Bitcoin Native Capital Markets | Bitcoin 2026

The title of this panel is Bitcoin native capital markets. We're with here with a couple of people building on Bitcoin scaling infrastructure L2s etc. I will allow them to introduce themselves. I also want to frame this in a way of like not just thinking at the individual application use case but also like where is the large you know demand of capital and why would potentially even institutions be interested in these types of uh technologies. But I'll let everyone introduce themselves first. We'll just start with David go to Ethan finish with Ecram. if you guys can introduce yourselves, what you're working on, and kind of your thesis for why it's important in the grand scheme of things and and why Bitcoiners should care about it. >> Uh yeah, my name is David Croy. I'm with Open Labs. Our team uh kind of pioneered and authored a lot of the uh original pieces on how to build ZK roll-ups on top of Bitcoin. Um I mean, I think uh goes without saying, people want financial activity with their Bitcoin. We're finally at the point where it's no longer like kind of cope and deception where uh like these things can actually out compete trady solutions. Uh they're more efficient, the margins are better and I think it's time that Bitcoin can have those in a non-custodial trust minimized manner. >> Yeah, I'm Ethan. I'm I'm building a company called Flashet. We build Bitcoin native markets. Uh our core focus today is just BTC to stablecoin swaps and then we have a product called orchestra which orchestrates that crosschain for deposits, withdrawals, crosschain swaps or spark native swaps which is a a network we helped build. >> Uh hi everyone, I'm Akram. I'm one of the co-founders and chief scientist of Chainway Labs and we are building Citria which is the first ZK rollup on Bitcoin. Uh it's important for Bitcoin because now uh you can have your BTC in a programmable environment with a lot less trust assumptions compared to other solutions. >> Okay, cool. So I don't really actually want to talk a lot about the technical infrastructure like kind of the semantics behind everything. Really quick audience, does everyone know what a rollup is? >> And do we know what a state chain is? >> Kind of. Okay. So we have enough context I think I think the things I want to focus on first and we can just go left to right or anybody can jump in is what are like the main applications and the main demand that you guys are seeing from users institutions when you're talking to different people in the ecosystem like what are the solutions they're actually looking for because I think there's this like very like vague term of like we want to earn yield on our bitcoin or we maybe want some type of you know swap application etc like what are you guys seeing from an institutional perspect perspective where the demand is and what type of applications that they want. >> For us personally, we're going after two products. We're going after Bitcoin back borrowing and fixed income backed by Bitcoin. And concretely, uh you know what we can say is you can do a 12-month duration Bitcoin back loan at 6% fixed interest rate. That product, especially if you can put it into a uh institutional um potentially even compliant style, that is across the board the single best product that exists uh in that segment. And that is essentially what's coming. Uh on the fixed income side, everybody's kind of very hyped up on Stretch, uh which you give dollars to Michael Sailor, he buys Bitcoin on his balance sheet, and then he pays you, you know, a fixed income yield. You can rebuild those products natively, uh fully backed by verifiable Bitcoin backed loans. Um and I would argue that these are a more compelling product that are more profitable and lower risk. Those two products alone, I think for us personally, are really uh where we're seeing the most demand for and where we expect to compete. >> Yeah. I mean our our our main focus is spot BTC. So uh we we actually spent a long time finding uh the right the right path for demand here and we now have a lot of great partners doing a lot of different things. Uh so we support everyone from you know wallets doing BTC to stablecoin swaps. We support on-ramps for BTC through our stack. Uh really wherever there is a BTC to stablecoin or stablecoin to BTC hop that's where we're the most valuable for customers. um you know crosschain swaps, BTC to stable coins do upwards of half a billion dollars of of volume a month. Uh and that's kind of the segment of the market we fit into today. >> Uh I think like there are interest from institutions on yeah bitcoin swaps and also lending borrowing and also privacy as well. So as Citria we we want to have everything on one place where you can swap your BTC institutions come can can come come and use the swap markets and also just today we announced like Moro markets you can now borrow uh against your BTC borrow stable coin with your BTC uh yeah and then there's this new coming app called Crest which is a privacy app where institutions can now have privacy with their BTC as You guys should check out Crest. It's