United Kingdom - In the wake of the recent US presidential election, Bitcoin's dramatic surge in value has reignited global interest in decentralized finance (DeFi) and cryptocurrency. However, as Bitcoin broadly captures headlines as a currency, questions arise about its future role in a rapidly evolving financial landscape. Could Bitcoin risk irrelevance if it doesn't expand beyond its primary function? To see into this critical discussion, Korea IT Times sat down with Alexei Zamyatin, founder of BOB (Build on Bitcoin), a visionary hybrid Layer 2 solution seamlessly bridging Bitcoin's blockchain with Ethereum's capabilities. Alexei argues that Bitcoin's true potential remains unexplored and promises to reshape the financial world. Our in-depth conversation with Alexei Zamyatin explores BOB's innovative strides in transforming Bitcoin into a central pillar of decentralized finance.
What is a hybrid layer 2, and what exactly is BOB trying to achieve?
BOB’s hybrid layer 2 combines the best of Bitcoin and Ethereum to create the ideal network for Bitcoin DeFi. The new model uses BitVM to leverage Bitcoin’s Proof-of-Work (POW) finality for security while integrating Ethereum’s EVM capabilities for innovation and ease of use.
The objective is to place Bitcoin at the center of a new decentralized financial model, unlocking its $1.5T+ market cap. Bitcoin has the scale, the brand, and the trust that will allow it to open up access to DeFi innovation to retail and institutional users who have previously been reluctant to engage in the novel technology for regulatory or risk reasons.
How the Hybrid L2 design works:
Bitcoin security: BOB will inherit Bitcoin security via BitVM
Trust-minimized BTC bridge: BitVM also enables to bridge BTC to BOB without trusting intermediaries. A revolutionary improvement over existing BTC bridges that are all centralized multisignatures.
Trust-minimized bridges to ETH and other chains: BOB will use Bitcoin security to create trust-minimized bridges to other networks, starting with Ethereum. The bridge works similarly to an ETH L2 bridge (e.g., Optimism) - but instead of checking for finality/fraud proofs on Ethereum, the bridge checks for finality on Bitcoin. As a result, Ethereum users can deposit ETH and ERC20 to BOB and be certain that they can withdraw as long as Bitcoin is secure. Since everyone in web3 trusts Bitcoin, this design offers the best possible balance of security and usability. Note: verifying Bitcoin from Ethereum and other smart contract blockchains is very easy, meaning this design can be expanded to almost all major L1 blockchains.
We’ve seen Bitcoin rally to over $90k recently. Still, Bitcoin has capabilities outside just being a currency or an investment - what else do you see it as being, and what is its potential?
Bitcoin DeFi currently accounts for 0.1% of its total asset value (compared to its 1.7 trillion market cap). For Ethereum this same figure is 30%. That’s a 300x opportunity to grow DeFi on Bitcoin. We have spoken with dozens and dozens of large Bitcoin DeFi users and funds keen to put their Bitcoin holdings to work earning yield. The blocker has been the technology, but this will change with increasing institutional adoption offering yield via initially custodial solutions, to be replaced by trust-minimized options when BitVM is live. The goal is to get institutional investors to deploy into Bitcoin DeFi rather than ETFs.
Why are you trying to bridge Bitcoin and Ethereum; and what advantages does a hybrid like this bring?
Using Bitcoin security, BOB will maintain trust-minimized bridges for BTC, ETH, as well as other L1s like SOL, TON & BNB - any smart contract chain that is able to read the state of Bitcoin. Instead of wrapping BTC to other chains, users deploy assets into BOB to get access to BTC liquidity - removing the need for centralized exchanges.
This positions Bitcoin at the center of DeFi. Today, most users use centralized exchanges to trade assets. In the future, users will use hybrid L2s like BOB where they only need to trust Bitcoin - and not centralized providers.
How do you envision BOB evolving over the next 5 years, and what milestones are you aiming to achieve?
BOB launched as an Ethereum L2 in May this year, built with the OP Stack. It has already grown to 100+ projects, 180k unique users and $200M+ in on-chain assets. The primary focus has been improving Bitcoin UX in DeFi, for example through the launch of BOB 1-click BTC staking. This enables users to deploy native BTC into dozens of products, including LSTs and DeFi vaults - only requiring 1 BTC transaction.
Currently in development, BOB will add a Bitcoin finality protocol to the ETH L2 setup. This means better security, trust-minimized BTC bridging, and faster withdrawals on the native ETH bridge - accelerating the growth of Bitcoin DeFi on BOB.
The final step is inheriting Bitcoin security through optimistic verification powered by BitVM2. As a co-author of the recent BitVM2 paper, I am actively involved in developing BitVM. This will enable Bitcoin DeFi to become truly decentralized, putting BTC at the heart of a new financial ecosystem and giving institutions the confidence to deploy their large holdings.
