkWare on the Solana VM and the [inaudible 00:40:44] VM. And I think along ways now, we have one of a very big narrative called Parallelism EVM, like Monad after the project kind of working on that. So we want to build this layered virtual machine to support multiple VM for developers not just to build EVM smart contracts, but also other smart contract to be able to deploy on Bitlayer, natively. So that's the third part of a solution we want to work on.

(00:41:10):

But I think in terms of priority, the highest priority is the layer-1 verification, right? To truly build a real layer-2, not just sidechain, is something Bitlayer is focusing on. We are six to 12 months away in terms of engineering. The V2 version is going to be front center around that. We are already V1 version mainnet. We launched our chain, we launched our EVM compatible version. We're going to work on the bridge, which we mention is the second solution, the trust-minimized bridge. And then once we have the real layer-1 verification with BVM, then Bitlayer is going to be one of the first native layer-2 with the same security level of layer-1. So that's gets us very different and unique compared to many other layer-2s in space.

Nick (00:41:51):

You've mentioned StarkWare a couple of times. I had the opportunity to interview Uri, one of the co-founders for Episode 152, and it's still one of my favorites. A brilliant guy, and I know the team over there is incredibly smart and working on some cool stuff.

Charlie Hu (00:42:03):

StarkWare is our investor, and it's a great partner, great to have them working with us. They're one of the best ZK team in the world. We are working with them closely using their ZK proof, but we are working on our own in-house ZK verification through this Bitcoin FI verifier. So that's our proprietary technology we're working on the layer-1 verification side.

Nick (00:42:26):

Are there any news or announcements you can tease or any alpha you can drop about things that are coming to the Bitlayer community?

Charlie Hu (00:42:34):

That's quite a lot, actually. So Bitlayer mainnet V1 launched six weeks ago, right? We have been dropping quite a lot of interesting assets. We dropped our OG Pass NFT, which get minted out within two hours. We had around 100 projects already deployed on our chain. A few projects in the DeFi space, quite a lot of fun DeFi space across lending, DEXs, stablecoins, and so on, and a few others NFT gaming space. So I think the best way is to look at our Twitter. But I think in terms of real alpha per se is four days later on June 18th, we will have the Cryptopedia ecosystem campaign featured on OKX wallet. So OKX is our investor. OKX wallet is one of the best multichain wallet right now with 60 million users, very active. We are expecting six million users from their wallets will interact with our ecosystem campaign, which is one month long.

(00:43:31):

So for the listener who are listening our podcast, if you use OKX wallet, if you interact on the Bitlayer ecosystem campaign, you will be one way or the other entitled with some interesting rewards or even airdrops from the ecosystem project we feature them. It will be seven of them across NFT project, gaming project, and DeFi protocols on Bitlayer, and, of course, some of the Bitlayer token itself, which we plan to launch maybe August, maybe September. The data has not confirmed yet. So that's like a major alpha you're going to see from OKX wallet. If you have that, you can just check on the discovery channel. If you don't have OKX wallet, I would recommend you to use that. It's one of the best user experience wallet. And so far, I have been using since last year. They're very Bitcoin friendly. They are compatible to all kinds of RUNE assets, BRC-20 token assets as well.

Nick (00:44:26):

Charlie, for any listeners that are like me, they've seen all the great things going on in the Bitcoin community, they're very intrigued by the L-2 story, and, of course, what we're talking about today regarding Bitlayer, what's the best way for them to get active in the community, find something to do, go to work, contribute? What would you say?

Charlie Hu (00:44:43):

We have the ambassador program, which we're rolling out another season soon. So for the people who actually want to contribute, that's the best way to engage. We have some of the ecosystem badges, some kind of tier system for the community members. For the people who are actually still figuring out to learn, best way is to follow our Twitter, check our website at bitlayer.org. If you are a developer, we have a pretty sophisticated well-written documentation on the website. You can check it out and get started. We have a few hackathons and developer community events. We just onboarded another DevRel person. She's a pretty experienced in the Farcaster community, now join us full time. We have one of the youngest in the history, an engineer from Stocknet. He's our global head of DevRel. So I think we are very paying a lot of efforts and also attention to the developer engagement.

