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Cross-chain Liquidity in Motion - Tower DEX x IBC Eureka
Recorded: April 14, 2025 Duration: 0:46:19Space Recording
Short Summary
In a dynamic discussion, Val Vallejo and Magmar explore the launch of Tower, a pivotal project in the Cosmos ecosystem aimed at integrating Bitcoin into DeFi. They highlight the potential for significant growth and liquidity, driven by strategic partnerships and innovative yield opportunities, positioning Cosmos as a key player in the future of Bitcoin finance.
Full Transcription
Thank you. test test test can you folks hear me
i can can you hear me what's up yes? Yes, we're good. Perfect.
These spaces are always so tough.
Listen, I love Elon, but what in the F are Twitter spaces?
Yeah, literally.
It was just like two minutes just for some people to roll in.
How do you do music on these spaces?
There was an update, and since then I can't figure out how.
There used to be a button on the bottom left where you could just pick which music you want to play, but it doesn't work always.
It's very weird.
Wait, actually, probably, Nico, you have to do it because you're the host.
But don't worry if you can't figure it out.
It's pretty buggy.
Okay. All right.
Let's wait for two more minutes,
three more minutes just as people roll in. All right, Val, you want to get started?
I was born, ready?
Let's do it.
All right.
Welcome, everyone, to this space.
I think this is the first space I've ever hosted.
So I'm going to be your host, Magmar, ready with the spicy questions for Val, our distinguished
uh spicy questions for val our distinguished uh guest here so uh val has been working on a new
guest here.
decks tower decks the canonical babylon decks um and he is value are the ceo if i am not mistaken
of of tower of the development company that is doing development on tower
the development company that's right thank you for the. The development company, that's right.
Thank you for the clarification.
And yeah, Val, you want to give a quick, like, one-minute intro of yourself, your background,
how you got here?
Yeah, sure.
Thanks, by the way, for having me.
And thanks, everybody, for listening in.
I'm also honored to be in the first spaces that you are hosting, and you're doing great
so far.
Yeah, my name is Val Vallejo. I've been in crypto since like I was 16 or 17, which used to be a
couple years ago. And now that I've turned 26 today, it's actually nine to 10 freaking years
ago, which is insane. Got into the space from like a research background and a tokenomics background
when it used to be, you know a one-person job and not like
a team of PhDs and market makers designing it and then kind of fizzled my way into working in the
space you know firstly part-time then attending drape university uh tim draper's private school
who i think everybody here is the bitcoin billionaire um and then kind of fizzled my way
into proper full-time working crypto initially for an eoc721
project so right in the beginning of nfts for supply chain tracking if anyone remembers the
v chain days uh been there done that it was a long time ago and um then a couple years ago
realized that i think chain fragmentation has to come to an end um ecosystem fragmentation and
essentially ecosystem tribalism has to come to an end uh wrote fragmentation and essentially ecosystem tribalism has to come to an end.
Wrote a piece about that in Cointelegraph
and that kind of started the thought process for me to say,
hey, I think that we are kind of approaching
the stage in crypto where we should look at chains
like cloud providers and realize that most people don't care
if a website is hosted by Azure or Google Cloud or AWS,
they should just be able to press a blue text link
and have it open up and show them the info they need.
So our solution to kind of help advance that evolution
that we saw happen naturally was Quasar,
which was, I think, until we shut it off a month ago,
was the biggest interchange yield provider,
yield aggregator in all of Cosmos,
helping people manage LP positions,
and essentially abstracting with the user experience
of having to click through chains.
And then in the last two years,
with huge effort from IBE,
we have seen that kind of abstraction roll out
in a more advanced way
and now we've gotten to the stage where i think that the real abstraction and aggregation has to
happen in btc fi now the bitcoin is finally getting unshackled uh and it's becoming an
actual d5 ready asset but i don't want to jump ahead but that's how we got here
exciting and val correct me if i'm wrong but you're famous for something something regarding
how you introduced trump into crypto or something about that yeah yeah there's a story why you're
responsible for trump's embrace of crypto i i think i played a part in it um i don't think
anyone controls orange man i cannot be controlled um but i did definitely play a part in it. I don't think anyone controls Orange Man. I cannot be controlled. But I did definitely
play a part in it. I am I introduced Ryan Selkis to the Trump to the Trump dinner. So
if anyone knows the famous handshake and kind of the crypto dinner at the white at Mar-a-Lago,
which started the entire discourse about, hey, maybe the crypto voting base in the US
is a super strong and like you know very
distributed lobby that should be acquired for the russian party to win um that kind of all came from
that dinner where ryan selkis was on stage with trump and kind of endorsed him for the first time
publicly officially and i was able to send him there because i could not attend i had conflicting
plans and i thought someone worthy
of the position of being on stage with trump should go and not some pleb from germany um and so you
know thankfully ryan circus took that invitation went over uh stood on stage and i think the rest
is history there's been times where flip-flop from me getting praise for it or me getting getting
flip-flop from me getting praise for it or me getting blamed for the price movements. But
I think in a long trajectory, if we look at crypto as a singular issue, not making any political
other statements, I think this has been a positive evolution for our space as a general.
