Exclusive interview with exSat founder: The emergence of a large number of Bitcoin L2s is normal, but a market hub is needed

Interview: Jaleel, BlockBeats

Compiler: Joyce, BlockBeats

The Bitcoin Asia Summit in Hong Kong is underway, from May 7 to May 10. The summit invited many Bitcoin ecosystem developers, project parties and important community players. BlockBeats also sent reporters to participate in the summit, and the relevant content is being followed.

The expansion plan around Bitcoin is one of the most concerned topics for many participants in this summit, and many related project parties came to communicate. exSat is a docking layer around the Bitcoin ecosystem, aiming to bridge the gap between BTC's native protocol and the emerging Bitcoin Layer 2 expansion solution. BlockBeats interviewed exSat founder Yves La and talked with him about exSat's project positioning and his views on Bitcoin L2.

BlockBeats: Please introduce yourself first.

Yves La Rose: I'm Yves, the founder of exSat Network. I've been involved in the Bitcoin space, or cryptocurrency space, since 2010. So I've been in the space for quite a while. Most people know me for my work at the EOS Network Foundation, where I was a block producer and later the founder and CEO of the EOS Network Foundation. But more recently I've been focusing on scaling the Bitcoin space.

BlockBeats: exSat's mission is to help scale the Bitcoin ecosystem through its concept of docking layers. Can you tell us a little bit about how exSat does this?

Yves La Rose: Sure. Our approach to scaling the Bitcoin ecosystem started with the concept of L0 and L2. Initially we called it the "hamburger" or "sandwich" approach. Since I've spent most of my time in the EOS space and am very familiar with it, the idea is to leverage the resources accessible to EOS to help scale Bitcoin. The original idea of L2 was to implement a data availability layer.

We hope to leverage all of Bitcoin’s UTXO data so that in the future transactions can be initiated on Bitcoin and trigger smart contracts on scalable solutions, such as on EOS or other compatible platforms. Our initial goal is to create a secure system, as many of the current Bitcoin scaling solutions are done off-chain or are opaque.

So we want to bridge this gap, leveraging the security and robustness of Bitcoin, and the flexibility and scalability of the Proof of Stake mechanism, backed by RAM from EOS. Because RAM is actual physical RAM, deeply embedded in the computer, it can achieve multi-layer indexing. We want to combine all three into what we now call a hybrid consensus mechanism, which is POW (Proof of Work) + POS (Proof of Stake), backed by RAM from X App.

exSat's system has validators or synchronizers who work together to create the trust and robustness of POW, and we do this using real Bitcoin miners. If a miner has produced a block in the past 72 hours, they can push that information to our validators. The validators run the POS mechanism, verify that the information they received from the actual miners is correct, and then write the data to RAM on EOS. The result of this is that we have access to the full UTXO data, which is about 60 GB of data, which is very expensive to write and access on other chains, but because exSat is backed by EOS, this can be extremely cost-effective and scalable.

exSat has synchronizers pushing data, validators have an incentive to read the data and ensure the data is correct, they need to wait for six confirmations or about an hour, and validators also need to stake Bitcoin and store it in an insured custodian. Then exSat mints wrapped Bitcoin for governance, users can deposit Bitcoin, and validators can choose to grant credit immediately and charge a small fee, or wait an hour and then wait for six Bitcoin confirmations.

This allows users to use their Bitcoin on a scalable solution and start interacting with applications, DeFi, and more. exSat's solution will be open to other second-layer networks. Most second-layer networks are very expensive to generate their own index data, and exSat makes this data open to everyone. Anyone can use exSat's EVM smart contract to access UTXO data. The cost of doing this is the Bitcoin transaction fee or the network access fee, which incentivizes validators and synchronizers.

exSat sets up a good incentive mechanism so that everyone in the entire system is motivated to maintain it, which improves security and is able to trigger transactions on Bitcoin and trigger smart contract transactions on the other end.

BlockBeats: How can people participate in exSat, and what do you expect them to do on exSat?

Yves La Rose: At the moment we have raised $20 million. So in terms of development, we are in a very good state at the moment and we have been working on this for several months. Tomorrow we will release the white paper. In the next few weeks, we will probably release the first beta version, which will be a smart contract version based on EVM.

