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Can Bitcoin Finally Work Like Collateral? Sui Says Yes
Recorded: March 19, 2026 Duration: 0:31:19Space Recording
Full Transcription
Thank you. Thank you. Hi, everyone.
Welcome to Unchained, your no-hype resource for all things crypto. I'm your host,
Laura Shin. Thanks for joining this live stream. Before we get started, a quick reminder. Nothing
new here on Unchained is investment advice. This show is for informational and entertainment
purposes only, and my guest and I may hold assets discussed on the show. For more disclosures,
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Quick note before we get into today's episode. Bits and Bits now has its dedicated feed. We're slash unchainedcrypto.com slash bits and dips.
Today's guest is Adani Abiodun, co-founder and CPO of Mistin Labs.
Welcome, Adani.
Thank you for having me on the show.
It's a pleasure.
Mistin Labs, which is behind the Sui blockchain, has big news today about Hashi, a new decentralized and trustless smart contract
based way to unlock DeFi for native Bitcoin. And you'll be launching that later this year.
Tell us about Hashi. Yeah. So a bit of background. Look,
2026 is going to be a year where Bitcoin truly becomes a collateral instrument, especially in
DeFi. So in 2024, what we really had was a year where we had a bunch of
bitcoin ets launched none of that could actually earn any yield all of it was pretty much locked
into custodians like biggo you name it most of crypto never actually benefited from any of this
nearly 60 or so of crypto market cap never cross-proliferated into the rest and it never
saw the huge wave we expected in
24 25 right there's a lot of this bitcoin l2 mantra that was going on we never really saw
that transition into into real growth into in d5 so bitcoin proved there's a strong store value um
it had not been great for payments but bitcoin as collateral instrument creates liquidity without
selling so d5 lending is going to be the way to really unlock Bitcoin.
And what is Hashi? Hashi is a means of enabling native Bitcoin without any form of wrappers or any
form of second or third order trust assumptions, enable you to actually formally lend Bitcoin
without having a tax event. It uses a decentralized network to power the borrow and lending.
And you can now start using formally verified smart contracts back
with actual insurance to now create Bitcoin generated bonds or enable and
facilitate loans for Bitcoin for the first time ever.
So this is going to be the first time ever in history where you have a fully
decentralized piece of infrastructure with minimal trust assumptions required,
backed by actual institutional insurance to enable folks to, institutions specifically,
to start lending Bitcoin directly in DeFi. So you have, we announced today over 20, 24 partners
who are going to be going live, which includes custodians, hardware wallet providers,
exchange partners, financial institutions that are going to enable you to effectively start putting your Bitcoin to work using decentralized infrastructure
for the first time.
And, you know, as you mentioned, you were saying that this is the first time that there
will be, you know, such a trust minimized way to use Bitcoin in a in like a smart contract.
And I saw the press release was saying that Hashi, quote,
takes an entirely different approach than existing wrapped Bitcoin offerings.
So explain how you're able to achieve all of that on the back end.
Sure.
So if you look at WBTC, as you just mentioned, wrapped BTC, the multiple variants of it,
right?
WBTC was a brilliant step forward, but only gained 1%
of the Bitcoin in existence, right? That's in part of due to the taxable nature of wrapping WBTC.
So the process of doing the wrapping actually creates a taxable event, which is absolutely
going to restrict the amount of Bitcoin that can go into proliferation because I want to borrow
against my Bitcoin. Being hit by a tax does not make it something that's absolutely viable. Our approach is very, very different with Hashi. Now with Hashi,
what we have is a trust minimized way of actually taking Bitcoin on the existing Bitcoin network.
You lock it into an MPC wallet on chain in an existing network, never leaving the Bitcoin
network itself. You don't create any derivative assets of any form. And then that
allows you effectively to originate loans directly on a SWE blockchain instantaneously. So you can,
with that mint WBT, you can mint with that USDC, USDT, you have to mint SWE dollar as well.
But ultimately, you can now have direct borrowing using the Bitcoin network to gain access to stable coins.
In the same vein, we're having partners who are going to be minting Bitcoin-denominated bonds as a way to fund, you know, fund the balance sheet by leveraging Bitcoin without having to also hit another tax event.
So who's going to want to use this? Imagine ETFs who previously had Bitcoin Decide Idol, had minimal ways to make that Bitcoin work for them. Now they can leveraging this mechanism.
And it's using the same security primitives that govern billions of dollars on the Bitcoin network
and the formal verification of smart contracts. And what that means is these contracts have gone
through mathematical proof to ensure true safety of borrowing and lending. And at the same time, it's going to be backed by insurance
at the same time.
