Bitcoin DeFi: Hashi aims to unlock native Bitcoin for DeFi lending without wrapped assets or taxable events, positioning BTC as widely used collateral.
Stablecoins: Users can mint USDC, FDUSD, Agora USD, and Sui’s native stablecoin to borrow and generate yield, with design features to lower borrowing costs via on-chain yields.
Tokenized Bonds: Wave Digital will issue rated, Bitcoin-collateralized bonds with instant on-chain issuance, trading, and settlement across Sui’s DeepBook and AMMs.
Institutional DeFi: Built for institutions (custodians, ETFs, banks, sovereign wealth funds), Hashi focuses on minimal trust assumptions, clear due diligence paths, and integrated insurance.
Security and Insurance: Risks from validator collusion and smart contracts are mitigated by formal verification, guardian models, and native BTC-denominated on-chain insurance.
Ecosystem Partners: Partners include BitGo, Bullish, FalconX, Ledger, First Digital, Alphaland/Alphalend, Na'vi, and others to supply liquidity and integrate lending markets.
Oracles and Pricing: CF Benchmarks and other oracles provide robust pricing to improve collateral efficiency and risk management for BTC-backed borrowing.
Market Outlook: The goal is to move beyond the ~1% WBTC penetration by enabling trust-minimized, insured BTC lending to drive broad institutional and retail adoption.
Transcript
Heat. Heat. Hey hey hey. people Hey Heat. Heat. Hey dancing hey. Hey, hey, hey. Heat. Heat. Heat. Heat. Hey everybody. Happy birthday. Heat. Heat. Heat. Heat. 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 you hear on Unchained is investment advice. This show is forformational and entertainment purposes only. and my guest and I may hold assets discussed on the show. For more disclosures, visit unchainedcrypto.com. Introducing Nexo, the premier digital wealth platform. Receive interest on your digital assets. Borrow against them without selling. Trade a variety of cryptocurrencies all-in-one platform. Now available in the US. Get started today at nexo.com/unchained. Quick note before we get into today's episode. Bits and Bits now has its dedicated feed. We're spinning up from the Unchained feed and moving to a new podcast and YouTube channel. So, if you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure to subscribe to Bits andBips directly. We won't publish there until March, but subscribe today so you can be ready for launch. Be sure to subscribe to the new feeds at unchainedcrypto.com/bitsandbips. Today's guest is Adony Abiodin, co-founder and CPO of Miston Labs. Welcome Adini. >> Thank you for having me on the show. It's a pleasure. >> Misten Labs, which is behind the Suie blockchain, has big news today about Hashi, a new decentralized and trustless smart contractbased 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, 2020 2026 is going to be a year where Bitcoin truly becomes um collateral instrument, especially in DeFi. So in 2024, what we really had was a year where we had a bunch of Bitcoin ETFs launched. None of that could actually earn any yield. Um all of it was pretty much locked into custodians like Bitco. Um 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 2425. 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 DeFi. So, Bitcoin proved it was a strong store of value. Um, it had not been great for payments, but Bitcoin as collateral instrument creates liquidity without selling. So, DeFi 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 rappers or any form of um you know second or third order um trust assumptions um 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 um 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 going to be going live which includes custodians, hardware wallet providers, um 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 if you look at WBTC as you just mentioned RAP BTC the multiple variants of it right WBTC was a brilliant step forward but only gained 1% of the Bitcoin of in in existence right that's in part of due to the taxable nature of wrapping WBTC so the process of doing a wrapping actually creates a taxable event which is absolutely going to restrict the amount of Bitcoin that can go to proliferation because if 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 onchain in an existing network never leaving the Bitcoin network itself. You don't create any deriv derivative assets of any form and then that allows you effectively to originate loans directly on a sweet blockchain instantaneously. So you can with that mint WBT, you can mint with that um um USDC, USDT, you're able to mint Swed dollar as well, but ultimately you can now have direct um borrowing using the Bitcoin network to gain access to um stable coins. In the same 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 your balance sheet by leveraging Bitcoin without having to also hit another um tax event. So who going to who's going to want to use this? Imagine ETFs who previously had Bitcoin decide idle 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 you know 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 it's a it's a new approach namely we saw in a previous where centralized lending mechanisms ultimately um saw issues Celsius was only a couple of years ago now you can have a trust minimized way of doing it fully decentralized and not having a tax event and making Bitcoin available. We think we can go way beyond the 1% that um WBTC is offered because one it's it's trust minimized with decentralization um fully ver functionally verified and then um 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. Um for people who might remember I think it was uh was it the wormhole one where they had Yeah. 