Stephen: This is your host, Stephen Sargent. We are lucky to have the Matt Mudano folks co-founder and CEO of Arch Network super early into Bitcoin. I'm talking one of those stories, college dorm 2012, find outs about Bitcoin. We talk about how Arch Network is building applications on Bitcoin.

This will be a back to back episode when we talk about layer twos, DeFi, everything on Bitcoin. It is the ecosystem. We talk about the evolution of Bitcoin over the last 13 years since he's been in the industry. How is it building on Bitcoin? How can we make it scalable and what the future looks for Bitcoin and blockchain technology?

We are so lucky to have Matt. This is probably one of my favorite episodes, so tune in and let me know what you think.

Stephen: This is your host, Stephen Sargeant. You are in for a treat around the Bitcoin. We're talking Bitcoin, L two, L one, defi, everything. Bitcoin. We have Matt Mudano from Arch Network. He is the co-founder and CEO. Matt, how are you doing today?

Matt: Doing fantastic. Thanks for having me on.

Stephen: We had a little prerecorded conversation.

Why don't I think we should bring a little bit of that into like, what's the existing landscape?

I always like to set the landscape. What are we dealing with on Bitcoin right now? Because I think there was a lot of hype. I think you even already mentioned in our pre-conversation around ordinals and BRC 20 tokens. Give us like what's happening today on Bitcoin. In Bitcoin, around Bitcoin to set the stage for this whole conversation.

Matt: Yeah, I mean, before last year in this whole really design space opening up in the Bitcoin ecosystem, you had probably just a few incumbents that a lot of people are familiar with. You said you're familiar with the Lightning Network and Stacks. You know, they've been around for many years trying to address this, you know, Bitcoin programmability issue.

But as a result of the taproot upgrade and ordinals of last year, it really opened up the design space quite a bit because now we can all of a sudden put arbitrary data on Bitcoin in a different type of way that makes it a little bit more flexible from a developer you know, type of experience.

So, that really kind of. You know, created this frenzy of of trying to create the best implementation of, of creating just that more flexibility for developers and more programmability expressivity. So we can do this, you know, defi opportunity on Bitcoin now that it's an opportunity. And you had a bunch of venture investors that.

Poured money in, there were hundreds of millions of dollars that were poured into the scene and you went from two sort of L twos to a hundred L twos and I don't think that necessarily a hundred Bitcoin l twos are needed. So of course, over time those consolidated a bit. And ventures sort of slowed down a little bit because I think that there's less clarity today and who actually is going to win this design race for creating a defi?

Denomin or Bitcoin denominated defi ecosystem directly on Bitcoin, which is a, a really important thing, like on Bitcoin is the most important thing. 'cause before, you know, recently everything's been predicated around sending Bitcoin to Ethereum and letting it interact with other Ethereum adjacent.

Protocols. So, I think that there's a lot of still work to be done on the infrastructure sides that we could actually bring, you know, defi to Bitcoin as opposed to taking Bitcoin away from from the miners and from all of the, you know, the core ethos of Bitcoin holders.

Stephen: Where were you seeing a lot of the interest, especially, you know, when the hype was there? Was it like, hey meme coins on Bitcoin? Was it like staking and defi? Where did you see a lot of the interest? Because you know, we see now with Solana, it's like all about kind of meme coin culture. I. There's a couple, you know, pro protocols like marinade, finance, you know, staking on Solana, but where do you see it on Bitcoin?

When that hype was there, where was most of the interest?

Matt: Well, when it first started, it was all about ordinals, right? Like being able to store whatever data that you wanted on Bitcoin, whether that was an audio file or it was art. It opened up this new type of asset class on Bitcoin itself. And it's pre, it's fairly significant because Bitcoin is obviously forever and it's premium.

It's not some IPFS link to it. Pointed to an AWS server. This is on Bitcoin forever. As long as you have access to a Bitcoin node, you can access the data that's on Bitcoin once it's inscribed. So this was a really cool moment because due to provenance and just that scarcity element, that premium element, there was a whole new like, frenzy for trying to find the, you know, the next big art.

You know, artist on Bitcoin that's using that Bitcoin as a canvas for digital art. So, that was a, that was a, you know, a wild. Time there was a lot of interesting art and and, and a lot of new communities that were forming around this idea. And then that demand quickly turned into how can we create fungible token standards on Bitcoin use, utilizing the same type of technology.

So you had BRC 20 that really started. There was a little bit of friction with the BRC 20. So then the creator Casey Timore of. Of the Ordinals protocol came out with runes, which is the second main Bitcoin token standard. And that's when a lot of meme coins and everything started taking off, of course, because if there's truly valuable meme coins on chains like Ethereum and Solana, and even some of these EVM adjacent chains like Sui Aptos and say, why shouldn't there be extremely valuable meme coins on Bitcoin where the market cap is $2 trillion.

Stephen: Is, and you know, it felt like, you know, the Bitcoin was playing off of the NFT hype. Is there a reason why, maybe, you know, the new protocol that you mentioned isn't, you know, continuing that hype right now, especially with how popular meme tokens are on Solana.

Matt: I would say that like, it's. It's a function of just wanting to stay as close to Bitcoin as possible. And that's really where the community started is like, we don't want to own art on Solana. We don't want to own art on Ethereum. We want to own art in our favorite crypto asset of all time, and the most OG asset of all time, which is Bitcoin.

And again, the provenance of it all really, you know? Create some additional value because there are some ordinals or NFTs that are put on specific Satoshis that have significant value or relevance to the history and culture of Bitcoin. So if you put art on top of rare, rare Satoshis, that compounds the value.

It's not just some random server space. It's actually has some significance to to the bitcoin holder and, and to the collector. So, so that's really what the race was on about and the frenzy. And now of course, most of those rare Satoshis are. You know, utilize, there's already some, some like early first 10 K collection, you know, with node monks and OMB and stuff like that where there's already the first of first and on the rare SATs.

So it's, it's starting to you know, find a floor, I would say, for that collector. And then we'll, we'll see what happens when things start moving into the future. But I think, you know, as more tools become available for creators, it should open back up because I think what. People are mostly frustrated with right now, which is what's leading to this, you know, law and price activity or floor price for both ruins and orals is just the lack of a good trading experience.