So if there's a, as part of DeFi, right,
if there's some event that causes loss in DeFi,
you are backed by the insurance as well.
So it's a new approach, namely, we saw in a previous
where centralized lending mechanisms ultimately saw issues.
Celsius was only a couple of years ago.
Now you can have a trust minimized way of doing a fully decentralized and not having a tax event
and making Bitcoin available. We think we can go way beyond the 1% that WBTC has offered
because one, it's trust minimized with decentralization, fully verified,
and then at the same time, it's backed by insurance. Okay this is really interesting so
give us some of the details on the MPC wallet like how many signers how many keys you know
because the details around how it's set up really matter for people who might remember I think it
was was it the wormhole one where they had yeah yeah okay so yeah so the details around this matter
because you know just splitting it up and and making multiple people responsible does not mean
that it's secure yeah so the way it works is very different right so every single validator on the
SWE network over 125 validators are all part of the signatory on the multi-sig account so the same
protocol that governs billions of dollars on a SWE network,
ensuring the safety of the SWE network,
that can process hundreds of thousands of transactions per second,
is effectively using the same cryptographic primitives
that secures the SWE network
to secure that MPC network on a Bitcoin network directly.
So you have SWE blockchain validators directly network on the Bitcoin network directly. So you have three blockchain validators directly engaging
with the Bitcoin network and independently directly
ensuring that security of the MPC wallet.
So it is a majority required to actually move funds.
And even as a backstop, in a scenario where there's even
collusion on the Bitcoin network, sorry,
collusion between validators on the two networks,
there's an additional layer with a guardianship
that happens on top of that as well. So you've got a fallback in the Guardian model and then
also the methodology that's leveraging the Sue Network today for security. It's effectively
the strongest mechanism you can have for security. You have partners like FarConnex, Bullish,
ErbroBank, who are going to effectively be using this same decentralized mechanism to supply Bitcoin or stablecoin liquidity for lending markets on Hashi directly.
Okay, wait. And so I'm sorry, you said it was the SUI validators, which is like, it's about a little over 100.
It's about 125 today and growing. Yeah.
Okay. Okay. So they're the ones that are kind of collectively managing this
mp got it okay correct um well so i you started to dive into this but let's just um discuss it
further you know i've been interviewing multiple people over the years multiple projects that have
talked about their attempts to unlike unlock the 1.4 trillion in Bitcoin by creating these different L2s.
But because of the issues around centralization, plus frankly just other technical issues around
liquidity and other things, it just has felt like DeFi on Ethereum has been more
appealing. So, you know, what do you think it like, you know, it's one thing to kind of have
the technological breakthrough or like a novel setup, but how are you going to kind of, you
know, get past the hurdle of people like trusting it
and getting actual activity on Hashi?
It's a very good question.
In fact, the rationale behind Hashi was actually product driven.
So we had a ton of partners and clients who were looking
to leverage swaths of billions,
of hundreds of billions of dollars worth of Bitcoin
and make it available in DeFi.
But when it came to due diligence,
they always got stuck when it came to not understanding fully
the end-to-end trust assumptions that need to be made.
So as you mentioned before,
there are a number of L2 solutions out there.
And none of the folks we're talking to,
we're talking about large banks,
sovereign wealth funds, nation states who have a large bitcoin and treasury who are effectively trying to make that
treasury available um and borrowing from it using decentralized finance of course they they were
unable to get past the due diligence stage and we we went through a lot of reviews with them to try
get uncomfortable with existing solutions and they never were able to get past that line and they actually asked us right could you come up with a
minimal trust guarantee and trust requirements they didn't want to have to trust many different
protocols to make it happen they wanted the minimal amount of steps to get their bitcoin
steps to get their Bitcoin available. And then the tax element was actually very central
available and then the tax element was actually very central to this as well they wanted
to this as well. They wanted ability to mint stable coins easily using Bitcoin backed assets,
ability to generate yield off stable coins directly as well to minimize the cost of a
loan, insurance to allow them to actually expand the offering to their clients. And
then we built Hashi specifically for institutions. So it took a lot of institutional input for us to come up with the ideology to solve that problem.
So it actually was birthed from a problem with sovereign wealth funds that we're engaged with,
financial institutions we're engaged with, and a lot of hedge funds that we're also engaged with.
So it had to be built because that gap was there.
That's why we've not seen this mass liberation of B2C and DeFi.
