Cardano: NerdOut - Pogun, Bitcoin DeFi

追加: 2026-05-20

[00:00:02]Today on Nerd Out, Hogan Bitcoin DeFi.

[00:00:11]>> [music] >> Welcome back to Nerd Out, the show we take a look at Cardano, we break it down but don't dumb it down. Today we're talking about Hogan and Bitcoin DeFi.

[00:00:26]And I have a very special guest with me today. I have uh the man behind the name Hogan, Torben.

[00:00:34]I don't know how to say your last name.

[00:00:35]Go ahead and introduce yourself.

[00:00:37]>> [laughter] >> Hey Andrew, my name is Torben Moguntia.

[00:00:41]And thank you for having me on the show.

[00:00:43]Um I'm the CTO of Hogan and yeah.

[00:00:49]I I'm I'm one of the three persons behind it, that's true.

[00:00:52]>> [laughter] >> Okay. Yeah, so so the name comes from your name and you've been working on this Bitcoin DeFi project for quite a while now. Um kind of tell us how it got started and where we're at today.

[00:01:07]Of course.

[00:01:08]Yes, so we started everything in the beginning of 2025 when I joined IO.

[00:01:17]I I joined the the research department of IO and the first thing I got assigned is basically research how a Bitcoin bridge with Cardano could work and how we basically anchor the trust on Bitcoin. Um and BitVM was not not 100% new at that time of course because the first paper came in 2023.

[00:01:39]Um but as many know, BitVM in the first iteration was not really practical and I think BitVM 2 was quiet in in the people's mouths at that time. So yeah, we are starting researching that and we came up with Cardinal which we presented then in in May on on the Bitcoin conference.

[00:02:01]Um Yeah, and this is how everything started. And yeah, since then >> That's where you and I first met and talked was at that Bitcoin conference.

[00:02:10]Exactly.

[00:02:11]Yeah. Uh tell us a little bit about that demo you did at the conference and and what it achieved.

[00:02:17]Yes. Um So, the demo on the conference basically um bridged an ordinal on mainnet um from from Bitcoin to Cardano.

[00:02:27]And it used to be BitVMX system at that time, uh which is a special variant of BitVM.

[00:02:33]Um yeah. So, we presented that um at Bitcoin.

[00:02:38]Yeah, but uh we we evolved a lot since then. Right. So, for people that don't know, what is BitVM? You know, they they've probably heard something to do with zero-knowledge proofs. Explain that system and the different generations of BitVM, kind of how it's evolved.

[00:02:55]Sure.

[00:02:56]Um So, BitVM stands for yeah, Bitcoin virtual machine more or less. Um And it basically allows you to prove yeah, something like smart contracts on Bitcoin. Uh of course, you have probably heard that smart contracts on Bitcoin does not exist, and that's actually true. So, there there is a special difficulty in how you actually can do something on Bitcoin, right? And um uh a guy called Robin Linus came up with a pretty smart idea of okay, you actually do not need to execute something on on uh Bit- Bitcoin directly. You can execute something off-chain, wrap this into a zero-knowledge proof, and then verify that zero-knowledge proof on Bitcoin.

[00:03:41]And that is more or less what what BitVM does. And um the first version was very theoretical. It worked in theory because you basically built a very complex transaction graph um to achieve that. Um but this was what not really executable on Bitcoin. Um and then there came a version two of it, basically, BitVM two.

[00:04:03]And that was the first time that it was basically possible to also execute it.

[00:04:08]Um but the problem was it was very expensive. So, uh also the BitVM system works like this.

[00:04:15]Um it is basically an optimistic roll up. So, right? If you if you have uh some computation, which you wrapped then in a zero-knowledge proof, and um you generally assumed this BitVM system that you say, "Okay, everybody made some honest uh some honest assumption about uh about what you computed there." But in the end, you don't know, right? So, we have basically a system where you can challenge this this uh computation that you posted on chain. And um this is called optimistic because in general you say, "Okay, we we uh what we what we computed here is okay, but everybody can come and say, "No, it's not." And uh enter basically this challenge phase. And when you enter this challenge phase in BitVM two, you basically paid around $15,000, >> [laughter] >> which was uh quite expensive. And also this challenge transactions were very big.

[00:05:13]You actually needed uh to coordinate it across several uh on-chain transactions, and you needed special handling of miners. So, you could not get this into a standard transaction, which made the system very impractical. But it's actually deployed and working.

[00:05:29]>> [laughter] >> So, So, if you if you built a bridge around that, you got to send more than $15,000 at a time, otherwise it's not worth proving that somebody cheated.