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 network over 125 validators are all part of the signary on the multisync account. So the same protocol that governs billions of dollars on a sweet network, ensuring the safety of the SW network that can process hundreds of thousands of transactions per second is effectually um using the same cryptographic primitives that secures a bit the network to secure that MPC network on a bitcoin network directly. So you have three blockchain validators directly engaging with a 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 backs stop in a scenario where there's even collusion on a bitcoin network direct um sorry collusion between validators on su network there's an additional layer with a with a um guardianship that happens on top of that as well. So you've got a fallback in the guardian model and then also the the methodology that's leveraging the network today for security. It's effectively the strongest mechanism you can have for security. You have partners like Falcon X, Bullish, Erbank who are going to effectively using this same decentralized mechanism to supply Bitcoin or stable coin 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 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 unlock unlock the $1.4 four trillion dollars in Bitcoin um you know by creating these different L2s >> but you know because of the issues around centralization um plus like frankly just other uh technical issues around um liquidity and you know 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 break breakthrough or or like a a novel setup, but how are you going to kind of, you know, get past the hurdle of people like trusting it and and getting um actual activity in in on Hashi? >> It's a very good question. In fact, um the rationale behind Hashi was actually product driven. So, we had a ton of um partners and clients who were looking to leverage um sws billions if hundred of billions of dollars worth of bitcoin and make it available in DeFi. But when it came to 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, um, sovereign wealth funds, nation states who have, uh, a large Bitcoin and treasury who are effectively trying to make that treasury available, um, um, and and borrowing from it using decentralized finance. Of course, they they were unable to get past due diligence stage. We we went through a lot of reviews with them to try to get them comfortable 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 um trust um requirements um 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 available and then the tax element was actually very central to this as well. They wanted um ability to mint stable coins easily using Bitcoin backed assets, ability to generate yield of 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 is birthed from a problem with southern wealth funds that were engaged with financial institutions were engaged with and a lot of um hedge funds that were also engaged with. So it had to be built because that gap was there. That's why we've not seen this mass proliferation of BTC and DeFi. So you can look at the list of um partners that we announced today that are going to be supporting Hashi. talking about um Alphalen, BitGo, Bullish um we have um wave digital Na'vi ledger um first digital it goes on Herbore Bank um even Bitco like these are large institutions who control billions of dollars hundred billions of dollars worth of BTC so given the size of these partners we came together and try 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 take a button and instantly start minting 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 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 of bitcoin and insurance pays out in bitcoin. So you have this full element where uh you know an amazingly um liquid but also efficient market backed by a form of verification also insurance is something the institution can now trust rather than you know 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 RAIA that's custodying at Bitco they can access this. So even though they're a centralized entity, um, they Okay. Right. So >> correct. That's correct. >> So like 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 that's exactly the way it works. Right. So if you imagine today if you're with uh you know 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 take. And we've seen it before with Celsius. Celsius went bankrupt, people lost a ton of capital, but DeFi was inherently strong, right? So, this is giving you that same platform where traditional um centralized issu entities like Bitcoin loans for their clients. So, you can be using a fully um self-custodial ledger ledger device and generate yield from your Bitcoin. you can be, you know, um, you know, any kind of, um, financial institution that has, um, 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. Step into a new era of wealth. Discover Nexo, the premier digital wealth platform. Manage your crypto portfolio with confidence and control. Receive interest on your digital assets. Borrow against them without selling. Trade a wide range of cryptocurrencies all in one platform. Now available in the US with 30 days of exclusive privileges for new clients. Experience Wealth Club Premiere. Access enhanced interest rates, reduced borrowing costs and crypto cashback on swaps. Get started today at nexode.com/chained. Quick note before we continue with today's episode. Bits and Bips now has its own dedicated home. We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed, macro, AI, and