You know, we've got great platforms like Magic Eden, who certainly, you know, do their best with the. Bitcoin architecture and what it's giving today. But there are certainly ways to improve it and make the trading experience much more similar to platforms like Ethereum and Solana, so that if we're trying to get some of those act those, those traders into our ecosystem, they don't get frustrated and leave.

Stephen: Makes sense.

You talked about og, you've been pretty early in Bitcoin, mining it in your dorm room. You know, very similar story to a lot of the early founders. In cryptocurrency, what like, got you interested in Bitcoin specifically from the mining side. I know a lot of my early day friends, like they would do it to buy some, you know, funny stuff on dark net markets or, you know, to get these hacking guys that used so prominently back in the early days.

What was the interesting thing for you that's like, oh, you know, like this would be fun to kind of mine bitcoin.

Matt: Yeah, like you said, I saw that side of the coin. Certainly some of my fraternity brothers were buying party drugs on the Silk Road, you know, with Bitcoin. So from a utility standpoint, I'm like, that's pretty interesting because no one's gonna use their PayPal address to buy drugs or something on the internet.

So, so like I immediately got what Bitcoin represented. I read the white paper as a result of. One of my friends, kooky friends, telling me one day this asset's gonna be a hundred thousand dollars. He was, he was dead serious, and it was less than a dollar at the time. So naturally I became very interested.

I read the white paper and then watched my friends kind of utilize it for what they used it for, and it, and a light bulb kind of went off for me. So I wanted to just. Dive in and immerse myself in the culture and, and figure out as much as I could. At the time, there wasn't very much to do. You know, there wasn't even mining equipment.

It was, it was laptop computers and stuff. Like there was no GPUs or anything that was mining Bitcoin yet. It was, it was very, very early. So I just bought a bunch of random laptops off Facebook marketplace and I was plugging into all the outlets in my dorm room, and I was just trying to accumulate as much as I could.

And yeah, the rest is history, but it, it was.

Stephen: free electricity too at the time, right? Like you can run up the door room

Matt: All inclusive, so, yeah, you might as well.

Stephen: with everyone using their hot, you know, their hot plates. If the college, university probably wouldn't know any different. You mentioned mining. That was actually gonna be my next question. I know the early mining days, you'd buy equipment, you know, the equipment manufacturers would mine their own Bitcoin for a few months to get as much Bitcoin, then send you the equipment afterwards.

Like what was the early days like of purchasing, like legit Bitcoin mining equipment?

Matt: You know, I'd never really like, got to that level where I was actually buying, buying miners. I was just using computers. And then day trading with the coins that I had on sites like Bid Instant and stuff. Whatever I could do, you know, that's, that's what I was doing. But you know, like it got to the point where Bitcoin kind of got a little boring because it wasn't.

You know, there was nothing you could do with it. It was just something to hold, or something to use to spend in a very, very limited type of landscape. So, you know, I, I held some, I, you know, I traded some and, you know, it wasn't until 2017 when the ICO bubble kind of came back around and that's when things got exciting for me again, personally as an investor in crypto because there were lots of really cool ideas that harnessed the core, you know, ethos of what I remembered about.

Bitcoin, you know, distributed systems and smart contracts and being able to cut out the middleman. All of these ideas were really like at the center of the 2017 cycle. And I participated in a lot of ICOs like Ethereum and Filecoin and Deep Brain Chain El like, you know, the list goes on. Many of those didn't quite pan out, but of course some did.

And yeah, I think that was like my first. For real foray into crypto and like diving deep into the white papers and the tech and all the different ideas.

Stephen: Yeah, and similar to like the NFT protocols, like the technology lasts, but maybe not all The projects definitely won't last, but.

speaking about NFTs, tell me about only gems. I feel like you were early on the, the digital craze, right? Having a digital NFT that matched the physical good. In this case it was like training cards.

I would love to know a little bit about like what brought you to that and what was like your thought process from a business perspective.

Matt: Yeah, I mean like in the 2020 cycle, you know, maybe even early 2019 you saw a bunch of tokenization stuff happening. The first platform I really saw was a platform, I can't even remember what it's called now, but it was tokenized tweets I. You could tokenize different tweets from history. So there are people that were like, you know, tokenizing iconic tweets and stuff like that and flipping them on the open market.

So I saw this really big trend in tokenizing, not just like physical stuff, but also just limited things things that are, you know, just, just scarcity nature. So, you know, then took off like the, the 2020 cycle, the bored apes and the metaverse plots and ENS domains and all that stuff, which I, I definitely participated in.

But my my actual true love besides crypto is in collectibles and like culture driven assets as I call them. So, sneakers, sports cards coins, guns, whiskey, that kind of stuff. That there's a whole like community and culture around, you know, there's an intersection of commerce and technology and culture.

So. You know, I looked at tokenized assets as a way to really. You know, eliminate the friction and the additional fees that come with trading collectibles. You know, the the major friction being like if you sell a, a, you know, a Michael Jordan sports card on eBay, you have the now the luxury of getting to go and buy a bubble mailer or envelope and taking it to the post office.

And, you know, the buyer of that collectible has to wait three to five days to receive it, and then he has to jump through all the same hoops just to kind of realize the. You know, the, the profits on his investment, if that's a flip, which mostly that's what the sports card market is. It's kind of like NFTs.

These might be even the first actual real NFTs is like pictures of sports players on a physical asset that people trade around that are limited. Right. It's,

Stephen: kind of thinking about how like people like talk down about NFTs as they hold like a piece of cardboard and that's worth 3 cents and they're like, well of course this has value,

Matt: yeah.

Stephen: see why NFTs have value.

Matt: Exactly. Exactly. So like, and if you think about actually the stock market in the, like the early days of the stock market, people didn't trade digital, like digital shares. They actually had physical pieces of paper that they traded hand to hand that represented the shares of the companies. So thinking about that now today seems pretty silly because if you want some Apple, you just go on your TD Ameritrade, or even Robinhood, you took a couple clicks and you have your apple.

Right. And then if you want to sell it and make that flip and realize the profits on your speculation or your investment, then you just make another couple clicks and you're out. So that kind of concept is really what I wanted to do with tokenized collectibles is really just take the friction out of speculating and trading these assets and created digital marketplace around them.

And, you know, we did some really cool things. We created a di like a daily fantasy. Sports game around your sports cards where your, your, your your assets are, the players in the game and stuff like that. And we, we did pretty well with it, but it's an extremely capital intensive business. And I think we were a few years too early.