[00:05:42]Pretty much. Yeah, pretty much that. Uh Uh, it is not really practical, right?

[00:05:49]And there were several iterations on it and Citrea, for example, found a way to to share um to share to share this um this deposits basically between people and make it a bit more attractive.

[00:06:03]But, yeah, still it was it was hard. And then a new version of this popped up called BitVM3. They were not very innovative with their names, actually. But, >> [laughter] >> uh >> [clears throat] >> BitVM3 basically then brought this whole um this whole on-chain footprint down to something which is actually practical and fits into a standard transaction.

[00:06:26]And this whole dispute mechanism of of the of this whole challenge mechanism of the of the optimistic path um of the non-optimistic path came down to around $30 So, that's something we can talk about, right?

[00:06:40]>> [laughter] >> Um the problem was that you basically shifted all this complexity now off-chain. And um you had now per backing what you were doing, and this under honest assumptions, um around 40 GB of data you need to store.

[00:06:58]Okay.

[00:06:58]>> When you when you are looking at a malicious setup, as in where you have some some security in the system, this actually blows up to terabytes. And then you also need to communicate this terabytes across operators, which then is again pretty impractical, actually.

[00:07:12]>> [laughter] >> Right. So, that was basically the the status of of BitVM around the end of 2026.

[00:07:22]Um and then some some smart guys came up with a new idea, okay, we do not actually need to have this whole cross whole cross 16 ZK verifier in the BitVM circuit. Because that is [clears throat] what they did at this time, basically.

[00:07:39]They had this verifier of the zero-knowledge proof um basically in the circuit they are trying to run on chain.

[00:07:46]Um and that was basically part of the problem. And they found a way um to abstract this away with a uh system called witness encryption and DRE.

[00:07:58]Um and this was allowing us to bring the the the on chain footprint keeping it at the same at these around 30 to 40 dollars and bringing the off chain footprint down from around 40 gigabytes to 22 megabytes. So now we are at a YouTube video. It's normal.

[00:08:16]>> Now now we're talking. Now we're talking, exactly.

[00:08:19]>> [laughter and gasps] >> Um So yeah, of course that was at that point a research paper um and research papers are nice but the practical system use needs a bit more than that. Mhm.

[00:08:30]So we picked up this paper and started to develop on it and of course found some issues.

[00:08:37]>> [laughter] >> But we were able to develop this further and further and improve it and found our own transaction graphs and with VM contract system around that and yes and and this is basically the the version which is is a program version of this with VM bridge today. Um and we're still developing on it. We are we are not entirely done.

[00:08:59]Um but we have cracked the core nuts you can say, right?

[00:09:05]So we we have this on chain footprint.

[00:09:07]We have tested it already. The confidence that the bridge can work as designed is pretty high is what you're saying. Yes, exactly. Um we are sure that it works so that we could verify already.

[00:09:18]Also the original system which we basically tested out last year with Cardinal which was working already on main net, right? Um is on the Cardano side very similar to what we have today. So the Cardano side basically we proved last year uh with the Cardinal system.

[00:09:36]But the problem was a little bit this with VM X system we had behind that, which introduced several issues and limitations for us. So, that is basically what we did over the over the over the last year, the second half of the last year, to find basically a replacement for this with VM X and into integrated with the with the rest of the Cardano system. Some improvements here and there, of course.

[00:10:00]Um yeah, and this brings us basically to this to this full bit VM bridge, which we are which we are now close to finish, actually. Mhm.

[00:10:10]Now, when I you you described it on on X um a number of times and we had some back and forth conversations about that. Let's let's get into exactly how this bridge works. From my understanding, there is um you're kind of bridging Bitcoin that's locked in a UTXO on the Bitcoin side, and then there's an exact NFT representation of that on the Cardano side.

[00:10:37]Is that correct? Similar like this, yes.

[00:10:40]Uh in principle, that is correct. Um also, what we are doing is we are creating a UTXO representation of the Bitcoin UTXO on Cardano. And yes, we are using a smart NFT for that, basically.

[00:10:51]Um >> Okay.

[00:10:52]So, you you lock any kind of UTXO up on on on Bitcoin and you basically with this NFT representation, you get a mirrored UTXO on Cardano. And this has actually several advantage. And in the end, this is a feature because we are able to um to keep the identity of that UTXO across the two chains. And that has several implications. So, first of all, this allows us to basically bring an ordinal over.

[00:11:19]Um but also, when when when you have a have Bitcoin basically in your in your balance sheet as an institution, you're keeping the identity of this locked UTXO. And this basically counts and in the most jurisdictions jurisdictions to our knowledge at least we have we have made some research on this and also um legal has has made research on this so we we know it's true. Um you basically do not get a taxable event for this because you never made a sale.