pretty cool. I think the thing I want to ask though, you mentioned Morpho and I might say something wrong and we'll handwave this for a second. So, isn't like for example, one of the largest Bitcoin focused apps is using Coinbase version of WP Bitcoin and using that in Morpho on like Bass for example. If you're not familiar with Bass, it's an Ethereum L2. um not really integrated with Bitcoin in any way, but that specifically that's Coinbase's Ethereum L2, but the largest token by volume and USD supply, whatever, is the actual Coinbase Bitcoin, and everyone's using Morpho with it. So, we had this huge wave. We had this huge boom of interest in Bitcoin L2s and new types of scaling protocols, different execution environments. And sometimes people think you guys are competing with each other. It looks more like you're competing with Coinbase. I'm not I'm not in this trio. These are >> you're not like in this like in this scenario though like why would someone you know an institution or even a regular user opt for using um something like Alpin or Citria in this situation versus just using Coinbase? Like what's the key differentiator and why aren't we seeing posts that huge interest in Bitcoin L2s? Why aren't we seeing the market move in the way that we thought it was going to two years ago? >> So I'll give my take here. We're we're very close with the the the Morpho team and when we talk with them they say look this product that we built with Coinbase this Bitcoin back borrowing product where you take your Bitcoin you put it into Coinbase they CBTC it borrows in Morpho DeFi on the back end that has been very successful even by Coinbase's standards but when they go and talk to other major institutions the Anchorages the Robin Hoods the cash apps etc everybody in the world wants that application for their customers but they say ah I don't necessarily want to use Coinbase not even because they don't trust Coinbase Coinbase is extremely trustworthy, right? But it's competitive. It's not neutral. If you are a custodian like Anchorage and then you say, "Hey, uh, customers like we're going to enable you to borrow against your Bitcoin, uh, but we're going to send your Bitcoin to our biggest competitor, Coinbase," like that is antithetical. That's that's, you know, like they don't want to compete like that. They don't want to send their their their customers assets. having a more uh trust minimized is beneficial, but really it's the neutrality of the asset which is is is is where these people want want to go and where I think Coinbase and these other rappers are are really uh strictly disadvantaged. I want to say also like a lot of bitcoiners don't want to like move their BTC to or bay or like coinbased BTC with this rollups all the execution is also written to bitcoin and uh it's secured by bitcoin and I think uh it adds val it adds value to it and also I agree mostly with what David said as well too. I have a I'll I'll take the contrarian the contrarian take here which is I don't think it really matters. I think at the end of the day these are markets and and retail at least not institutions maybe uh will go to where they get the best rates and the best experience. And I think for a retail user they don't really care whether it's CBBTC or WBTC or XYZ BTC. Uh what they want to do is get interest on their Bitcoin or maybe they want to take a loan out on their Bitcoin. Um, and today more phone base and you know a bunch of other D5 protocols have created great two-sided marketplaces. Um, and the incentive for retail users is to go out to where the best rates are and to where the market is most efficient. Um, sadly that's not the case with Bitcoin markets yet, at least for lending. I think maybe we'll get there in a couple years with the right incentives, but it's going to it's an uphill battle. I mean, we're we're fighting against a multi-billion dollar market with PMF and thousands of users that have already deposited their Bitcoin. So, I I think it's going to be tough. Um, I think it makes sense and and and it's valuable for the ecosystem, but I I don't think it makes sense for retail to to do so yet. >> Okay. So, what >> I didn't like that answer. >> Sorry. No, no, I'm like, so like coming from a bit of a tradey background, I used to own a private money fund. I sold it. So, I'm quite familiar with with with these markets. Like over time, like there is a correlation between the risk profile of a financial application and the economics of it. And I do think that there is a world where there is a a structural I guess floor on how risk-free something like CBBTC can be perceived and there is a further floor that can be reduced by having these like onchain zk rollups neutral trust minimized applications. Maybe you add things like insurance on top of that. there is a credible path to get there and I think that that additional floor that we can drop it will manifest itself in superior economic terms that that these applications built Bitcoin natively can acrewue which Coinbase cannot. So in some ways I actually probably agree with Ethan when he said that maybe in a few years I think