how it all collides with crypto. If you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure you're following bits and bips directly. We won't start publishing until March, but getting set up now means you'll be ready on day one. You can find the new Bits andB channels at unchaincrypto.com/bitsandbips. You can also find us by searching Bits and Bips on YouTube, Apple Podcasts, Spotify, or wherever you listen. Back to my conversation with Adony. So, you started to get into this a little bit before um 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 um one prime example is Wave Digital. Um, wave digital is going to issue the first secured actual rated bond that's collateral fully collateralized by bitcoin. It's going to be powered by hashi. So these bonds will provide um effectively a new mechanism for issuers to raise lowcost capital backed by BTC directly on chain is going to enable institutional 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 to leverage Bitcoin in a stable coin holdings um entirely. And of course, there's integrations directly with D5 protocols on SUI like Nav'i, Scalab, Swend, Alphalend. It's fully integrated into the lending protocols for SUI. So, you'd be able to um access Bitcoin based loans directly using those protocols. It's important to note that Hashi is an actual primitive on SUI. So it's meant to be it's composable. It's something that builders can build on. So they can build assets um they can build protocols based on the Hashi protocol effectively leveraging that for their customers without having to um rely on you know second or third order effects of trust guarantees that are required for other um systems as well. So this this element of I can issue a bitcoin based bond by way digital and basically have this something as a rated bond is is going to be the industry first. So, we're very very proud about that. >> And um like so earlier we talked about you know 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 spill out what the actual risks are to the Bitcoin that people put on Hashy. >> Yeah. So the the risk for um for Bitcoin against for those leveraging hash is going to be of course Bitcoin network right if Bitcoin network has issues it's you know it loses 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 suite so the way in which Hashi communicates with Bitcoin network is via effectively creating a multi-IG account on the Bitcoin network So the bitcoin three network is effectively engaging and validating the bitcoin blockchain at the same time. So if you were to have um validators collude on a Bitcoin network, sorry, on a on a SW 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 multisigg between the three 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 and Sweet blockchain. That is another vector of 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 the 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 in computer science for smart contracts. You get that with a sweet blockchain and smart contracts that engage between the sweet 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 bit for this to happen. Ultimately increasing the likelihood of this happening is very very low. Um there's also institutional um insurance um provided right sober um sorry insure is going to introduce a first native BTC denominated insurance um designated effective to pro to protect BTC 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 um your you claim your insurance directly in Bitcoin as well. So I think it's a 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. Um can can you explain a little bit more about how it works? Because you know um 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 um 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 an a large insurance company that um the security guarantees are given that that are effectively built by our teams um 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 have by being able to show that formal verification is very strong. That's something they absolutely are going to want and that the 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 multiig not individuals and then a guardian model that sits on top of that that allows them to wrap an insurance product and price that onchain directly. So at the point of locking Bitcoin on a bitcoin network um in a bitcoin address you can make a payment in bitcoin at the same time for generating um yield or for borrowing. So your your your pre your 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 suite 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 stablecoin. They can come in the form of just paying basis points on top of whatever you're um drawing 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 the point of deposing funds, you can make insurance payments automatically entirely. >> Okay. And then one thing that I was wondering is uh just because of how the Bitcoin price fluctuates in dollars, they they must be buying Bitcoin as like new Bitcoin is being deployed in Hashi. Is that correct? >> So the Bitcoin 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 long bitcoin themselves. So in that in that sense you're going to want to be denominated in bitcoin. >> Okay. Okay. >> Yeah. >> And um actually I meant to ask you earlier you might have mentioned this whi which type of stable coins are uh you know will users be able to access? >> So we has a number of s coins today. We have um 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 um Swiss's native um stable coin which is Swed. Uh Swed is different in the sense