Now if you look at the top volume collection on open seat, it's courtyard. Courtyard is like tokenized Pokemon cards and stuff. So like you do start to see some of these ideas start to, to pan out and, I think I was just a bit early, and that's kind of what I like to think is my special talent is seeing trends very, very early on, and that's what I saw with the Bitcoin ecosystem.

I saw that this was gonna be enormous opportunity for building, you know, the next blue chips, the next unicorn companies that capture the interest and demand from Bitcoin and its, you know, yield potential.

Stephen: And it's crazy to think when you say too early, like usually people are like decade. Like, you know, when you think about vr, like, oh, I was decades too early. Like being 16 months too early in crypto it can still have the same devastating effects. Very interesting.

Jump into you talk about, you know, building on Bitcoin, jumping into Arch Network, you're building applications. On Bitcoin. Right. Not sending them to other blockchains coming back around and then maybe they might end up on Bitcoin. Explain to me what Arch Network is. You know, I always say like the grandma or the five-year-old, but like really give some analogies of what the arch network is building.

Matt: So I'll start with a high level and then I'll kind of work my way into the, the grandma analogy here. So, so, simply put arch is a totally unique designed to. Essentially bring in more programmability to Bitcoin smart contract type programmability, which of course, Bitcoin cannot do on its own. The dilemma here is that Bitcoin does not have its own vm.

It also does not have smart contract controlled wallets that can do Turing complete programmability. What turning completes means is you could do both state changes and asset transfers. More importantly, the asset transfer, right? When you put something into Ethereum smart contract, you know. The, the, you know, the assets are shuffled around based on the rules of the smart contract to whichever user, right?

And with Bitcoin you don't really have this. So what Arch did is we built a custom built VM that essentially can do these more complicated computations like Amms and perps X trading. And it's much faster than than Bitcoin, which is of course pretty slow. And then it also has this cryptographic multisig that is.

Very similar to a smart contract controlled wallet that takes the instructions of the smart contract. Make sure that there's an honest majority consensus that says, yes, this, this smart contract was governed fairly and we should go ahead and execute it right? So we've basically built that on top of Bitcoin so that we can do these more complicated touring complete actions.

That was not possible before. And virtually everybody else is all predicated around bridging your assets to a layer two, like an EVM rollup of sorts, where you can do programmability of course, but it's not happening on Bitcoin. You're minting some representation of your Bitcoin on an EVM chain, and you're interacting with ERC 20 tokens and using Ethereum consensus or some type of centralized sequencer.

So it's very, very different and where there's some distinct advantages for building. You know the architecture that we built, so we can move very, very fast at the base layer of Bitcoin. So it seems like layer two speeds, but happening on the base layer. And this is only possible with Arch because of the VM that we built.

That's explicitly sort of intertwined with Bitcoin. So I, I guess I'll go back to this this, this analogy like you said with the grandma, you know, so I'd say, you know, grandma, you know how you know Bitcoin is like digital gold, right? It's valuable. It's secure. People trust it, but you can't really do much with gold.

You can't get. Use it to get a loan. You can't use it to earn interest or build anything useful without taking it to a bank or a jeweler or something like that. So bitcoin's exactly the same. It's powerful, but it's kind of stuck. So that's really where Arch comes in. Imagine Bitcoin is like this giant, beautiful vault of gold sitting in the middle of a desert, super secure, but not very usable.

Arch is like building a high tech financial city around that vault. You need roads, you need banks, you need shops, you need tools for building new things. You need shops for trading, you need banks for borrowing and lending, but all of it's designed to work with that original goal to make it more useful without have ever having to move it out of that vault.

Right? So Arch really makes Bitcoin smart, where before it really couldn't do those things and it was very, very stuck. So hopefully that makes, makes a little bit more sense.

Stephen: The way you describe it, I'm picturing like the Mr. Beast, the Beast Games where they just have the money and the money, the money's there, and they just built a city around all this money and everyone's interacting to somehow utilize this money to power the whole entire city. Right.

Matt: Here's another visual, like just how everybody was trying to compete and and like undercut everybody to try to like get that, you know, get those prizes. That's what you're gonna see when this defi landscape really opens up. It's not gonna be about points farming, you know, for some Ponzi inflationary thing on a.

Ethereum, it's gonna be about being early to the eventual $400 billion defi opportunity that's gonna be built on Bitcoin, and everyone has a, has an equal chance of being early to it, and it can be life changing for a lot of people.

Stephen: I love it and best believe it. We're going to the beast games. If people wanna know a little bit more about me, I'm taking that million do like you put me on. I don't care if I'm on a high rise, I'm taking the million. I don't care if my whole team's out, we'll discuss this from an island, not the beast island.

We'll discuss this from a nice warm island somewhere else. But I get, you know, the, the, the people that decided to go the alternate route and keep their team in.

Why Bitcoin though, Matt? Like when you think about it, you know, you've, you've, you know, originally you started on Bitcoin, but then you're, you've built companies, you know, utilizing the evms, I believe.

And, you know, on the Ethereum network you probably have the skills enough that you see, hey, soul's really hot. I could take my lessons from, you know, the last 10 years and apply it to so, and do some damage there. Why? Kind of go back and say, no, I'm gonna stake my claim into Bitcoin.

Matt: Simply put, it's, it's the biggest opportunity of this end, next cycle. You know, like I could go to salon and I could build a project and it would probably be easier in terms of building what's necessary or needed. Much harder to compete, by the way because you already have, you know, a 10,000 pound.

Gorilla with Jupiter and you know, the, the major incumbents that are anchoring the, the Solana ecosystem. And same to be said about Ethereum. You know, you have unis swap, you have ave, you have the major players that are gonna be very difficult to dethrone. So if I'm an application developer, I'm thinking where's the next?

Biggest opportunity. It's not gonna be in Ethereum, it's not gonna be in Solana. Even though that Solana is actually, you know, doing phenomenal. You know, I think that they're making some, some phenomenal moves in the RWA space and, you know, pushing the bounds of the open internet, which is a phenomenal thing.

But it, but to, to, to capture an opportunity, you need to be early and. This is the definition of early people think that they missed the Bitcoin wave because they didn't get to buy in at, you know, $700 or $7,000 and now it's, you know, a hundred thousand dollars. We're still very, very early because we have not built the Bitcoin denominated defi landscape yet.

