S15 E35: Nick Schteringard & Konstantin Wünscher on OpenDelta on Runes

0:47Vlad CosteaHello there and welcome to the Bitcoin Takeover Podcast. This is Season 15, Episode 35, and we are live here with the creators of OpenDelta, which is the stablecoin protocol built on top of Runes, which is this meta protocol like ERC-20 tokens that was launched last week on Bitcoin. And it's very interesting. My guests today are Nick Schteringard and Konstantin, I hope I don't mess this up, Wünscher, and they are the creators of this protocol. Welcome, guys.

1:19Konstantin WünscherHey, Vlad. Pleasure to be here.

1:22Vlad CosteaOkay, so let's start with the hard questions.

1:25Why does Bitcoin need another stablecoin? I know that we have, and we have had for a long time, Tether on top of the Omni layer. Why would you want to do this with Runes on Bitcoin?

1:40Konstantin WünscherI would actually say that Bitcoin had a stablecoin before. I don't consider Tether being a stablecoin on Bitcoin. So I feel like Runes is actual Bitcoin-native, as a token that actually sits on Bitcoin, as opposed to the Omni layer. And yeah, to be honest, when you said, why does it need another one? I think there aren't actually any right now that anyone is using. So I feel like, you know, we're one of the first ones who's attempting this.

2:10Vlad CosteaOkay, how do you define a stablecoin? Because that's also important as a starting point.

2:16Konstantin WünscherYeah, so actually, maybe first, firstly, I want to say, we call... well, what we're doing is we describe what we're doing as a synthetic dollar, not a stablecoin. And obviously, it's really subjective how you define a stablecoin. In my opinion, a stablecoin is something that really just has, you know, sort of like a one-to-one tether between, you know, some real-world asset like a dollar and crypto. And in our case, it's synthetic because there's actually a complete disconnect between, you know, the real dollar and the, you know, our synthetic dollar because the values or the stability is created through, you know, the derivatives markets of Bitcoin.

3:02So which is completely like, you know, decoupled from, you know, the actual dollar, if you will. So that's what I want to say, you know, about what we consider to be stablecoins. I don't consider our project a stablecoin. It's a synthetic dollar. And I guess the important part here is that, you know, like any other sort of stablecoin, it is not always guaranteed to be a one-to-one peg, right? So there's obviously some conditions that need to be met in order for it to be one-to-one pegged.

3:36So, yeah, that's sort of my definition of it. And again, OpenDelta is creating a synthetic dollar, not a stablecoin.

3:43Vlad CosteaIt's interesting because when Tether came around, it was, I think, in 2015 or 2016 on the Omni layer on top of Bitcoin, there was this promise that they're going to hold in their reserves $1 for every one USDT that they're issuing. And for a while, they operated in this way and then they decided to diversify their US dollars into gold, into Bitcoin, into bonds. Right now, I think Tether is one of the largest holders of US Treasury bonds. And I was wondering, how do you want to maintain the peg?

4:19How will your synthetic dollar always be worth $1 and not get de-pegged and trade at a lower or higher price on the free market?

4:30Konstantin WünscherYeah, I mean, I guess it is kind of hard because on the free market, obviously anything is possible. People can, you know, because it's obviously sort of sentiment driven. But as far as like our sort of peg, you know, that we guarantee... well, we guarantee a certain sort of collateral ratio to our sort of token that we issue. And we do that through, you know, basically using Bitcoin to collateralize a short position in the Bitcoin futures market. Or more specifically, a delta-neutral position in a futures market, which basically means that you are not exposed to the price of Bitcoin.

5:15You're pegging your Bitcoin against the dollar. And basically that mechanism guarantees sort of like the peg. Although again, there are edge cases where the peg might sort of, well, it's not guaranteed anymore. But again, considering sort of the other models that exist to create a sort of, you know, I guess synthetic fiat currency. This one is fairly risk-free, you know, considering, because the Bitcoin futures market is massive. So, you know, and it's not dependent on us. You know, we are basically just tapping into it. And, you know, if you look at volumes of Bitcoin futures, you know, it's in hundreds of millions.

6:05And that's basically generated through actual sort of like economic activity. People are trading these things. Institutions are trading this. It's not just, you know, retail anymore that trades this market. So, there's a lot of certainty, I would say, in this space. Again, Bitcoin being sort of now, you know, very well accepted. It's, you know, it's unlikely that it will go away. I mean, you know, the only time where, you know, there's a risk to this model is when Bitcoin basically goes to zero. Which I think is, you know, all things considered, not very likely.

6:41It is still a possibility. But again, considering, you know, comparing it to other models, I think it's a much safer way to do this. If that makes sense.

6:52Vlad CosteaIf you spend more than a couple of months in the Bitcoin market or even less than that, you're going to notice a pretty large amount of volatility when it comes to price. And I was wondering, how are you going to manage the reserves that back your synthetic dollar in order to make sure that you're always having enough reserves to back the price of your stablecoin?

7:17Konstantin WünscherYes, maybe it makes sense... go on, Nick, you go.

7:22Nick SchteringardYeah, I mean, actually, we do not like depend on the price of Bitcoin because of the delta-neutral position because we hold spot BTC and the short position against it. So essentially, if spot is rising, is increasing in price, the short position is losing and vice versa. So essentially, this neutrality allows us to maintain the stability of the synthetic dollar. That's the whole thing about that. So with the volatility... so we don't care about volatility that much.

8:02Vlad CosteaOkay, that's interesting. But there was a mention by Konstantin that it will work as long as Bitcoin doesn't go to zero. So what happens, for example, if we lose 50 percent in one day because BlackRock decides to dump or Michael Saylor sells his bags?

