Let's Talk Bitcoin DeFi

The Spaces explored the state of Bitcoin DeFi from three angles: an L1 execution layer (RE) powering Reswap, a UTXO management platform (Setonomy), and broader ecosystem momentum across Runes, ICP-based tooling, and Spark. Musing (Reswap) detailed RE (Runes Exchange Environment) by Omnity: a decentralized PSBT-based execution layer on Bitcoin L1 enabling AMM trading, lending/game demos, multi-intention swaps, anti-MEV properties, 5-second confirmations on RE with ~10-minute L1 finality, audits and an open-source roadmap. Reswap’s new protocol revenue donation mechanism routes fee revenue (in BTC) into the RICH pool, lifting price, rewarding LPs in BTC, and deepening liquidity; donations are trackable on RuneScan. Jay (Setonomy) showed how reclaiming UTXO padding and bundling low-value inscriptions recovers sats for trading/mints; emphasized UI/UX as a differentiator; outlined Alcane NFT staking with BB emissions and tradable staking receipts, plus an upcoming swap and Xverse Express API integration. Doc Father shared a macro view on fungible token standards and the need for robust infra on Bitcoin. Neva previewed Joy on Spark (fees from Magic Eden to seed liquidity, no LP at launch) and cautioned on Spark-era risks. Active Asian communities, ICP launchpads, and weekly spaces indicate strong builder momentum.

Bitcoin DeFi Twitter Spaces — Reswap (RE), Setonomy, Spark/JOY, and Runes Asia

Participants and Roles

• Barbara (Host/Moderator)
• Musing — Product Manager, Reswap (built on RE: Runes Exchange Environment)
• Mr. Jay — Setonomy team (UTXO visualizer/manager)
• DOC Father (John) — Community voice/commentator
• Dominic — Community member, plugged into Xverse/Spark ecosystem
• Neva (aka Naver/Neighbor) — Spark team; steward for JOY token initiative
• Evie — Audience member (UTXO/ordinals user)

Key Themes and Takeaways

Reswap and the RE (Runes Exchange Environment) stack on Bitcoin L1

• What RE is:
  • A decentralized virtualized execution layer built on Bitcoin L1, designed to bring DeFi tooling, complete smart-contract-like capabilities, and composability to Bitcoin without modifying Bitcoin Core.
  • No bridges, no off-chain custodial risk; natively leverages PSBT.
  • Launched by the Omnity Network team; audited; plans to open-source next year.
• Core mechanism — DPS (Decentralized PSBT Signing):
  • Coordinates multiple parties/projects to co-sign a single PSBT carrying multi-intent operations.
  • Practical interoperability: “intents” can call any RE contract, enabling complex, multi-step DeFi actions atomically.
• RE performance and UX:
  • Transactions “confirm on RE” in 5 seconds, giving users near-instant feedback. Final L1 settlement still follows Bitcoin block times (10 minutes).
  • RE prevents MEV/front-running: intents are pre-committed and hashed (post-signing amounts are fixed), so the trade is either finalized as signed or rolled back.
  • The team is exploring a “continuous trading” mode to chain actions without waiting for L1 finality (mitigating RBF risks); target by end of the month.
• Reswap — the first AMM DEX showcase on RE:
  • Runes-to-Runes workflow: enables seamless “DOG → BTC → RICH” routing in a single intent/PSBT, minimizing fees and mempool load.
  • Assets in liquidity pools are contract-controlled (not multisig), deployed on ICP for verifiable logic; transactions are trackable via Ruin Scan explorer and also visible on the Bitcoin mempool.
  • Focus: Runes integration first, given PMF and ecosystem traction.
• Ecosystem scope on RE/ICP:
  • Lending prototypes (e.g., Liquidium demo), early gaming demos (e.g., Cookie Clicker, “Saturday Dance”); more Bitcoin L1 games expected by year-end.
  • Wallets: Xverse, OKX, etc. support PSBT signing for a native experience.