If you look at. How Ethereum progressed from where it was in 2017 to all the way to Defi summer of 2020, which is where it peaked. You know, you're talking about $40 to $4,000. You know, that's what the, that's what Bitcoin can do when we start building the unis swaps and the AVEs and the curves and the alchemies and stuff that really is gonna support building this financial city around this perfect form of money.

So, and you asked why I chose Bitcoin. There's like no other. Opportunity that I see is even close to, to this one. And as a builder, that in our ecosystem as well, like, you know, the application side of things, the same thing. The same thing is gonna be said too, like the next unicorn is going to be in the Bitcoin ecosystem and there's no question about it.

Stephen: As an entrepreneur, how do you balance that? Like, Hey, you know, if I catch what's trending, I'm gonna get that capital interest to, hey, if I really focus on utility, I might be able to build a more sustainable, sustainable project. You know, like I, I always think that's hard to, to balance and then like already, you know, recovering from, Hey, I was a little too early in this space and now I'm trying to go back to being early in Bitcoin.

How do you balance that as an entrepreneur about like, where do you put your and stack your chips?

Matt: It's a great question. You know, I think it really comes down to gathering as much data from the market as you can seeing what the, the market wants and try to skate to where the puck is going. And in a lot of ways, you know, this isn't really, this design wasn't my decision. This was a lot of. You know, foresight on my partner and CTO front Amin who saw this opportunity to open up, you know, what, what's really possible and build something directly on Bitcoin instead of doing what everyone else was doing, which is just, you know, copy and paste a fork of the EVM or, or even the SVM or move VM or something.

There's a lot of opportunities for us to do something easier. But when it comes to harnessing this, this. Particularized opportunity and building what's actually gonna be truly a lasting contribution for the space. There was really no other way for us. So we don't view it as being too early or not early enough.

We feel like we're at the perfect time here and and we're doing, we're making the right decisions to actually, you know, stay in the space and have lasting contribution, staying power.

Stephen: That makes a lot of sense. I feel like Bitcoin has gone through some stages, you know, really early days, like the colored coins and then like the Lightning network. Which seemed to get a little bit of traction, especially with government involvement. It seems to have run a little flat now. Like how do you position yourself, like how do you do something different that somebody's already tried and failed, maybe not failed, but haven't progressed away and got Bitcoin to, nobody's mentioning Bitcoin and being the most scalable blockchain in the same sentence.

So how are you, like, how do you approach that, you know, where others may have failed or stopped their projects? How do you like continue on the, the, the torch and like power through that?

Matt: Yeah, it's all about, you know, going back to being data junkies, right? Trying to harness as much data as we can, and we have the benefit of getting to see what's worked in the past for all these different ecosystems, what didn't work clearly, lightning, you know, failed and what they were trying to achieve.

So we're trying to pick up the, the torch and try to accomplish what they were trying to do in a different type of way. You also have stacks that have made certain design choices that you know are. Maybe kind of, holding them back a bit. And then of course you have a lot of data on the Salona side, you know, and things that they've done to really optimize for their ecosystem and performance.

That I think there's a lot to be gleaned from there as well. So getting the opportunity to see all this play out, you know, before having to make any of these, you know, these critical design choices, it gives us the opportunity to really have something that is truly different and. We're, we're kind of addressing the problems while also bringing the solutions.

Stephen: And what are people building with? Like what is the smart contract language? I know we don't have all developers listening to this podcast, so you know, maybe you could just provide what language are they building in? How does that differ? Or is the same to maybe, you know, Ethereum or Solana?

Matt: Yeah, it's very similar developer experience to building on Solana. So it's rust. We actually forked the exact same repo that Solana forked called EVPF. It's a very high performance vm and that's what we started with. And then of course we've made specific design considerations to Bitcoin, but of course from a parallel execution environment and independent state and learning from all of the things that, you know, the Solana Foundation and their core team and the Anza has done, I think that that's stuff that we really wanted to try to learn from and, and put that into our stack.

Stephen: What game are you in? Are you in the building game? Are you in the hiring training game when it comes to developers? Are you in the recruitment game trying to get more developers? To come and build on top of Arch Network versus, you know, taking grants and tokens from, you know, every blockchain or L two that pops up over the next few weeks.

Like, what game do you think you're in? Like, what game are you playing if you had to, you know, put, put a nail on it.

Matt: Yeah. You know, it's funny 'cause like, I think right now all aspects, all games are, are immediately relevant to us, you know, like ear in the early part of last year. Maybe the game was fundraising, making sure that we were ironing out our messaging and all the strategy and all that stuff so that we could raise a good round and get good investors.

And then as time goes on, now it goes into products, you know? But now everything is, is relevant. We're working with the teams that are getting ready for their launch. We're still continuing to optimize the platform and the tech so that we can keep moving faster and faster and have a better developer experience.

From a docu documentation standpoint, we're still speaking with investors and buyers of the token, like. Liquid funds and market makers and exchanges and things like that. So it's unfortunately for us, there's not a lot of sleep in the arch camp at the moment because all of the games are currently being played in terms of what, what needs to be done to get ready for our launch.

Stephen: What fun would it be? Building your own, you know, and network? If you, if you, if you had to go to sleep, right? The whole point is to stay up all day every

Matt: You know, we'll sleep in the.

Stephen: no, why no bridges though? Because I think, you know, a lot of people would be like, why don't you just bridge It makes more sense. You know, coming from a crypto compliance background, I still, you know, the Ronan Bridge hack is still fresh in my mind.

$600 million that they didn't notice for almost a week later. Is that the main reason why your team decided to go with like this bridge list execution, or is there another technical reason why you decided on No Bridges?

Matt: Well de, well, bridge risk is probably some of the most you know, exploitable opportunity, you know, and, and, and, and points of friction and fear for users for sure. There's also the giant wormhole hack. There's been a few others in more recent history as well, and. You know, I think that it goes even further against the core ethos and user experience expectation of the Bitcoin user, where they appreciate sovereignty of their assets and they want control of your keys.

You know, the, the, the metaphor, not your keys, not your coins. That especially rings true to Bitcoin holders who do not absolutely do not want to give up their keys. And that is basically what bridging is. So, if they wanted to prioritize, you know, yield and programmability over security, they would've been on Ethereum of all this time.