of the yield from Swed, the Treasury yield um from Swed which is one to one backed by um US treasuries. It's actually through a partnership we have with Stripe and um and bridged. um this stable coin pays the yield back to the street 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 um feasible way of generating bitcoin denominated yield but also lowering your cost of borrowing as well. >> Okay. And then um you briefly mentioned the bonds uh but can you explain a little bit more about how that works? So we we have a partner um in this in a 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 top top um leading rating agencies will actually issue um a 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 Deepbook which is our decentralized um order book. You're able to trade that on AMMs across this ecosystem. You'll be able to also leverage these in peru uh other venues as well on suite. But for the first time, you're going to have professional firms who can trust um the bonds um issued on chain because they're they have traditional ratings applied to them that you get from um high you know 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 now seen a world where CFI is highly leveraging DeFi and doing that with you know 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. Um, one other piece of this is, um, I saw you're using CF benchmarks, a crypto index provider. Um, basically is an oracle. So, can you explain, you know, how they will be used? >> Yeah. So, the important thing is um ensuring that you can get um 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 Oracle providers and CF benchmarks is one of the leading. Um Cubis 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 um possible loan or the max amount of loans from a bitcoin you have issued and also for any kind of um defy risk management you have a solid source of pricing data to make uh 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 opt um I also know Catraa is another one um but you know how would you differentiate Hashi from its competitors? >> So um I I would say traditional means of launching um 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 the I would say technology is one thing but being able 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 the what are your what you're trusting is minimized to very small number of factors so that's the first thing secondly is 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 um showing that you know hashi does not constitute a tax event especially in many jurisdictions in in the US example for example. So that's in the design also the security right um we're talking about the fastest network in crypto namely bit um that we've been building from our days of getting meta to launch Libra um 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 with formally verified smart contracts with a team that effectively has been entrusted to launch search at Google you know um you know some of the world's most advanced um um um protocols that exist in 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. Differentiator is going to be the technology assumptions or the 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 um Hashi and I think it sets it 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 um you know, whoever does manage to unlock that $1.4 trillion in Bitcoin on DeFi. That's that's going to be huge. So, um 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.
Is Bitcoin Really a Safe Haven Right Now?
Summary
Transcript
Heat. Heat. Hey hey hey. people Hey Heat. Heat. Hey dancing hey. Hey, hey, hey. Heat. Heat. Heat. Heat. Hey everybody. Happy birthday. Heat. Heat. Heat. Heat. 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 you hear on Unchained is investment advice. This show is forformational and entertainment purposes only. and my guest and I may hold assets discussed on the show. For more disclosures, visit unchainedcrypto.com. Introducing Nexo, the premier digital wealth platform. Receive interest on your digital assets. Borrow against them without selling. Trade a variety of cryptocurrencies all-in-one platform. Now available in the US. Get started today at nexo.com/unchained. Quick note before we get into today's episode. Bits and Bits now has its dedicated feed. We're spinning up from the Unchained feed and moving to a new podcast and YouTube channel. So, if you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure to subscribe to Bits andBips directly. We won't publish there until March, but subscribe today so you can be ready for launch. Be sure to subscribe to the new feeds at unchainedcrypto.com/bitsandbips. Today's guest is Adony Abiodin, co-founder and CPO of Miston Labs. Welcome Adini. >> Thank you for having me on the show. It's a pleasure. >> Misten Labs, which is behind the Suie blockchain, has big news today about Hashi, a new decentralized and trustless smart contractbased 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, 2020 2026 is going to be a year where Bitcoin truly becomes um collateral instrument, especially in DeFi. So in 2024, what we really had was a year where we had a bunch of Bitcoin ETFs launched. None of that could actually earn any yield. Um all of it was pretty much locked into custodians like Bitco. Um 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 2425. 