 Welcome to today's live AMA session. I'm Jessica Reilly with Cointelegraph. Today we will discuss Layer 2 solutions for Bitcoin and the future of DeFi on Bitcoin. We are joined today by our guest, Charlie Shrem and Enrico Roboli. We are delighted to have Enrico with us today. Enrico is the co-founder of Mint Layer with over 17 years of experience in software development. He has worked with prestigious teams like Bitfinex, Digital Science, McMillan Science and Education in London. He is a true expert in the field and is passionate about free software, new technologies and of course all things Bitcoin. We are also excited to welcome Charlie Shrem who is a member of the Mint Layers Advisory Board. Charlie is an American entrepreneur and Bitcoin advocate who co-founded the startup company BitInstance and played a crucial role in the early adoption of Bitcoin. He is also a founding member of the Bitcoin Foundation and has been recognized as a pioneer in cryptocurrency. So get ready to ask your burning questions and gain some valuable insights from Enrico and Charlie's wealth of knowledge and experience. Enrico, Charlie, welcome to the show. How are you both doing today? Thank you, Jessica. Thank you for having us on the show today. We are, I'm doing great and it's very exciting to be here with you to discuss Layer 2 solution and the future of DeFi on Bitcoin. Absolutely. Well, we're excited to have you both here today in today's discussion, we will focus on Bitcoin Layer 2 solutions and specifically how Mint Layer is enabling Bitcoin to achieve scalability, reduce fees and network congestions, accelerate transaction speeds, enhance the centralization, improve security and connectivity. But if that sounds like a mouthful, don't worry. The guys are here to explain everything but first here's a quick video introducing Mint Layer. And our audience to please send us your questions in the chat and make sure to like the video and subscribe to the channel. Let's get started. Enrico, Charlie, we just saw a quick video introducing Mint Layer, but can you provide an overview of what Mint Layer is and what it aims to achieve in the DeFi ecosystem? Absolutely, Jessica. So Mint Layer is a protocol and it's designed to face some of the issue, more than issue, let's say, challenges that Bitcoin faces. And one of these is the lack of the tools that are in other technologies, for example, Ethereum, right? So with Mint Layer, what we can do is to create new kinds of tokens, smart contracts. And we also have a decentralized exchange, all of that built on top of Bitcoin. So we've tried to expand the possibility of Bitcoin itself. Awesome, Charlie. Anything to add to that? Yeah, I'm gonna say that like for the past, since 2015 when scaling and being able to do things on top of Bitcoin came into question. I mean, Vitalik originally wanted to launch Ethereum on top of Bitcoin. And the original Bitcoin community kind of, one of my major regrets in my life is this, is that we didn't embrace this idea of like all of us working together to build on one blockchain and figure out ways to scale because the early days of Bitcoin, people were just focusing on Bitcoin and growing that. And if we diluted into too many different blockchains, it would have confused people. But now that Bitcoin has grown up and many different blockchains and projects that are doing DeFi, decentralized finance, you have NFTs, you have decentralized exchanges, you have title insurance, you have different type of like products and services that you can earn yield and do things within crypto land. You can join metaverses and you can play lots of games and earn tokens to do that. There's like, you can work in the industry, but with Bitcoin, other than being able to save it and spend it and use things like Lightning Network, Bitcoiners, we wanna be able to do a lot of these things. Unfortunately, there's never been a way to do it without losing decentralization. I'm a decentralization maximalist and I believe that if you're gonna be involved in cryptocurrency, if we're gonna do decentralized finance and everything that we're doing in crypto land here, we have to be transparent about, are we decentralized? And if we're not, where is the decentralization being lost and people are willing to pay for that? And so you have all these different layer two scaling solutions that have been attempted to launch on top of Bitcoin. Some of them are very successful now. There's been this huge spring right now, hundreds of millions of dollars of people between stacks and now mid layer and a bunch of other protocols that are launching like side chains and drive chains on top of Bitcoin. This is the future. And so we, this theory going back for scaling is what we've all wanted to do, but we don't wanna, we get scared of letting someone else control our Bitcoin. We should, and rightly so, we get scared of other people holding any sorts of our money. Well, with the mid