that is probably a proper time frame right now. Yes, I I agree that we are at a disadvantage but structurally like I do believe that we will out compete these big monsters. >> Okay. >> Go ahead. Yeah. No, go ahead. I I I I I agree partially. I think the the risk profile is maybe overstated, especially for institutions. If I'm Black Rockck or, you know, a big investment fund, I'm more than happy to trust that Coinbase is going to honor my BTC deposit into CBBTC. Um, and if that means I get access to a huge pool of liquidity that's already willing to give me yield on it, I'm happy to go for it. Like, if I owned a fund, I would happily put money into into CBTC. >> May I? >> Okay. So uh what will end up happening with these Morpho V2? Morpho has these things called vaults. You have vault A, B, C, D. You can deposit the dollars into there and then it can allocate to different duration loans. Variable interest rate, one month, three months D, etc. The receipt that essentially the lender receives kind of represents it's essentially a collateralized loan obligation. It is a CDO, a Bitcoin collateralized loan obligation that is an asset that is maybe comparable to something like Stretch, maybe earning like 10%. People will take that and they will loop it because they are degenerates and they will post that as collateral. >> Sweet sweet leverage >> and they will they will borrow dollars against it at a lower maybe 4% and they will loop that. That looping borrowing at a variable interest rate lower 4% and looping it back into fixed interest rate maturities is what starts to compress the interest rates down. Now the limits of how much you can run that loop and how far you can compress down the interest rates is a derivative of essentially how risky the underlying Bitcoin back loans are. And so these small incremental gains in kind of risk between the the the collateral of something like a ZK rollup and Coinbase will start to magnify. They will quite literally the leverage will start to expose these incremental differences and you will start to see um like in my opinion uh lower uh interest rates on ZK roll up and trust minimize Bitcoin back loans via Morpho than what they will do on Coinbase. And I think most people don't yet understand this basically securization loop where you're taking the collateral and looping it because it has previously never existed in DeFi until Morpho will be introducing it probably in the next couple of months. >> Maybe the Morpho team doesn't like that I'm saying that but alpha leak. >> I'm not I'm not the I'll push back one last time then we can move on. I think what what's interesting is that risk is kind of a derivative of how how well someone understands something. Um, I don't think we're at the the the point where people understand ZK well enough to trust it more than they trust, you know, a public institution like Coinbase. I, you know, I'm I love ZK. I'm a big supporter, but I I don't think we're at that point yet, and I don't think we'll be there for, again, a couple of years. I'm bullish on this long term. Um, but I think today it's just we're we're we're far from the puck still. >> Fair. >> So, do you have anything? Yeah, do you want to follow? >> So, uh when you say public institutions, yeah, people trust Coinbase, but I think the value of these trust minimized systems is like you can have these one of NFN signers like big institutions where if you trust at least one of them, then you would know the BTC is secure. So instead of trusting one entity for CBPTC, you could trust like at least one of them is honest in the uh NFN signers. Again, I think that the majority of like the the major pools of capital probably don't care is my point. Like I I think the vast majority of retail, probably like 99.999 plus% of retail doesn't care. And I think a lot of institutional capital probably doesn't care either and is happy to trust Coinbase point blank. I think again this is the right direction, but I think from a I think it's more of like an ethical vision uh argument than it is a a practical one. >> I see. I think yeah I mostly agree that's the situation right now but in the long long term I truly believe that the decentraliz decentralization works in the long run. >> Agreed. >> Okay. So Ethan I actually want to ask you a specific question because I feel like we've talked a little bit more about how the roll-ups are thinking about go to market and how they're thinking about you know different applications. uh in your guys's document I know you're flash but flashet is is directly integrated with spark which is one of the new emerging state chain protocols and bitcoin l2s in the documentation specifically said that you were not another like full-fledged blockchain you were not a a a rollup or a kind of quasi side chain how do you guys when you were designing and kind of thinking about this from first principles why did you guys decide to go in the direction of the state chain protocol and then additionally building your your infrastructure on top of that what was kind of the thought process when you were going through that? >> I mean, so Flashet has