I had the pleasure of presenting at the Massachusetts Institute of Technology during their annual Bitcoin Expo on April 6th 2025. Thought you all may find it interesting. Video link below if you want to reference my slides. It is a 15 minute presentation with 15 minutes of Q&A.
Video: https://primal.net/e/nevent1qqsvs6n8z5m2fu5q5y5tqdd8xwjv053znufhfh80mytmlngrd44axdg3uyvuy
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(00:00) Introduction and Personal Journey
(01:09) Focus on Money, Education, and Policy
(02:32) OpenSats: Supporting Open Source Contributors
(05:20) The Role of Ten31 in Bitcoin Capital Allocation
(07:09) Bitcoin Adoption and Business Strategy
(10:48) Challenges and Opportunities in Bitcoin Business
(15:06) Layer Two Investments and Protocols
(19:21) Funding and Supporting Bitcoin Businesses
(24:01) Relationship Between Bitcoin Businesses and Open Source
[00:00:00]
ODELL:
So what's up, guys? Speaking at MIT, kinda unreal. Feel a little bit of imposter syndrome right now. My name is Matt Odell. I've been focused on Bitcoin for about ten years now. I think it's, you know, it's easy to think of these things as tech projects, because that's exactly what they are. They're software. But, ultimately, Bitcoin is a movement of individuals. It it requires people to do things, and it requires people to step up, and it requires people to support each other along this movement. So about five years ago, I came to the conclusion that I needed to do more, and I didn't really know what was the best role for me in the movement, where where I could provide the most value.
And I basically came up with with three general target areas. And those areas, were money, education, and policy. On the money side, there's I have two focuses. I have OpenSats, which I'm one of the cofounders of, which is a five one c three charity providing support to open source contributors. And I'm a partner at ten thirty one, which is one of the larger venture funds. And we do we're we're a capital allocator to Bitcoin, so we do more than just venture now, focused on for profit businesses. I also launched Bitcoin Park in Nashville, Tennessee, 1 of the growing Bitcoin capitals of the country. We just expanded to Austin as well. And I'm one of the founding board members of Bitcoin Policy Institute. We're the largest think tank in DC focused on freedom focused Bitcoin usage, self custody, privacy, running your own node.
Today, I'm gonna focus on the money portion. The money portion is incredibly important, and the reason is is we see a massive disconnect. What has been happening over the last decade is most of the money in the greater crypto ecosystem goes to shitcoin projects, even though Bitcoin by far dominates the industry. If you measure any KPI, whether that's market cap, users, value, Bitcoin wins. But if you measure how much money is going into the space, Bitcoin loses. So there's a bunch of people around the world that wanna work on Bitcoin, but they don't have the money to do it.
We're gonna start with OpenSats. So OpenSats, like I said, is a five zero one c three nonprofit, focused on open source contributors. Not just Bitcoin, but we run on a Bitcoin standard. So we accept Bitcoin donations, we accept dollar donations, and we automatically convert the dollar donations into Bitcoin. We hold our entire treasury in Bitcoin in multisig, so not a single person can rug it. We're not relying on banks, and we're able to pay all of our grants out globally in Bitcoin. Open SaaS literally could not exist without Bitcoin.
So this is the structure of our organization. It's quite unique. Obviously, we're an organization, so organizations are inherently centralized. But we wanted it to be we wanted to mitigate the centralization risk as much as possible. So at the top level of OpenSach, we have a nine person board, complete volunteers. Every grant decision has to come down to a majority of that board, so it's hard to corrupt. You effectively have to corrupt five of nine board members in order to corrupt it. Then underneath that board, we have a variety of committees focused on subject matter, smaller niches.
And those committees are also volunteers. So they review first. They the applications come in. Anyone can submit an application. We have grant recipients in 40 plus countries, 200 grant recipients right now. The application comes in. It goes into our private GitHub repo. We do reviews all in line. Committee does reviews first. Board does committee reviews second. And it's basic ACKER NACK across committee and board. Those aren't public, but given any specific situation, they could be made public after the fact. We effectively have a full audit trail of every single decision that happens in the organization. Then once that happens, we send out Bitcoin monthly.