layer solution, it's actually using the Bitcoin blockchain as a checkpoint security system. So it's still using the security of proof of work of the Bitcoin blockchain. And so if you wanna wait for that, you can wait a full block, but in between those times, you have the mid layer blockchain which sits on top of the Bitcoin blockchain and continuously with the proof of stake chain, you're able to do all sorts of different things and do everything that DeFi does on all other blockchains, but every 10 minutes or so, it gets fully cemented into the Bitcoin blockchain. Absolutely, awesome. Well, you know, with everything that's happening and what we've seen in finance over the last week, especially with SBB and signature bank and so forth, we see that traditional finance is unsustainable really. And so why is it important to have sustainable and decentralized solutions for finance? And how does mid layer contribute to this vision? So we need to empower individuals and businesses to have more control with their own assets. And that was the perfect example what happened the last few weeks, right? A couple of weeks. When you have like a dollar in the bank, they are at risk. I mean, it's clear, right? Especially today after what happened last week. When you have Bitcoin in your wallet on the other side, they are safe. I mean, it's about, it's on you to maintain the security. You can't have a bank run on your own money. Exactly, exactly. And the same can happen when you use other kinds of tokens, right? So you have the transparency and you have all the tools to make sure that a bank run cannot happen basically. It's exactly that. I wrote down what you just said because it comes out the transparency. We love banks, banks are a necessity. We use them. They're involved in our everyday lives here. Regional banks, local credit unions, Enrico where you live, local bank that you have probably contributes to the community. Banks are very important for our local communities where we live. Unfortunately, there is zero transparency. What happens as soon as you deposit your dollar at that bank? And we thought, especially after 2008, and we see these big in the US FDIC insurance plaques as soon as you walk into a bank, it's all over the walls. Your money is protected by the FDIC. So if we see that all the time, why are we still pulling our money out of these things? And the reason is, is because when you don't know where your money is, even if you think you know, but if you're not, the more control you have over it, the more you can see, the less inclined you are to pull it out. And so imagine a world where like all of your banks balance sheets and everything was all on a blockchain. So Silicon Valley Bank, they collapse not because they want something wrong, is that they make and buying long-term government bonds that paid very little, where everyone else can pull out their money and get short-term yield elsewhere. And so if all of this was transparent before, because no one's reading the books of these banks, no one's going in to the filings and reading them. But if it was simply on a blockchain where to view and understand and dive deep in, we would never have bank runs. And we can see that the regulator come only after, right? So they cannot prevent the collapse of the bank. They can only intervene when it happens. Yeah, in a defensive strategy at the end. Absolutely. Now, how does Mint Layer differ from other blockchain networks currently in use in the DeFi ecosystem? Okay, so Mint Layer is different. We try to follow what happened on Bitcoin. So we try to follow the same concept of Bitcoin without creating an unsustainable blockchain. We are creating something that is more easy to, like for example, running a node for us is very important and being able to run in a full node is critical if you want to have achieved this decentralization that we are talking about, right? So the blockchain is not like milliseconds milliseconds or even seconds for each block. It's a one-minute block time from one to the other, one or two minutes. And the block is one megabyte. So it doesn't grow a lot, right? It's a different trade-off from Bitcoin, but it's still very close to Bitcoin than others. And the way it scale is using the Lightning network. It's technically, it's not accounting-based. It's not an account system. So you don't have your address that is always the same if someone sees this, someone knows and can associate the address to your identity can see everything you did from the beginning of this account and even in the future. But it is like Bitcoin, you can generate as many addresses as you want. So there's an improvement in privacy already in the transaction level. And Charlie, did you have anything else to add to that? No, it's a good point that I forgot there. And going back to like the whole decentralization thing, the faster you scale, the less individual people can run your full nodes. And so most