So you can look at the list of partners that we announced
today that are going to be supporting hash we're talking about uh upland bit go bullish we have
wave digital and navi ledger first digital it goes on erbo bank um even bit go like these are
large institutions who control billions of dollars,
hundreds of billions of dollars worth of BTC.
So given the size of these partners,
we came together and tried to greatly understand
their requirements to build this specifically for them.
So in a lot of these custodians,
what you're going to be able to do with ASHI
is click a button and instantly start making stable coins
without having to go through centralized entities
and having these centralized trust guarantees
that you're going to ultimately need. And then you couple that with insurance is
going to be required as well. So you can actually buy Bitcoin denominated insurance. You pay for
the insurance in Bitcoin and insurance pays out in Bitcoin. So you have this full element where
you know, an amazingly liquid but also efficient market backed by formal verification also insurance is something that
institution can now trust rather than you know a spaghetti nest of different technologies that
it's very hard to understand okay and just to make sure i understood um so you said something like
without it having to be centralized but as far as i understand this works for both people who self-custody as well
as people who custody elsewhere so like for instance if i'm like let's say that i'm using an
ria that's custodying at bitgo then they can they can access this so even though they're a centralized
entity um okay right so that's correct that's correct. So some people will use it in like a pure DeFi way and other people will use it in like
a Coinbase Morpho or basically just like DeFi mullet type of way.
Exactly.
That's exactly the way it works, right?
So if you imagine today, if you are with any one of these providers today, they're going
to have to go and source liquidity from any
third party and these third parties have a balance sheet have a risk element that they've taken we've
seen it before with celsius when celsius went bankrupt people lost a ton of capital but d5
was inherently strong right so this is giving you that same platform where traditional um centralized
issue and entities like bitgo can leverage the decentralized nature of what SWE offers to originate loans for
their clients. So you can be using a fully self-custodial ledger device and generate
yield from your Bitcoin. You can be, you know, any kind of financial institution that has,
that's sitting on Bitcoin for the clients, leverage the same infrastructure as well. So
we built it for the highest amount of, to cover the broadest amount of Bitcoin possible, not for just a small amount
of users or just purely retail. So that allows us to really go after a broader sense of just beyond
this 1% Bitcoin is covered today by WBTC. We really want this to be the home of where Bitcoin-based
yields is going to be generated. Okay. So in a moment, we'll talk a little bit about the products and services that will be
enabled by this. But first, a quick word from the sponsors who make this show possible.
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Back to my conversation with Adani. So you started to get into this a little bit before,
but just tell us a little bit more about the different types of products and services that
people will be able to access when their Bitcoin is deployed on Hashi? Yeah. So one prime example is Wave Digital. Wave Digital is going to issue
the first secured actual rated bond that's fully collateralized by Bitcoin. It's going to be
powered by Hashi. So these bonds will provide effectively a new mechanism for issuers to raise low cost capital,
backed by BTC directly on chain. It's going to enable instantaneously,
basically instantaneous issuance of bonds, instantaneous trading, and also all the
settlement for this will be done entirely on chain. So it's going to give institutions new
access points for hedge funds, for venture capital firms, and to leverage Bitcoin in a stable coin holdings entirely.
And of course, there's integrations directly with DeFi protocols on SWE,
like Navi, Scalab, SWE Lend, Alpha Lend.
It's fully integrated into the lending protocols for SWE.
So you'd be able to access Bitcoin-based loans directly using those protocols.
It's important to note that Hashi is an actual primitive en-suite.
So it's meant to be, it's composable, it's something that builders can build on.
So they can build assets, they can build protocols based on the Hashi protocol,
effectively leveraging that for the customers without having to rely on, you know,
second or third order effects of trust guarantees that are required for other systems as
well. So this element of I can issue a Bitcoin based bond by way digital and basically have
this something as a rated bond is going to be the industry first. And we're very, very proud about
that. And like, so earlier we talked about some of the ways that you were able to make this decentralized and to reduce the single points of failure.
But, you know, I'd love to hear you spell out what the actual risks are to the Bitcoin that people put on Hashi.
Yeah. So the risk for Bitcoin against for those leveraging hashi is going to be of course bitcoin network
right it's a bitcoin network has issues it's uh you know it loses uh this 51 guarantees that we
expect that's you know everyone has an issue there right let's assume that's not going to happen
let's talk about the its connectivity with sweet so the way in which hashi communicates with bitcoin
network is via effectively creating a multiisig account on the Bitcoin network.
So the Bitcoin network is effectively engaging and validating the Bitcoin blockchain at the same time.
