Arkstream Capital|Unleashing Bitcoin’s Potential: Modular Innovations and Cross-Ecosystem Synergies

On May 7th, we convened a space meeting with thought leaders from Merlin, BOB, Mezo, and Nubit. The session was centered on unleashing the potential of Bitcoin through modular innovations and cross-ecosystem synergies.

During our deep dive, we explored the transformative impact of these technologies on the Bitcoin ecosystem, discussing the implications for new financial models, crypto projects, and applications. This meeting was more than just a discussion; it was a collaborative effort to envision a decentralized future for Bitcoin. Here’s a recap of the compelling insights shared by our esteemed guests.

Host Ren｜ ArkStream Captial &Investment Director

• Good evening, everyone. It’s a great honor to be here for our event, “Unleashing Bitcoin’s Potential: Modular Innovations and Cross-Ecosystem Synergies.” Tonight, we have with us representatives from renowned Bitcoin ecosystem projects, namely Merlin, BOB, Mezo, and Nubit. Let’s start by inviting each of them to give a brief introduction.

Jeff | Merlin Chain Builder

• I’m Jeff from Merlin Chain. I believe it’s great to change minds and build more here. We’ve accomplished a lot together last year with new protocols and products. We’ve bridged 20,000 NFTs and facilitated a significant volume of Bitcoin transactions, which few central exchanges can match. I see the passion from the market and builders. I’ll keep building, and I think builders in Bitcoin will change minds, just as Ethereum did for crypto. I believe Bitcoin will follow suit, and congratulations to all the builders. Let’s make Bitcoin fun again.

Chris | BOB BD of Lead

• I’m Chris, leading the business development for BOB. We’ve been working on Bitcoin for the past decade, and we’ve identified an opportunity to connect Bitcoin’s usability with Ethereum’s. Our dream with BOB is to make it as easy as possible for projects and users to use what’s happening within our ecosystem. We’ve launched on the Optimism chain as an eighth rollup with Bitcoin security and usability. Our focus is on onboarding projects and users, leveraging the best parts of both Ethereum and Bitcoin.

Yogi | Mezo Ecosystem Lead

• I’m Yogi, leading the ecosystem at Mezo. Our project is founded by Thesis, a studio incubator that has been building on Bitcoin for about 10 years. We believe Bitcoin is a secure and centralized asset, and we aim to build an ecosystem around it. Mezo is our way to use tBtc, a decentralized Bitcoin, to build a Bitcoin economy. We’re excited about the growing demand to put Bitcoin to work and the potential for a thriving ecosystem.

Hanzhi | Nubit Co-Founder

• I’m Hanzhi, a co-founder of Nubit. To achieve our goals, we require high-performance consensus algorithms and specialization in data availability to support large, valid datasets. Our aim is to add new layers to achieve Bitcoin-level decentralization while leveraging Bitcoin’s robust economic security.

Host Ren｜ ArkStream Captial &Investment Director

• Let’s address the question of why the Bitcoin ecosystem has seen a surge following Ordinals and BRC-20 tokens. Is this growth due to hype or is there an underlying technological shift?

Jeff | Merlin Chain Builder

• I’m a strong advocate for Bitcoin token protocols like Ordinals and Ruins. While the issuance of numerous tokens daily can lead to market saturation, the new protocol presents an exciting opportunity. Unlike the ICO era, these tokens are community-driven, with no central authority. This allows for organic growth and utility, which is a significant shift in the crypto space. I believe this model will lead to a sustainable ecosystem where communities build around the tokens, attributing value and creating utility, which is still largely untapped.

Chris | BOB BD of Lead

• It’s clear that hype plays a role in crypto, but Ordinals have shown that Bitcoin can offer unique use cases for block space. This is a significant departure from the traditional NFT model. Ordinals demonstrated that community preferences can influence Bitcoin’s direction, which is a powerful shift. It’s not just hype; it’s about the community driving the utility and innovation on Bitcoin, which is a substantial development that will likely continue to grow and evolve.

Hanzhi | Nubit Co-Founder

• In addition to new assets and protocols, it’s the Bitcoin-native technological innovations that are also contributing to the ecosystem’s boom. There’s a focus on enhancing security and ensuring the protocols are truly native to Bitcoin. These efforts are crucial for attracting conservative investors and expanding the ecosystem. I believe that with these innovations, the Bitcoin ecosystem is poised for significant growth, becoming a highly valued and liquid space with strong resistance to market volatility.

Yogi | Mezo Ecosystem Lead

• I’d like to add that the recent developments have indeed sparked a lot of interest and potential in the Bitcoin space. We’ve seen miners and developers alike getting on board with the idea of putting Bitcoin to work, which has led to increased transaction volumes and user engagement. The use cases that have emerged, such as Ordinals, have shown that there’s a substantial demand for Bitcoin to be more than just a store of value. This has catalyzed a surge in projects building on Bitcoin, and I believe this is just the beginning. The ecosystem is set to grow as we continue to explore and innovate within the Bitcoin space.

Host Ren｜ ArkStream Captial &Investment Director

• Let’s proceed to the next topic, which addresses the issue of security. There’s a notion that Layer 2 solutions for Bitcoin are less secure than those for Ethereum, and the high gas fees can be a barrier for retail investors in the DeFi ecosystem. What are your thoughts on this? Do you agree, and how are you enhancing security for Layer 2 solutions or modularity within the DeFi space?