of the blockchain networks in DeFi that you see today unfortunately are not decentralized. The private keys are held by a few people or they have some administrative backdoor or just a stake blockchain that they've built. There's like five or six people that are holding onto most of them. And so scaling it's a lot, you wanna scale a lot faster and then there's this like incentive to just give up a lot of that decentralization to scale faster. And that's why Bitcoin back in 2016 was deciding to scale very slow. The difference between Mint Layer and the other Layer 2 solutions as I see it is that Mint Layer doesn't need any involvement from Bitcoin. However, on Mint Layer, you can also write to the Mint Layer blockchain and then you can write back to the Bitcoin blockchain. Bitcoin developers don't need to do anything. Whereas in a bunch of the other Layer 2 solutions right now, from what I understand in reading all development history, they need involvement in Bitcoin developers to open up for example, OP Return or OP Transaction Verify. There's certain things within Bitcoin to open up the ability. And as we saw, Bitcoin probably won't change much. And that is because Bitcoin wants to make sure that the first, that if you sent a transaction 10 years ago and you leave your Bitcoin, you don't need to do anything to it. You don't need to keep upgrading software or a lot of other blockchains, you can't use the savings there because if you don't upgrade the software or do something or involved in a fork or whatever, then you can lose your money. Or Bitcoin's motto is like even the first transaction 15 years ago, it doesn't move. So what I like about Mint Layer is that there's no involvement from Bitcoin developers here. Everything can be built and grown on its own. And what's cool about it is that you can decide, you can decide where you, going back to the coffee example, I will wait a Mint Layer block for a cup of coffee because no one's gonna try to hack into the Mint Layer blockchain just to like steal my cup of coffee or reverse that transaction. But if I'm selling my house and I'm using the Mint Layer blockchain because it's using some tokenized system, tokenized homes, I'm probably gonna wait for the full Bitcoin block, but it's like 10 Mint Layer blocks just to get that extra boost of decentralization. Got it. And bringing that to point about transactions, what is the difference between Mint Layer and Lightning Network and other Layer 2 blockchains as it relates to Bitcoin? So I see Mint Layer as a settlement layer. So it's a layer for slow and big transactions while Lightning Network is used to scale Bitcoin for micro transaction for the coffee, right? And I see they can, Mint Layer and Lightning Network to be interoperable. So you can use the tokens that are issued on Mint Layer inside the Lightning Network with the node. And so this is something that is pretty new. And I don't think anyone is, there are no other sidechain doing that. There are other sidechains. Obviously there is a rootstock that is used to run smart contracts in Ethereum, for example. There's liquid from Blockstream and stocks. They are all very good examples, but I mean, we're doing something different, right? So the key point of Mint Layer in respect of the others is that you don't, it's using a topic swap transaction so that you can swap Bitcoin from your, from the Bitcoin main chain to any token that is issued on Mint Layer. So you don't need to have a wrapped version of Bitcoin or a federation that is custodian because when you have this, for example, a custodian that castes your Bitcoin, okay, still there's a lot that you can do, but still we end up in the same problem of the banking system where you can have potential bank run or if there is a fractional reserve, obviously, and or hacks, we saw a lot of hacks on the bridge. So it's the way that we want to create this interoperability between Bitcoin and the Mint Layer is so that you are clear. It's clear the trade-off between the security of your Bitcoin on the main chain. And it's lower, obviously, but it's because you need to wait for the 10 minutes or whatever depends on how fast is the Bitcoin transaction to get into the block. So it might be even an hour depending on what you're doing, but it's more reliable. Absolutely. And so would you say it works better for larger transactions focused on, like you said, if you're buying a house maybe, there's just a more secure way to transfer your Bitcoin coins across the chain? Exactly. I mean, if you are buying a house, for example, your house is a token on Mint Layer, right? Then it's a good idea to, you know, wait for the real Bitcoin on the main chain and wait for the actual settlement of the Bitcoin on the main chain. And the cool thing is that there could be a relationship now between your tokenized home and Bitcoin so you could potentially borrow against your home in Bitcoin. You can maybe do a Bitcoin