Most of our grants are denominated in dollars or euros on a yearly basis, and then they're paid out monthly in Bitcoin. This is something that you just could not do, with the dollar system. I cannot imagine trying to run wires to 40 plus countries once a month. This chart is actually from last year. We're now sending out a million dollars roughly every month. Kind of unreal that that's even possible. So now ten thirty one. Why does ten thirty one exist? Ten thirty one exists because, first and foremost, I'm a capitalist, and I believe that profit incentives are incredibly effective at scale. I think that capitalism scales the best. I think that's one of the reasons America is such a dominant country.
Open Sats is incredibly important because there's some things that just can't be monetized, and everything else is built on top of them. Ten thirty one is important because of scale. So my good friend, Vitter, is in this room. There he is. He posted this on Nasr the other day. And I think his title was protocols are better than platforms. Now, couple of things you can take away from this graphic. The first is, it's what happens on the Internet in the day. Internet itself is an open protocol. And it kind of gives this expression, this this example case, that emails we're seeing 340,000,000,000 emails sent per day, which itself is an open protocol built on the Internet. And that protocols open protocols are able to hit a level of scale that you don't see with closed platforms with walled gardens.
Now, what you don't see here is of those 340,000,000,000 emails sent per day, about half of those are Gmail. So you have a private company that is scaling email in open protocol. What you also don't see is there's about a 50,000,000,000 WhatsApp messages sent per day. There's no way for us to really verify that number, but according to Facebook, that's what you have. So just to provide a little bit more context here. Now, that is similar to our thesis at 10:31. Our thesis at 10:31 is quite simple. Bitcoin adoption will continue to grow. Bitcoin as an open protocol will dominate.
The companies that build on top of Bitcoin will be able to scale out the protocol further, and we'll be able to reap the benefits. They'll be some of the most profitable businesses in the world will likely be bitcoin companies. Similar to how we saw internet adoption. Enter VC. Historically, I've always hated VC. One of the interesting things about my journey is I do have a podcast called Rabbit Hole Recap that we've been doing for seven years every week. If you listen to every episode of Rabbit Hole Recap straight, it'd be twenty four days. So you can torture a prisoner by just playing Rabbit Hole Recaps constantly.
Why do I bring that up? I bring that up because in the early days of Rabbit Hole Recaps, all I would do was shit on VCs. And now, I run one of the largest venture funds in Bitcoin. So this is your traditional VC. Everyone thinks it's easy. Even the VCs think it's easy. The reality is, when they come into Bitcoin, it's actually very difficult for them. And why is it difficult for them? It is difficult for them because traditional VC is based on an easy money environment. Their performance is pretty much correlated with interest rates and easy money, cheap money. Being able to take as much money as possible in an easy money environment, scatter shot it all over the place, and hopefully have a few winners.
A 16 itself was founded in a zero interest rate environment. This is not a sustainable phenomenon. This is a rare thing. This is a a a blip in society with broken incentives. And they're self aware. They they realize that they're a zero interest rate phenomenon. They said the quiet part out loud. So what does investing under Bitcoin standard look like? It's quite simple. You have an opportunity cost. Bitcoin's the hardest money in the world. Bitcoin will purchasing power should increase substantially with adoption. And as a result, you have this built in hurdle rate. You have this hurdle rate that you have you have to outperform. Otherwise, you're just better off holding Bitcoin.
In simple terms, businesses need to stay humble and stack stats about it. So let's dive into this a little bit. You can acquire Bitcoin 2 different ways as a business, and it's actually very similar with individuals. You could be profitable, not a really complicated concept. Be a profitable business, stack stats about it. Or you can do, like, financial engineering tricks, which I think, you know, like the micro strategy approach, which I think is more of an arbitrage opportunity that probably won't last very long, but it's just because of where we are in the adoption phase. You have to assume that if you are not a profitable business, you will fail.