Yeah. All I heard from that was you were invited on stage with Trump and you said,
I have conflicting plans.
You must be a very busy man.
No, so I wasn't invited on stage.
I was able to attend dinner if I wanted to
because I was able to acquire tickets for it.
The stage situation happened
because I started in the Trump team in the background
and telling them that they should put him on stage.
Like, hey guys, you don't know me.
I just have a normal ticket holder,
but this guy who's now going in my name is like someone you should really put on stage.
Who does have to be on stage?
Back then, you know, CEO of Missouri, one of the biggest non-poken crypto companies in the U.S.
Back then, I thought they should know about it.
Yeah.
Yeah.
Exciting.
All right.
Let's get into the meat of it.
So you mentioned this phrase, which I like, unshackling of Bitcoin, right? For a long time, Bitcoin has been something you hold that you basically never sell, that you never move, and that you distrust everyone around you if they ever try to get you to do anything else with it.
with it but here we are today uh we have tower a bitcoin uh and babylon based decks and we have
babylon itself uh basically a place that has attracted you know billions of dollars of bitcoin
tbl um tell me about this unshackling story like why are you excited about it why do you think it's
real and why should why should the community be uh be uh observant
yeah totally a great question um i'll i'll hold out i'll go into higher level for a second here so
obviously bitcoin started it all and i think that in the early days if people here have been in
crypto for many many years they vividly remember time when everything that wasn't bitcoin was
considered a shitcoin just ambiguously if it wasn't bitcoin and i also if people have been in the space for so long remember
that all of the you know not your keys not your coins or all of the lessons about security all
lessons about hodling obviously the hodling the misspell all of that originates in bitcoin bitcoin
has been essentially the cultural setter for crypto for many, many years. And I think in the last two, three years, that has actually kind of shifted with the advancements in DeFi and Ethereum ecosystem.
Bitcoin has lost its position as the cultural leader of crypto, even though it has been that for so long.
And in came a culture of more pragmatic thinkers of financial primitives, active usage of blockchain technology not just you know
holding the new gold and throughout this entire period bitcoin was unable to participate which is
hilarious i mean if this was like a school playground you know the kid that came up with
all the games and like with the playing ground and built i don't know the the table tennis
table with everyone else was included from play, simply because
it didn't have the necessary technology to participate, it didn't have a VM, it didn't have
proper bridging technology. And I think that is a pretty interesting development happened,
which is that Bitcoin is digital gold, yes, but also it was completely disregarded in any other use case.
Naturally, by being 6% of the entire Bitcoin in a crypto market cap, pardon me, we've had a lot of development happening in the background in trying to make Bitcoin a more active asset, which oftentimes gets polarizing views because people still think, you know, you shouldn't touch your Bitcoin, you shouldn't move them.
But I think the times have changed, and I think that if you have a digital gold, gold has primitives in the financial space, so should the digital gold.
And I think a lot of the approaches that we've seen in Bitcoin, DeFi, or generally, you know,
Bitcoin as an asset in DeFi, BTCFi, has been kind of like, I don't know the English word again, but it's like not a proper solution, kind of like rigged together, like a little bit trying to cross the chasm.
We've seen that with WBTC as the original DeFi asset for Bitcoin, but that's a custodian solution, which is very unnatural to Bitcoin.
We've seen attempts for adding VMs or L2s to Bitcoin, which is, I think, a noble effort and also has future
in a couple of years. But I think I have timelines that are significantly longer than people anticipate.
And especially with Bitcoin becoming such a massive national security item, I don't know how fast and
how quickly there's going to be updates on actually UpCat and other developments there.
But in comes Babylon and just takes like an unbelievably pragmatic approach
and just says, yeah, how about we start at zero or we start at one
and we introduce the most basic primitive invented by Cosmos to Bitcoin
and we stake it.
But because we have now invented staking way past down the line
of the LST lifecycle with Lido coming out,
let's actually liquid stake
almost all stake Bitcoins.
