Cryptocito Interview with David Tse, Founder of Babylon

Welcome back to CryptoC2 and welcome to this interview with David, the founder of Babylon, which is a project I've been covering here since September of 2022. So it's been more than two and a half years and the Babylon project went through many iterations from the early days of being this research Bitcoin security project that is focused on timestamping to reduce the unboarding times for Cosmos chains. Well, now they're dominating Bitcoin staking, a category that actually created and pioneered and now one of the most highly anticipated launches for 2025. The Babylon Genesis is going live very, very soon. And with it, of course, the native baby coin that is also being airdropped to early Bitcoin stakers, early pioneers, NFT holders, and many more communities, which we're going to be covering in a separate video. We're not going to touch upon that in that interview. And also as a disclosure, I am an investor with C2 Ventures into Babylon since over two years now and been in touch with the team throughout the years. And it's just impressive to see how much they have grown and how they could capture the mindshare and market shares of Bitcoin staking. And also with Sexydo, we are both a finality provider. So you can stake your BTC directly with us at Sexydo. And also we're going to be a Genesis validator for the Babylon Genesis network. So you will also be able to stake your baby tokens with us at Sexydo. And as always, I'm very grateful for each and every one of you that is delegating and staking with Sexydo. You guys are the best and you've been supporting us since 2021. And we truly appreciate that. Do not forget to like and subscribe if you enjoy the content of this channel and this interview. And now let's get into it. Here's David, founder of Babylon. Yeah, I'm very glad to have you back, first of all. And in preparation actually for today's interview, I re-listened our interview from September 2022, which was a very different time. The merge was just happening in that week, the Ethereum merge. We talked a lot about security in general, POS chains. We talked about long range attacks, about unbonding periods. And you were introducing the Babylon project at that time. And I also asked you back then, why did you choose to build on Cosmos? And your answer was, because Cosmos or the Tendermint algorithm, which is now called Comet BFT, has very solid security proofs. And I want to start off by asking you to kind of, you know, get back to this time and then provide a bit of a recap to how, you know, your journey as a founder was over the years. The Babylon project, Cosmos, just kind of a recap from that time to today. Yeah, so CryptoSeek. So great to be here again after two years, two and a half years, right? So we talked at, that was just before Cosmoverse, I believe, 2022. Yeah, so at that time, we were focusing on this protocol called Bitcoin timestamping. So Bitcoin timestamping shares security with Bitcoin on a Cosmos or any actually any proof of stake chain by timestamping to Bitcoin. And we really like that protocol. It has solved a very important problem in proof of stake networks, which is the long range attack problem. So proof of stake network always have this problem of kind of like, you know, the chain is policing the token, but the token lives on the chain as well. So it's kind of like a little bit of a circular thing. And that leads to this thing called long range attack. And that was solved by using an external trusted party, which is Bitcoin, Bitcoin to sort of provide that security. Yeah. Now, since then, I think one of the biggest breakthrough we had is that we went beyond just using Bitcoin as a passive security measure using this timestamping, but adding a active role, active role that Bitcoin can play. What does that mean? Bitcoin is a chain. But Bitcoin is also an asset. And what is the most active part of the Bitcoin ecosystem are the asset holders, because they're the ones who actually hold this very viable asset. Today is probably worth, I don't know, 1.4, 1.5 trillion, a significant chunk of the crypto market. And we came up with this protocol called Bitcoin staking, which allows Bitcoin holders to provide security to proof of stake chains. Now, this kind of security is quite different from the timestamping because timestamping provides long range, long range security, whereas Bitcoin staking provides short range security. So this is a way of envisioning. This is like you have a proof of stake chain like Osmosis. Osmosis have their native token Osmo, but now you can add on top of that an extra layer of security, which is Bitcoin staking on top of Osmosis base security and provides additional security, allows you to carry a higher TVL on your chain. So that's our idea. And it was extremely hard to design and build because Bitcoin staking uses the asset and the asset is on Bitcoin is described not using smart contract, but using this kind of dumb contract called a Bitcoin scripting language. And it was just very hard to make it work, but we did. And so now we are approaching sort of the launch of the chain, the first chain that uses this Bitcoin staking as a security layer. Yeah. And as you mentioned, it's been two and a half years. And now not only is Babylon the, I guess, category creator or at least, you know, pioneer of Bitcoin staking, but also you managed to attract over four and a half billion dollars worth of BTC around 52,000 Bitcoin that are now staked on