related mortgage where it's on gain, whereas right now there's no physical way to do that. And so there are a lot of these things that Bitcoiners want to do. It's like a trillion dollars of market cap right now or whatever it is, 800 billion, that people wanting to use Bitcoin for stuff, but every time they try to like dive their toes in, we get hacked and scammed because, you know, or we get our funds frozen. You know, if you wrap your Bitcoin, you're at the whims of someone freezing them. If you use one of these protocols, I've played around with a lot of them and they're really cool, but they're not, again, transparent that the fact that they're very early stage beta networks testing out these new technical theories, but it's like they're testing with my money and that scares me a little bit. Yeah, so everyone needs to be a lot more transparent about that. Absolutely. And with that said, what are your predictions for DeFi market for this year as far as transparency growth, especially when it comes to Bitcoin, crypto and probably regulation with everything that we're saying? I think we have seen a lot of interesting ideas and interesting tools the last couple of years in the DeFi space. I think one of the issue that is that if you take the whole DeFi all together, right, there's no underlying value. And, you know, all these tokens are there, but if they are all trading each other, like there's some, you know, fees moving from here to there, but at the end of the day, right, there's nothing behind. I think what it could be the future of DeFi is when you connect that to real-world assets, as Charlie said, like your house that can be used as a collateral for a loan or something. Yeah. This is where you actually create something that has used the technology, but also create a new kind of economy. And so like in the future, what's good? So let me take a step back. We saw this like huge DeFi explosion a year or two ago and decentralized finance is gonna continue to grow. You're gonna say, it's not gonna be just like DeFi, it's gonna be decentralized information, decentralized moving of assets, the security tokens. You have all these things that are gonna come out. Regulations are either gonna come out of Europe or come out of the US, probably Europe first, because that's just how it's been in crypto for the last 10 years. And so what we did see in the last year was this like relationship between the traditional finance world and crypto. And that's where we saw Celsius, Voyager, FTX, all these companies and there's like dozens of them that collapsed in the last year that were trying to like bring DeFi to traditional finance. And that's where our industry broke because half of them were doing the same things that the banks were doing and then half of them were just running on fractional reserve and there were a lot of problems but it broke. But DeFi didn't break and traditional finance is breaking. That's what we're seeing in explosion and prices today. Bitcoin's growing, Ethereum's gonna be at over 2000, we're seeing because like crypto land is growing, it's moving, we're hiring, our jobs, our industry, our unemployment rate is at zero, like we're hiring, we're bringing people on our industry and so that's gonna continue to grow. Everything that the regular world does wrong, crypto is gonna like do better and build better products and services to do that. And Bitcoiners don't wanna be left behind and so I think that you're gonna see multiple layer one solutions, dozens of them, Mint Layer hopefully being one of the top ones and they'll all allow for a relationship between Bitcoin and other EVM based blockchains like Ethereum, Polygon and the rest of them. And so you'll see like Bitcoin, Ethereum, all these blockchains and then Mint Layer and other protocols act as like the messenger service between them. And then one day we'll look and we'll wonder why we launched other blockchains in the first place when we could have scaled with protocols instead, but it doesn't matter. Yeah, no, I totally understand when you look at all of the assets out there, I think last time I checked Coin Marketplace or other different asset logs, we had over 22,000 different currencies and existence and it could be overwhelming, especially for those who are coming into the space learning about crypto blockchain technology. And so I think everybody looks to Bitcoin and Ethereum and names that we know, household names. And so like as we're talking about like the future, what is the roadmap for Mint Layer development and how do you plan to involve the community in the process? Okay, so we are about to launch Mint Layer and the launch Mint Layer is composed by several steps. We are launching the token now on a major exchange. It's next week. And we are about to also launch the Tasman. The Tasman for us is very important because it's when we will allow developers to start building and experimenting with the network. But the