And so what we've seen is $5 billion
of Bitcoin liquidity flowing through Babylon
looking for DeFi.
I think Lombard's numbers are
75% of all LBTC are in DeFi applications,
which is like around a billion dollars.
And we've seen this unshackling
and essentially this almost Trojan horse where the staking primitive is really just an exploitation of liquidity.
So I think that, you know, I'll give you a chance to step in again because I like to, yeah, but I think that we are on the cusp of kind of a real evolution BTC5.
Yeah, that's awesome.
And let's talk about tower give me the give me the intro to tower uh how it sort of serves users in the cosmos how it serves uh bitcoin how it serves users of
babylon why you're bullish yeah yeah totally so i think what we've seen with advancements in infrastructure and IBC, bridging technology specifically, and sovereign chain thesis is that you can have more specialized products that are specifically designed for a certain use case.
If anyone has read the Bible, the Tower of Babylon, you know, stood grand in the city center.
I also have finished the story and I know that it perished in the biblical story.
So we will be significantly less cocky this time around.
I can promise you that.
But the Tower is supposed to signify the central place of BTC5.
And I think that the central place of BTC5 is the central place of Babylon because Babylon is BTC Phi. If you go and DeFi Lama and you check the liquidity distribution, 85%
of the entire BTC Phi market
cap liquidity TVL
is Babylon. So
what we've kind of said to ourselves is, look,
Babylon is kind of on route to be
a Bitcoin eigenlayer
and I've known the Babylon
since around times because they
wanted to do Bitcoin snapshotting
for Cosmos chains. You might remember remember that magnus um and i've exactly the original pitch the seed round deck was that
um and so i've seen them kind of just keep taking the same steps of what i thought are mistakes that
eigenlayer made and i have a lot of you know friends at eigenlayer i respect the team tremendously
but what i think everyone has seen is
they thought that they had a legion a roman legion surrounding them which was all of the lrt providers
that turned out to actually be mercenaries and just go to the highest bidder and run with it
and so eigenlayer just gave up the entire user experience the entire user flow the entire
ownership of of that vertical um for. And everyone else ran with it.
And now I can't even say the best positions could be.
And I saw a similar fate for Babylon.
And so a couple of months ago in the background,
I approached him and said,
hey guys, I think you are in an unbelievably good position.
And you might not see it right now.
You're literally sitting on a pot of gold.
going to be the issuance for all the future BTC that is ready in DeFi you are the the singular
You're going to be the issuance for all the future BTC that is ready in DeFi.
app that provides a core primitive to Bitcoin and you're going to have all of the cards because all
liquidity is going to flow through you all of the issuance is going to flow through you
and the entire BTC Phi ecosystem is going to surround you you're going to be with that
and with months of months of background work we have established ourselves
as like you know the first premier and canonical dab on babylon uh tower decks now dexes have done
have been done before i don't think i need to explain dex to anyone but i think the positioning
here is the is the specific thing which is i think any ecosystem the first decks or like the supported project is like the face of the
ecosystem and the advocator for it and i think that bowler is such is so good at institutional
connections it's so good at being risk averse i mean the entire staking technology is so
meticulously developed over so many years and so carefully crafted they're not like messing around
with it that it's good if there is a counter team
to that which is like the defy team and like the the ecosystem team and so tower decks is
gonna position itself to be the primary spot for bdc liquidity and all of crypto um with the
support of cosmos ivc and eureka um and generally the abstraction of chains in the background.
So cool. Very cool. And obviously we're partnered on IBC Eureka. For folks who don't know,
IBC Eureka is an extension of IBC that basically lets IBC extend natively to Ethereum and any smart contract-based ecosystem. So you can try it right now. If you go to go.cosmos.network, you can transfer for,
basically cents, depending on the gas fees of Ethereum, directly to Ethereum and back.
And it's also the bridge provider for Babylon, for onboarding assets from the different LBTC and liquid-staked Bitcoin providers, and has been responsible, I think, for a lot of the inflow so far into Babylon and into the assets that are tradable on Tower.
to Babylon and into the assets that are tradable on Tower.
I would love to hear sort of what does Eureka unlock for Tower and why are you excited about
that partnership?
Yeah, I think that the advancements in bridging technology to be so much more than just like
token transfers is what's really exciting me. We've seen different stages of growth trajectories or growth strategies in crypto.
Initially, it used to be, you know, ecosystem maximalism.
It used to be like whatever the hottest new thing is and vampire attacks and, you know,
airdropping to the competitor, like all of these different things.
But I think that we've slowly moved into a way where the real distribution is through aggregators,
is through intent-based bridging, is through routing.