8:20Konstantin WünscherThat's still fine. It's just if it actually goes to zero, you know, like actual zero. So that's that means because, you know, in the limits, you know, what you'll end up with is huge amounts of Bitcoin as collateral. Because, you know, if Bitcoin goes to zero because we're having a short position, we accumulate large amounts of positive P&L, you know, because we are on the right side of the market. So we accumulate, you know, hundreds of thousands of Bitcoin, but then that Bitcoin is worthless.

8:47So, you know, I mean, that is that that's the issue. It's not the, you know, 50 percent downturns, they're not the problem. It's really when the price goes to, you know, close to zero, where the collateral that we hold is, you know, needs to contain more Bitcoin than there actually are, you know, in existence. So that's that's the issue. Right. But again, I mean, that is, you know, it's beyond, you know, what you would expect Bitcoin to do. If there's a 75 percent drop, that again is fine. It's just that if you know, if you go really to like, you know, if Bitcoin is worth a dollar or like, you know, 50 cents, then then we have an issue, I guess.

9:26But again, like when the price drops, we are on the right side. So we actually making a lot of Bitcoin. And that's basically the collateral that value that increases through this.

9:36Vlad CosteaWe spoke about the stablecoin, but you also mentioned that it's not really a stablecoin. It's more of a synthetic dollar. But we haven't spoken too much about the way in which it's deployed on the Bitcoin network. And that's Runes. Why did you go for this design? Why do you think it's a good idea to use this as opposed to something else?

9:58Konstantin WünscherWell, I think this is just a general need to have this natively on Bitcoin. I mean, I'm a longtime Bitcoin user. And now you have a lot of new applications on Bitcoin, and they're getting a lot of traction, like inscriptions, for example, Ordinals. And right now you can only trade them against Bitcoin, which is great. But also sometimes you want to capture some of your P&L or your profit in something that is less volatile than Bitcoin. And in order to do this, you can't, I mean, I haven't seen a way to do this.

10:36So what I would like is, you know, trading an inscription against a rune that is a stable rune, so I can have sort of more of a price certainty. And this just doesn't exist. So what we thought is, well, this is clearly something that is missing in this ecosystem right now, because it doesn't exist, at least, you know, as far as I'm concerned, I haven't seen it. So that's sort of the reason why we looked into this. And again, I think OpenDelta, generally we are pretty agnostic. It's not like that we have to deploy it on Runes, but we see it as a nice place to start because we think that, you know, the biggest need is in that ecosystem.

11:18Because again, there's virtually no competition right now. I mean, there are right now, I mean, there are a couple of other stablecoins sort of in the making, but again, it's a very early space to deploy this in. So that's where we see opportunity.

11:36Nick SchteringardYeah. So the short answer to this question is actually about the demand. So actually I was building a Lightning infrastructure company before that. So basically the Lightning API that allows you to actually send and receive Lightning payments, BTC Lightning payments. And I was always thinking that once we have a stablecoin on Lightning, this thing will fly. So I was like always waiting for this stable coin to pop up and boost Lightning. But I realized that, I mean, maybe it's true, it's still true, but the whole demand and the whole attention of users for now is within the inscriptions, Ordinals.

12:20Whether you like it or not, it doesn't really matter. And people are trading that. So there is volumes there and the same thing will be with Runes. And that's why these people need some dollar-denominated stability to trade against. So if you have like a very volatile asset, like for example some, for example, memecoin, like whether you like it or not, once again, you will be more comfortable into trading it against dollar to see whether you are profitable or not. So the whole thing here is to offer this type of a dollar stability to these people who are trading these things right now.

13:01But as Konstantin said, we are pretty agnostic and still like I feel some, you know, some dedication to Lightning for some reason, I don't know. And our best hunch is to actually make it available on Lightning with some protocol in the future. Maybe it will be Runes because they are Lightning compatible as both use the UTXO model. Maybe that is RGB or whatever that is. I don't know. Like for now, we're following the demand and what users are asking us to do.

13:35Vlad CosteaTo me, it's interesting that you foreshadowed my question because right now the on-chain fees on Bitcoin are pretty high. They used to be much higher just a few days ago. They lowered a bit, but they're still pretty high for the average trader. And the confirmation time, even if you pay for the next block fee, it's somewhere around 10 minutes. And I guess for these people who trade stablecoins, why would they want to use your protocol and your synthetic dollar as opposed to something that's convenient and has a network effect already like Tether on Tron?

14:13Konstantin WünscherWell, so, go on, Nick, you go.

14:17Nick SchteringardYeah, I mean, so my answer here is that you can't really trade Ordinals assets and Runes assets against Tether on Tron. There is no cross-chain DEX that allows you to do so. So that's the point. Konstantin, you can add to this.

14:35Konstantin WünscherYeah, I think so.

14:40Yeah, it's really like, maybe it's not very clear. Like if you have ever roamed this sort of ecosystem, it's really hard to stay in Bitcoin and do all these things. It's obviously you can go through some certain bridges to go into other networks. But I mean, another sort of example, I would say, I mean, Nick touched on this, is there's a big nascent demand in, you know, generally like people that deal with Bitcoin, companies that need sort of stability without necessarily... having stability easily accessible to them without having to go through some sort of like off-ramp or sort of swap service that is a centralized exchange or something.

15:31For example, previously I was also running a Lightning company and we actually got a lot of, we had a lot of customers coming to us saying, look, we have merchants, we have a payment processor, we process a lot of Bitcoin payment. And maybe it's also not very apparent to people, but there's a sizable market for Bitcoin payments right now. And there's also miners who like earn Bitcoin, right? And they need to basically pay for things in the real world and they need to, they have to have certainty and they don't necessarily want to go like sell the Bitcoin somewhere for Tether or USDC.