This is not a complicated concept. Somehow, this was lost on people. You need to be a profitable business. And you have to assume that Bitcoin is going to go up forever because that is what has been happening. It is a scarce asset. And as price as as adoption increases, so should price. So what does that mean? That means that if price if if Bitcoin is is is gonna continue to go up with adoption, earning Bitcoin today can be worth earning 10 times, you know, in in ten years. Right? You need to earn it sooner rather than later. So this idea this is what Fiat VC built out. This idea of grow at all costs, lose a ton of money, maybe not be profitable for twenty plus years, and then eventually turn on this this the profit drivers.
That doesn't work under a Bitcoin standard. You need to make money as quickly as possible. You need to be as sustainable as possible as quickly as possible. So in a Bitcoin world, this might be what a successful business looks like. Only loses money very little in the beginning, and then in Bitcoin terms that's denominated in Bitcoin. In Bitcoin terms, they might actually look flat. Like, their revenue, their profits, they might actually look flat. But because Bitcoin's increasing in purchasing power, that's actually a successful growing business on the right hand side. Now, that's the hard part about building a Bitcoin business.
There's good news, and the main good news is that we have this open protocol to build on that aligns incentives across all companies that are building on it. You can almost think of it as this this shared equity pool. Right? If you're in a startup, let's say you're startup at Google or you're startup, you know, Facebook, when Facebook was a startup, you only have your own internal equity. You have to hope that Google is successful that you'll eventually get liquidity. But if you're in a Bitcoin startup, most employees own Bitcoin.
Most successful Bitcoin businesses own Bitcoin. They have this shared equity. They have this shared alignment. And because it's an open protocol, there are many areas for partnerships. The collaboration we see between the many successful Bitcoin companies in the world is absolutely beautiful to watch, and it's just very interconnected. Like, everyone at the end of the day is using this open protocol together. This is just a quick snapshot of some of the companies that we've supported across the entire ecosystem. And what's interesting here is what fascinates me the most is this idea of companies that maintain and build open source software, and then have a separate profit model attached to it. And the reason that this is nice is because it's sustainable. So you have open source software that is able to get built out and maintained without relying on donors, without going and begging for government grants.
That is massively powerful and, as a result, should pay big dividends in terms of freedom. With all that said, I think I did pretty well on time. If anyone has questions, I I I enjoy Q and A the best, so thank you.
[00:14:01] Unknown:
Hello. Hey. Thank you for your, talk. So you had a layer two investment in your, deck. So I wanna know because, you know, I know you're, a little bit more maybe specific or, like with your investments. So what does an ideal layer two or meta protocol or whatever you call it investment look like in your again, that, you know, kinda uses your thesis the same way. But do you have any other criteria for investing, let's say, a successful SaaS flowing layer two? Jim West?
[00:14:32] ODELL:
So layer two, it's, the hot topic or at least it's been the hot topic for the last four months, five months, talking to investors. The only layer two that we really focus on right now is lightning. It's actually being used at scale. I think there is some other promising proposals, and initiatives, but, we're kind of doing a wait and see approach and seeing, you know, how it how it plays out and where adoption happens. And, specifically, we will not invest in anything that requires a Bitcoin soft fork or any kind of change of the protocol up layer. I just think that's a recipe to burn capital really quickly, and Bitcoin is very hard to change by default, and that's a feature, not a bug. So you you kinda need to you kinda need to lean with that.
[00:15:35] Unknown:
Thank you. That was awesome. One of your graphs showed how in a Bitcoin world, the company looks successful even though it's flat because of the increasing purchasing power of Bitcoin over time. Yeah. Traditional finance is so used to talking about yield. And I'm just wondering what your thoughts are in a hyper Bitcoin noise world. How do we wrap our heads around value, you know, and growing value? Is there something better than just thinking about increasing purchasing power?