(00:45:32):

For the retail who actually don't code, right? For the users who wants to just degening, right? I personally was a degen myself as well. I think just tapping into the [inaudible 00:45:41] community, right? Join Discord. Our community ambassadors, some of the moderators, sometimes share some interesting offer. Jump on our community calls every week. Sometimes we have some community call. It's not even initiated by our official person. Sometimes they just jam ideas and so on, "This project which launched deployment on our chain." There might be some interesting point system going on. Tap into that.

(00:46:06):

[inaudible 00:46:08], a few other protocols, right? They have these new things coming along the way. I don't want to name-drop too much, but a lot of those top performing projects have a lot of interesting stuff. And one of my favorite personally I would say is that there's a prep DEX called [inaudible 00:46:20]. They just launched two days ago. Had tremendous amount of growth in the last 48 hours. For the people who wants to trade on-chain with prep DEX, that's an interesting one. So for Bitlayer, I mean, imagine us like a big conversion on Arbitrum, right? We are looking for good applications like GMX on our chain. So we are looking for potential ones like [inaudible 00:46:39] as well on that.

Nick (00:46:41):

Charlie, for those that are thinking through what L-2 and Bitcoin and how that whole thing works, if we contrast or compare what happened at Ethereum with the proliferation of L-2s and we see what's happening with Bitcoin and L-2s, how will the story at Bitcoin be different? How will the L-2s compare or contrast with what we've seen on Ethereum?

Charlie Hu (00:47:04):

Well, Bitcoin has a very unique culture, right? With all due respect, Ethereum have this central entity which is where we consider as official, which is Ethereum Foundation or Consensus. Bitcoin doesn't have that. Bitcoin Foundation is just a symbolic thing, right? It's not necessarily making too much decisions. Satoshi and core devs play important role, but now also become very, very decentralized. It was a very miner-driven, miner-centric community. Now, with the Bitcoin ecosystem, with the layer-2s, [inaudible 00:47:38] become more and more developer-driven, but it's also very decentralized. Meaning the Bitcoin Layer-2 space will be more free market-driven, focused on finding product market fit, finding your own niche, and having the supply-demand equilibrium.

(00:47:53):

Compared to Ethereum, Ethereum is much more, "Are you OG? Do you know this person? Do you know that person? [inaudible 00:48:00] the track record? Do your community like you, for example, Ethereum Foundation? If not, you're nobody." I think that's very, maybe not accurate, but actually by working with Ethereum, by working in the Ethereum layer tools, I feel working in Bitcoin ecosystem is very different on this part. On the programmability side, because we're even compatible, a lot of other layer tools are even compatible as well, onboarding devs engineering-wise is very similar. There's not too much difference. The culture, which I mentioned, is different, right?

(00:48:31):

The other thing different is liquidity. Bitcoin has much bigger market cap than Ethereum, right? A lot of Bitcoin liquidity has been sitting in their cold wallets not being like a yield bearing assets for 15 years. Now, we have all these staking protocols like Babylon, all the other native yield bearing protocols coming along the ways. We might really unlock, let's say, just 10% of the liquidity on Bitcoin, right? We can have a very interesting new flood of liquidity on DeFi Summer. That's very exciting.

(00:49:02):

We are expecting to see multiple programmable BTC coming along the way. In history, we had Wrapped Bitcoin, WBTC, right? Which was founded by BitGo in a more centralized way, which is okay. And now we are seeing more and more new BTC coming along like Lorenzo, which is doing stBTC. Lombard is a new protocol now doing the LBTC. One of the major mining farm called, and alpha, Bitmain, also, they're doing the FBTC. So more and more type of programmable Bitcoin, which will be minted on layer-2, including Bitlayer, will come along the way. So it's [inaudible 00:49:39] unpacked with native Bitcoin, but now on the layer-2 side, which are also more programmable. Those are things interesting and exciting, and it's very unique.

Nick (00:49:49):

Charlie, as we talked earlier, a little bit about your background working in Asia building community there on some really notable projects and doing some things in the Ethereum space, a lot of my listeners are enthusiastic about The Graph and the future of The Graph. I'm just curious in your prior journey if you ever came into contact or what your perspective was of The Graph as it relates to that experience.

Charlie Hu (00:50:12):

I'm a big fan of Graph since 2020. Graph has been a very important middleware web3 infrastructure for a while. When I was in Polygon, I was in multiple groups with The Graph co-founder. I'm personally a good friend with Iris. I don't know if it's okay to actually mention her name. She's a good friend. We were in multiple panels together, Twitter space together since 2021. So quite a lot of the things and impression I got about Graph was from her and from the co-founder.