existed before or was created before Spark existed. >> The sole mission of of creating Bitcoin markets. So, you know, Bitcoin trades trillions and trillions of dollars a year. It's entirely through siloed oligopies in in the US and other countries. So, if you're in the US, you know, you trade on Coinbase Gemini Kraken. If you're in Europe, you trade on one of the many exchanges in Europe. If you're in Asia, you're on Binance. Um, in my past life, I I I did a lot of stuff in DeFi. And what I admire about Salana and Ethereum is this ability to create one global pool of liquidity. Um, and and from that perspective, you start to understand that, okay, now that a random person in Asia can be my counterparty, a random person in Europe can be my counterparty. And it creates a very efficient market. We see that on Salana today. I mean, you can trade soul USDC on Salana cheaper than you can on Binance or sometimes, you know, at par. Um, which is incredible. Uh so we we set out with a mission to create the same kind of infrastructure for Bitcoin. Uh and we took a very holistic approach. So first we we were very naively built a lot on lightning. Uh and I'm a big lightning maxi but it's not the place for a product like this. Um and then Kevin from Spark uh had the genius idea for Spark. So we helped build the first version and kind of iterated on it to be able to build the the vision for FlashNet. Um so it was very much a first principles approach of this is the problem we want to solve. what are the best tools to do so uh and how can we do so as quickly as possible to serve our customers uh in the best way possible. >> You mentioned something really interesting there like specifically I want to point to the Ethereum example of like there's just one giant pool of liquidity and all the applications are composable with each other etc. What we've seen from other ecosystems that have tried to scale via L2s or add more functionality via L2s is this real fragmentation of liquidity and the fragmentation of user experience and users having to go from different places and different chains to access different applications. A lot of people will say that lightning is like the lingua frana I think is the term of it for all these different like bitcoin L2s and execution environments and so that there won't be this like fear of uh liquidity fragmentation and application fragmentation. How do you guys think about that? Do you think it's a winner or take all? Do you think that there's going to be one platform that services all of these capital market participants in it's going to be flashing okay five years hopefully. >> Um what do you think about that like as the competing dynamics? Do you think it's counterproductive to build like, you know, 10 different L2s that are all trying to solve the same thing with different approaches? Do you think that fragments liquidity? Do you think it worsens the user experience? Because you would argue that cap like, you know, competition would solve this, but in Ethereum, it's actually been very detrime detrimental to their scaling roadmap, which is why Salana, I think, overtook them from a capital markets markets perspective. So curious on your guys' thoughts on that and how that how that evolves. >> I don't know. I I don't think it's winner take all. I think it's winner take majority. Um, listen, I think the the the beauty of Spark is is that it's completely compatible with native L1 wallets. So, Spark can speak L1 uh and Spark can speak Lightning as well. So, when you when you have funds in a Spark wallet, when you're using Flashnet, you don't really have to know what's happening under the hood. I mean, a lot of the wallets uh that that use Flashet today use it as a way to go from, you know, BTC on mainet or BTC on Lightning to stable coins on another network and they don't even know what's happening underneath. Um and then we have other protocols and other products that use us purely for trading to to you know to ARB and provide liquidity and all these things right so I think there there's different products for different people uh I think our main focus is very much just spot BTC markets uh I think Alpen and Centraa are very focused on lending and yield and that's not our market I mean that's not our focus that's not who our customers are today uh we're we're solely focused on building this one giant pool of liquidity and you know Alpen and Catraa I'm going force them to support Lightning and at one point or another and they'll be able to tap into that pool of liquidity, right? So, Lightning is very much the glue. Yeah, for sure. >> Okay. Any thoughts on that? >> Uh, I mean, yeah, you kind of mentioned this idea of like Lightning as the lingual franka. It's the web that connects all these different L2s. Like, I could maybe buy that idea, but like first I need to be sold that there are multiple L2s worth actually tapping into. And uh I don't know that there are. >> I mean, there's Bass and Ethereum where they're all the current like, you know, Bitcoin supply is right now. So, well, okay. So, but like all right, say say we need to get get in there. Like >> if you have something like native USDC, uh they just have like it's a centralized ledger. So, like you can just burn USDC on Ethereum and you instantly mint it on something like Alpen. Like why why would you need Lightning? Like you have a centralized database that can literally mint a trillion dollars instantaneously. So, like I kind of need to be sold on why I would open up a lightning channel when I just have like a fully centralized bridge that can do it instantaneously better. >> Welcome to predict. The world is a market. Everything is a market. Every headline moves the line. Every moment is your market. Call the moves. Bet on your instinct, your prediction, your edge. Dual bits. Predict where everything is a market. >> I agree. >> Aram, do you have any thoughts on that? Like especially around like the fragmentation side of it. Yeah, curious. Uh yeah, I don't think it's not also a winner takes all but uh having lightning as a interoperability layer is great. I think at the end of the day jumping from one layer to another layer with lightning uh is really easy. Right now you can like in 4 seconds withdraw your money from Citria via lightning using atomic swaps. So you can easily like jump from Citria to like using flashnetss and then do swaps there. But also you can use uh battle tested like AMMs on Citri as well. Uh so yeah it's I think it's good that we're all trying these different uh technologies and then market will decide what's >> what's yeah >> I do agree with David that lightning is the glue but it's maybe like an unnecessary glue like we it it definitely is the glue between all these Bitcoin layers. I think the the kind of the feature and the bug of Bitcoiners is that everyone's always arguing about everything constantly and there's like a billion different directions everyone is going into. So liquidity will naturally fragment. I think Ethereum could have very much used something like lightning between its vast web of L2s. Um would have saved a lot of money from DPRK hacks. Um >> but yeah, we'll see. I it will be used. Is it useful? Where where's the money and where's retail going? We'll see. >> I wasn't going to ask this, but you mentioned it, so now I'm going to ask it. So, there's this idea of bringing infrastructure from other ecosystems and applying that on top of Bitcoin to do it in a more native and trust minimized way. The EVM is the biggest example of this and Citrian and Alpin are both building with EVM compatible execution environments. There seems to be though like within the last like couple of weeks there's been exploits and different things happening in those ecosystems. How are when you're speaking to these market participants, how do they feel and how much are they analyzing the actual core infrastructure? Do they trust depositing their money into inside of EVM contracts? Do they want a different type of execution layer? When you guys were thinking about this, you know, before building your systems and going to market, how are you guys thinking about which infrastructure to actually use and provide for these institutions? Specifically on the EVM side, I'm very interested and if people are hesitant because of that and what's going on recently. >> My my hot take is despite the reputation, the blue chip EVM applications and protocols have actually been extremely robust and really secure. Where they have faltered is supporting this long tale of Shitcoin applications that really have just taken trade-offs and cut corners. You know, in the current example where North Korea uh you know, essentially hacked this token called RS E. It's like, you know, reststake staked ETH, you know, multiplied by, you know, Fartcoin. >> It's a beautiful thing. >> And and you know, and then it's like we're going to use a bridge that it's basically just like like a ser of one. It wasn't like a multi-IG uh where you had >> it was a one it was a one of one multi. >> It was a one of one multi-IG and the one of one was querying what's called like an RPC. They query maybe half a dozen different RPCs. They basic North Korea basically dosed five of them and then poisoned the one remaining one and then allowed themselves to basically mint and bridge 300 million with very basic risk controls. Pretty much all of this is mitigated. And in my opinion, like that's why if you look at the extremely robust protocols, they've actually been hyper secure in in Ethereum. It's this random long tale of stuff that just gets exploited and poisons the well for everyone. So for us at Alpen, we're just taking a hyperfocused approach. there's only probably half a dozen applications and use cases that we care about and nothing else is being supported. >> Yeah, that's one of my favorite quotes from like the more expressive smart contract space. There's only like four contracts that are even worth writing. So, we should just focus on those. >> What's interesting is it's also like the majority of the hacks, at least in like the the the recent couple recent hacks, they're not even like smart contract exploits. They're like full on just like key exploits. Like some signer connected to the wrong