[00:16:08] ODELL:
Yield. Yield is what screwed over this guy. First off, I I forgot to mention, just for a comparison's sake on OpenSats and ten thirty one, there's a lot more capital flowing into for profit businesses as well. So it's, like, maybe $40,000,000 has been raised into OpenSats, while a hundred and 50,000,000 has been raised into ten thirty one, just to give you a little bit of context there, and why both are incredibly important. So, the question is yield on Bitcoin or thinking about saving on Bitcoin and a Bitcoin standard. I think, first and foremost, this idea that your money loses value over time is kind of a perverse thing. Like, I think most people like, the average person probably doesn't want to deal with investments or hire an investment adviser or pick stocks or figure out which high yield savings account is the right one for them. I think they just wanna work hard, care for their family, do the things they love, and just save save their money in something that goes up in purchasing power over time, and they just don't have to think about it.
But on the investor side, we hear a lot of people wanting yield, and now what they say is they say safe yield, because everyone got wrecked last cycle chasing yield. I think one of the interesting models, I see we have Rob, here in the audience. He's one of the founders of AnchorWatch, which is a self custody insurance focused product. So they offer insurance on self custody. Hopefully, one day, there'll be an example of a company that's building out an open source stack with a profit motive on top. But, he hasn't open sourced his wallet yet, but, hopefully, he will do that soon.
They right now, they denominate their, policies. They have a Lloyd's cover holder, Lloyd's of London, and they denominate their policies in dollar terms. Now I think there could be a world where it's denominated in Bitcoin terms. Right? So if you have one Bitcoin, it's insured as one Bitcoin. And then you could basically have a one to one Bitcoin coverage. And then if you put Bitcoin into that, on the opposite side of that, on the insurance side, then you could take a cut of the premiums. And then you kinda have a non degen yield pool that is lower risk than basically what we've seen up until this point, which is just you take money and you just bar you lend it to degens, and the degens just lose all the money.
So you have that. And I think, you know, profitable businesses is is is a way to look at it. Sats flowing businesses. Businesses that have positive cash flow, and those are either coming in as as Bitcoin directly or they're coming in as dollars, and then they're converting it to Bitcoin and storing it as Bitcoin long term.
[00:19:22] Unknown:
I, my wife and I are are veterinarians, and we're kind of, one of these for profit businesses operating in a a kind of an industry that's turned more, like, hyperfiatized and hyperfinancialized. So it's made us made it really easy for us to stay humble, StackSats.
[00:19:40] ODELL:
We recently
[00:19:41] Unknown:
bought a just a super ugly veterinary hospital and are running super lean. But, we I'm just kind of just thinking about the the kind of way to operate. We built a farm and kind of plugged our extra Bitcoin into spreading meat through farmers markets and donating to soup kitchens. And I thought I'd be happy just doing that, but this kind of makes me wanna scale up and, like, kneecap all the super corporatized things that are taking over our industry. Are there any funds like, you guys specifically fund, like, Bitcoin building companies, but do you know of any funds that fund, like, an anti fiat, anti corporate Bitcoin standard for profit company? Like, is that Not yet. Yep.
[00:20:28] ODELL:
It's something that interests me a lot. It almost like it's it's almost more of like a private equity strategy, but, like, a non predatory one, of, like, the idea of, like, small bit like, investing in just profitable small businesses that run on a Bitcoin standard. I think there's a lot of opportunity there. I think what people don't realize, like, everyone loves Saylor. But I think, like, the Bitcoin treasury strategy actually benefits small businesses the most. So, like, if you're just running, like, a profitable dentistry office and you just keep your profits in Bitcoin, you're probably gonna be, one of the most valuable dentist office in, like, ten years.
Next question. Howdy.
[00:21:11] Unknown:
Funding software maintenance has been a theme of today and yesterday. Does OpenStack support core devs or what, how how is how do you contribute to that?