And so you can get to a point where,
independent of wallet software,
independent of destination or entry point,
wherever the deepest liquidity is,
whatever the best execution price is, that's where something can be routed through.
I think Eureka and IBC specifically are like just the most trustless bridging tech that exists.
I mean, anytime a bridge tries to design itself to be better, it ends up with IBC every single time.
It comes up with the same spec as IBC.
So I think what's good about is that the growth strategy
and the ability to export liquidity as a DEX
has gotten significantly better.
Because nowadays, you can actually build real,
you know, transaction flow, real bridging flow,
real swap volume through integrations
with aggregators and bridging providers
rather than having a, you having a zero-sum game
of trying to onboard people to your specific frontend.
Do I think that a lot of people
are going to interact with Tower Frontend?
100%, especially when Babylon,
BTC, LST issuance moves onto their chain
and when the ecosystem starts growing as a broad
and there's more apps that you can interact with on the L1.
And once Tower's version two launches,
which we've already teased with significantly more use cases.
But with that being said, I think the first entry point or like the first interaction people are going to have
is actually going to become tremendously weighted
towards the aggregators
because they are so much better at user retention.
You know, if you go and skip build, skip that.
But I think now it's go to Cos network i have to reach with you it changed okay
sorry i was just joking right now it's go.com network there we go one so you go on that it's
it's you have a a sticky user experience experience because really the product you do is best execution,
people and the new generation of two users
cares more about an ecosystem or project loyalty,
or actually vice versa, project loyalty gets built
by best execution over time.
But I think the real growth strategy unlock
I think the real growth strategy unlock is what's exciting me about this partnership.
is what's exciting me about this partnership.
Yeah, same here.
I think one of the things that I've been thinking about a lot is where we have Babylon, right?
And Babylon, in my opinion, and we have tower, you guys, in my opinion, this is an incredible
opportunity to attract a massive amount of TVL and liquidity
into the Cosmos ecosystem through Babylon and through Tower.
And the thing that I'm really focused on is how do we keep it, right?
Because we all know that TVL is mercenary to some degree.
And what I want to do is try to find out ways, you know, over the next five to 10 to 20
years, using this point to sort of attract more Bitcoin into the ecosystem and give it places to
flow into. And so I'd love to hear, because one, that drives your eco volume, that drives the
overall Cosmos ecosystem success. And so it's something that I'm thinking about a lot.
Is Tower V2 designed to do that?
Or how do you think we can keep the Bitcoin around even after the initial TDE is over?
Yeah, it's a very good question.
I think I have a couple of nuanced opinions on this.
I think a lot of this is yet to be seen how it develops, but I can tell you what I think
right now.
What I think right now is that the stickiness of liquidity
is directly correlated to the amount of things you can do with it
and also the, I guess, quality or the yield of things you can do with it.
And I think that in this position,
the essentially Babylon acting as the issuance place for DeFi-ready Bitcoin
as a Cosmos decay chain is tremendously positioned to essentially be like this port city,
Singapore, Panama City, Cairo,
where you can have a ton of liquidity flowing through
and we have active participation.
I think we as Tower, our biggest goals is,
besides just advancing the DEX,
is building the Babylon ecosystem like
build onboarding and helping teams and brought a scheme cosmos and I think that Eureka and and
you know skip build or pardon me goals go cosmos is a really good tools to to keep liquidity and
to keep the user retention if we offer best execution.
And I think the likelihood of Tower offering best execution for Bitcoin, LSTs, which will
be all the Bitcoin people are going to trade on chain anyway, is incredibly high with V2
and generally all the plans we have.
I think if I would tell you, I know you are very ambitious, Magma, we've known each other
for years now, but I think if I would tell you the tv tvl goals i would have
you would have to go and defy lama swap uh and check the biggest dexes and realize that there
isn't that much left over what i'm targeting um and i think for a good reason because bitcoin
really just is so under underrepresented in defy and i think that bablon and tower can do such a
good job of just bringing that all in
into the broader cosmos and retaining that.
And with bridge abstraction
and chain abstraction happening,
we can just connect the best apps
and the best use cases people can offer
to do with their Bitcoin. And I think that the future
on that front looks very bright. Now, do I think
it's going to be 10 different app chains
interacting with each other? Maybe. I think it depends
on what the app chains provide. Do I think it could also to be 10 different app chains interacting with other maybe I think it depends on what the options provide do I think it could also all be just a very fat Babylon L1 with a ton
of products totally see that happening too do I think this can coexist and both happen absolutely
I think that we are cosmos can actually dare to go into an abundance mindset which is something
we haven't heard since terror days so I really don't want to trigger anyone here but cosmos I
think has forgotten about abundance for a degree
because we've been strapped on liquidity for so long.