So if you were to have validators collude on a Bitcoin network, sorry, on a SWE network, then there's a carried risk there. And then the way you solve that, this is something
that's never happened, but the way you solve that is by having a guardian model, a multi-sig between
the SWE validators in a scenario where there's collusion, there's a guardian model that sits on
top of that, that can protect everyone against loss. And then the other risk will be smart
contracts. So smart contract, let's say there's a bug in the smart contracts that facilitates
the minting of stable coins between what exists on the Bitcoin network and SWE blockchain. So smart contract, let's say there's a bug in the smart contracts that facilitates the
minting of stable coins between what exists on the Bitcoin network and the sweet blockchain.
That is another vector of failure.
But what we do there is we do something called formal verification.
And this formal verification is not something all chains can do, but it's a mathematical
proof that you look at a smart contract code and you run a number of mathematical simulations and generate proofs that this contract does exactly what it says and it doesn't have any side effects
outside of what's been programmed to do. That is a very, very strong guarantee. It's actually the
strongest guarantee you can get in computer science for smart contracts. You get that with
a SWE blockchain and smart contracts that engage between the SWE blockchain and also the Bitcoin
network. And then the other
element to secure against that is insurance so let's say all the mathematical models fail
let's say that the validators all collude let's say the guardian models actually fails as well
right like so a lot of things have to fail that for this to happen ultimately increasing the
likelihood of this happening is very very low and there's also institutional insurance provided right so
sober and sorry so to ensure is going to introduce a first native btc denominated insurance designated
effective to put to protect bt collateral on hashi so the premiums and claims are settled in native
bitcoin um so you you pay for your insurance in Bitcoin. You claim your insurance directly in Bitcoin as well.
So I think it's a first that's ever been done in the crypto space as well in regards to that.
Yeah, I mean, that insurance bit is really interesting.
Can you explain a little bit more about how it works?
Because, you know, like what was novel to me is that this is done in kind in Bitcoin.
So, yeah, I don't know.
Did they have to, like, I don't know if it's a traditional insurer
or, you know, what they had to do to be able to do that.
Yeah, so the way it works is you've got to convince a large insurance company
that the security guarantees are given that are effectively built by our teams
reduces loss
significantly to the point where they can put their name behind it and back it with a premium
that's very, very low. Because it's all great to say you have insurance, but if it's very expensive,
then what's the point, right? So our goal is to have insurance as low as humanly possible.
And you get that by being able to show that formal verification is very strong. That's
something they absolutely are going to want.
And that the Guardian model, in addition to the validation collusion model,
is something that we've designed significantly against as well.
So these are the elements showing that loss is minimized by having strong smart contracts.
Loss is minimized by having the validators control the multisig, not individuals.
And then the Guardian model that sits on top of that,
that allows them to wrap an insurance product and price that on-chain directly.
So at the point of locking Bitcoin in a Bitcoin network,
in a Bitcoin address,
you can make a payment in Bitcoin at the same time for generating yield or for borrowing.
So your assets are effectively secured
against that kind of loss.
In addition to, let's say you want to also have insurance
against the borrow lend protocols on SWE as well.
You could also purchase insurance for that as well.
So that can come in the form of reduced yield
that you get from the Sabrecoin.
They can come in the form of just paying basis points
on top of whatever you're borrowing against
or whatever collateral you're providing.
So this is all fully on chain.
There's no contract to sign elsewhere.
You at the point
of minting and a point of depositing funds, you can make insurance payments automatically entirely.
Okay. And then one thing that I was wondering is just because of how the Bitcoin price fluctuates
in dollars, they must be buying Bitcoin as like new Bitcoin is being deployed in Hashi. Is that
correct? So the Bitcoin premium, the great thing is the Bitcoin premium itself is paid in BTC.
So they would have assets backing the Bitcoin directly to be able to make the payment.
So yes, they are, for insurance fund today, do that, they're in long Bitcoin themselves.
So in that sense, you're going to want to be denominated in Bitcoin.
Okay. Okay.
Yeah.
And actually, I meant to ask you earlier, you might have mentioned this, which type of stable coins
are, you know, will users be able to access?
So SWE has a number of stable coins today. We have USDC, we have First Digital USD,
we have Agora USD. There are a number of stable coins that exist today. And we just recently
announced SWE's native stable coin which is sweet dollar
sweet dollar is different in the sense of the yield from sweet dollar the treasury yield from
three dollar which is one to one backed by um u.s treasuries it's actually through a partnership we
have with stripe and um and uh bridged um this stable coin pays the yield back to the SWE network directly. So you can actually
get reduced borrowing rates because the yield you're getting from a Bitcoin can go to lower
your cost of borrowing as well. So it's going to be an economically feasible way of generating
Bitcoin's yield, but also lowering your cost of borrowing as well. Okay. And then you briefly mentioned the bonds,
but can you explain a little bit more about how that works?