[00:21:21] ODELL:
Yeah. So, we have we've approved about 230 grants in total. We have rejected about 1,200 grants, just to give you a idea of scale, which is pretty crazy. And those grant recipients cross the gamut. So there's some are, like, very small projects and very small grants that are external to core. We probably are funding, depending on what you count as core or not, like, 10 to 20 ish core adjacent people. I have here 20 long term support grants. So that's one of our newer initiatives that we're trying to scale up, which is this idea of of a two year term rather than a one year term, gives some of the really fundamental contributors that are doing a lot of the maintenance and a lot of the review, a little bit more security in terms of what they can expect. And that also comes with an easier, like, review and renewal process. So all of our grant recipients, they submit quarterly reports to us as well. So we've we have, like, 200 outstanding grants right now. That means we have 800 reports coming in every year.
And we do all of this. I don't know if I mentioned it or not, but we're a % pass through. So we have a separate operations budget where people can donate just operations. So our operations is incredibly lean. It's like it's a couple salaries, basically, is the majority of our operations. So we're trying to scale that up in the most lean way possible, and there's been some growing pains. But, yeah, we love we love funding maintenance. We had Roger up here earlier. Like, we provided some funding to tour that was for that focus. But but, yeah, maintenance is is incredibly important. I thought Adam did a really good job yesterday. Or people just don't realize. Like, it's like a small town fire department, and you just need these people need support, and the burnout's real as well.
And it's easy to get disenfranchised, and so we have a lot of focus there.
[00:23:37] Unknown:
So you've got these two funding orgs that are kind of separate concerns between VC and open source. What do you think is the relationship between Bitcoin businesses and open source projects that a lot of times they rely on? And how can some of the value that the businesses create kind of accrue back to open source, even not just monetarily, but, like, technical contributions and other things? Well, I think
[00:24:03] ODELL:
I think there's two pieces here. Right? The first thing is, unfortunately, we haven't really seen broad ecosystem support for open source contributors from, like, the the for profit businesses. You know? Like, Coinbase historically, for instance, probably one of the most successful, quote, unquote, crypto businesses in the world, hasn't really given much back to to Bitcoin developers and Bitcoin open source contributors. They do a little bit, and it's appreciated. Every bit is appreciated. But in general, this idea of providing sustainable funding and sustainable support for the people that are actually building out the protocol has been less than desired. So what first of all, what I'm hoping is we do have this new breed of Bitcoin businesses that have only been launched in the last three or four years. As they start to become more profitable, hopefully, they will start this trend of of really contributing in size.
The second piece is only until recently has there been any kind of real funding for Bitcoin businesses that are building out more self custody, open source kind of focused verticals. Historically, where you see the majority of funding goes in two directions. It's KYC exchanges, so just buy, sell Bitcoin, charge 1%, very easy not easy business, but straightforward business model, and mining, which is a brutal business, very capital intensive, but is easy for capital allocators to wrap their head around. Businesses like a Start Nine, for instance, right, which is a completely open source stack where you can host things at home, right, basically a server at home, and then build premium services that you sell on top of that is a harder business to raise money for.
And we're just starting to see capital allocators willing to take that risk willing to take that risk and and support those types of projects. Mempool.space is another perfect example of that. Like, mempool is a completely open source stack. Anyone can run their own mempool instance at home. Convincing investors that that could actually be a profitable SaaS flowing business is much harder hurdle than convincing them that Stripe can be incredibly profitable, for instance. I think I have time for one more question. Otherwise, we'll wrap.