Tasman is also where we will start to gather metrics that are fine tuning all the blockchain and every aspect of it, fixing the bugs, the bugs that we can find. And after that, obviously the goal is to launch the mainnet in a few months after that. This is the beginning for us. This is the beginning of Mint Layer. Obviously Mint Layer doesn't make any sense unless there is people that use it, right? So we are working very hard right now to create an ecosystem for Mint Layer. And we are working on an ecosystem fund for Mint Layer. And the goal is to have commitment for 300 million over the next five years to fund and support all the innovation and entrepreneurs and developers for Mint Layer. We are also working on an incubator with Launchable, that is one of our main partner. And also lastly, we will also work on an accelerator for projects that are already in place and that you need to expand and grow. One of the things that personally is more exciting into all of that is Mint Layer Institutional. Mint Layer Institutional is a brand new thing. We just started working on that and Mint Layer Institutional is a company dedicated to bring institutional and real-world asset on the Mint Layer platform. Well, it sounds like you have a lot going on and we look forward to seeing more of this. But before that, can you share what are other unique features of Mint Layer's architecture? Okay, so Mint Layer has no native token for example, a native gas token, for example. When you do a transactional Mint Layer, you don't have to pay the fees with a specific token. You can use any token that is accepted by the network of block-siders. And this is very interesting, right? So for example, it happened to me, right? I had to use like a dozen addresses and I was receiving stable coins. But then in order to move those stable coins, you have to send Ether on every different account, right? And so you have to do a lot of transaction because you have to do one transaction to put some gas token into the account, move the token and then withdraw from the account your system, get the gas token, Ether or the kind of token, right? In Mint Layer, you can use the stable coin itself as a gas token, for example. Like you can pay transaction with a stable coin. So even as a metric, so to understand exactly how much you are spending for the transaction will be easier, right? Another thing is the UTXO architecture. So with a UTXO architecture, you can also aggregate a lot of transactional together. This will improve the scalability of the platform itself. So if you are an exchange or if you are doing a lot of transaction instead of sending one transactional every time, right? You can aggregate more than one and send a single transaction with a lot of inputs and a lot of outputs. That's really important. Like that's, I just want to point out, like that's how transactions should be done. So when people point out like how many transactions a blockchain can do and they say, yeah, it can do like millions of transactions a second, that shouldn't be like an exciting metric. You should be talking about the fact that you can have millions of unspent inputs and outputs that could be batched together in single transactions every second. And so when you have actually like, if you go right now and you have Bitcoin on Binance and you withdraw it, what Binance is actually doing most of the time is they're batching all of their transactions and sending over one to save them Bitcoin transaction fees, time and space. When Ethereum launched and every other EVM-based blockchain, it moved away from this UTXO model into the account-based system model, where it's like, imagine like a large Google spreadsheet and every time you create an address, you have an account in that spreadsheet and every time there's a transaction, it takes some from someone and it adds some to someone else. Now, if you think about how do you scale that? You got to just make the spreadsheet bigger and faster, but that shouldn't be fast scaling is not smart scaling. So going back to like the UTXO model, but being able to do like stable coins and stuff like that, that's great. Sorry, Enrico, I wanted to like really highlight that point. No, no, no, that's what's very important. And also I can add that when the part of the transaction that is more costly is the signature like the crypto signature, right? When you do a batching, you can aggregate many signature into one. This will save a lot of space and time for the verification of the transaction, but also because you have to keep your blockchain so more stores from where. So even in terms of space and demanding for your hard disk and the node requirements. Thank you for that. We've seen recently the appearance of the Ordinals protocol that enables uses of NFTs on Bitcoin. Do you use it in your token standards for NFTs in Mint Layer or do you have your own? So Mint Layer has one of the token standard is the NFT. So