Babylon. And we are in a very exciting phase right now because the Babylon chain is about to go live. And with it, maybe, I mean, the Babylon chain itself is going to be the first BSN, Bitcoin secured network, but then there will be others. And I think it will be very interesting to see how that ecosystem is coming together, right? Which is a first in our entire industry. But I want to talk about BSNs a little bit later. First off, I wanted to stick around a little bit on the kind of Cosmos technology side of things, because Babylon chain is going to be a full on Cosmos chain, right? So can you maybe share a bit your kind of views and your thoughts about why building on Cosmos? Yeah. So why building on Cosmos? The answer is the same as the answer I gave you two and a half years ago, which is that it's really better tested, a base protocol. And it has this important property, which is one single shot finality. So if you, for example, talk to people in Ethereum, in fact, I think Justin Drake, one of the key people in Ethereum Foundation, just gave a talk last year on revealing the roadmap of Ethereum proof of stake. And one of the roadmaps, in fact, the most important part of the roadmap is to have a Ethereum proof of stake with one shot finality, single shot finality within five years, within five years. Okay, guys, tenement or now called co-competitive already have single shot finality five years ago, five years ago. So you can see how sort of the advanced tenement is now granted, of course, Ethereum size or validated size is much bigger. And so it's a much more technological challenge to build this to that size. So granted that, but the important thing is Ethereum tenement is here today. And we're building today, not building in five years. So I think that's the important thing. Yeah, I really like that. That's also why I asked you that question again, because I think a lot of people, when they think about Cosmos, they only affiliated with IBC, right? This interoperability protocol, which is also one of the most innovative parts of Cosmos. But I think people oftentimes forget that Cosmos builders have been early, early pioneers for POS in the first place, right? Way ahead of time, right? And I think this is also something important to point out. Nonetheless, I want to also briefly touch on IBC because now we're about to enter a new phase of IBC with the launch of IBC Eureka, which is going to be deployed on the Cosmos Hub first. And I think with it, there's a lot of excitement now for a new era of Cosmos and interoperability, because that enables EVM interoperability, basically expanding IBC. So I'm wondering if Babylon is going to be integrating that or how does that play together? Actually, yes, I should point out. So the Babylon chain, by the way, CryptoCito is now called Babylon Genesis. Babylon Genesis to emphasize that it is the first, it is the first BSN. In fact, Babylon Genesis, I believe is the first customer, first user of Eureka, IBC Eureka. It's happening in the next little while. Yeah, so definitely IBC. So I would say two particularly big innovations in the Cosmos ecosystem from a technology point of view is one, IBC, interoperability, definitely number one. Number two, which is very important for us as well, is the idea of slashing, the idea of crypto, true crypto economic security. I believe Cosmos is the first POS system which has true slashing. And that is really the connection to Bitcoin staking, because Bitcoin staking is a remote asset. And without the slashing, there's really nothing to stick. So without naming names, there are some so called Bitcoin staking protocol out there, which the idea is that you lock your Bitcoin and then you say, oh, I'm securing this chain. Okay, so what's the connection? What sense are you securing this chain, just locking a Bitcoin in on the Bitcoin chain? There's no slashing. And so therefore, you cannot think of this as in any means providing security to the proof of stake chain. And slashing is the mechanism that will make the connection between the asset sitting on the Bitcoin chain and the proof of stake chain. And in this case, the Babylon Genesis is a Cosmos chain. Very nice. Yeah. So yeah, two ideas are core to our technology. Very nice. I think, I mean, we did this one live stream interview two and a half years ago, but we did other shows, also one in person here in Dubai around a year ago. And I think the conversation over the years has then always shifted to different kind of topics that were relevant at that time. And I think around a year ago, we also spoke a lot about, well, how's the Bitcoin community even reacting to this? Right. And I think this was before Bitcoin staking went live. And I think now, obviously, you know, Babylon attracted more than 50,000 BTC to be locked up. So my question is, number one, are you happy with that? Like, did you expect more? Are you okay with that? Or are you overwhelmed with it? And number two, what are currently the conversations that you are having with Bitcoiners? And what are their kind of thoughts around Babylon? Yeah, so we were quite surprised. If you look at the entire so-called Bitcoin file, BTC file, which is this new ecosystem or new direction of building DeFi Bitcoin, we're by far the largest. And so, yeah, we were quite impressed. And the reason is because Bitcoiners are well known to be conservative on sort of doing anything with the Bitcoin. And for good reasons. They have been burned in the past by projects like Celsius that