16:10They basically want a quick way to peg the Bitcoin without, you know, losing them, basically to hedge the short-term volatility. So yeah, we had a lot of people coming to us saying, oh, can we hedge our Bitcoin with you over Lightning? Because that's very convenient. It's like a quick API. They send us a few Bitcoin or not a few Bitcoin, but a few satoshis, and they're going to get locked in against the dollar price. And that's very convenient. If you think about like Stripe, to integrate that is super easy to receive payments.

16:46And it's a similar thing with like being able, if you have Bitcoin, to convert it into dollars. I guess what we're doing is it's probably the most seamless way to get from Bitcoin to dollars without having to do all this, you know, this DeFi, you know, like magic that you have to do, which no one really understands. But there's really no way to sort of do that right now, having Bitcoin and then going to, you know, USDC on Tron or USDT on Tron. And yeah, so I guess also, I mean, this is more of a very organic use case for this product.

17:21And I think this is also something that we are super passionate about, is, you know, enabling this, basically having this, you know, actually serving people that have this real need of, you know, a stable sort of currency, you know, when they have Bitcoin, you know, Bitcoin holders or Bitcoin people that use Bitcoin in their daily operations.

17:46Vlad CosteaI did read the interview that you did for CoinDesk and there was this press release that was published today. I think this is the first interview that you guys are doing about your protocol. But you did mention that the Bitcoin audience has not been previously exposed with some of these DeFi mechanisms. I guess this was already being used on Ethereum or some other networks. But now you're importing that and making it possible with Runes. Is that correct? You're basically looking for the audience that was not previously exposed to this sort of stuff?

18:23Nick SchteringardI mean, I would say so. So we are looking for a few types of possible customers, and those Bitcoin users that were not previously exposed to DeFi magic, we would be happily serve them with this synthetic dollar. Probably we didn't really talk about the yield that is coming with this synthetic dollar yet. We can elaborate on that more because this is actually a DeFi component to this story. But as Konstantin said, we had a lot of other use cases. Like, for example, we were talking to miners that... so miners are used to hold 50 percent of reserves in Bitcoin, let's say, and some other portion of the reserves into fiat, into like USD.

19:18But they also are keen to buy, like, for example, treasury bills to actually make interest on the fiat reserves to actually make money on that. And so for those miners that are residing in the United States or Canada, for example, this is not an issue. They can buy the T-bills and be happy with that. But there are a lot of other miners all around the world that are cut off from the banking system, for example, for some reason, or they don't want to touch fiat rails for other reasons.

19:50They can actually plug into USDO, and you can consider, like for miners, they can consider that as a Bitcoin bill. So it's like essentially a dollar stability with the embedded yield coming from the funding rate on the derivatives exchanges that we are using. Yeah, that's... did I answer your question?

20:14Vlad CosteaBy any means. That was a pretty good answer. And I just want to ask you guys, since this is live and we only have about 100 views, 100 viewers, can you please retweet this? It's already on my feed. And while you retweet this, let me present an advertisement for Wasabi Wallet. I know it's been a pretty hard week for privacy, but this is a truly open-source solution for CoinJoins. And if you have Bitcoin and you maybe withdraw them from one exchange and you want to use them somewhere else and not have your name attached to them, or maybe that you are a podcaster like myself and you receive Bitcoin donations from people and you don't want to spend those Bitcoins with someone else's identity, Wasabi makes your Bitcoins fungible with these CoinJoins with 100-plus inputs, 100-plus outputs.

21:03It does breakdowns, so it divides your coins, it consolidates some inputs. It's really interesting. And just in case you're concerned about not being able to put your coins on some exchange, you don't have to sell it. You can spend it directly with the Buy Anything button, which is at the top of the wallet. You'll find the button there. It connects you to ShopinBit through Tor routing. You tell them what you want to buy and where you want it to get delivered.

21:34You pay for it and it gets delivered wherever you want. They can pretty much source anything that's legal in Poland. So think about that. They ship worldwide and you can do all of this with Wasabi Wallet. So go to wasabiwallet.io, download the wallet, give it a try. Privacy is important, and use it for as long as you still can, because I believe it's a human right. So, guys, I hope you retweeted this because I want this to get more than a thousand views by the time I finish. Thank you.

22:09And I was going to ask you, are you concerned about the reputation of the Runes protocol? Because it seems like the people who built on top of it are calling themselves degens, and they like to basically use these, what are they called, Dickbutt JPEGs and issue children of these Dickbutt JPEGs, like more of them. And there are a bunch of guys who want to airdrop some of these runes that they etched, and that's the word for it, it's not mint, it's etch, for the runes.

22:38They want to send them to the OCEAN mining guys who are very triggered about the existence of Runes. And I guess there are two layers of the question here. The reputation of the protocol and if you think it's going to impact the success of your synthetic dollar. And on the other hand, are you concerned that there's a bunch of node runners who are going to try to filter your transactions?

23:04Nick SchteringardI can start, Konstantin, here. So with regard to the Runes protocol as a concept, we are like agnostic, as we previously said. So Runes is only the beginning for us. But we are really dedicated to a Bitcoin ecosystem and we just follow the market demand. That's why we chose Runes as the first protocol to deploy. But maybe after that we'll be, you know, if RGB is product-ready and we can deploy there, maybe we will do that. So, I mean, still hoping to get Lightning on board with this synthetic dollar in the future.