But I think Babylon is an olive branch
that is extended to our ecosystem that says,
hey, here's a try again.
And this time there is more than enough liquidity.
We just have to figure out
how to offer the best products for it.
And I think that's what's really exciting about this.
Yeah, and from my perspective,
we've had a lot of really great opportunities
like Babylon in the past, right, as an ecosystem.
But what we've failed to do as an ecosystem
is basically expand on them and then leverage them
for even more growth in the future.
And that's honestly why we built and launched IBC Eureka around Babylon's launch. We planned that.
And the reason we did so is because we want Babylon to be extremely successful.
We want it to continue to generate or to attract TVL. We wanted to get as much
Bitcoin liquidity as possible. We want Tower to be successful. It's now natively integrated
into SkipGo. And so no matter where people swap, it could route through Tower if it's
best execution. And that's one thing that I'm very committed to doing is making sure
that at the ICF and the ICL level, we are supporting these applications
heavily so that with the spark can come the fire, right? And that can burn for a lot longer than
what it used to be, right? So I definitely hear you on that.
Cool. So we still have about 30 minutes. I have a couple more questions, and then I'll leave some time for questions
for the community at the end.
Do you want to tell us a little bit more about Tower V2?
Like any features that we could expect
to look forward to any additional?
Yeah, totally.
I think Tower V2 can be seen more
as an actual birth of an ecosystem, because when we internally think about Tower V2, we seen more as an actual birth of an ecosystem.
Because when we internally think about Tower V2,
we don't think about only the features that we're going to offer.
We also think about immediately what they're going to integrate to
and what those integrations and those different dApps could look like.
Because I think that IDEX's viability in IDEX's positioning
increases exponentially with the amount of integrations it has. So to tease a
little bit, I think our website actually shows this, but we are going to go into VE tokenomics,
into bribenomics. So essentially locking tower tokens and directing liquidity with votes
and incentives with votes. And I think that there's a lot of misconceptions about VE,
but what has been historically the case actually,
pretty clearly almost every single time is,
if you have a new ecosystem
with the first real DAB being a DEX, a supported DEX,
and the DEX has support from the broader ecosystem player
and also VE tokenomics, it's a pretty long mouthful.
I know that it's a lot of assumptions,
but it happened three times in the past.
You are positioned to create a flywheel of incentives,
of growth spending, of attention to the downstream ecosystem
that really propel a lot of activity.
So the entire Power V2 is actually designed
around the thought process of how to just
come like trap and jump out and completely ignite the afterburner on the Babylon ecosystem,
the BTC ecosystem and literally just take the crown of what is the center of BTC?
It's Babylon.
And what's in the center of Babylon?
It's a tower.
Yeah.
Very cool.
I'm curious, like obviously DEX DEX is important. And you guys are
the first, correct me if I'm wrong, but the first application to go live on Babylon. Usually for,
for, you know, DeFi to take off, you need a lot, you know, many different primitives,
you need lending, you need, you know, some kind of more advanced trading protocol.
Are there any things that are sort of coming up for babylon that we should
be excited about that are going to sort of use tower and integrate deeply with tower 100 percent
um and i totally agree i think that right now the the baby decks we've released it and called it
baby decks for two reasons it's the decks for baby but also it is a baby version of the decks
um is there to kind of like,
we treat it, I know this is pretty cheeky,
we treat it internally almost like a public testnet in what it achieves.
And the way we're looking at this is,
hey, look, you can outright baby
and you can interface with the Babylon L1 for the first time
and you can have a DAP or you can interface
and you can start to get accustomed to the idea
that there is some activity about.
But we're also keeping it very low key.
We're keeping it small and contained
so we can have control of how this develops right now
and gather some data.
For example, where does the volume come from?
Where does the flow come from?
What is the behavior of users on chain?
We've all gathered this now.
By the way, you guys have been tremendously helpful on the go.cosmos side here as well to see how people
interact with an ecosystem that is new for them and the Cosmos SDK chain. And so in the next steps,
we are already in the background talking with multiple teams for the next version for the grand,
I guess, opening of the ecosystem unconstraintly.
That's going to come around summer of this year.
And these conversations are already happening
because it takes a lot of effort to integrate properly
and to onboard as well.
There's a lot of lobbying, a lot of convincing
that we're doing in the background
to really kind of outline and showcase this Babylon vision,
this BTC5 vision.
I can't name specific names.
Obviously, you know how it goes until it happens.