Or possibly in wrap Bitcoin or something like that, which they haven't done. So, you know, there's only about 15 billion worth of liquidity in WBTC compared to the, you know, nearly 2 trillion in total value. So I think that goes without saying that the user does not want to bridge. So starting with taking your assets somewhere else and doing bridge first, programmability second was a non-starter for us.

We wanted to make sure that users had the. Opportunity to participate in defi on Bitcoin without necessarily having to sacrifice custody of their assets.

Stephen: How important is UX now that you talk about, you know, users and, you know, I feel like we still haven't solved. It's still Bitcoin. Ethereum still very clunky. Where are we with the UX of maybe something, some of the things that are being built on Arch Network or is that just the price you have to pay for security is like, the UX may not look as smooth as some of the other like FinTech applications that we see in the traditional tech world.

Matt: No, the whole goal of our arch infrastructure is to give a total Solana experience on Bitcoin. You know, we've got some pretty sophisticated rollback mechanics so that you can move at the speed of arch even while you're inter interacting with Bitcoin, because if for whatever reason the transaction doesn't get included in the block, we're able to roll back the affected state.

So application developers don't have to worry about their databases getting messed up. In terms of state transitions and those atomic transitions. So, so I think that that's number one gonna be the goal is providing this speed element on the base layer. So the user experience is quite good. Also, you know, most of the trading experiences on Bitcoin are mostly order book, these PSBT driven order books, which is not the best user experience either because these are not market making.

Market maker driven tokens by any means. These are just meme coins on Bitcoin. So you need a more liquid pro, like a liquidity profile which is gonna be more synonymous or analogous to an A MM, you know? So we need more complex and higher performing type of protocols like Amms on the base layer, Bitcoin, which is certainly what Saturn and funky bit in our ecosystem is really working on.

So, of course, though.

Bitcoin will get hamstrung or bottlenecked by its block times and block size. There's only so many transactions you can fit in the block. So we do have ways of scaling, you know, our chain as well in parallel to Bitcoin as it gets more and more bottlenecked by by the base layer.

I.

Stephen: How do things like you talk about bottlenecks, and we're gonna get into some of your ecosystem and partnerships. But I'm curious, how do things like having orphan blocks soft forks, how do all hard forks, how do all these, you know, Bitcoin specific and other blockchains, but really Bitcoin specific events, how does that then impact the arch network?

Or does it impact the arch network in any way? I,

Matt: I would say that the arch network ultimately impacts these things, right? Like the whole point of having a haling is to. Force us to try to figure out ways to create more demand for block space as time goes on. When those block rewards start diminishing, then it becomes our job to make sure that we're paying for the security budget of Bitcoin and keeping the miners incentivized.

You mentioned that there's a lot of these orphan blocks and the men pools very dry right now. That's a result of. Us not doing enough things at the base layer of Bitcoin, we're sending our Bitcoin to Ethereum. We're putting it into cold storage. We're buying it with ETFs. None of that is equating to on chain transactions, which is what actually drives the fees back to the miners, which scales the security budget of Bitcoin keeps it safe.

So we're mainly focused on creating more demand for that block space by doing more native. Bitcoin transactions, and that's ultimately why we feel like we're much more aligned to the Bitcoin ecosystem than a lot of these other layer twos.

Stephen: Because demand and supply changes so much in Bitcoin, I feel like the miners. You know, can be quite finicky or you don't have to make a lot of, you know, huge decisions on what they're gonna support and what they're not gonna support. Do you need the miners support in this? If like miners are like, Hey, we love this application. it matter? Is those two things, like not directly correlated, or is it great to be like on the minor's good side and have their support and you know, maybe even their ideas? I'm curious, how do you look at miners and your network?

Matt: So technically speaking, we don't necessarily need their supports or their favor in order to continue to do what we do like in the eyes of Bitcoin, even when our proof of stake network signs the other half of a transaction, which is which would allows us to do more. Peer to pool type of things like borrow and lending rather than just this peer-to-peer thing in the eyes of Bitcoin, it is still a peer-to-peer two party contract.

It just so happens that arch net like validator network is the other party in that two party contract. So as far as the minor's concerned, there's nothing that they necessarily need to opt into. That being said, we are working pretty closely with Mepo space and a lot of these miners to start to.

Engage in ways to, to further their interest and, and, and upside in some of these things. So we have some pretty sophisticated state chaining where we can actually do intro block trading and we chain those transactions together. We're also doing some things for non-standard transactions, which basically means that we can do some things like bypassing mepo policy and chain more than the limit that Bitcoin kind of enforces.

Right now you can only chain about 25 of those state changes together. But if we change. Or if we chain more of them together, then that can represent more revenue opportunity for. The minor actually. So, but there's some, there's some, you know, pros and cons with that, and there's some balancing act that needs to be gone.

You don't want to chain too many together because it risks, you know, like some revenue loss if that chain doesn't actually make it in the block. So there's like a lot of this I. Fine tuning and tweaking and game theory that is going on behind the scenes when, when we're working with it. But this is as innovative as it gets, you know, we're not just shipping the Bitcoin somewhere else and, and letting, you know, the EVM do all the work.

We're actually trying to, you know, get as low down to Bitcoin as possible and stay aligned to the minor network, which is, I think, you know, a worthwhile mission.

Stephen: Yeah, it's an important part of the ecosystem on drive. It is like, you know, having a baseball team in a baseball, you know, stadium, but no fans. Like you kind of need, you kind of need them both. In order for you guys to both to thrive you talked about some of your ecosystem partners. I see stable coins, I see Dex, I see RWAs.

Can you talk us through some maybe unique use cases, you know, emerging use cases that, you know, since the, you know, Trump administration come in. Has there been any interest in, you know, maybe more stable coins added to the network with the favorability of some of the genius and stable acts there in the us?

Matt: Yes, absolutely.

I think that you know, as a result of this growing institutional demand for Bitcoin, not Solana, not Ethereum, and not other stuff that we see, you know, alt, alt coins. They're, they're starting to become more comfortable and more interested in putting Bitcoin on their balance sheet. So finding new and innovative ways where companies and institutions can leverage Bitcoin in a variety of different ways, whether it's for cashflow management or for leveraging for future, you know, for additional forms of yield.