[00:11:51]>> sold. Exactly. You never sold and you never exchanged basically this this amount of of of of Bitcoin. It's still the same representation and if you unlock it you actually get exactly the same UTXO back. So this identity preservation is a pretty pretty nice feature we get with this. And additionally you get ordinals which is maybe not the >> [laughter] >> not the power use case but it's also cool.

[00:12:17]Yeah. No, I mean and ordinals have their own different use cases besides, you know, monkey pictures too. So.

[00:12:24]Um So when this So once you have this UTXO representation of Bitcoin on the Cardano side you could take this NFT and then fractionalize it. Is that the idea to get all the way to the DeFi side of things?

[00:12:43]Yes. Okay.

[00:12:45]>> Um this is one way of doing it. Also first of all and I will I will yeah I have to mention basically our other product basically the credit market, right?

[00:12:53]>> Yes. Um because you will be able to to have this this NFT as a collateral directly in the credit market.

[00:13:00]>> Okay. So if you if you basically go directly to stable coins uh or or something else you want to lend, all right, with the credit market you don't need to fractionalize your >> Right. your your your Bitcoin. You basically can immediately go to the credit market with it and take a loan against it. And this is actually the institutional use case um from from what we know from our market research. Um so they will usually not uh fractionalize the the Bitcoin UTXO and get a fungible Bitcoin out of it.

[00:13:30]But, yes, you can do that. So, basically, uh, if you want, you take your your bridge UTXO now, fractionalize it via a smart contract on Cardano, and you will get a a fungible representation out of it, which we call Prime BTC, by the way.

[00:13:45]>> [laughter] >> Prime BTC. Just a a little uh, dash on it. Um, and then, of course, you have a standard uh, Cardano native token, and with that, you can do whatever you like. Um, and you also have the way back, of course. So, if you basically then accumulated a certain amount of of this Prime BTC, you can go through the contract, reclaim an NFT, um, and and use the way back through the bridge. But, that is not necessary.

[00:14:12]Um, for the Of course, that is not very comfortable if you would do this, especially for the users. I need to always accumulate this the right amount to now get my Bitcoin back. That's not what you want. Right. I mean, unless you're the one that brought it across, then it makes sense. But, yeah.

[00:14:27]>> Then it makes sense.

[00:14:28]>> And then, for somebody else, then it's like wouldn't it you kind of be like stealing somebody else's NFT on the way back, or >> [laughter] >> Yeah, if it's about the same exactly the same thing, right? Yeah, then of course, right? If you say, "Okay, I do not care so much if I'm going in and out with a representation of one or two Bitcoin," then then it maybe does not matter too much. But, um, in the end, we have put a second layer on top of this, which we call the atomic swap layer.

[00:14:59]And it's basically swapping BTC for BTC, right? Because you have now the representation on Cardano, and you have the original native representation on Bitcoin. And the interesting part about about this atomic swap layer is it that it's really 100% trustless and does not have any intermediary. Um, so, you have a pure two-party protocol, basically, um, which can be run by everybody. And uh there's no bridge in the middle. There's no no custodian in the middle, nobody.

[00:15:30]So, it's really the user and uh maybe another user on the other side. So, and we have developed basically a provider system for that. So, that makes it easier for for normal users. And um So, what are the what does the incentive model look like for that? So, I'm assuming, you know, the person on the Bitcoin side will get some you know, so many basis points for swapping you know, for the the prime BTC or something like that. Yeah, exactly. It's it's basically what you say. You have basically a fee incentivization model for this. Um So, everybody can become a provider. You can, I can.

[00:16:10]Um and in the end you you will hold a little bit of the prime BTC, a little bit of normal BTC, and then you can spool up the system and uh provide it.

[00:16:20]Um also a normal operator node of the um of the BTCM bridge can do that. They have basically this in the operator node already included and they can start it up if they want because they basically hold both sides usually anyway, right?

[00:16:35]So, they are they have an easy way of handling the provider anyway.

[00:16:40]Um but it's not needed that you run an operator.

[00:16:42]>> Right. And then a provider could then use the normal bridge back if they needed to rebalance or arbitrage their pools. Like they could save up enough of the prime BTC to claim one of those NFTs and then move move back to top up their Bitcoin bucket for other maybe smaller people that wanted to come back to the Bitcoin side.

[00:17:05]Perfect.

[00:17:05]>> okay. E- E- Exactly like that. I I get it. I'm getting it now. [laughter] Finally. I didn't get it when we're talking on X, but I'm I'm getting it now.