23:41So, answering about the reputation, I don't think that being a degen is a crime or being a degen is a bad reputation. So these people are just more risk-adjusted. They like trade some assets that are highly volatile, probably going to zero in a few weeks. So that's their choice. And I don't think that this is something like wrong. So with regard to, let's say, these assets that are supposed to be issued on Runes in the coming weeks, so probably most of them will be memecoins. Right. So and I assume that many, you know, Bitcoin people are kind of embarrassed with these. But if you look at, for example, Solana and its recent success with getting more users on board. Memecoins are actually in charge of this success because this is a great customer acquisition strategy for getting people into the protocol. And then some of these people will stay with you and use something that is actually useful.

24:59So I would treat like these memecoins and these worthless assets trading as a customer acquisition strategy. So some people are going to make money. Some people are going to lose. They are all adults, hopefully. So they make their own choice, hopefully. And, I mean, some of them will just stay long-term within the Bitcoin ecosystem. Maybe they will buy Bitcoin and maybe they will use Lightning in the end. So just treat it as a marketing trick for getting people on board with Bitcoin. And I think that, you know, so getting to my previous thought about stablecoins on Lightning.

25:46So there is an issue with people who are holding Bitcoin, especially Bitcoin hardcore maxis. So they, the ideologists, hold to the death against actually paying for anything in Bitcoin, right? So they pay only on Bitcoin conferences. I do the same, actually. So it's not a criticism. So I'm not like ready to pay in Bitcoin for anything because, I mean, I think this is a valuable asset for me. And I think there is a high chance that it will appreciate in the future in price, I mean. So I just bet on that, right? So I need something else to actually use for, you know, for payments.

26:25And that's why I think that, like, stablecoins or other types of dollar-denominated assets are good for this purpose. And I think there is no reason why they could not live on Bitcoin itself, or on any layers that are Bitcoin native. That's it.

26:46Vlad CosteaThat's an interesting take. And in some circles, that's enough to get you canceled and not invited to conferences. But to your credit, you're building something on Lightning. And I think that's pretty difficult, especially since the Lightning network hasn't really grown over the last couple of years. In my experience, I'm not sure if it's everyone else's. The payments are not as reliable as they were a couple of years ago. And today we also got the news about Phoenix Wallet, which is no longer going to work in the U.S.

27:18And that's, I guess, the largest of LSPs, which is no longer going to serve U.S. customers. And the narrative for Litecoin, not Litecoin, Lightning, for a while has been this, that you're supposed to use an LSP if you want to have a non-custodial experience, because it's much more convenient than running your own node. And it's more efficient and it makes payments faster, you know, because if you have this slow node that you run on a Raspberry Pi on top of Tor, people will say, oh, you're slowing down the routing, and they'll try to bypass you.

27:52So it's pretty unfortunate what's happening with Lightning. And I want to ask you, what is it like to have a business in Lightning these days?

28:02Nick SchteringardKonstantin, can you go first?

28:04Konstantin WünscherYeah, it's incredibly hard. I mean, I think that the biggest issue is just from a business point of view, is to find a business model that actually makes this business sustainable. Because the user base within Lightning is, it's not big. I mean, it's not nothing, but it's, you know, the people that are in there are obviously very, very dedicated to this. And they're fine with taking some sort of, you know, they're able to go the extra mile. But like, from a business point of view, like providing the service, like in the end of the day, you have to sort of find a revenue stream.

28:47And Lightning in itself is really hard to monetize because, you know, you're not making any money on routing. I mean, that's a myth, at least right now, and I feel like for the next, you know, foreseeable future. And you just have to find a way to, you know, to find other business models. And all of those business models essentially boil down to volume. And unfortunately, there is not enough volume on Lightning that it makes, you know, sense to create a business, at least not like a proper business, maybe a lifestyle business.

29:18If you're a one man show somewhere running something, you know, making a couple hundred thousand sats a month, you know, that's fine. But like, you know, if you're actually like a proper business, you have a few employees, then you have to actually make some bread. And it's incredibly hard. Again, not only are you dealing with a very small user base, but also that user base is not very transacting in large volumes. So, what I've seen in Lightning is like the businesses that actually sort of have, you know, some sort of sustainability are either infrastructure providers that sell Lightning infrastructure...

29:50Bigger businesses that experiment with Lightning, you know, somehow, you know, they're not, but these bigger businesses, their single revenue stream is not coming from Lightning. They have other business like other sort of like pillars they stand on. It's just something they experiment with. They want to have the ability to receive Lightning payments. So they buy this, you know, that infrastructure, and they pay for it and that's cool. And then the other things is basically just, you know, on-ramps and off-ramps and brokerages.

30:17These guys, they make money because people always buy Bitcoin. But that's, again, another business like buying and selling Bitcoin to people and maybe let them hold it in Lightning. But like any more sophisticated business model, they're just incredibly hard to realize in an actual sort of business environment. So, you know, I think right now it's almost like impossible to create anything else than a, you know, like an infrastructure, like an LSP service or like a brokerage of Lightning that actually makes money, like proper money. So that's not a lifestyle business, you know.

30:51So it's incredibly unattractive to entrepreneurs. So that's sort of what I'm saying. And that's, I think, you know, and I think there's also like a reason why I, in the end, sort of fell out of love with Lightning. It's not because I don't appreciate the technology. It's more like it's just incredibly slow, this, you know, this entire ecosystem, like the company backing it. You know, I feel like it's, you know, in the last four years, I would have hoped that, you know, it would have been much bigger now, but it kind of like wasn't growing, you know, that fast.

31:25And, you know, I think it's just hard to rely on that, you know, for your own sort of, you know, ways to work. So, yeah, I mean, that's sort of my take on this. But, say, I'm still a big Lightning fan. You know, I used it for a long time. But in the end, I folded.