technically you can issue NFT on the Mint Layer without the need of using the Bitcoin blockchain and storing the whole picture inside the chain. I don't even know how the Ordinal protocol works. I'm going to research this now. It's basically, it's basically there. How does it work? They're using the witness to store the witness part to store the picture themselves. Those that are storing the pictures in the actual witness section of the Bitcoin blockchain. So you still, that's not anything new though. That's been done before. That's like how colored coins did it, no? Yeah, kind of was an upturn back then. Perfect. We're all learning together in full time. Absolutely. That's what we're all here for this AMA to just learn more about what's going on in this space. So what are your long-term goals for Mint Layer's development and sustainability? And how are you addressing any regulatory challenges and compliance issues, especially in light of everything that we're seeing happening in this space over the last couple of months? The regulatory part is complicated because depends on where you are, what you're doing and even the people that is using that. For us, we are issuing the, for us as software. So we are building software. But if you use Mint Layer to, for example, to issue a security token, then you enter into this situation where the security law is like, I think it's a century old or about two. And it's very complicated. So this is why we're building Mint Layer institutional, right? So it's to address this specific problems if you want to be an issue of a regulated token. And as the expert of the technology, we can assist the counterpart to create the perfect scenario with the right smart contract and so on. Got it. Well, I think we're about to wrap up. Did you guys have anything else you'd like to mention or leave our community with? One of the things that I see in the future is, today we have this concept of, today we are working a lot with the fiat money. And fiat money are the, basically our reference, right? It's the way we give value at things, right? What if, and this is a question more than that, what if we don't need it? What if we could use real-world asset to pay for the coffee itself? Like for example, I am in my shop and I want to buy it for the coffee, right? But I'm a Tesla holder, right? What if I could have a system where instead of paying the coffee with dollars, I just use a portion of my wealth, like I consume part of my Tesla shares and somewhere in the light network, there is a node that wants to do the transaction and the recipient gets what they want to do. Without even touching the fiat. This is technically the principle. It's not only that, it's like, why stop there if you own a house that's worth $250,000 or something? If you want to take a loan against your property, the closing cost is going to be at least 2% of total value of the home. So that's $50,000 or something, actually not. 250, yeah, the closing costs are going to be around $15,000 just to borrow against your own house. If I could have my own tokenized home and I could get a credit card that borrows against my home and it's all using algorithms that price these assets out where you don't need to rely on appraisals and real-world people and slowness and closings and 30 days notaries and whatever, it could be a great world. It's all about equality. Amazing, I absolutely agree. It sounds like a wonderful idea. Enrique O'Charlie, thank you so much for connecting with us today. I've learned so much about the Mint Layer Network and I know that our audience has as well. Today we've learned how Mint Layer offers a secure solutions for scaling and accelerating decentralized finance with a sustainable architecture inherited from Bitcoin. But before we sign off, I'm sure that the audience would like to know how they can get in touch with you and how they can reach out to the team if they have any additional questions. Can you share what's the best way for the community to stay in touch and reach out to your communities and follow up with any questions? Sure, so if you go on the website, www.mintlayer.org, there are a lot of questions the links for Telegram channel, the Discord channel, Twitter and all our social media. So, well, I welcome everybody and there's the documentation. So if you have a question, come and ask. We're ready to show you and discuss with you with the community even the future of Mint Layer. It's not about us, it's about everybody that is using the technology. Absolutely. Well, Enrico, Charlie, I just want to say thank you again for joining us today for the AMA and thank you to our audience for being interactive and sending along your questions. I also want to remind everyone to please subscribe to Cointelegraph's YouTube channel. We do AMAs like this quite frequently. Thank you again, Enrico and Charlie and thanks again to our audience. We'll see you next time. Thank you, bye-bye. Hey, guys.