[00:17:14]>> [laughter and gasps] >> That that is exactly the idea behind of this behind this. And also the whole atomic swap layer does not just works for Prime BTC. It basically works for any BTC representation. So if you if for you is it's fine to trust one chain, for example, so we have tested this with one chain lately on mainnet.

[00:17:33]This is why I'm mentioning it, right?

[00:17:35]And then we put the video on X, then you can do that, right? So also you do not need the bridge, you can basically use the trustless layer of atomic swaps between Bitcoin and Cardano for that. And and move basically between the chains pretty freely. Also it's very quick.

[00:17:51]I think that that is some something which is also nice because most bridges take some time, right? Because they they they need the finality of on both sides and then they take some extra and so on.

[00:18:02]On the atomic swap layer you basically can choose there there are parameters.

[00:18:06]If you want it very quick and for you it's fine to wait so much blocks basically, you can set this as a parameter. And if the provider accepts this as well, that that is good enough basically. Of course you should not wait just one block, that is not really safe, right? So there there are some parameters you should respect and the the tooling helps you with that.

[00:18:27]But it gives you control as a user basically to decide about what is important for me and what I want. And by basically having everybody the giving everybody the possibility to provide a you create a natural market, right? Where also everybody can participate really in DeFi fashion and this will also keep prices low, I think, right? because you always will have somebody which says, "Okay, I offer this, I have it anyway, I need to put my my BTC at work here and just can earn some money by by providing swaps." Right. Yeah, so let's let's talk about that let's talk a little bit more about that lending market. So me as somebody who has works for USDM.

[00:19:13]Um you know, I want to bring my dollar liquidity over and lend that to somebody that has Bitcoin. Uh what does that look like for me?

[00:19:25]And um I know your your loans are not the typical crypto lose your collateral type of loans when the price drops. Explain a little bit more about how that all works.

[00:19:37]Yes.

[00:19:38]Um So our credit market is basically inspired by the idea of Rusty Fallen Icarus, right? That's not a secret. We are very happy to work with him. He's also an advisor of us.

[00:19:50]Uh he has a lot of smart ideas.

[00:19:52]>> [laughter] >> Yeah, I've I've tried to get him on the show a few times, but he likes doing his own videos.

[00:19:58]>> [laughter] [gasps] >> Yes.

[00:20:01]Can you imagine?

[00:20:02]Um so the the credit market is basically sought in the sense of Bitcoin DeFi. So because everything what Poven does is is about Bitcoin DeFi. We really want to create a space for Bitcoin DeFi on Cardano and make it the natural chain uh also because of the UTXO relation between the chains um for for Bitcoiners because it has the the biggest liquidity in in in the entire market, right? That's not a secret. So and we think Cardano is exactly the right uh technical layer for that. But for that it needs to have some things which makes it attractive for Bitcoiners, right? And um the credit market is one of these missing pieces in our in our in our opinion.

[00:20:48]And the credit market is first of all a credit market which is not which has isolated positions. So this means if you are if you are agreeing I I as a you basically have um not a pool where where you participate like in the standard Aave protocol or something like this.

[00:21:06]Um you have an isolated position which you can negotiate about actually. So I can create an ask and say I'm looking for US DM loan of $100 and I'm willing to give 100 or $200 in in collateral for that. Mhm. So and then this ask goes on chain and a lender which which basically has the the 100 US DM says oh it's okay I I I accept that, right? And then he's basically giving me that loan and this loan which is created from from from from this ask and and the offer which the lender is giving me um becomes our loan and this loan is only for us basically between the lender and and me as a borrower. And and this is pretty special because I'm not pooled in anything up.

[00:21:56]Isolation gives me also certain amount of security. And then we have no oracles.

[00:22:02]So my my loan is not just getting liquidated when when Bitcoin moves, right? And it's it's it's basically not getting defaulted or liquidated by price, it's getting defaulted or liquidated by my behavior. So if I'm paying the agreed payment in the terms, then no nothing happens. I'm I'm I'm basically just paying down my loan and everything is fine and even each time I pay I can take a little bit of the collateral out, so I'm getting my Bitcoin back. Mhm. So >> So it's So it's more like, you know, how getting a home equity line of credit or something like that works where it's you have to pay it back on terms and as long as you're paying they can't take your house type thing. Exactly that.

[00:22:49]>> It doesn't matter if the the house goes up or down in price, that doesn't matter.

[00:22:53]Exactly it's it's more like in trust fund, right? You have a proper normal mechanism like bank loans work basically and >> we think that is first all missing in in crypto at all and I think there is no other protocol doing that.