31:53Vlad CosteaIt's interesting because I do remember at one point in 2019 or 2020, Alex Bosworth, who is the leading engineer at Lightning Labs, posted that he made like three Bitcoin just from routing fees. And this post led to this race, I guess, where everyone was trying to open as many channels as they could and balance them and make sure they have a lot of inbound and outbound liquidity to be able to route. And I did that myself. And I discovered that after spending a lot of Bitcoin opening channels and trying to be well connected, just because I was on top of Tor, because I didn't want to reveal my location, the location of my node.

32:33And also because I guess I was running this on a Raspberry Pi 4 with four gigabytes of RAM, so not the fastest machine. I wasn't routing too much and I was making like 30 satoshis a month, which doesn't even cover one on-chain transaction for opening a channel. And I found this experience baffling. But I thought that everyone else is making much more money from routing. And now that you tell me that there's not money, there's not a lot of money to be made from routing, it's a bit shocking.

33:03It makes you wonder, you know, are these LSPs profitable?

33:08Konstantin WünscherWell, I mean, you know, Nick can tell you about that because he's building a company in that space.

33:17Nick SchteringardYeah, I mean, so I probably disagree that you can't make money on routing. So there are companies, professional routers that are making like 1.5 to even 4 percent per month. But it all depends on the traffic. Probably in the bull cycle, this model is more viable; in a bear cycle, it's less viable. But still, there is not much things to do with Lightning as an entrepreneur right now. So my experience was I was building a Lightning infrastructure company, like essentially the custodial API for other payment processors to integrate Lightning by being abstracted from channel management and rebalancing.

34:06And actually, I signed a big deal with, like, a big processing firm that already has like billions in Bitcoin on-chain volumes. And I was like, okay, so this is like a solid milestone. If I managed to get like even one percent of these volumes into Lightning, will I make money at all? And I made calculations and I looked at the business model, and like even at the possible business models in the future, and realized I need like at least 10 such big companies

34:41To use my software for me to actually doing something like something that looks like a business. And there are no 10 companies like that in the world, like even in the world, like right now. So at that time I met Konstantin and we just discussed our Lightning experience, let's say so, and decided to build a Bitcoin-centric product, which is OpenDelta right now, but which does not necessarily depend on Lightning to be successful. So we are still, for some reason, wish Lightning very well, like, we still hope it will fly.

35:19But we are building a product that does not really like need Lightning to be successful. So that's probably the thing that we change in our business strategy.

35:33Vlad CosteaYeah, to me, it's interesting to hear about more experiences with the Lightning Network. I honestly hope it's going to succeed. But in the last couple of years, I've sort of lost faith in the project only because it didn't really take off. It's the exact same people using it. And they say, yeah, it's fine because it's a circular economy. It's for small amounts. But for example, we had Michael Saylor, right? Big Bitcoin bull. He said Lightning is great, but is there any large channel or large node that was opened by MicroStrategy?

36:05I don't think so. I haven't seen it. It should be there. It should be visible if it's out there. But still the largest...

36:11Nick SchteringardMaybe they are on Tor.

36:15Vlad CosteaSure. But they still have to name their node, and the liquidity is visible. So even if you have your IP hidden, you can still show that there is liquidity. And I haven't seen a boost in liquidity since their announcement. They are happy to use the existing infrastructure. Also the guy who tried to do Libra, David Marcus or something.

36:36So he was trying to do Facebook's stablecoin, basically. And right now he's very bullish on Lightning. But has there been any increase because of that? I haven't seen it. Seems like these guys are just trying to capture the system.

36:52Nick SchteringardI'm actually, I mean, I'm actually a big fan of David Marcus and Lightspark as a company. Like, kudos to them. And actually I believe this is the only company that can actually, you know, make this fly. And I think there are some developments on their side. So from what I read and heard, they are doing these Universal Money Addresses. So essentially they are reinventing PayPal on top of Lightning. So you have this email-style address. Let's say if you're residing in Mexico and you're using a bank, you have your email address, which is a Lightning address.

37:33And you can send your pesos back to the United States, and it's all converted under the hood into Lightning. And you receive dollars on the other side of the trade, of the payment. And I think that, like, this use case for Lightning sounds plausible. It does not necessarily require Lightning to be bigger in terms of deployed liquidity or locked liquidity. So maybe they are just using what already exists. But I feel like the Lightspark company is the company that we need to closely watch in order to understand what is happening with Lightning.

38:16I mean, there are other companies that I respect, like Breeze, for example, right? So, I mean, let's just hope these people will figure out what is going on.

38:29Vlad CosteaYeah, I honestly hope that Lightning is going to take off. It's been an 18-month project for about six years now. Seven, if I'm not mistaken, but it is fine. I hope there will be other layer twos that are going to take off. And I'm not sure if it's going to be Ark. I'm not sure if it's going to be sidechains with BitVM. So basically, BIP 300 without the BIP 300. But whatever, I'm bullish on Bitcoin still. I just want to read an ad from the show's sponsor, Hodling.

39:03They're based in Switzerland. I guess you guys also went to Switzerland and did some business there. We can talk about it if you want. This guy's name is Polto. He's from Neuchâtel, Neuchâtel, Neuchâtel, I'm not sure how you pronounce that one. It's a French-speaking city in Switzerland. And he has this company called Hodling SA. And they are here to simplify the complexities of Bitcoin security, providing peace of mind through a secure, private and self-managed environment. In the Swiss tradition of precision and security, their services assist you in setting up, maintaining and operating self-custodial Bitcoin infrastructure.

39:41From the selection of multi-signature configurations and hardware wallets to ensuring your setup is robust and tailored to your needs. So go to hodling.ch if you have a lot of Bitcoin and you don't know how to manage it across I guess more complex setups or if you're part of a company that holds Bitcoin in its treasury and you don't know how to set up the multisig and how to distribute the keys to your managers. These guys can help you. They're going to give you the proper advice.