You don't want to just it.
But I can say if you think of the main primitives
that you care about,
I think about the main primitives
that have use cases in DeFi.
We are talking to multiple players,
all of these categories,
simply because you do need a full ecosystem
to be worthy of user times.
Yeah, absolutely.
I mean, I'm just thinking about ThorChain, right?
I mean, ThorChain obviously had a huge liquidity crisis recently, but before that, it was doing
incredible amounts of volume of Bitcoin against USDT and ETH and all kinds of different assets.
against USDT and ETH and all kinds of different assets.
You know, this could be, I mean, like, you know, the bull case here is that this could
be an equivalent or even bigger, right?
Given how much liquidity is coming in for other reasons, and that's going to be locally
available.
I think if I can jump in, if I can jump in here, I tremendously respected ThorChain for
many years.
I think that their innovative approach to things
has been super important.
I think you always need pioneers who just try stuff.
And, you know, I used ThorChain multiple times
in the past as well,
because they came up in a time,
which was, you know, pre-Bablon, pre-BTC LSTs,
post-WBTC, where there was this gaping need of,
hey, I just want to be able to trustlessly,
on a DEX deck swap into native
BTC on Bitcoin right or swap out of made of BTC on Bitcoin and it did really
well there and then they convoluted different risk parameters and obviously
blew up as we all know but finally by dollar terms they're still the biggest
decks in BTC Phi and and around I think 20 25 million and I think and I mean
this with all due respect i think this is
not going to last for a long time and certainly not if you know the goals that i'm approaching
other than anything to go by and i think that you know the landscape has changed there is a main
issuance place for bitcoin and dfa now it is babylon there is a a main place where you can swap and route volume through which is skip and there is a you know a
previous attempt which showcased that abstraction is the move but was benefiting from a gap that
has been since filled which is store chain and i think that we can probably work with thought
chain in the future you know jack samplin uh is a good friend of mine i've worked with him for many
years and he's obviously you know a stranger ofplin is a good friend of mine. I've worked with him for many years, and he's obviously, you know,
a stranger of his one of the teams that's supporting ThorChain
and its efforts to come back now.
And I think there certainly is ways to work together in the future.
But I think that the advantage of, you know,
routing the good-con traffic through it has been kind of lost.
And I think that in a new generation of crypto,
you really need downstream applications that you can tap into.
That's what we have home field adoption.
Yeah, yeah, absolutely.
Yeah, I mean, sounds like you're on a mission.
We have the right pieces.
Like, there's no reason why basically Cosmos can become the home for Bitcoin and also the
home for sort of all the DeFi that comes out of it.
And I guess to go into that a little bit more, what do people want to do with their Bitcoin?
Right. Let's say, you know, you talk to Lombard, you lock up your Bitcoin, you get LBTC, you know,
you bridge it over Eureka into Babylon. Then what? Right like what what do generally people um what are bitcoiners excited
about doing bitcoin are they excited to lend it to use it as collateral to uh swap it into other
assets yeah let me ask you a question actually to hear your thoughts here but what would you assume
is an attractive apy to give Bitcoin holders?
Uh, talking to some of them, I get, I get very different answers. So, so, so from some folks, I hear 6% or above, and then from other folks,
I hear 2% or above.
So I'm not really sure, honestly.
Okay.
With both of these though, that's like tremendously low.
If you think about it, right?
Like if, if the people that that said
bitcoin is to not used is to be held were true then you would assume that the yield would be
significantly higher right for the some assumed risk people take on but it isn't you're completely
right it's it's actually mid single like around the range that you gave i think it's like five
two percent i would say it's like the golden range of you know from our conversations and generally what we've observed
in DeFi what Bitcoin holders of Babylon BTC LSTs are expecting and I for one am positively shocked
and surprised I think that is incredible and I think that shows to Bitcoin strength if the yield
that has to be created to make this interesting is low
single digits, that is already beating pretty much anything else I can think of.
I mean, even unless like an institution with a massive custodian, even USD nowadays, really
people want 8 to 12%.
I think what people want to do with their Bitcoin, it depends a little bit on what entity
we're talking about. But I think broadly speaking,
if an entity or a person goes ahead and says,
they are happy with 5% to 8% yield.
Because I think those people look at Bitcoin
in a multi-year timeframe.
And that yield compounds.
That really makes a difference.
If you look at that yield for three, four, five years,
that's a material change in how much Bitcoin you're holding.