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 DeFi. So, Bitcoin proved it was a strong store of value. Um, it had not been great for payments, but Bitcoin as collateral instrument creates liquidity without selling. So, DeFi 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 rappers or any form of um you know second or third order um trust assumptions um 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 um 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 going to be going live which includes custodians, hardware wallet providers, um 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 if you look at WBTC as you just mentioned RAP BTC the multiple variants of it right WBTC was a brilliant step forward but only gained 1% of the Bitcoin of in in existence right that's in part of due to the taxable nature of wrapping WBTC so the process of doing a wrapping actually creates a taxable event which is absolutely going to restrict the amount of Bitcoin that can go to proliferation because if 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 onchain in an existing network never leaving the Bitcoin network itself. You don't create any deriv derivative assets of any form and then that allows you effectively to originate loans directly on a sweet blockchain instantaneously. So you can with that mint WBT, you can mint with that um um USDC, USDT, you're able to mint Swed dollar as well, but ultimately you can now have direct um borrowing using the Bitcoin network to gain access to um stable coins. In the same 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 your balance sheet by leveraging Bitcoin without having to also hit another um tax event. So who going to who's going to want to use this? Imagine ETFs who previously had Bitcoin decide idle 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 you know 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 it's a it's a new approach namely we saw in a previous where centralized lending mechanisms ultimately um saw issues Celsius was only a couple of years ago now you can have a trust minimized way of doing it fully decentralized and not having a tax event and making Bitcoin available. We think we can go way beyond the 1% that um WBTC is offered because one it's it's trust minimized with decentralization um fully ver functionally verified and then um 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. Um for people who might remember I think it was uh was it the wormhole one where they had Yeah. 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 network over 125 validators are all part of the signary on the multisync account. So the same protocol that governs billions of dollars on a sweet network, ensuring the safety of the SW network that can process hundreds of thousands of transactions per second is effectually um using the same cryptographic primitives that secures a bit the network to secure that MPC network on a bitcoin network directly. So you have three blockchain validators directly engaging with a 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 backs stop in a scenario where there's even collusion on a bitcoin network direct um sorry collusion between validators on su network there's an additional layer with a with a um guardianship that happens on top of that as well. So you've got a fallback in the guardian model and then also the the methodology that's leveraging the network today for security. It's effectively the strongest mechanism you can have for security. You have partners like Falcon X, Bullish, Erbank who are going to effectively using this same decentralized mechanism to supply Bitcoin or stable coin 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 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 unlock unlock the $1.4 four trillion dollars in Bitcoin um you know by creating these different L2s >> but you know because of the issues around centralization um plus like frankly just other uh technical issues around um liquidity and you know 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 break breakthrough or or like a a novel setup, but how are you going to kind of, you know, get past the hurdle of people like trusting it and and getting um actual activity in in on Hashi? >> It's a very good question. In fact, um the rationale behind Hashi was actually product driven. So, we had a ton of um partners and clients who were looking to leverage um sws billions if hundred of billions of dollars worth of bitcoin and make it available in DeFi. But when it came to 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, um, sovereign wealth funds, nation states who have, uh, a large Bitcoin and treasury who are effectively trying to make that treasury available, um, um, and and borrowing from it using decentralized finance. Of course, they they were unable to get past due diligence stage. We we went through a lot of reviews with them to try to get them comfortable 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 um trust um requirements um 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 available and then the tax element was actually very central to this as well. They wanted um ability to mint stable coins easily using Bitcoin backed assets, ability to generate yield of 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 is birthed from a problem with southern wealth funds that were engaged with financial institutions were engaged with and a lot of um hedge funds that were also engaged with. So it had to be built because that gap was there. That's why we've not seen this mass proliferation of BTC and DeFi. So you can look at the list of um partners that we announced today that are going to be supporting Hashi. talking about um Alphalen, BitGo, Bullish um we have um wave digital Na'vi ledger um first digital it goes on Herbore Bank um even Bitco like these are large institutions who control