40:12I know that my friend Polto, who is I think the CTO of this company, spends a lot of time hacking hardware wallets. And his living room is just hardware wallets that he's using for experimentation. So he's the real deal. I personally vote for his expertise. Anyway, I was going to ask you about your intention to bring your protocol, your synthetic stablecoin or synthetic dollar onto other networks. And how is that going to work?

40:48Konstantin WünscherYeah. So I guess we have to basically figure out which one of these, you know, available networks are worth looking at because obviously there's a lot of noise right now. And we do spend a lot of time speaking to these protocols or layer twos, whatever you want to call them, and figure out what their plan is and also what the technology looks like. And I mean, our strategy here is to basically take it quite slowly. And then basically figure out, okay, where are the most of the users? What are they using?

41:21And then sort of go that direction. Again, I guess we do have to take this approach just because obviously for us, it takes time to integrate with another layer. And we have to be sure that it makes economic sense. And how it works, I would say it really depends on what layer two it is or what other protocol it is. Because I guess all of them have different tools available. It could be quite complex or it could be quite, I would say, DeFi-like, if they offer some sort of EVM that we can use. In the Runes scenario, we don't have that right now.

42:00So it's going to be very similar, where we just basically mirror this by just issuing a bare token. But obviously, if there's an EVM, we can also have some sort of smart contract that can, you know, mint and redeem those sort of autonomously without actually us having to do anything. So yeah, it really depends on the protocol itself. And again, other than that, we have to basically play it by ear. You know, what's out there, what is getting traction, and then basically go with that.

42:36Vlad CosteaWhat are the wallets that are going to work with your synthetic dollar? How is the user experience going to be?

42:46Konstantin WünscherSo, you know, pretty much all the wallets that are integrating Runes right now, which would be Xverse, UniSat, Magic Eden, OKX Wallet. Like, are there any others?

43:00You know, I think these are the main ones at least right now that you can use. And I think the user experience is actually not that bad. I'm not sure whether you have made any rune transactions, but, you know, it feels pretty much like sending Bitcoin to someone, what you are actually doing. It's just that, you know, they have sort of names that are not Bitcoin. So, yeah, I think the user experience is pretty solid. And I think this is also, I guess, one of the reasons why we wanted to launch on Runes, is because it doesn't require anyone to leave Bitcoin.

43:34You know, you don't have to get a specific wallet that is not a Bitcoin wallet. Obviously, it has to support Runes, but it's still just a Bitcoin wallet, if you will. So it's different to Lightning where you have to get a whole setup and have to like move Bitcoin into Lightning, and that, you know, costs and takes time. And then it's basically in there and then you can't really get it out without, again, spending money, fees, or waiting. And there's, you know, transaction uncertainty, which you don't have in Lightning either, which is also great, to be basically on the base layer.

44:08So at least we don't have to worry about transaction failing. It can still be, you know, in the mempool for a long time because transaction fees are too long. But I guess that's not as bad of an issue, really. So the user experience, I think, is pretty good.

44:23Nick SchteringardYeah, I think actually that these Ordinals and inscriptions hype that started last year actually made it possible for, you know, convenient Bitcoin wallets to emerge, because before that, there were not that many Bitcoin wallets that had similar user experience, similar to what we have in the Web3 space, so-called, like, for example, like in Solana. Whether you like it or not, you have a Phantom wallet, which is a super convenient way of like transacting.

45:05And now we have the same kind of products in Bitcoin space.

45:12Vlad CosteaBut on the other hand, do you believe that the high fee environment is going to make people not want to send this synthetic U.S. dollar, as in maybe that they want to send $10 and they realize that they have to pay another 10 for the transaction fee? And that's a deterring factor that makes them move to other networks?

45:34Konstantin WünscherI don't think that, actually. So I would have agreed with you, like, about four years ago, but then I've just seen the sort of DeFi space evolve and people just generally don't necessarily care much about transaction fees these days. They pay hundreds of dollars in Ethereum. They don't pay much in Solana, I guess. But I think this transaction fee scare is a little bit over.

46:02Yeah, it's just like there's too much emphasis on this. And I don't think it actually is an accurate representation of what users like. So people generally don't send $10 worth of Bitcoin to each other unless you are a Lightning user. And most of the people that are transacting, at least on Bitcoin, they do it in like bigger chunks, like they buy Ordinals that are worth $200, $300, even more, and then, you know, paying $5 is not really that big of a deal. Because again, it's not really, I guess, yeah, the users don't use it for micropayments generally.

46:39And I think my belief is that, you know, I think this micropayment sort of environment will emerge, but it will take some time. And right now, most of the activity is in just like larger volume payments. And there it doesn't really matter. For us, again, I mean, we haven't touched on this, but we have this native yield that is sort of applied to this USDO, which, you know, gives that token a utility beyond transacting. It just basically gives you something by just holding it. Which is, especially for the beginning, quite important because we're not necessarily reliant on people using it to make daily transactions for paying a coffee or something.

47:25It's like a universal dollar savings account where you hold dollars, you get a few percent interest on it a year. And you're doing it all on Bitcoin, which I believe is a great first use case. And then eventually, once the circular economy actually comes about, people might want to transact it. But then I believe we have other layer twos that enable people to very intuitively bridge it and transact quicker. But again, you know, I think also evidently, when the transaction prices, sort of the transaction fees spiked, you know, there wasn't... I don't think, I mean, maybe I'm wrong here, but I don't think the volume on Lightning sort of increased.