Wi-Fi or connected his wallet to the wrong website or whatever it may be. >> It's not like Methos got unleashed in like >> Yeah, exactly. >> the stupidest exploit. They spent probably a couple hundred thousand dollar auditing these smart contracts and then it's just a key got leaked. >> And I think that's the important thing too like in terms of like the key exploits, I think the largest one ever is like four individual signers with the Axi Infinity. I think it was four people that got exploited. So, as long as you can build something that's a little bit more distributed than four people, that's that's you're probably at this point doing all right. As long as you have basically people people are always going to be the bottleneck. That's it. Like you you can audit your smart contract however you want, but if people are at the end responsible for like there's this concept of upgradeable smart contracts uh on the EVM and the fact that you know a key could theoretically just pull the contract from under you and put another one there. Like it's always people. People are the bottleneck for security at least. >> For sure. For sure. So, we're running up on time here. I think the last question I yeah want to pose to you guys is again like I mentioned earlier, there's a ton of hype. What do you think the ecosystem in terms of these financialized applications might have to do differently or approach differently over the next two to three years to take away that market share from the incumbents, >> more centralized players? And from like a strategy perspective, if you're thinking about like hyperfocusing on one area of your go to market, like how can you differentiate like we talked about earlier from the big institutions and and pull and pull liquidity into your own systems. So what's the thing that you think maybe that you had an idea on maybe two years ago that you've changed your mind on and want to approach differently now as you move forward? >> Uh well, I mean I I've kind of given my pitch. I I think a lot of these financial institutions really are kind of seeing the light and the power of uh you know Bitcoin and like this onchain finance and they're really kind of starting to make their decision right now. They're starting to make the decision about you know do they go with CBBTC, do they go you know with WBTC, do they go with some of these more novel solutions and I think probably within the next year we're going to see a lot of you know fintexs that are basically signing deals and kind of like staking their flag in the ground and saying like this is my preferred solution. You know I've kind of made my pitch. I think Ethan has countered somewhat and like that is probably a pretty accurate assessment of the current debate right now of internally at these companies the decisions that they're going to make and for me personally if I just kind of put my best pitch out there and we build the best product in this trust minimized you know Bitcoin rollup and I present the case and nobody cares then uh that would be a little heartbreaking but it would be like okay no big deal uh we gave it a shot and the people just don't care >> that's how I'm approaching it >> any yeah any thoughts like Yeah, I mean listen, we're we're big believers in in in this idea of global neo bankanks. I think the the the next big fintex will probably be built on chain. I think there there's two major aspects to that. It's it's Bitcoin and stable coins. Bitcoin is kind of this store of wealth and and and kind of a wealth generating asset and stable coins is an everyday spending asset. I think where we fit into that is really just providing the the the one global liquidity layer for that. I think more and more institutions want to be global from day one. Um, and we'll see a lot of these, you know, US only fintex or or euro only fintex. I think we'll rapidly see them go global with self- custody. I think self- custody has become, I mean, as easy as custody at this point. Um, so I I I think in the next two or three years, we're going to see an explosion of liquidity going towards onchain solutions, whether it's uh, you know, powered specifically by by by bitcoin rollups, by spark, by bitcoin, I don't know. But I know that Bitcoin in one way or another will play a very big piece of this. >> I also want to add like having all these uh defy primitives in one ecosystem is also uh appealing like it it makes more sense because now you can as David explained you can add things on top of each other to create more complex uh defy pre defy uh usages out of it. So yeah. >> Yeah. All right. Well, I think that's about time for us guys. Any 30 seconds left? Any closing thoughts? Anything I didn't ask you that you wanted to be asked? What are the Yeah, 30 seconds. >> We are on mainet. Use Citria. Give us feedback. >> Cool. Thank you guys so much. Appreciate it. >> Every year this community comes together to celebrate, to debate, to build what comes next. And every year the stage gets bigger. Sound money center stage. So where do you go to celebrate the next chapter in Bitcoin history? You come home. Nashville. July 2027.