billions of dollars hundred billions of dollars worth of BTC so given the size of these partners we came together and try 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 take a button and instantly start minting 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 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 of bitcoin and insurance pays out in bitcoin. So you have this full element where uh you know an amazingly um liquid but also efficient market backed by a form of verification also insurance is something the institution can now trust rather than you know 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 RAIA that's custodying at Bitco they can access this. So even though they're a centralized entity, um, they Okay. Right. So >> correct. That's correct. >> So like 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 that's exactly the way it works. Right. So if you imagine today if you're with uh you know 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 take. And we've seen it before with Celsius. Celsius went bankrupt, people lost a ton of capital, but DeFi was inherently strong, right? So, this is giving you that same platform where traditional um centralized issu entities like Bitcoin loans for their clients. So, you can be using a fully um self-custodial ledger ledger device and generate yield from your Bitcoin. you can be, you know, um, you know, any kind of, um, financial institution that has, um, 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. Step into a new era of wealth. Discover Nexo, the premier digital wealth platform. Manage your crypto portfolio with confidence and control. Receive interest on your digital assets. Borrow against them without selling. Trade a wide range of cryptocurrencies all in one platform. Now available in the US with 30 days of exclusive privileges for new clients. Experience Wealth Club Premiere. Access enhanced interest rates, reduced borrowing costs and crypto cashback on swaps. Get started today at nexode.com/chained. Quick note before we continue with today's episode. Bits and Bips now has its own dedicated home. We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed, macro, AI, and how it all collides with crypto. If you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure you're following bits and bips directly. We won't start publishing until March, but getting set up now means you'll be ready on day one. You can find the new Bits andB channels at unchaincrypto.com/bitsandbips. You can also find us by searching Bits and Bips on YouTube, Apple Podcasts, Spotify, or wherever you listen. Back to my conversation with Adony. So, you started to get into this a little bit before um 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 um one prime example is Wave Digital. Um, wave digital is going to issue the first secured actual rated bond that's collateral fully collateralized by bitcoin. It's going to be powered by hashi. So these bonds will provide um effectively a new mechanism for issuers to raise lowcost capital backed by BTC directly on chain is going to enable institutional 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 to leverage Bitcoin in a stable coin holdings um entirely. And of course, there's integrations directly with D5 protocols on SUI like Nav'i, Scalab, Swend, Alphalend. It's fully integrated into the lending protocols for SUI. So, you'd be able to um access Bitcoin based loans directly using those protocols. It's important to note that Hashi is an actual primitive on SUI. So it's meant to be it's composable. It's something that builders can build on. So they can build assets um they can build protocols based on the Hashi protocol effectively leveraging that for their customers without having to um rely on you know second or third order effects of trust guarantees that are required for other um systems as well. So this this element of I can issue a bitcoin based bond by way digital and basically have this something as a rated bond is is going to be the industry first. So, we're very very proud about that. >> And um like so earlier we talked about you know 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 spill out what the actual risks are to the Bitcoin that people put on Hashy. >> Yeah. So the the risk for um for Bitcoin against for those leveraging hash is going to be of course Bitcoin network right if Bitcoin network has issues it's you know it loses 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 suite so the way in which Hashi communicates with Bitcoin network is via effectively creating a multi-IG account on the Bitcoin network So the bitcoin three network is effectively engaging and validating the bitcoin blockchain at the same time. So if you were to have um validators collude on a Bitcoin network, sorry, on a on a SW 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 multisigg between the three 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 and Sweet blockchain. That is another vector of 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 the 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 in computer science for smart contracts. You get that with a sweet blockchain and smart contracts that engage between the sweet 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 bit for this to happen. Ultimately increasing the likelihood of this happening is very very low. Um there's also institutional um insurance um provided right sober um sorry insure is going to introduce a first native BTC denominated insurance um designated effective to pro to protect BTC 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 