48:10You know, firstly because people couldn't open channels, because they faced the same issue, because they had to pay a lot of money to open the channel. So yeah, I mean, this is sort of the way I think about it. It's just the first stage where maybe transacting for daily payments is not actually the use case. And then eventually it will be. But for now, I guess we are covered with the other sort of angle that we take on this, not just making it a way to transact.

48:43Vlad CosteaLet me ask you another very simple question that I guess should be more obvious. It just came to my mind. But before that, so let me ask the question. I'm going to present the ad and then I'm going to let you reply. Why is it always stablecoins that are pegged to the dollar and not the euro, not the Chinese yuan, not the ruble, not anything else? Why is it specifically always the dollar? But before that, before I let you answer, I have to read an advertisement from LayerTwo Labs and they asked me to read this in a monotone voice.

49:17Is Blockstream going downstream? Has RGB getting you down and brown? And ground? After a long day of listening to Peter McRetard, why not feel something for a change? Feel alive. Join LayerTwo Labs and make everyone feel sad and frustrated and angry. Our next ritual is at 3 in the morning in the ancient forest. See you there. I'm Paul Sztorc and I approve this message. Or do I? Anyway, tell me about the dollar as opposed to euro or some other fiat currency to which you want to peg.

49:55Nick SchteringardYeah, that was a funny ad.

49:58Konstantin WünscherYeah. Yeah, I'll go on. It's quite like, at the end, it's just demand is just on dollar, really. We actually tried to do this synthetic, we tried to do synthetic euro, which was, you know, it was about like, you know, maybe 1% of what people wanted, you know, compared to dollars. So I think eventually, you know, it's totally possible and I think, you know, it's something that we will consider. But, you know, we just also have to, you know, it doesn't make sense to make a product that no one wants.

50:29And so, you know, I guess eventually I think there will be more stablecoins on different currencies, but I think it will be much later. Even if you look at the TVL on EURC, I think Circle has a euro as well. It's just so much smaller. So I guess there's not much, you know, generally demand for these more exotic pairs. And yeah, I mean, this is, I guess, a pretty simple answer to this.

51:00Nick SchteringardYeah, I mean, the most, like, probably the simplest answer to this is that dollar, United States dollar is the world's reserve currency, right? And, you know, the whole trade, world trade is happening in dollar, like maybe for like 80% of cases. And it will stay so for like coming years or tens of years probably, I would say. And that's why everyone is just more comfortable in counting in dollars. So everyone needs some, you know, some unit of account that they have in mind that they can refer to.

51:41And it's hard to keep a lot of units in your head. So dollar is just a natural one because it is with us for a long time as a reserve currency after all of this political stuff happened last century.

51:59Vlad CosteaYeah, I'm still waiting for the British pound stablecoin or the Indian rupee or something. That would be interesting.

52:09By the way, are you planning to launch other stablecoins other than this one or is it just this one synthetic dollar?

52:19Konstantin WünscherI mean, we don't have any specific plans. But again, I guess for us, it's not actually technically that hard to do other stablecoins. It just boils down to, you know, again, the demand for it. So we'll see what's going to happen. So we, yeah, we just, you know, play it by ear.

52:44Vlad CosteaI have to ask you guys, if you ever considered as a scaling layer for your stablecoin to use something like bearer assets, like this Satochip, Satodime actually, which basically is a card, a Java card. It has NFC. You can tap it to scan the balance and you can pass this on from one person to the other without any on-chain transaction. And you think this would be a solid use case to create cash? And by the way, if you want to get one of these, use promo code BTCTKVR for 5% off.

53:15Konstantin WünscherYeah, that's a cool idea. I actually never seen this, but I think that sort of stuff has a lot of application potential in emerging markets, you know, where people are actually using Bitcoin to transact or hold, which is again also a pretty like big area that we want to get into, you know, and I think, yeah, I mean, I never considered this, but this looks pretty cool. But again, like I think there needs to be, it's a very specific market that would, you know, that product would fly in and that needs to be sort of like this, you know, sort of uncovered, really.

53:52Nick SchteringardIs it kind of e-cash on that card or not? Is it Bitcoin?

53:58Vlad CosteaI think it's pretty blockchain-agnostic. You can put whatever you want on it. It's programmable, but you can put Bitcoin assets on it. I know it works with Counterparty. I know it works with Ordinals, if I'm not mistaken, because they're basically satoshis. You don't have to do anything. So it should also work with Runes, which means if someone wants to make a payment, all you have to do is just have the proper, I guess, mobile wallet software to scan for what's inside. And people can make payments to each other just like this by exchanging digital, not digital, exchanging physical items like cash.

54:40Konstantin WünscherThat's like you have to have the exact amount on that card. And then also, how do you, like, couldn't just someone stand like beside you and read the... because obviously it's somewhere, where's the private key stored on this thing? Is it, you know, how do you read it? How do you unlock it? I mean, I have a lot of questions on the security model.

55:01Vlad CosteaThere's a smart card for this. If you want to store your private key and it's just like your bank card, the secret is stored in that tiny chip. And the way that it works, if you unseal it, it's evident. So it has this tamper-evident design where if someone tried to get the money out of it, it's obvious.

55:27Konstantin WünscherOkay. I see.

55:28Vlad CosteaBut it's pretty expensive. I guess it's like 25 euros. So for emerging economies, that's a lot of money to exchange. But for birthday gifts or whatever, if you want to give someone their first Bitcoin or their first synthetic US dollar, because that's cool, I guess.

55:45Yeah, you can do this.

55:48Konstantin WünscherFair, fine. Fair, gift card, I guess.