Good morning. Thanks for the talk. Just curious, how do you think about your funding priorities, themes, etcetera? On which side? On ten thirty one? Either or. OpenSats OpenSats is kinda beautiful because we hold our treasury in Bitcoin, and, we're not beholden to anybody else. I mean, raising money for it has been, a slog. And fortunately, there's, like, one or two players that provide the overwhelming majority of funding into the ecosystem, and we need to broaden that donation pool. But the nice thing about OpenSats is it's just open application. So we don't really have to think that closely about what we necessarily wanna see. We see what applications come in. We review them, and then we decide if if we're gonna pay or, if we're gonna approve the grant or reject the grant. On the ten thirty one side, I mean, I I I want to see more businesses that are focused on self custody and freedom focused Bitcoin usage, that are focused on trust minimization in terms of third parties, and that can still have a sustainable business model.
I think we saw the early days of that, with the two main CoinJoin wallets, with Wasabi Wallet and Samura Wallet. They were open source stacks that had a sustainable SatsFlow model. Now, they ran into legal trouble, which is one of the issues with centralization is that you have a central party that you can prosecute and put in jail. But the general premise of an open source stack that because of Bitcoin, you are actually able to monetize directly in a sustainable ethical way is relatively new. So I just I wanna see more of those things happen, and we have been allocating to those types of projects. Projects like mempool. Space, projects like Primal, projects like StartMine.
Anyway, guys, thank you. My time is up. Appreciate you all.
So what's up, guys? Speaking at MIT, kinda unreal. Feel a little bit of imposter syndrome right now. My name is Matt Odell. I've been focused on Bitcoin for about ten years now. I think it's, you know, it's easy to think of these things as tech projects, because that's exactly what they are. They're software. But, ultimately, Bitcoin is a movement of individuals. It it requires people to do things, and it requires people to step up, and it requires people to support each other along this movement. So about five years ago, I came to the conclusion that I needed to do more, and I didn't really know what was the best role for me in the movement, where where I could provide the most value.
And I basically came up with with three general target areas. And those areas, were money, education, and policy. On the money side, there's I have two focuses. I have OpenSats, which I'm one of the cofounders of, which is a five one c three charity providing support to open source contributors. And I'm a partner at ten thirty one, which is one of the larger venture funds. And we do we're we're a capital allocator to Bitcoin, so we do more than just venture now, focused on for profit businesses. I also launched Bitcoin Park in Nashville, Tennessee, 1 of the growing Bitcoin capitals of the country. We just expanded to Austin as well. And I'm one of the founding board members of Bitcoin Policy Institute. We're the largest think tank in DC focused on freedom focused Bitcoin usage, self custody, privacy, running your own node.
Today, I'm gonna focus on the money portion. The money portion is incredibly important, and the reason is is we see a massive disconnect. What has been happening over the last decade is most of the money in the greater crypto ecosystem goes to shitcoin projects, even though Bitcoin by far dominates the industry. If you measure any KPI, whether that's market cap, users, value, Bitcoin wins. But if you measure how much money is going into the space, Bitcoin loses. So there's a bunch of people around the world that wanna work on Bitcoin, but they don't have the money to do it.
We're gonna start with OpenSats. So OpenSats, like I said, is a five zero one c three nonprofit, focused on open source contributors. Not just Bitcoin, but we run on a Bitcoin standard. So we accept Bitcoin donations, we accept dollar donations, and we automatically convert the dollar donations into Bitcoin. We hold our entire treasury in Bitcoin in multisig, so not a single person can rug it. We're not relying on banks, and we're able to pay all of our grants out globally in Bitcoin. Open SaaS literally could not exist without Bitcoin.
So this is the structure of our organization. It's quite unique. Obviously, we're an organization, so organizations are inherently centralized. But we wanted it to be we wanted to mitigate the centralization risk as much as possible. So at the top level of OpenSach, we have a nine person board, complete volunteers. Every grant decision has to come down to a majority of that board, so it's hard to corrupt. You effectively have to corrupt five of nine board members in order to corrupt it. Then underneath that board, we have a variety of committees focused on subject matter, smaller niches.