So we have a partner in this space that effectively has built a model
where they can issue Bitcoin-denominated bonds directly.
They're called Wave Digital.
So these bonds are actually rated by the ratings agency.
So these bonds are actually rated by the ratings agency.
So top leading rating agencies will actually issue
rating against these bonds that are issued on chain.
And you can trade those in real time on chain.
You'll be able to trade that on Deepuk,
which is our decentralized order book.
You'll be able to trade that on AMMs across the SWE ecosystem.
You'll be able to also leverage these in perps
and other venues as well on SWE. But for the first time, you're be able to also leverage these in perps and other venues as well on
SWE. But for the first time, you're going to have professional firms who can trust the
bonds issued on chain because they have traditional ratings applied to them that you get from
highly reputable financial institutions as well. So if you want to go and raise capital
and you have a balance sheet of Bitcoin, you can issue those bonds on chain directly and have that rated by a highly reputable
ratings agency. So I think you've now seen a world where CeFi is highly leveraging DeFi and doing
that with the same kind of guarantees and even stronger trust assumptions that you get from
traditional finance as well. Okay. Yeah. And then as you mentioned earlier, there will be a number of different DeFi protocols for earning yield.
There will be vaults. One other piece of this is I saw you're using CF benchmarks, a crypto index provider, basically as an Oracle.
So can you explain how they will be used?
So can you explain how they will be used?
Yeah. So the important thing is ensuring that you can get true pricing of what Bitcoin.
Well, the true price of Bitcoin on a Bitcoin network, let's say you want to borrow against your BTC.
Well, what is the price of Bitcoin? Where do we get the price of Bitcoin from?
So we are going to rely on very strong or providers and see a benchmarks is one of the leading
QBIS and CF benchmarks are going to effectively support pricing data.
It's going to enable collateral to be even more efficient and BCC asset movement to be seamless
ultimately. So having strong oracles, not just one but a number of oracles,
is going to ensure that one you can get the best possible loan or the maximum amount of loans
from the bitcoin you have issued and also for any kind of um defy risk management you have a solid
source of pricing data to make decisions on as well okay so um as i mentioned earlier there's
a number of you know attempts at these bitcoin l2s and there's actually one that launched today
opnet um i also know satreya is another one um But, you know, how would you differentiate Hashi from its competitors?
So I would say traditional means of launching protocols that are going to generate yield for Bitcoin normally have a number of problems.
One, they're very, very difficult for institutions to understand.
So I would say technology is one thing, but we need to explain the technology,
especially to finance people, is very critical.
So I think Hashi wins there.
It's a very easy model to understand.
What you're trusting is minimized to a very small number of factors.
So that's the first thing.
Secondly, it's differentiated because it's not a wrapped asset.
So there is no tax element from leveraging Hashi versus other primitives.
Other, when you're using L2s and other schemes,
they effectively are creating a form of a derivative asset
that effectuates a need to pay a tax.
So we've got actual legal opinion showing that Hashi does not constitute a tax event,
especially in many jurisdictions, in the US.S. example, for example.
So that's in the design.
Also the security, right?
We're talking about the fastest network in crypto, namely BIC and SWE,
that we've been building from our days of getting Meta to launch Libra.
We have a team of the world-leading cryptographers in the world.
So something like this is built with a lot of research and development. We've formed a Verify Smart Contract with a team that
effectively has been entrusted to launch Search at Google, you know, some of the world's most advanced
protocols that exist in traditional tech and also traditional finance today. So it's coming with a
team with a very strong pedigree in finance and also technology.
So the differentiator is going to be obviously the team that's building it. The differentiator is going to be the technology assumptions or the safety assumptions you need to make in order to
make a deposit and something that's easily explainable and backed by insurance, especially
something that is insured on chain. It's fully transparent. So these are the things that back
Hashi and I think it sets apart from other offerings that exist in the market today.
All right. Well, I'm excited to see how all this plays out.
I mean, I think, you know, whoever does manage to unlock that one point four trillion dollars in Bitcoin on DeFi, that's that's going to be huge.
So, yeah, thanks for sharing about Hashi.
It's a pleasure. Thank you very much.
And thanks to everyone who joined this live stream.
We will catch you next week.
Bye.