That's definitely interesting for institutional Bitcoin. So we look at this as sort of the tip of the spear into a lot of Bitcoin liquidity that's gonna support all of the defi activity because you can't, you really have a defi ecosystem with $5 million worth of stable coins. You need hundreds of million dollars worth of stable coins, right?

So, getting the institutions behind. This is gonna be very important. So I mentioned cashflow management. There's an, there's a use case being built within the RWA sector in our ecosystem that really focuses on the factoring business. Factoring is basically an element of cashflow management. If I'm a manufacturer of goods, I spend X amount of dollars to make those goods, and I sell them for, let's say, three x.

But that money is on 30, 60, 90 day terms, meaning that the, the purchaser of those goods are gonna pay me over some period of time. So until I get that money back, I'm kind of short on cash. But I don't wanna stop manufacturing my goods. I wanna actually keep making more goods so I can, I. Sell more. But I'm waiting on more money.

So there's all these factoring businesses, which is a multi-trillion dollar industry where they basically loan the money to the manufacturer so they can keep on manufacturing and and, and, and they pay back that, that short term loan when the the customer pays them on their 30, 60, 90 day terms. So you can use Bitcoin for this, right?

Because anybody's willing to borrow against Bitcoin. It's a great reserve asset. Everyone wants to use it as collateral. As I just mentioned, more and more companies are becoming more comfortable with putting Bitcoin on their balance sheet. We just saw a GameStop make a $1.3 billion purchase worth of Bitcoin for their balance sheet, right?

So all of this is to say like, it's going to be a reality in the future where Bitcoin, I mean, institutions just hold Bitcoin naturally on their balance sheet. So now how can we. Leverage Bitcoin to continue to improve their business operations and, and utilize it in those, for those types of things.

So that's really you know, unique because you're not gonna see this happening. Cashflow management with Solana tokens or Ethereum tokens. It's gonna be Bitcoin only,

Stephen: Makes sense. GameStop needs to like give their marketing team a raise because IF feel like they are, figure out a way to be in every yearly news cycle, like at the top of the list

Matt: you know?

Stephen: year. They find an interesting way.

Talk to me a little bit about, titan, you know, you have this new release especially with Bitcoin native to tokens.

You might have to break this down a little bit for us, but what is the methodology you're using? You know, what was people using prior to Titan and then what are you doing and taking advantage of implementing Titan?

Matt: Yeah. So, if, if I could draw another analogy, you know, and, and back to the early days of Ethereum, you know, there was three year gap between 2017 and 2020 when Defi summer really started to peak and take off. And what was happening in that three year span is all the infrastructure providers really catching up to provide a much.

Better developer experience so that an application doesn't have to run their own node. They don't have to run, you know, to do their own men or their own indexing of the blockchain and all this stuff, right? They can just write the smart contract and build an application and, and they're off to the races.

So what Titan is, is a massive improvement. In the men pool indexing department of Infrastructure. So when developers want to know what's happening in the men pool, whether it's for Bitcoin getting confirmation into the block or if it's for some specifically ruins tokens and what's happening in the men pool from that perspective, there was an indexer called electors.

And there's been a lot of our developers who have been finding it challenging to be. Performance enough. So we in partnership with the Saturn team, created a new indexer to replace the electors indexer, which will be a much more performance men indexer and run's indexer. And we have open sourced it for any developer to use to their advantage doesn't have to necessarily be on arch.

This is just for any Bitcoin developer that wants to index the men pool and, and, and run specifically. So this is just another contribution to try to further advance. And improve the developer experience so that we can hurry up and shorten that three year gap that it took Ethereum from going, you know, from 2017 ICO to 2020 defi summer.

We don't want this to take three years and we don't think it will. We're trying to accelerate that timeline as much as we can. I.

Stephen: That makes a lot of sense and I think that was a great analogy for the audience comparing it to, you know, that Ethereum progression.

I'm curious 'cause there's like stable coins and RWA builders on the platform where you guys would like regulatory requirements you know, how does that impact your developers, your network?

Can you talk about any regulation that is, you know, impacting that?

Matt: So one of the applications in our ecosystem that's really focused on RWA called honeybee, it's a joint venture with a you know, like a legal structure or SPV framework for RWA and compliance, right? So, chin Thai is based outta Singapore. They have multiple jurisdictions where they're licensed and regulated into issue RWA assets and onboard.

And tokenize RWA type of offering. So, that, that, that project, honeybees already got a few a hundred million in deals tokenized on their platform, and the platform hasn't even gone live yet. One of them is called Smart Gold. They they basically let you buy with your IRA gold, which gets tokenized and deployed in the RWA ecosystem and, and perps ecosystem for yield.

So be able to long and short bitcoin with, I mean, sorry gold with leverage. And you'll ultimately drive some yield back to those tokenized gold owners. So now you can be spot long gold while also earning yield on it.

Stephen: I love it. I love it. You mentioned Bitcoin ETFs and it's not really like creating that transaction volume on Bitcoin that you would normally see with other types of, you know, utilizations of Bitcoin. With this, do you think now, especially with your network, do you think this might be the entrance? To a lot of, you know, institutional investors that want to get into Bitcoin, but also want it to be usable for or do you think that there might be, you know, limited capacity for you to handle like the KYC and anti-money laundering and compliance requirements that a lot of these entities need to enter into the defi space?

Matt: Yeah, I think it's already happening. You know, if you look at Babylon and the 6 billion doll dollars worth of Bitcoin, that was staked into their protocol. A a large percentage of that was, was institutional Bitcoin. I. But what you see though is from not just a, you know, risk perspective, sometimes in some cases it's a legal requirements, is that they need to use qualified custodians like Anchorage or Bitco or in other jurisdictions like Cobo or, or Copper, right?

So I do think institutions play a large part. In getting yield and and, and underpinning the defi landscape with both Bitcoin and stable coins. But it's just going to happen in a way that is aligned with qualified custodians so that they can make sure that the, you know, the funds, assets or balance sheet, Bitcoin remains safe.

And they're not taking any, you know, on chain risk from the custody and storage of their assets.

Stephen: It makes a lot of sense. You know, you know, with Defi though, I think you know this better than anybody else especially Ethereum. It relies on like Oracles and other Data Inc. Aggregators that leverage all the data service providers like chain links. What are the applications that Bitcoin are using or, or does Arch Network have their own applications that kind of power this ecosystem?