I think there's also a huge user group that wants to borrow against Bitcoin, you know,
Bitcoin-based stablecoins. I think that's a huge market that's going to come up. And again,
when we're talking about integrations for Tau, we would want to integrate all of the top players
here. We want essentially to offer people a product suite of, hey, I have Bitcoin, I want to
use them in DeFi. What i do what where where do i go
i think that's where we're positioning ourselves from the front end perspective um you know the
yield can be usually achieved with uh lp and delta neutral pool so essentially pooling two lsts
together that seems to be a very interesting use case um because you just facilitate people
to essentially you know whether they want to speculate on points campaigns
or they want to speculate on future yield
or they are pendle use, right?
You facilitate all of the trading volume.
You can win there.
So I think the biggest use cases are LPing,
borrowing against it specifically for stable coins
and also general borrowing for looping,
which then taps into both the other previous use cases.
So basically use cases.
So basically use cases that provide yield in relatively low risk ways without selling the Bitcoin.
I imagine Bitcoiners don't want to sell Bitcoin.
Exactly.
Exactly.
I think that there's always still the steady stream of like, let's say someone is overweight
Bitcoin or like someone in Bitcoin is like, oh, there's a new project i want to sell into i think um i forget the statistics but i think a huge
amount of hype purchasers you know hyper liquid uh sold bitcoin to be able to buy hype um i think
there's always been kind of these these these cases where bitcoin gets sold for a you know
exciting new asset and i think that that's going to increase in amounts
with Babylon and BTC Phi and Tower
because it's just more natural.
It's closer to Bitcoin.
It's more of a beta player on Bitcoin
than a beta player on, say, Ethereum.
But broadly speaking, I would say you are correct.
The golden geese for BTC Phi is use cases for Bitcoin
where people end up with bitcoin or to use the bitcoin
yeah i and i you know bitcoiners are not uh unemotional people as far as i understand they
they like things they like the sound of certain things they're definitely tied to a very core set
of principles but one thing they seem to really, and that is very shocking and exciting to
me, is they really like Cosmos. And talking to Bitcoin people, I've asked sort of like, well,
why are you, you know, Lombard, for example, is thinking of launching a Cosmos chain.
And I asked them, like, you know, why Cosmos? Like, why is it so exciting? And the answers I
gave them, and then I'd love to ask you the same question, or the answers that they gave me are one, Cosmos doesn't have a sort of dominant asset, it has the principles of sovereignty, and it has a bunch of different assets. And so Bitcoin, you know, because Bitcoin doesn't have its own DeFi ecosystem, it can feel more native, versus like on Ethereum, where you're always battling with ETH or Solana where it's Sol or SWE where it's SWE. And so they like that feature about Cosmos. And they really like this concept
of validator and customizable security, right? Where you can customize your validator set
to basically ensure that your Bitcoin is safe even when it does leave Bitcoin. And I think that's another reason why the Bitcoin issuers really liked Eureka is how
secure it was and how it followed the IBC security paradigm.
But to turn it around to you, why, like, does Cosmos have a legitimate shot at being the
Bitcoin ecosystem, like the official almost Bitcoin ecosystem?
And why would that be the case?
What do we have that sort of makes that more likely than not?
Yeah, great question.
Dude, if this is really your first time hosting,
goddamn, I feel inadequate in my first hosting.
So I think the baseline is optionality.
I think Bitcoin users like Cosmos because it baseline is optionality. I think Bitcoin users like Cosmos
because it gives them optionality.
And you want optionality if you're scared of risk, right?
If you're like, if you come from like nothing,
you want to be offered options.
Like a child going to the zoo for the first time
wants to be asked if it wants to stand next to the lions
or if it wants to stand next to the zebras, right?
If you are in a scared state, you want to be given options.
And I think Bitcoin, BTC5 or Bitcoin users generally start off by being skeptical for good reason
about how their assets are being used.
And I think Cosmos speaks to them in that case because it gives them optionality, right?
You have different app chains, you have different security parameters, different security levels.
different app chains you have different security parameters different levels um secondly i think
castle is also interesting because it actually and it's a failure on our end to be competitive
maybe it was because we didn't succeed but at the end of the day we haven't been seen as a
adversarial ecosystem uh it's like you know or die against you you know like head-on collision
um ethereum i mean how long is have people said, this is a new Bitcoin,
or it's going to dethrone the master, or, you know, or Solana or like anyone,
but Cosmos has never done that.
Again, maybe it was to our failure because we were too focused on our infighting.
But at the end of the day, we were more approachable as an ecosystem
from BTC Files perspective, because we kind of were very pragmatic
in providing technology and infrastructure rather than, you know, an ecosystem from BTC Files' perspective, because we kind of were very pragmatic in
providing technology and infrastructure rather than, you know, oh, we're going to dethrone
Bitcoin as an asset.
