How To Make Money While Holding Bitcoin | Charlie Hu
🎯 Summary
Podcast Episode Summary: How To Make Money While Holding Bitcoin | Charlie Hu
This 41-minute podcast episode, hosted by Anthony Pompliano (Pom) featuring Charlie Hu, Co-founder of BitLayer, centers entirely on the emerging landscape of Bitcoin Decentralized Finance (DeFi) and the infrastructure required to unlock yield and utility for Bitcoin holders.
1. Focus Area
The primary focus is on Bitcoin DeFi, exploring the technical necessity, current state, and future potential of building programmable applications and generating yield on top of the Bitcoin network. Secondary themes include the global adoption dichotomy between Asian retail investors and Western institutions, and the technical challenges of scalability (speed and cost) versus security inherent in Bitcoin’s base layer.
2. Key Technical Insights
- Bitcoin Finality Requirement: True Bitcoin DeFi, in Charlie Hu’s view, requires that transactions ultimately settle on the Bitcoin network (Bitcoin finality), differentiating it from less secure sidechains that lack a direct link to Bitcoin’s security model.
- The “Ideal” Bitcoin DeFi Stack: The optimal design involves using a Layer 2/Rollup structure where heavy transaction throughput is handled off-chain, but the final proof settles on the Bitcoin block (via recursive proofs/verification). This structure must utilize Bitcoin as gas fees and Bitcoin as liquidity assets.
- Scalability Trade-off: Bitcoin L1’s current 7 TPS is insufficient for mass DeFi adoption. New infrastructure must provide high throughput and lower costs (solving the high gas fees seen during Ordinals peaks) while maintaining the security derived from the L1 settlement layer.
3. Market/Investment Angle
- Value Unlock: Bringing DeFi programmability to Bitcoin—the most decentralized and secure asset—represents a “major value unlock” and catalyst, as it utilizes an asset that has historically been “underutilized” or “idle.”
- Asian Retail Driving Demand: Asian retail communities (particularly in Vietnam) are currently the most active users and experimenters in the Bitcoin ecosystem, driving early demand for new use cases like Ordinals and DeFi tooling, often moving faster than Western institutional adoption.
- Institutional vs. Retail Dynamics: While Western institutions entered via ETFs, the builders and early users exploring on-chain utility are predominantly retail, often digital nomads who prioritize decentralized, permissionless access.
4. Notable Companies/People
- Charlie Hu (BitLayer): Co-founder of BitLayer, focused on building the necessary infrastructure for Bitcoin DeFi.
- Loi Luu (Kyber Network): Mentioned as an OG DeFi builder and an early investor in BitLayer, highlighting Vietnam’s deep roots in DeFi building.
- WBTC (Wrapped Bitcoin): Cited as the “first generation Bitcoin bridging,” which relied on centralized multi-sig custody to bring BTC liquidity to Ethereum DeFi.
5. Regulatory/Policy Discussion
The discussion touched on regulatory clarity as a catalyst, noting that the approval of Bitcoin ETFs in the US, followed by Hong Kong and Australia, signals growing institutional acceptance, which will eventually pave the way for regulated DeFi applications built around Bitcoin.
6. Future Implications
The conversation strongly suggests the future of Bitcoin is evolving beyond “digital gold” to become the foundational settlement layer for a new wave of decentralized finance. This will require robust, scalable Layer 2 solutions that inherit Bitcoin’s security guarantees while offering EVM-like functionality (or similar battle-tested smart contract capabilities) for lending, trading, and other proven DeFi primitives.
7. Target Audience
This episode is highly valuable for Crypto Professionals, DeFi Developers, Bitcoin Maximalists interested in utility, and Investment Analysts looking to understand the technical roadmap and market drivers behind the next phase of Bitcoin innovation.
🏢 Companies Mentioned
đź’¬ Key Insights
"Um, we might see some interesting Bitcoin-based use cases which is high-frequency, such as perpetual DEXs, even on-chain option protocols, like, um, you know, prediction markets, you know, for price prediction that actually, you know, doesn't require rigorous KYC, right, in a DeFi way to do that and back, but focus on Bitcoin assets."
"Um, but I think you mentioned about some interesting new use cases, right? I'm very excited and also very looking forward to see the kind of high-frequency on-chain protocols will be built on the Bitcoin rollup, like a scalable rollup."
"One of them in the macro perspective, I believe, I believe I've been talking across many different, you know, events and also podcasts, is the Bitcoin ETF staking approval."
"The key missing gap, right, we see in the Bitcoin space. If we're trying to build this like Bitcoin security rollup system, we need to have this like verification component. So, currently, BitLayer is one of the key Vivienne alliance members and doing the research and working on engineering solutions and optimizing this verification, you know, module, and that's actually getting close."
"The key difference between the true Bitcoin security equivalent rollup model compared to the sidechain, right? So, the sidechain, in case people don't know, transactions don't really settle back to the Bitcoin network. It's settled within their own validator sets. So, it's sidechain security, right? So, sidechain security is fundamentally different compared to Bitcoin security."
"I think security is the most important thing, like one of the key principles, right? People want to make sure that the transaction is secure, they're not being hacked, right? You know, there's no vulnerability issues on their liquidity pools and so on."