(00:50:40):

In the Bitcoin ecosystem, since we are also even compatible, we need web3 infrastructure middleware, like The Graph. We're talking to LayerZero. We're talking to a few other along the way as well. They are serving a very important function, right? In the ecosystem. So for us, now we are building ecosystem, we're definitely exploring collaboration. And I have only good words to say about Graph. Not much else.

Nick (00:51:05):

Charlie, I only have a couple more questions for you before I ask you the GRTiQ 10. And these are 10 fun questions I ask each guest of the podcast every week. The first question is, let's talk about what's changed since you got active in the web3 space. I mean, it's only been a short while since you've been full-time in web3, but it seems like decades or centuries of growth and development. How has the space changed?

Charlie Hu (00:51:30):

The space changed a lot. In the beginning, it was a bunch of cryptologists. I now keep thinking liberal people, right? Very small niche of group. Sometimes we call these outliers, we call these the minorities, right? And so on and so forth. Now this is my third cycle, right? Every cycle, we see more and more people in terms of builders, in terms of users coming a long way. It's getting more and more mainstream, which is good. That's what we need. It's getting more and more liquidity, right? Now institution money coming with ETF and so on. So the space definitely changed. The regulators are now getting more and more educated about what is crypto, what is digital assets, how we regulate that. Corporates are also now talking about web3 as a one of the key strategy in pretty much every single annual meetings and so on.

(00:52:22):

Technology-wise, we developed so much, right? In the beginning was smart contract. Now, we have intraoperability, we have all the scaling solution from Plasma, Validium, now to Optimism [inaudible 00:52:34], ZK [inaudible 00:52:34], right? And now we're working on BVM around Bitcoin stuff. A lot of technology has been developed throughout the cycle. Most of technology actually developed between the bear cycle because there's not too much to talk about. People can only build. On the bull cycle, we have a lot of product market fit. Users get excited. The people who build product actually can find their users, have effective marketing and so on. So the space changed so much in a way.

(00:53:02):

I think for some people, it's getting a bit hard for them to find next great idea nobody else did before, nobody else discovered it before, right? Which is so unique, so new that potentially can change the world. Those lists of ideas and things getting less and less, meaning there's a lot of things that have been there down there already. Many things failed, certain things worked, right? And certain projects still there, right? I think it's about survive. For the projects being started since 2014, 15, majority of them actually died due to various reasons, right? The ones that are actually still there, some of them have been doing very well. So it's a very cyclical industry. In order to survive throughout different cycle or across the cycle is very important. It's something definitely very humbling for us now that I'm building Bitlayer, trying to survive the cycle, especially on the bear and to be long-term project, which is something very difficult and challenging, and we try our best to do that.

Nick (00:54:05):

And then the last question I want to ask you, Charlie, is you've mentioned a couple times these themes or narratives that emerge every cycle. We got DeFi Summer, we got the ICO boom, all these different things that happened. As you look forward to the cycle we're in now or maybe the forthcoming cycle, what are going to be the one or two narratives you think that sort of define this one?

Charlie Hu (00:54:27):

That's something I wouldn't say I'm the best expert to give answer. But from my humble experience and observation, I see DePIN getting a very exciting narrative, especially for other ecosystems like Solana, [inaudible 00:54:40], which is a very high-performance chain with very low gas fee. They're trying to onboard a lot of the hardware IoT stuff. Personally, from my childhood, I was a very hardware fan. I saw a lot of the people working on that with some smart hardware IoT stuff. Hardware IoT is not new, right? It's been there even before crypto. And now, they're thinking about doing this kind of decentralized network with an incentive layer with tokens and so on. But if we talk about economically, it's something similar as gaming cycle last year, although unfortunately, most of gaming doesn't work because the quality was not good. They didn't manage to acquire the users from Web 2 to web3, right? A lot of gaming projects actually fail.

(00:55:26):

Now, this DePIN is interesting in a way. I see a lot of new wave of users might potentially interact with blockchain through that, right? So for me, now that I'm building infrastructure, if I look at what kind of application narrative which gets me exciting, other ones actually can bring new users. They can bring new users to the web3 space for legitimate reason, not just for speculation, but for other reasons, right? In 2021, that was gaming, potentially. That was Metaverse because of the big company Facebook doing that, promoting a lot. We're talking about whole digital world, digital society. And NFT, we could argue, just because of the culture, because of the community vibe, people like to purchase that JPEG and put there on their Twitter profile. I would argue that was a good adoption. A lot of my friends who never used crypto, they purchased Ethereum and bought their NFT in 2021. That was the way they entered crypto space. That's very important.