55:52Vlad CosteaYeah, and it's redeemable directly on the Bitcoin blockchain. It's not through some third party. People are used to gift cards coming from companies, you know. You go to that company and they provide to you this product or service.

56:10I don't think I have many more questions for you, except for what do you guys think about the Supra cycle?

56:17Nick SchteringardYeah, man, I love it as well. I like the meme. It actually became a meme. Like, I learned this Supra meme from you, from your Twitter. So you're the creator, right?

56:30Vlad CosteaYeah, I even have a T-shirt made by my girlfriend. I don't think it's too visible on the camera. But basically, the idea behind it is to wait until one Bitcoin buys you one Supra. If it's possible to get one for half a Bitcoin, even better. And then you get a girlfriend. But the way in which I did this was to just draw a line on a chart. And the irony behind it is that there are so many price prediction models that try to be scientific and mathematical.

56:58And they say, yeah, we should be using this logarithmic scale and Fibonacci and whatever, and we're going to predict that this is going to happen at that point in time. I just drew a line, and it's more accurate than their models, so joke's on them. It predicts 80k by September, so watch out for that.

57:19Konstantin WünscherOkay, 80k by September.

57:22Vlad CosteaIt's not like... People told me, oh, you're being bearish, Vlad, with your line, and I wasn't. It actually played out just the way I drew that line.

57:36Konstantin WünscherYeah, so you can buy a Supra for 80k, is that what it is?

57:41Vlad CosteaYou can get a pretty nice Supra for 80k. There's the new one, the Mark 5, that's actually made by BMW. I'm not a big fan of the concept, but it seems to be pretty good. I haven't read any major complaints about reliability because that's the issue with BMW. But if you want to get the Japanese one from 20 years ago, I mean, it's more of a challenge to find one, even 30 years ago. I think it started getting released in '94, so it's more expensive, ironically, because it has a legendary engine, and it was in the movie The Fast and the Furious.

58:17And the presence for like 30 seconds, there's a scene where it beats a Ferrari in a race, and I think that one scene in the movie has tripled the price, most likely. Supra is like the Bitcoin of Japanese cars right now. Not the Subaru, not Honda, even though there's Honda S2000, which I guess is harder to find and also expensive. But the Supra is like the Holy Grail. If you have one of these, it's like having the Bitcoin of cars. And the reason why I came up with the Supra was actually the fact that I was thinking that the meme is the Lambo, right?

59:02Everyone wants to get a Lambo. But most of us will never get a Lambo, even if we can afford it. Even if you have the Bitcoin to buy a Lambo, what's the point?

59:16So, you know, what's the point? I mean, I searched for just buy a Lambo. 90% of the Lambo at 10% of the Lambo price, so that's the Supra. And it sounds like the Supra cycle, it's the perfect meme. Thank you for acknowledging it.

59:31Konstantin WünscherYeah. Yeah, excellent.

59:34Vlad CosteaGuys, I wish you all the best with OpenDelta. I know that it's not easy to launch a stablecoin in this environment and there's a lot of competition. I'm also aware of another project, another project that's very similar. They contacted me last week and they bailed in the last minute from the interview.

59:53You guys were also able to raise like $2 million from a VC fund. Can you tell me a few words about that and why you need the money and what's going to happen with it?

1:00:06Konstantin WünscherYes. Well, I guess, you know, obviously, you know, building that sort of stablecoin is kind of like, it's not easy because there's a lot of, I guess, know-how and, you know, technology that goes into this. And again, I mean, we, you know, basically, you know, first of all, raised this money to, you know, build the product, the project, the protocol, really. And yeah, again, I think that's pretty much the reason to do this. You can't really do this as a one-man show and, you know, everyone has to sort of, you know, make some bread in the end of the day.

1:00:44So, you know, there needs to be some sort of funding. But again, I think what is good though, that it was incredibly hard to raise money for a Bitcoin project, you know, a year ago. And now it's easier, which is nice because it allows us to drive this ecosystem forward. And yeah, I mean, that's pretty much, you know, the reason we, you know, went out and fundraised for this.

1:01:09Vlad CosteaIf you're listening to this and you're one of the 308 people who watch this live on X slash Twitter, look up OpenDelta, follow them, keep up with whatever they're releasing. I think it's interesting. It's different from everything else out there. And I like their approach. I like their energy. It's going to be interesting to see if Bitcoin is going to end up having the dominant stablecoin, even if you guys don't call it stablecoin. I hope you're aware that the market is going to call it a stablecoin.

1:01:43Synthetic dollar is too long of a name.

1:01:47Konstantin WünscherIt's too technical as well. But yeah, I mean, this is really sort of, I guess, our sort of, you know, vision for it. And that's sort of what we stand by. But yeah, I mean, that's okay.

1:02:01Nick SchteringardYou know, we are purists in that way. We want to be technically correct.

1:02:06Vlad CosteaThat's the best way to be technically correct, because I guess the money and the market will follow if you're technically correct. So congratulations on the project. Really nice having you on the show. This was the first time you ever heard them talk about this. It was your second time on the show, Nick. You were last year on the Bitcoin Takeover Podcast with your friend Slava, working on Stroom Network, trying to bring liquidity from, what's it called, WBTC, via Lightning Network, and to mine Bitcoin.

1:02:41Nick SchteringardYeah.

1:02:42Vlad CosteaVery cool project. Not mine Bitcoin, but open Lightning channels. That was even more ambitious.

1:02:48Nick SchteringardYeah, they will have more news in the coming months, I would say. So they are building like very, very fast.

1:02:57Vlad CosteaAnd once again, follow OpenDelta. Keep up with them. There's a lot of cool stuff happening. You have a lot of money to make it happen. Good luck with that.

1:03:06Konstantin WünscherThank you.