um your you claim your insurance directly in Bitcoin as well. So I think it's a 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. Um can can you explain a little bit more about how it works? Because you know um 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 um 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 an a large insurance company that um the security guarantees are given that that are effectively built by our teams um 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 have by being able to show that formal verification is very strong. That's something they absolutely are going to want and that the 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 multiig not individuals and then a guardian model that sits on top of that that allows them to wrap an insurance product and price that onchain directly. So at the point of locking Bitcoin on a bitcoin network um in a bitcoin address you can make a payment in bitcoin at the same time for generating um yield or for borrowing. So your your your pre your 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 suite 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 stablecoin. They can come in the form of just paying basis points on top of whatever you're um drawing 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 the point of deposing funds, you can make insurance payments automatically entirely. >> Okay. And then one thing that I was wondering is uh just because of how the Bitcoin price fluctuates in dollars, they they must be buying Bitcoin as like new Bitcoin is being deployed in Hashi. Is that correct? >> So the Bitcoin 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 long bitcoin themselves. So in that in that sense you're going to want to be denominated in bitcoin. >> Okay. Okay. >> Yeah. >> And um actually I meant to ask you earlier you might have mentioned this whi which type of stable coins are uh you know will users be able to access? >> So we has a number of s coins today. We have um 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 um Swiss's native um stable coin which is Swed. Uh Swed is different in the sense of the yield from Swed, the Treasury yield um from Swed which is one to one backed by um US treasuries. It's actually through a partnership we have with Stripe and um and bridged. um this stable coin pays the yield back to the street 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 um feasible way of generating bitcoin denominated yield but also lowering your cost of borrowing as well. >> Okay. And then um you briefly mentioned the bonds uh but can you explain a little bit more about how that works? So we we have a partner um in this in a 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 top top um leading rating agencies will actually issue um a 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 Deepbook which is our decentralized um order book. You're able to trade that on AMMs across this ecosystem. You'll be able to also leverage these in peru uh other venues as well on suite. But for the first time, you're going to have professional firms who can trust um the bonds um issued on chain because they're they have traditional ratings applied to them that you get from um high you know 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 now seen a world where CFI is highly leveraging DeFi and doing that with you know 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. Um, one other piece of this is, um, I saw you're using CF benchmarks, a crypto index provider. Um, basically is an oracle. So, can you explain, you know, how they will be used? >> Yeah. So, the important thing is um ensuring that you can get um 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 Oracle providers and CF benchmarks is one of the leading. Um Cubis 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 um possible loan or the max amount of loans from a bitcoin you have issued and also for any kind of um defy risk management you have a solid source of pricing data to make uh 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 opt um I also know Catraa is another one um but you know how would you differentiate Hashi from its competitors? >> So um I I would say traditional means of launching um 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 the I would say technology is one thing but being able 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 the what are your what you're trusting is minimized to very small number of factors so that's the first thing secondly is 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 um showing that you know hashi does not constitute a tax event especially in many jurisdictions in in the US example for example. So that's in the design also the security right um we're talking about the fastest network in crypto namely bit um that we've been building from our days of getting meta to launch Libra um 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 with formally verified smart contracts with a team that effectively has been entrusted to launch search at Google you know um you know some of the world's most advanced um um um protocols that exist in 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. Differentiator is going to be the technology assumptions or the 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 um Hashi and I think it sets it 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 um you know, whoever does manage to unlock that $1.4 trillion in Bitcoin on DeFi. That's that's going to be huge. So, um 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.