(00:56:21):

So for me, that's my criteria to evaluate if this narrative actually makes sense. What I'm looking at right now, DePIN could be one of them. A lot of people are talking about AI. I'm not an AI expert at all. I'm still learning about how certain decentralized AI model works. I use OpenAI every day pretty much, right? So how does this web3 version of AI can make a difference? We're still learning.

(00:56:44):

For Bitlayer as ecosystem because we have this philosophy of free market, so we try to not make too much decision and saying certain narrative is better than the others. I think a lot of developers in their domain knowledge is more knowledgeable, smarter than us. So we're just trying to help them if they want to deploy on Bitlayer. We help them go-to-market strategy and a few other things. We don't really finger-pointing, "You should do this and that," right? But if they need help, we try our best to help figure out the tokenomics, a bunch of other things, right? But we wouldn't be the person kind of saying, "We're only to do that because we believe in that." We have only one sector-focused ecosystem. We are actually ecosystem agnostic per se.

Nick (00:57:31):

Well, Charlie, now we've reached a point where I'm going to ask you the GRTiQ 10. I ask these questions every week. They give us a chance to get to know you personally, but also I hope these questions help listeners learn something new, try something different, or achieve more in their own life. So, Charlie, are you ready for the GRTiQ 10?

Charlie Hu (00:57:46):

Please.

Nick (00:57:57):

What book or article has had the most impact on your life?

Charlie Hu (00:58:01):

Antifragile.

Nick (00:58:03):

Is there a movie or a TV show that you would recommend everybody should watch?

Charlie Hu (00:58:08):

Matrix.

Nick (00:58:09):

If you could only listen to one music album for the rest of your life, which one would you choose?

Charlie Hu (00:58:14):

The Metallica Black Album.

Nick (00:58:16):

What's the best advice someone has ever given to you?

Charlie Hu (00:58:20):

Never underestimate the heart of the champion, right? That's a slogan of a football team. Do not underestimate some of the people who has a big drive.

Nick (00:58:29):

Charlie, what's one thing you've learned in your life that you don't think most other people have learned or know yet?

Charlie Hu (00:58:35):

Well, that's too deep. That's not a TLDR version of a question. To be diplomatic. The world is so big, to be the bridge between West and East is very important. Whoever can do that, especially in web3, is actually very useful.

Nick (00:58:48):

What's the best life hack you've discovered for yourself?

Charlie Hu (00:58:51):

People like to procrastinate. I have my principle is like if certain things, which is somehow important, if I can finish that within a minute, I do that right away, and I can move on.

Nick (00:59:03):

And how about this one? Based on your own life experience and observations, what's the one habit or characteristic that you think makes people successful in life?

Charlie Hu (00:59:13):

A lot of the successful people keep this crazy discipline, make things in order. I have this zero inbox policy. I don't really miss certain things. I try to make things in order. And we have been very effectively, efficiently grow things.

Nick (00:59:30):

And then Charlie, the final three questions are complete the sentence type questions. So the first one is, the thing that most excites me about the future of web3 is...

Charlie Hu (00:59:37):

Bitcoin ecosystem.

Nick (00:59:41):

And if you're on X, formerly Twitter, I still call it Twitter, you should be following...

Charlie Hu (00:59:46):

CharlieHusats.

Nick (00:59:47):

And then the final question, Charlie. I'm happiest when...

Charlie Hu (00:59:52):

I'm happiest when I see certain people get their problem fixed.

Nick (01:00:05):

Charlie, thank you so much for joining the GRTiQ Podcast. It was a lot of fun to talk to you and to learn more about what's going on in the Bitcoin space, and particularly at Bitlayer. You shared a lot of great information today. I'll put links in the show notes for listeners that want to stay in touch and follow that. If listeners want to stay in touch with you, Charlie, follow the things that you're working on, what's the best way for them to stay in touch?

Charlie Hu (01:00:27):

Follow us on Twitter. That's the best way. Bitlayer Labs, that's our official Twitter. My personal Twitter is CharlieHusats. It's been a pleasure to talk to you, Nick. Great to be on the podcast. I had a great time together, and looking forward for the next one.