collapsed, people lost a lot of bitcoins, etc. I think it's really a testament of the level of security of a protocol of making sure that the Bitcoin remains on the Bitcoin chain, doesn't get bridged to another chain. And so I think that is really important. And yeah, 5 billion, 57,000 Bitcoin, 55,000 Bitcoin. If you look at the percentage of the supply is about 0.3%. And you can say 0.3% is such a small number. But you know, we are, as you said, category defining Bitcoin staking is completely brand new. And we are just at the start here. And we have, I should say the ceiling is almost unlimited at this moment. Yeah, I honestly think so too. And I also believe though, that at the same time, you know, what Babylon needs and Bitcoin staking is time in production time in the market and to also become a battle tested, you know, on main ad in the real world. And I think the past two now years have been amazing to see the iteration of the project and how it gained traction and became this category creator for Bitcoin staking. But I think now the next phase is about, you know, solidifying that position and also making sure that everything is running smooth, which basically brings me to the broader go to market. We already talked about the main ad launch that is imminent, IBC Eureka, which might play a role there as well. But I guess one of the most important things to make that whole system succeed is to also attract solid BSN, so-called Bitcoin secured networks. You mentioned Osmosis already. I think there's also this deal between, and maybe you can explain that a little bit more, but where they get some sort of allocation, the Osmosis, I guess, grants program. I think there's a firm proposal on the Osmosis side where they become a BSN, them being Osmosis and also the kind of launch partner for the baby token. So can you maybe talk about that and overall kind of what's in the pipeline for BSNs to launch and what will be the rollout plan for that? Yeah. So yeah, Osmosis is a good example. In fact, the governance proposal is being debated right now and voted upon right now. So, hey, anyone listening to programs, please go and vote. Actually, very interestingly, we started this project early on with an Osmosis governance proposal as well. I don't know if I mentioned it in the program, but about two years ago, we had another governance proposal, a totally different one, on timestamping, on the quick unbonding that you mentioned. So that was the beginning of our journey and now we are sort of coming full circle just before the launch of the Bitcoin staking chain. So I think Osmosis is a good example because I want to illustrate one thing here, right, which is that now security is something hidden. Honestly, security is not like the most sexy product out there. Why? Because people never worry about security until they hack. So selling security product, my experience and also the experience of many people, is hard. It's just hard because you have to convince people to pay you for something that has not happened yet. Okay? Now, so our go-to-market, a very important part of our go-to-market is that the thinking is, hey, why do you need security anyway? If there's nothing happening on your chain, then you can have all the security in the world, but it's useless. It's like you have nothing valuable in your house and yet you have many, many layers of armed guards around your house. What's the point? No point. Okay? So our point though is that the security should go hand in hand with the economic activity. Okay? Economic activity. And how do we do that? Well, security is provided by Bitcoin. But liquidity, liquidity is an important injection into the economic activity. And liquidity itself is also provided by Bitcoin. So one thing that emerged in the Babylon ecosystem are these liquid-staking protocols. There are now about eight to ten of them, including projects like Lombard, Solve BTC, etc. These are all providing liquidity. And the attraction of a project like Osmosis to become a BSN is not only they can get security, they can also get this liquidity. And in fact, the economics of the proposal, if you look at it, is basically the fees they get by swapping these assets, that the fees, part of that will go towards the sticker. And so now you complete a full sticker. Because the economic activities it brings in will provide the fees that covers the security. And I think that Osmosis is a very good example of that we're not only providing security, we're also providing economic activity through Bitcoin liquidity. Osmosis. Are there already other BSNs that are publicly announced or some that you can mention already? And are some of them also outside of Cosmos? Or are these mostly new ideas? Or what's the landscape there? Osmosis. Yeah, so we have a few that we talked about in public already, like Bob. So Bob is a layer 2 of the platform. So we're going to launch a layer 2 on Bitcoin and Ethereum. And they will be launching as a partner in probably so-called phase 3. So right now we're phase 1. Phase 2 is the Babylon Genesis launch. Phase 3 are the other BSNs launch. Bob is one of the partners. Korn is also another partner at layer 2. Osmosis is going through a governance proposal right now. Hopefully it will pass. If they will pass, they'll become a launch partner as well. Yes, we have a few others that are in the pipeline. And we have some actually quite significant ones that we will announce very shortly. So I will just leave it as a sort of a teaser here. Yes, you