And I think that Cosmos also being the first, you know, proof of stake ecosystem, there
is a certain, you know, game recognized game, I think, that comes from pioneers to pioneers,
you know, Bitcoin being the entire pioneer of blockchain, and then us being the pioneer of proof of stake.
So you know this, by the way,
because we've had beers before
and I think I applaud your effort
to go a little bit spicy in the end
because I think I have a different opinion
of what I count Cosmos as an ecosystem to be.
But to be in line with your question,
does Cosmos the way you see Cosmos have a shot?
I think we do.
I think that
we have
at least a better shot than we've ever had.
How about this? I'll leave it at that. I think we have a better
shot than we've ever had because the issuance
of DeFi Ready Bitcoin is now
happening through Cosmos-based chains.
I think that the bridging
technology has gotten so advanced on all
fronts through IBC that you can really connect apps and different use cases together.
If we don't become one of the main Bitcoin, you know, BTC5 Bitcoin liquidity destinations, we have truly messed up.
Yeah, I agree.
And when I say Cosmos, I mean basically a very inclusive view of cosmos that
includes the app exactly that's what i figured any nzk based chain exactly yeah and and things
especially that you use ivc i think is the key here given it's the it's the way to interoperate
uh yeah i mean i i i generally really agree with that i think i personally think that there's
I generally really agree with that.
I think, I personally think that there's like,
it is shocking to me that, you know,
everyone is focused on getting ETH liquidity, right?
And getting Uniswap deployed and getting, you know,
all of these Ethereum things,
when Ethereum is basically 10 times smaller than Bitcoin.
You know, like who gives a crap about Ethereum
and sort of like whether whether
we're getting those users or whether we're getting also who gives a crap about it but also
uniswap doesn't give us exactly right and we have babylon uh know, at $1.6 trillion asset, larger than, you know, almost
every other company combined, interested in our ecosystem, moving it over in the order of,
you know, hundreds of millions of dollars at a time. This could be the start of something
really exciting for Cosmos, definitely for Tower, definitely for Babylon. Um, and yeah, I mean, as you said, one of, one of, I think the benefits of, of
being here now as, as the former skip team is we can try to really take advantage
of that and help help this stay right.
And help this really turn into something great.
I, I couldn't agree more.
Bullish couldn't agree more.
I'm bullish. Uh, cool. Bullish. Couldn't agree more. I'm bullish.
Cool.
Based.
Based.
Well, let's see.
Anything else to cover on Tower?
Maybe we should open up to a couple of questions from the community.
Yeah, let's do that. And while we're seeing someone raise their hand, yeah, we're working hard on getting
the integration to go to network, a cost of the network going on.
I think that's a big update soon.
We're working on showing volume metrics and generally all the vanity data points.
Obviously preferred to have had that on one day, one hour zero, but test nets are not
the same as main nets always.
There were some things that had to happen that were more important than that,
but you'll soon see that.
Points, as everybody knows, are already being awarded,
but will be retroactively shown.
So we will have a points dashboard
where we will see that as well.
Partner incentive programs are starting very soon as well.
I think you'll hear from that or about that imminently.
So yeah, those are like all the things
on the current version of the DEX.
Pool deployment front end as well,
so everybody can create a pool.
But then, you know, the real big V2
is gonna have to be a little bit behind Velvet
or hidden behind, and you just have to wait
and see what happens there.
But let's see if someone has any questions.
Questions from the community. ask anything about Bitcoin anything about Val's personal
life his relationships with Trump uh tower their v2 I am either sufficiently known or incredibly interesting.
Either way, I can live with that.
That's all right.
That's all right.
Good stuff.
Well, I am super excited about Tower.
I'm super excited about the partnership.
Obviously, we have a very long way to go, but I think everyone here can
agree that this is the spark. And we've been given this sort of golden opportunity as Cosmos,
as builders, as an ecosystem to basically provide a home for the largest asset in crypto.
And that's something that really excites me because, you know, Bitcoin fits a huge amount of the beliefs that Cosmos has had since the beginning.
Sovereignty, self-custody, you know, trust or verify, don't trust.
And so I see I see these as natural fits.
And obviously, Towers is going to be paving the way there and providing the first real liquid venue for all of that to sort of take part.
So I couldn't be more excited.
And Val, really, thank you for coming on.
Thank you for having me.
I appreciate it.
And I'm also super excited about what the future is going to hold.
Good stuff.
Thank you, sir.
Catch you soon.
Cheers.
See ya.