What we are looking for now is three aspects: the first is more cooperation with Bitcoin mining pools. Yesterday, we announced the cooperation with Spider Pool, which should be the seventh in the ranking of computing power, so it is very high. We are looking for other mining pools that see the potential, they can push data with a small workload, if they have produced blocks in the last 72 hours. Then they can pass these earnings to their customers or people who join their mining pool in order to attract more computing power. So we are looking for cooperation with mining pools, especially those with larger scale, like the top ten or top twenty mining pools.

Secondly, we are looking for more validators, we are looking for institutions or large projects, like known projects, trading platforms, institutions, who can stake 100 Bitcoins in a custody solution, which is a fully secure and insured custody solution, and they also want to see the potential of the XSAT token, the exSat network, so that they can join as a validator and verify the information pushed by Bitcoin miners. These are the first two main aspects.

In addition to this, we are also looking for other second-layer networks. In the future roadmap, as a docking layer solution, or one of the sandwich approaches that I mentioned earlier, other second-layer networks currently do not have their own index data, they operate off-chain. We offer them this opportunity, they can use our data. It will be transparent, decentralized, and open. They can join and start leveraging the exSat network to provide more transparency and trust for their projects. So we really want to be a hub for other second-layer networks. Think of it as Amazon marketplace or Taobao in China. It's like a platform where everyone puts their items there, and then other people will come here to access all the different items. That's what we hope to do. If we can be a hub, the user experience can access all the different second-layer networks, different ZK-Rollups, different Sol-DMs, or any other second-layer network through exSat.

BlockBeats: What are the next major plans for exSat, and what challenges do you foresee in achieving these goals?

Yves La Rose: First of all, today we are about to release the white paper. In the first phase of the project, we will develop and launch an EVM-compatible smart contract solution as quickly as possible to test this concept as a proof of concept, and at the same time start the official mining of the official XSAT token. After that, once we launch the network, we will work with mining pools to stake more Bitcoin to build stronger trust. The third thing, there is no clear timeline, is to open up for other second-layer networks so that they can start connecting to our network.

Among the challenges that may be faced in the future, because there are so many second-layer networks now, I think one challenge is, from a user's perspective, being able to distinguish which ones can be trusted and which ones bring value. I think this is a big challenge. Another challenge will be usability. Even though the blockchain field has a history of 14 or 15 years, it is still very difficult for users. Many people in the current ecosystem are very tech-savvy, or they have to go through a lot of cumbersome steps to complete certain operations.

For the development of the industry, I think it is still a challenge. If we really want to achieve mass adoption, we need to lower the barriers. People need to be able to interact very easily. That's where the opportunity is. I think we need to continue to invest a lot of money and research into making this space more accessible. The more accessible it is, if the premise is security, this industry is only just getting started. That's where the opportunity is. We just need to figure out how to make people's experience simpler. It's still very difficult at the moment.

BlockBeats: There are so many Bitcoin Layer2 projects on the market now. What do you think of the current Layer2 projects?

Yves La Rose: I've been in this space since the beginning of 2010, so I've been here for a long time. One of the shifts I've seen is obviously that Bitcoin was originally the only platform that could use smart contracts until Ethereum was born in 2015. Now blockchain is not just a store of value or a payment solution, you can now do a lot of things on the blockchain. And in the past seven years or so, a lot of resources have been invested in expanding Ethereum, leveraging Ethereum, DeFi, and accessing Ethereum liquidity. But Bitcoin has been "alone". Bitcoin has the most assets, but it's very difficult to access them. So all you can do is hold your Bitcoin, or get more Bitcoin. With new changes like the Taproot upgrade that we're seeing, we're seeing new technology like RDL, but it's still very limited. The opportunity right now is that when we compare the market cap of Bitcoin to the market cap of Ethereum, and the TVL of Ethereum to the TVL of Bitcoin, there is a huge opportunity.

We've seen a lot of second layer networks in this conference over the last six to eight months. There are so many people trying to invest in this space right now because they see a huge opportunity. There's a lot of money locked up in Bitcoin that can't do anything with it. To me, I'm very optimistic about this because it means a lot of research and investment is going into the Bitcoin ecosystem, which is great because a lot of it has been put into the Ethereum ecosystem over the last seven years.

So I think it's very good for everybody. I think we're going to have multiple solutions and different approaches. One of the downsides is that because it took Bitcoin seven years to get to the point where it's scaling right now. Ethereum came along in 2015, but maybe around 2017, we started to see a lot of scaling solutions. But Bitcoin has only had a short time to do the same thing now, maybe only a year or two. Because it's the beginning of the bull run, we're seeing a lot of attention on this. One of the challenges is that it's very limited time, so we're going to see a lot of projects try, a lot of projects fail, a lot of projects may not be very secure, a lot of projects will grab the attention people are paying attention to Bitcoin's second layer, and these second layers may be scams or there will be risks. So there are pros and cons to this. But overall I think it's very good.