will know this project when we announce it. Yes. Nice. I mean, we're doing like three to five videos a week here on the channel. So, or at least getting back to those levels. So we'll definitely cover that when the news come out. I'm also wondering, so I think phase 2 is probably one of the most important ones to also set the foundation then for phase 3 and to attract those quality BSNs. And I think a lot of people, I think we talked about this also last time we met here in Dubai and made our interview here about people comparing Babylon to eigenlayer, right? It's like eigenlayer basically being to Ethereum, what Babylon is to Bitcoin. And I don't want to ask you to compare them, but I want to ask you if you have any observations, lessons learned or anything from the eigenlayer launch, what they did right or what they did wrong. Because to be honest, me as a kind of crypto, you know, community member, I don't see them as, you know, much in the focus front and center anymore as I did like six to eight months ago. So I'm wondering what are your kind of thoughts on that? So, you know, the thing is, as you know, right, the crypto world is attention span is rather short, it's rather short. So these things happen with projects. So I don't want to sort of try to explain or give any reasons for that kind of attention swing and increase and decrease. However, I would like to say a few words about sort of the difference between us and eigenlayer in terms of the go-to market, which I think we learned quite a bit from observing that project. As you know, Shriram is also a long-term collaborator of ours. So I certainly understand that project a lot. And talking about category defining, I think the restaking, certainly they defined that category. And that was a really good contribution. Now, one thing I want to contrast between our go-to market, between us and eigenlayer, two things. One is we're dealing with Bitcoin. Okay, we're dealing with Bitcoin, which is a much larger asset, is about seven times now the size of Ethereum. Okay, so that is sort of one, I think, of our advantage. But two, very importantly, is the go-to market. So as I mentioned, our go-to market is really on chains and protocols, BSNs, that have economic activities. Okay? Okay. Eigenlayer's go-to market is basically these middleware protocols, which by themselves do not have economic activities. They provide infrastructure to Ethereum, additional infrastructure to Ethereum. Bitcoin. And so that's a very important difference. Because I think one of the biggest selling points of Bitcoin, in addition to the large security size, is also the liquidity, as I mentioned. And with economic activity, comes the need for this liquidity. And so I think that is sort of our focus of coupling the security and the liquidity. And I do not believe that is their focus. So it's two different directions. And I think two different directions due to perhaps Bitcoin asset is quite different from Ethereum, because Bitcoin is a pretty idle asset. And so allowing people to use it as a liquidity injection on other economies is important. And I think that's the difference between us and Eigenlayer, basically due to the difference between Bitcoin and ETH. Yeah, true. And I also think that, you know, Bitcoin being a proof of work chain, which is probably never going to change, versus Ethereum that did the migration and ETH as an asset is also now productive by just staking it or liquid staking it or whatever. I think that's also a major difference versus Babylon is now for the very first time unlocking the value of Bitcoin and turning BTC into a productive asset on-chain, right? So I think that is very, very exciting. We are out of time though. I really appreciate in especially those busy days that you took the time and shared an update about the project. Always great to see you and hope to see you at Cosmoverse. I think, you know, back in 2022 was a big year. Like we got to know each other. You came to the channel for the first time. You had your kind of coming out of stealth at Cosmoverse. So I'd love to see you this year as well. Yeah. I mean, Cosmoverse is really our first time coming out of stealth on the timestamping protocol. And I still remember that great interview you did with, for us, with, I think, uh, Saiki. If I remember correctly, it was me, Saiki, and you. That was a great interview. And that was a great introduction, uh, of us to the Cosmos ecosystem. So we always appreciate people like you, yourself, who support us in the beginning when we were small. And, uh, so thank you so much. Really appreciate that. And I definitely hope to see you in this year's Cosmoverse. Yes. Nice. One, one final question. Is there any call to action, anything to the Cosmos community specifically, like that, you know, might be relevant for the next couple of weeks or months when it comes to supporting or getting involved in, in Babylon? Yeah, definitely. Uh, if you want to become part of the Babylon ecosystem, BSN, please do talk to us. Yes. The integration with the Cosmos chains is the easiest integration. We have integration with actually, uh, several, several stacks like, uh, Avitrum and Optimism, but the integration with Cosmos is the easiest. Why? Because Babylon Genesis is a Cosmos built on the Cosmos stack itself. So that's the stack we're most familiar with. And that's why the integration is easiest. Nice. Perfect. Thank you so much for your time. And yeah, looking forward to hear from you soon again. All right. Thanks.