Matt: We do have a bunch of infrastructure providers and partners, some of which are supporting ecosystems like Solana. So you know, from the RPC and indexing standpoint, we have partners that are supporting the developer community to make sure that it's easier to build their applications and they constantly are on, you know, always on and performing.

We also have, you know, different things like token metadata and NFT metadata so that they can be you know, formatted by deck screener or, or viewed by deck screener. So we have a partnership with Plex, which is the main token metadata, you know, infra provider for Solana. We're also working with Piff, the Oracle for, you know, lots of chains, especially Solana, so that we can get price feed, Oracles and other on chain events you know, into the ecosystem as well.

So depending on, you know, what we're talking about also, the indexer and RPC would be maestro. Those guys are the, you know, the go-to. RPC providers for all UTXO chains starting on Carano and now coming in to support the Bitcoin ecosystem. So there's lots of different infra providers that we work directly with so that the developer experience can be quite good.

And then anything that's missing, you know, we just build it ourselves. I.

Stephen: With, you know, a lot of the flack that Bitcoin gets around scalability, obviously there's still a lot of people in trad fire that like, you know, mention the Silk Road every chance they get. They don't understand the traceability and the security of Bitcoin as well as the transparency. Do you think like Bitcoin needs an, a new marketing strategy, a new they need to go through maybe a PR agency when it comes to branding?

Or what are your thoughts on, you know, the way Bitcoin is portrayed? Is it now too leading towards like a traditional financial product and doesn't have a lot of those elements that you started with when you first started, you know, mining in your dorm room,

Matt: Y you know, you know, one thing to remember is that Bitcoin doesn't have a foundation or some centralized entity like Ethereum, Solana, and other ecosystems have, you know, so number one, it's very difficult to get some of these infra providers to play ball be or take on the risk of supporting the Bitcoin space because they're not getting a massive grants from some foundation.

So that really leaves it up to the developers and developer community and projects like ours and Saturn and, you know, good earnest developers that are just pushing the space forward. Shout out to Leto fifa, who who, who makes a lot of tools for developers to make it easier to hack around Bitcoin's limitations and architecture.

But that being said, like. There's a lot of different camps in the Bitcoin space that all feel differently about what it should be portrayed as, or how it should be taken into the future. So it's very, very difficult to get some type of social consensus around what Bitcoin should be used for. But then again, I.

Should there be anybody that gets to dec make that decision? Bitcoin was designed all about decentralization and freedom of choice. So having all these different options to decide and choose your own adventure, utilizing this self-sovereign form of money, I think is the exact point. So like not letting anybody get to put their finger on the button and say, this is what I think Bitcoin should be used for.

This is how I think that it should be. Portrayed as I don't think is something that. Is, is even wise to do. I think it's, it's open to interpretation. It's, it's for everybody.

Stephen: I am curious, how much are you leveraging AI in some of the tools? Maybe your developers, like where, where does AI play into this? Because we're seeing a lot of blockchain times AI convergence. It's probably the new, you know, key term at a lot of the crypto conferences we're seeing recently, like AI has kind of stolen the show there. Where do you see the le the levers to best utilize ai?

Matt: I think, you know, if, if any developer out there is saying that they're not leveraging ai they're probably lying or kidding themselves, you know, all of the tools now for building really revolve around some type of ai tooling or, or assistance. You know, so I, I don't exactly know how much. The team relies on it.

But, you know, these are some crack devs and I think AI is, is something that can just 10 x your productivity and, and some of your you know, your, your, your solution or problem solution thinking, you know? So, I don't think that it's like we're just using it to, to generate and pump out our code for the core product by any means.

But that being said, like if we run into some innovative challenge, which we do. Quite frequently when you're building something, this unique and novel you know, utilizing AI to kind of get more perspective on what other type of low level systems and how they address similar issues. AI can help with that.

Stephen: I am curious, you know, you talked about, you know, the tumultuous VC landscape right now, especially when it comes to Bitcoin and maybe some other blockchains. Have you seen a switch? You know, 'cause for, you know, talking about Ethereum, you know, it took three years to get that infrastructure. It feels like for the last 30 years, VCs have gone away from, you know, semiconductors and manufacturers.

They've all been in on SaaS and tech products. But we're seeing recently they've kind of gone back into this, you know, manufacturer hardware space. Have you seen that too? Or is that just me, you know, seeing this from afar?

Matt: It is a good question. I mean, we have these like ebbs and flows in the market and. You know, it's always about front running narratives at times. So, I think AI is certainly driving the need for some of this, you know, hardware to making, making sure that it catches up. So, quantum computing, AI, robotics, that's driving a lot of the demand for, you know, hardware side of things.

But that being said, you know, I'm, I'm pretty tunnel visioned on on this Bitcoin side of things right now. So really not you know, too in tune with it, but maybe that's an amine question that we can follow up with.

Stephen: I love it. I love it.

You did raise 7 million, I believe it was last year. How do you plan to allocate that across the business? Is that mostly focusing on building out the ecosystem and making sure there's. Proper funding for developers? Is it, you know, focus on the UX of the network? Like where do you kind of allocate that?

Does seems like a lot of money, but for what you're building, I don't think it goes as far as as, as it might seem.

Matt: you're right. You know, the, the war that we're gearing up for is gonna be an expensive one. You know, building our tech is no, is no easy feat. We've got 11 really hardcore en engineers from all over the world, and we're continuing to scale that engineering team to keep moving fast and pushing the limits of what we can do on Bitcoin.

That being said, 7 million was just our seed round led by multi coin. We just closed another series, A route led by Pantera. So in total we've raised now 21 million. So, that is you know. Really gonna go towards making sure that first of all, the cryptography and the network is always staying ahead of what's latest and greatest tech, you know, tech for, for our developers and our ecosystem.

But also, like you said, supporting the developer community and making sure that they have the resources that they need to be successful. It's gonna be really hard to, you know, justify success for Arch without having some successful applications and making sure that they, they have the. You know, the resources they need is, is, is tantamount right now.

So some of our resources go towards that. And of course, you know, a little bit of marketing and scaling the team and, and, and putting out the vibe. 'cause at the end of the day, like this is a cultural movement. This is gonna be, you know, bringing developers and bringing liquidity back home to Bitcoin where they always belonged.