BlockBeats: How do you define Bitcoin L2?

Yves La Rose: I guess I'm a bit more of a purist. So when I say exSat is a scaling solution for Bitcoin, I specifically don't say exSat is a second layer for Bitcoin. Because in my opinion, to be a true second layer means that if it fails, it will affect the first layer (L1). But most so-called second layer solutions, they are not really second layers. Because if they fail, nothing will change on Bitcoin, it will only affect the assets on that network. So in my opinion, the real second layer we haven't really seen yet, BitVM is moving in that direction, there are some other solutions, QED is another solution that might be closer to a real second layer. All the others are scaling solutions for Bitcoin, which is great, we need more scaling solutions, but in my opinion, a real second layer is a network that if it fails or has problems, it will have an impact on the first layer. But this is a more pure definition of the second layer, and I've been involved in this space since 2010, so I have a special perspective on this.

BlockBeats: Predict the price of Bitcoin and what will happen next?

Yves La Rose: In this bull run, I think Bitcoin will reach $180,000. But I think that will be short-lived. So I think the stable peak will be between $120,000 and $140,000, which is what I expect. From the current price, I expect a 2-3x increase. I am very bullish on Bitcoin. August, September, October are going to be great. We still have a few months to go, you know the halving has been completed, this time we saw a little bit of a pullback, this time it happened before the halving. There have only been three halvings before. But this time it's very interesting, we saw Hong Kong just launched an ETF, which is great. The Ethereum ETF may also be approved. I'm not sure what will happen, but I'm very optimistic about the future. Usually the summer after the halving is a very good time, and then the fall will be incredible.

BlockBeats: There is a view that "Ethereum ecosystem is the touchstone of Bitcoin ecosystem", that is, Ethereum ecosystem will develop first to see the situation, and then return to Bitcoin. Do you think this is the case?

Yves La Rose: This view is very interesting. Ethereum is currently the academic center of the blockchain ecosystem in my opinion. This is where you can find the most libraries, the most DeFi applications, or overall applications. So in a way, it is indeed a kind of test platform. Depending on the development of these scaling solutions and what we see in the short term, something may happen, as you said, in fact Ethereum may just be a seven or eight year experiment for Bitcoin, and then Bitcoin will return. Because Ethereum shows how to scale, and then there are standards everywhere, right? So the compatibility of EVM is incredible. This allows anyone to start coding and all liquidity is accessible at any time.

If Bitcoin can use this as an example, I believe it can surpass Ethereum by a lot in terms of applications and TVL. If it does, then Ethereum may become a touchstone for Bitcoin again, perhaps a touchstone for eight or ten years. This is a very interesting question. Some people call it the "return of the king," just to save the Bitcoin ecosystem. So, that's why we think it could be an experiment. I mean, Bitcoin is the king, Bitcoin is the oldest, it's the most secure, it's the most valuable. Bitcoin is the entry point for most people, it's the entry point for institutions. But in terms of functionality, it really has nothing. So if we can bridge that gap, Bitcoin could be better, it could dominate the world. And that's why we're so excited about exSat. Because if we can play a role in that and help the Bitcoin ecosystem scale, I think everyone will benefit. I think that's great.

I don't think there's one chain that's going to rule all the others. For example, even in our solution, we're leveraging Ethereum. We're leveraging proof of stake, which has nothing to do with Ethereum, just like we're leveraging the EVM because you still have a lot of developers, a lot of liquidity. So if everyone can aggregate, or you can find a way to aggregate and then enhance security, I think everyone will benefit. So I think there's still room and a role for Ethereum. I don't think Ethereum will disappear, but maybe its role may change and be different from what it is currently, just like hopefully Bitcoin's role may also change. Bitcoin used to be seen as a store of value. Now we're seeing that Bitcoin may start to shift towards value creation. Bitcoin used to be more of a payment solution. Now we're starting to see that Bitcoin itself may start to be used for actual operations. So we're starting to see a paradigm shift in the roles and functions that Bitcoin can provide. If that happens, I think there will also be some role and function changes in the functions that Ethereum provides. But I think it's more beneficial for Bitcoin than it is for Ethereum. But both can coexist, I think they're both fine, they're developing on different tracks and can coexist.

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