[00:23:08]Um at least not to my knowledge at the moment, but I could be wrong.

[00:23:13]Um for all the market stuff I'm the wrong person.

[00:23:17]>> [laughter] >> Yeah.

[00:23:19]>> [gasps] >> But yes, in the end you get this and I think that is a great use case. It's actually something I looked for in the past and could not find. So for me it's very exciting to work on this actually. Yeah.

[00:23:32]So basically you're just setting up the environment where people can bring their own ideas of what a loan would look like from a lender side and here's what I'm willing to accept for how much Bitcoin and vice versa, you know, I'm willing to put this much Bitcoin up for this loan at these terms and then I will pay that back over such and such period of time and then then it's just between me and and the lender how that works. That's kind of cool.

[00:24:03]Yes, exactly.

[00:24:04]And of course we will provide a nice interface and a chat where you can basically negotiate the things and which helps you to do all this.

[00:24:11]Okay. [laughter] Interesting.

[00:24:16]Yeah, so there's it seems like there's a lot of different areas in this whole thing where people can participate. Like they could participate on bringing their Bitcoin over and maybe putting that in the credit market. They could bring their Bitcoin over, fractionalize it, put it into some D 5, let people, you know, trade ADA against Bitcoin or, you know, dollars against Bitcoin and and do some type of yield farming with it. They could uh put their Bitcoin and prime Bitcoin and make some some profit as people want to move across that secondary bridge.

[00:25:01]Um yeah, so it so there's it seems like there's a lot of interesting ways this could could develop and and people get a lot of choice, it seems like. Yes, and there's also a short layer actually.

[00:25:12]Okay, let's talk about it.

[00:25:13]>> [laughter] >> So, as I said, we are about Bitcoin DeFi and if you remember Charles said some around this Bitcoin 2025 said are basically the three rules of Bitcoin, right? Everything has to be in Bitcoin, also the yield has to be in Bitcoin.

[00:25:29]>> So, we of course also thought about how to generate yield.

[00:25:33]Okay.

[00:25:33]>> this is basically the the third piece of the puzzle. So, we have basically the bridge which brings Bitcoin to Cardano in the in with a trust anchored on Bitcoin because that is the important piece here for Bitcoiners.

[00:25:45]Um then we have the credit market which allows you basically uh to put your Bitcoin at work and get stables for it. And the yield layer now takes basically the stables or any other kind of token and puts it into yield opportunities. Okay.

[00:26:00]>> this could be real fight. For example, this can be RWAs. So, what we are doing is basically we are building a partner network and uh of of several existing yield providers basically which all work with stablecoins. And um we basically allow a one-way route for for Bitcoiners to basically bridge, get a credit, and put it into yield, get the yield, exchange it again Bitcoin, and bring it back to Bitcoin. So, and and with that you have basically the entire uh loop of how you bring your Bitcoin to to work and and actually generate yield for you. And this is something which is not existing this today, right? Um and the nice thing about it is it is non-custodial.

[00:26:43]>> [laughter] >> Right.

[00:26:44]>> Which is also not existing because every other solution which is basically coming when it comes to bridging or or also also yield um is always a custodial service. And most of the lending platforms today are custodial as well. I know like the big one, strike.me, um Jack Mallers' company, that's completely custodial.

[00:27:04]So.

[00:27:06]Now, this is this is very cool stuff. Um we're we're kind of getting to the end of our our time here. Uh is there anything else you want to talk about related to the project, uh the treasury withdrawal, you want to highlight anything uh related to it at all?

[00:27:23]Um yes, as of course we have the treasury proposal and uh it would be super nice if it would support us. Uh we really want to make Bitcoin DeFi work and we are a small team out of uh which is coming out of IO, but we are working close together only on this topic. Um I think we have a really good concept which we are able to bring to work.

[00:27:48]Um it will really benefit Cardano. We will contribute back to the treasury and uh pay pay back the the money we get out of the treasury if we get funded.

[00:27:58]And beyond that, um yeah, we really believe this will bring a big benefit to Cardano and want to do this. Um so I I really appreciate any votes which we which we will get. Also, if you have any questions about us, about the project, about the technology, I'm on X, Omar, the CEO is on X, um also on LinkedIn. Feel free to contact us. We are happy to talk. We're happy to talk answer any questions. Uh we are very confident uh that we can answer them. Um so yeah, feel free to do that.

[00:28:32]Okay. Well, I want to thank you for your time in joining us and and really bringing us up to speed on everything Bitcoin DeFi.

[00:28:39]And with that, nerd out.

[00:28:43]>> [music] [music] >> Woo.