Chris | BOB BD of Lead

• We’ve taken a somewhat modular approach. Instead of creating an entirely separate ecosystem, we leverage Ethereum’s established benefits, usability, and security measures to build a functional ecosystem and then integrate Bitcoin in a way that makes the most sense. We’ve launched as an Optimism rollup with hybrid security, utilising Ethereum’s settlement and merge mining to combine the best features of both blockchains. This approach allows us to tap into Ethereum’s mature rollup technology while incorporating Bitcoin security through blockheaders and hashes provided by our mining partners. It’s a modular strategy that adapts to the best security and usability features of each chain as technology evolves.

Yogi | Mezo Ecosystem Lead

• We’re still in the early stages and building off TBTC within the Threshold Network. It’s about finding a balance where Bitcoin’s security mechanisms can coexist with Ethereum’s capabilities. We’re keeping a close eye on how the year unfolds, especially regarding technologies that could allow for Bitcoin settlements. For now, we’re focusing on leveraging TBTC and the security provided by the Threshold Network, and we’ll be sharing more about our approach soon.

Host Ren｜ ArkStream Captial &Investment Director

• Chris just mentioned leveraging the strengths of Ethereum for the development of Bitcoin’s Layer 2. Considering Bitcoin’s potential modular structure, what do you think are the key differences between the modularity of Bitcoin and that of Ethereum?

Chris | BOB BD of Lead

• I’m not a technical expert, but from what I understand, Bitcoin’s development in this area is in earlier stages. Innovations like Bitcoin’s VM are still under research, and it’s crucial to manage expectations realistically. We’re taking a hybrid approach, focusing on what’s achievable with current technology. Ethereum has had its DeFi summer to explore modularity, and Bitcoin is on a similar path, albeit with its unique challenges and opportunities. We’re cautiously optimistic about the future but are clear that we’re still figuring out the best use cases for each blockchain.

Yogi | Mezo Ecosystem Lead

• Bitcoin is undergoing a significant shift, moving from a state where smart contracts weren’t possible to one where they are. This is a different kind of modularity compared to other chains. Currently, we’re utilising the TBTC network to facilitate Bitcoin transactions across chains without a multi-sig. The next 18 months will be crucial as we see step-by-step improvements and learn what works and what doesn’t from a scaling perspective. Bitcoin’s Layer 2 solutions represent a massive opportunity, and we anticipate a lot of demand from those who want to build with Bitcoin as a core asset.

Hanzhi | Nubit Co-Founder

• The modular potential in Ethereum and Bitcoin reflects their distinct philosophies and uses. Bitcoin’s modular approach is just beginning to evolve, with a focus on scalability and efficiency while maintaining decentralisation and censorship resistance. As part of the Bitcoin ecosystem, we’ve established a server modular Bitcoin infrastructure that allows for smoother transitions and better data handling without disrupting the main Bitcoin Layer 1. This approach is emblematic of the unique path Bitcoin is taking in its development.

Host Ren｜ ArkStream Captial &Investment Director

• Thank you, Chris. Your answer was insightful. Hanzhi, you mentioned Bitcoin’s potential to surpass Ethereum. Could you elaborate on that? Also, do you have an estimate for the future valuation of the entire Bitcoin ecosystem?

Hanzhi | Nubit Co-Founder

• As a tech specialist, I’d say there’s technically no limit to Bitcoin’s potential valuation. The challenge lies in making Bitcoin more active and ensuring it’s utilised in a secure and native manner, which is easier with smart contracts in the Ethereum ecosystem but requires more ingenuity in Bitcoin’s case.

· The interaction and mutual innovation between these two ecosystems hold immense potential. Integrating a vast developer community into Bitcoin’s ecosystem is a fascinating prospect. We’re on the cusp of what could be termed “Bitcoin Season 2,” which promises to be an adventurous and highly promising period for the industry.

Host Ren｜ ArkStream Captial &Investment Director

• Thank you, Hanzhi, as you’re specifically building Bitcoin’s data availability (DA) layer, what’s your outlook on the future development of Bitcoin’s DA layer, especially compared to Ethereum’s? Could you elaborate on the landscape’s progress since you began focusing on Bitcoin DA?

Hanzhi | Nubit Co-Founder

• Bitcoin’s Layer 2 faces challenges with data availability due to its limited block space and throughput. Even with data compression, it can only support a finite number of transactions per second, and the cost of DA remains high. Centralized solutions could compromise decentralization through data withholding attacks. Therefore, enhancing DA is crucial for Bitcoin’s survival and growth, contrasting with Ethereum where DA is more solidified.

· Our aim at Nubit is to establish a Bitcoin-native DA layer that minimises trust and leverages Bitcoin’s security. We’re building the infrastructure necessary for DA that Bitcoin currently lacks. We believe a modular DA layer, developed in a coordinated manner, will define Bitcoin’s future with more scalable possibilities.

Arksteam capital was established in 2020, which is a well known crypto-native venture capital firm focusing on appeal Alpha strategy with $80 million under management Crossover Hundred portfolios.The arkstream management team boosts the average of 7 years experience in the crypto sectors. With the backgrounds of prestigious institutions and companies such as Stanford, MIT, Google, Evs and Blackrock, the team has been collaborating since 2017, long before arkstream was beauty, which makes it one of the selected 1% of crypto-native teams that thrived since

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