Reswap revenue-donation mechanism and RICH utility

• Protocol revenue donations:
  • All Reswap trading fees are settled to BTC and donated into the “Hope You Get Rich” (RICH) pool.
  • Donation = adding BTC liquidity to the pool without receiving LP tokens, so LPs share real BTC yield pro-rata.
  • AMM effect: pool’s Runes side stays constant while BTC side increases, pushing RICH price up on donation events.
  • Decentralized trigger: anyone can execute a donation once a pool’s accumulated revenue exceeds 10,000 sats (the caller signs and pays the L1 fee). Events are trackable on Ruin Scan.
• Expected benefits per donation:
  • Price appreciation for RICH,
  • Real BTC rewards to LPs,
  • Deeper pool liquidity.
• Outlook:
  • Liquidium (close partner) plans a token with a revenue model (e.g., market buy + distribution to stakers). Watch for utility tokens maturing within Runes.

Setonomy — UTXO management, staking, UX, and Alkanes builds

• Core product:
  • UTXO visualizer/manager to “reclaim sats” trapped as padding in inscriptions and small UTXOs; one-click reclaim button plus granular controls.
  • Example economics: inscriptions padded with 10,000 sats only need ~330 sats; reclaiming ~9,670 sats can add up for active minters. 100 inscriptions padded at ~330 sats each is roughly $33 at current BTC prices.
  • Helps users bundle and optimize UTXOs (e.g., consolidate many tiny rune/inscription UTXOs) for more efficient DeFi activity.
• DeFi-related features and roadmap:
  • Staking live for certain “orbitals/Alkanes NFTs”; swap function for those assets is in development.
  • Token: not soon; focus is on product. A tentative target is “around the halving” (do not quote; subject to change).
  • Integration: listed in Xverse’s featured dapps; planning to use the new Xverse Express API.
• UI/UX as a competitive edge:
  • With AI making base coding more accessible, projects must win on UX: fewer steps, intuitive flows, and in-app guidance matter for onboarding.
• Alkanes builds — Big Boob NFT staking (technical nuance):
  • Built staking contracts in Rust for Alkanes (indexer-driven computation akin to Ordinals/Runes, but distinct from Bitcoin L2s).
  • Each staked Big Boob emits 1 BB token per block; a staked “receipt” NFT is minted that is tradable (introducing a new trading dimension based on accrued BB).
  • Planned: token/NFT swaps (e.g., 25,000 BB redeemable for one Big Boob); holders get discounts on Setonomy utilities.
  • Contrast with ordinal staking: ordinal staking is typically timelock-based; Alkanes contracts allow richer parameters and dynamics.

Spark/JOY updates and cautions (Neva)

• JOY token:
  • Partnering across the ecosystem to bring JOY live; early on there will be no standard AMM liquidity pool.
  • Spark trading model (today): individual listings, similar to Runes’ early PSBT markets; goal is to reach AMMs via Flashnet in time.
  • Magic Eden partnership: trading fees from the UNITY original inscriptions on Magic Eden (until snapshot) will be directed to JOY liquidity.
  • Airdrop: not yet; snapshot timing TBD.
• Xverse Mobile timeline:
  • Per Dominic, Spark on Xverse Mobile is expected next week (subject to change).
• Caution to users:
  • Be wary of claims like “JPEGs on Spark” — not currently on Spark’s roadmap; some teams may overpromise. Review GitHubs, track records, and feasibility.
  • Expect many new launches and copycats; practice strong due diligence.

Runes Asia and ICP-driven activity

• On-the-ground momentum (per Musing):
  • Despite “runes are dead” narratives, Asia is vibrant and coordinated — particularly around ICP-based infra and launchpads such as Odin Fan (a Runes launchpad on Layer 2, built on ICP, similar tech stack relation as RE’s ICP contracts).
  • Communities are onboarding newcomers daily (often OKX Wallet-first) and actively trading launchpad tokens; market caps and stability of certain ICP-launched Runes compare with OG Runes.
  • Notable ICP/adjacent participants: Liquidium (lending), Odin Fan (launchpad), Tacky, Formowell, BlockManner (lending/launchpad/activity hubs), and more.
• Strategy alignment:
  • Reswap is collaborating with top communities to seed liquidity pools on Bitcoin L1, enabling native BTC purchases of community tokens without bridging; aims to broaden user reach while keeping L1 settlement security.