So at the end of the day, this is, this is something that we have to, you know, be very careful and conscientious of how we're building our community and making it sticky.

Stephen: I love it. I love it. Do you think it's easier to attract developers and maintain them, like, you know, every L two is popping up with different tokens and different grant packages, but kind of like saying, Hey, we're in Bitcoin and that's what we're doing. Do you think that brings in a different set of more, you know, committed and engaged developer community that aren't jumping around from project to project?

Matt: I think it certainly brings in an opportunist, right? Because as I mentioned before, this is probably the best opportunity of this next cycle with very little competition. Competition meaning like existing incumbents that are, that are achieving mind share and already have a tremendous amount of distribution and liquidity.

So I think the early builders who are in this space, they have their. You know, their eye on the prize. That being said, I think that other ecosystem builders, especially in the Salona ecosystem as it becomes more competitive, are gonna start to see the evolution of the Bitcoin ecosystem and start to take notice of the opportunity there as well.

So it's not gonna be not that crowded for too long. It's gonna be very competitive, just like other ecosystems. But there's a lot of liquidity to support these, these, these builders. So it's a great opportunity right now.

Stephen: Any advice for entrepreneurs? Like was there a spot in your deck that you think you fumbled a little bit and you were able to recover? You're quite a great talker I think everyone could see by listening to this podcast. You have short, concise, and passionate answers. Is there any advice for entrepreneurs that you know are trying to, you know, go after this giant?

Matt: I guess the, the, the best advice that I can give is don't build for the problem of today. Try to think what the problem of tomorrow is going to be, or the problem of next year, and build towards that. You see far too many teams and builders that are trying to, you know, recreate you know, or, or something that's re-inspired by.

Something that is already built and it's servicing the customer today. So we don't need another pump fund copycat. In fact, I think that, you know, pump fund has its own issues on its own at the moment it's trying to deal with, so building for today's problem is, is not, I think, the most worthwhile thing to do.

The, the highest upside for your time as an, as a builder is to, is to figure out the next issue. What's, what is the, the, the community gonna need tomorrow and building towards that.

Stephen: I am not a vc, but that would've probably sold like that. Just a thought process might be the, you know, the big takeaway from that is like just approaching the industry in a completely different way.

What's on the roadmap as we close out the conversation? What's on the roadmap? We, you know, we just got into Q2.

What's on the roadmap for the team? Is it more like finalizing everything and building out Titan? Is it like, you know, maybe getting, you know, and adding in with the capital that you just raised? Some more developers, core developers on your team? Where's the roadmap taking us in

Matt: Yeah. So right now we're in our final stage of, of auditing the core build. So our V one you know, ecosystem. Our, our product is going live. As soon as we ensure that it's a hundred percent bullet tested and secure. So we, we retain Zeek very high quality audit shop and we'll also do a Bug bounty program on Unify before we we officially launch.

But that's tentatively planned for June. So we are literally in our, you know, 90 day countdown phase right now where we're getting. Face-to-face with a lot of the builders in our eco. We're cherry picking the best ones to see which ones we're gonna prioritize as far as support. We're walking them into the doors of VCs that are bullish on our ecosystem and want to know who the next, you know, potential opportunities in beta place to the eco are.

So, and then, and then in Dubai, we're having a IRL trying to ki to kind of get together at the end of the month so that. Around token 2049 where we can all get together and really kind of just vibe out and lock in together as we get ready for main net. So that's what's going on right now.

Stephen: Awesome. How about Singapore? You know, you know, a little token, a

Matt: Of course.

Stephen: No.

Matt: We'll be there. We'll be in Singapore, we'll be in Hong Kong for Bitcoin, Hong Kong and and Ordinals Asia. We'll also be in Vegas for, for the Bitcoin conference in late May. So we'll, we'll be, you know, pretty aggressively on the, on the Road show this year as a result of the May net launch.

Stephen: Awesome. I just keep on bringing up Singapore token and seeing like maybe somebody has an extra F1 ticket that they're, they're willing to shell out or they're maybe sponsoring a car. It's funny that you mentioned Unify. We just recorded an episode. It probably will be live by the time we air this one with Mitchell Amador and we love what they're doing over there at Amm Unified.

It's such a fun, you know, progression from, you know, just bug bounty to create their ecosystem. Matt, this was a pleasure to have you on the podcast. I think, you know, I think it gets the passion going where a lot of us started, which was Bitcoin only, right? Like we understood Bitcoin before it got separated from Bitcoin, from the blockchain.

And I think a lot of us early, you know, crypto compliance folks Bitcoin is where we started. It's funny that you mentioned when I started listening to this podcast and Brian Romley, when the price was $700, used to talk about a $10,000 Bitcoin. And people would laugh at him every episode and every time he tweeted that.

So you were having similar conversations with people that were talking about a hundred thousand Bitcoin. And both of those have been reached. So it's kind of funny to,

Matt: Yep.

Stephen: back at the conversations and start auditing the conversations we're having today with people and saying, who's gonna be right in the next 10 to 15 years with some of the things that, the outlandish comments that they're making.

We might then need to start auditing a little bit closer. Who who might be onto the next big thing.

Matt: Yeah, man, I'm, I'm excited for it. I think you know, Kathy Wood might've started the train with the, with like the bull posting and price predictions of what Bitcoin can, can re like, somewhat realistically achieve in the most bullish case. But now you have a lot more people that are saying million dollar Bitcoin, this, that and the other.

And for someone that has seen it literally since sub dollar and get all the way to a hundred thousand plus, you know, I don't, I don't discount that one bit. And people that, that also look at it from a. A more pessimistic view. I just, I just say that you don't really understand what it really is and what the opportunity can be.

If we, if we play this right.

Stephen: It is funny the way our brains think too, we're like, it just went from literally nothing to a hundred thousand dollars in 15 years, but. The thought of it going to a million seems silly. Right? So it's like when you think it's just like funny. Yeah. We've just, we watched it do exactly that, but our brains can't take us any further.

Very interesting. Matt, the pleasure to have you on the podcast. We're excited to see what our net arch network is bringing to big, like, let's bring back, back Bitcoin, baby.

Matt: Yep. Everyone come back to Bitcoin. We're ready for it.

Stephen: I love it. Talk to you soon. Matt.

Matt: Thanks a lot.

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