Macro perspectives on Bitcoin DeFi

• DOC Father (John):
  • Bullish on Bitcoin’s broader asset stack; expects a dominant fungible token standard to emerge (whether Runes, BRC20 v2, or something new).
  • Infrastructure remains the bottleneck; aggregators like Sats Terminal are crucial.
  • Advocates for full Bitcoin-native functionality: DeFi, NFTs/Ordinals, stablecoins, as close to L1 as feasible.
  • Focus on education via the Crunch Set stream and partnerships with leading teams.
• Mr. Jay’s framing:
  • Celebrate innovation across L1, L2s, and indexer-based protocols; be precise about “Bitcoin-native” vs L2 claims to avoid user confusion.

Q&A and Clarifications

• Ordinals padding/minimum sats (Evie → Setonomy):
  • Platform auto-detects safe amounts; typical padding is ~330 sats for transfer safety. If an inscription holds more (e.g., 10,000 sats), users can reclaim the surplus without burning the inscription. The UI prevents unsafe transactions.
• RE finality timing (Barbara → Reswap):
  • RE confirmation: ~5 seconds for in-RE actions. Outside RE or for L1 finality, expect Bitcoin’s ~10-minute block time. “Continuous trading” (to keep interacting within RE without waiting) is being reintroduced with RBF/risk mitigations.

Notable Mentions and Ecosystem Highlights

• Alchemist (by Omni Sets team) on Alkanes:
  • Building a DeFi loop game that consolidates swaps, staking, and game mechanics — a one-stop Alkanes DeFi experience.
• UI/UX matters:
  • Projects with clear, self-explanatory flows and hover-based tooltips reduce support burden and accelerate adoption.
• Technical reliability meta:
  • Spaces experienced multiple “rug”/audio issues; contrasted humorously with Bitcoin’s uptime and stability.

Near-term Milestones and Watchlist

• Reswap/RE:
  • Continuous trading back by end of month (subject to limitations to mitigate transaction replacement risk).
  • More Bitcoin L1 games by year-end; RE open-sourcing next year.
  • Ongoing revenue donations into RICH liquidity; track on Ruin Scan.
  • Liquidium token launch with revenue model (watch staker distribution mechanics).
• Setonomy:
  • Xverse Express API integration; ongoing feature expansion (swaps for Alkanes/“orbitals”).
  • Possible token around the halving (tentative; product-first focus).
• Spark/JOY:
  • Spark on Xverse Mobile expected next week (tentative).
  • JOY liquidity via Magic Eden fee diversion until snapshot; airdrop details TBD.
• Alkanes:
  • Alchemist DeFi-loop game; continued staking/trading experiments (e.g., Big Boob/BB token mechanics).
• ICP + Runes Asia:
  • Elevated activity on Odin Fan and associated ICP-based apps; watch Tacky, Formowell, BlockManner, and Liquidium.

Closing Notes

• Reswap (RE) is pushing native Bitcoin L1 DeFi via PSBT-based composability, MEV resistance, and rapid user feedback, while innovating on protocol revenue donation to strengthen the RICH pool and LP yield.
• Setonomy is easing UTXO friction and expanding DeFi primitives across Bitcoin-adjacent protocols, with standout UX and novel Alkanes staking/token mechanics.
• Spark/JOY is coordinating ecosystem partnerships to bootstrap liquidity and infrastructure; users should stay vigilant amid rapid launch cycles and exaggerated claims.
• Asia’s builder/user momentum (especially ICP-linked launchpads) is a significant growth driver for Runes, with L1 liquidity seeding via Reswap as a vital bridge to wider adoption.