And those committees are also volunteers. So they review first. They the applications come in. Anyone can submit an application. We have grant recipients in 40 plus countries, 200 grant recipients right now. The application comes in. It goes into our private GitHub repo. We do reviews all in line. Committee does reviews first. Board does committee reviews second. And it's basic ACKER NACK across committee and board. Those aren't public, but given any specific situation, they could be made public after the fact. We effectively have a full audit trail of every single decision that happens in the organization. Then once that happens, we send out Bitcoin monthly.
Most of our grants are denominated in dollars or euros on a yearly basis, and then they're paid out monthly in Bitcoin. This is something that you just could not do, with the dollar system. I cannot imagine trying to run wires to 40 plus countries once a month. This chart is actually from last year. We're now sending out a million dollars roughly every month. Kind of unreal that that's even possible. So now ten thirty one. Why does ten thirty one exist? Ten thirty one exists because, first and foremost, I'm a capitalist, and I believe that profit incentives are incredibly effective at scale. I think that capitalism scales the best. I think that's one of the reasons America is such a dominant country.
Open Sats is incredibly important because there's some things that just can't be monetized, and everything else is built on top of them. Ten thirty one is important because of scale. So my good friend, Vitter, is in this room. There he is. He posted this on Nasr the other day. And I think his title was protocols are better than platforms. Now, couple of things you can take away from this graphic. The first is, it's what happens on the Internet in the day. Internet itself is an open protocol. And it kind of gives this expression, this this example case, that emails we're seeing 340,000,000,000 emails sent per day, which itself is an open protocol built on the Internet. And that protocols open protocols are able to hit a level of scale that you don't see with closed platforms with walled gardens.
Now, what you don't see here is of those 340,000,000,000 emails sent per day, about half of those are Gmail. So you have a private company that is scaling email in open protocol. What you also don't see is there's about a 50,000,000,000 WhatsApp messages sent per day. There's no way for us to really verify that number, but according to Facebook, that's what you have. So just to provide a little bit more context here. Now, that is similar to our thesis at 10:31. Our thesis at 10:31 is quite simple. Bitcoin adoption will continue to grow. Bitcoin as an open protocol will dominate.
The companies that build on top of Bitcoin will be able to scale out the protocol further, and we'll be able to reap the benefits. They'll be some of the most profitable businesses in the world will likely be bitcoin companies. Similar to how we saw internet adoption. Enter VC. Historically, I've always hated VC. One of the interesting things about my journey is I do have a podcast called Rabbit Hole Recap that we've been doing for seven years every week. If you listen to every episode of Rabbit Hole Recap straight, it'd be twenty four days. So you can torture a prisoner by just playing Rabbit Hole Recaps constantly.
Why do I bring that up? I bring that up because in the early days of Rabbit Hole Recaps, all I would do was shit on VCs. And now, I run one of the largest venture funds in Bitcoin. So this is your traditional VC. Everyone thinks it's easy. Even the VCs think it's easy. The reality is, when they come into Bitcoin, it's actually very difficult for them. And why is it difficult for them? It is difficult for them because traditional VC is based on an easy money environment. Their performance is pretty much correlated with interest rates and easy money, cheap money. Being able to take as much money as possible in an easy money environment, scatter shot it all over the place, and hopefully have a few winners.
A 16 itself was founded in a zero interest rate environment. This is not a sustainable phenomenon. This is a rare thing. This is a a a blip in society with broken incentives. And they're self aware. They they realize that they're a zero interest rate phenomenon. They said the quiet part out loud. So what does investing under Bitcoin standard look like? It's quite simple. You have an opportunity cost. Bitcoin's the hardest money in the world. Bitcoin will purchasing power should increase substantially with adoption. And as a result, you have this built in hurdle rate. You have this hurdle rate that you have you have to outperform. Otherwise, you're just better off holding Bitcoin.
In simple terms, businesses need to stay humble and stack stats about it. So let's dive into this a little bit. You can acquire Bitcoin 2 different ways as a business, and it's actually very similar with individuals. You could be profitable, not a really complicated concept. Be a profitable business, stack stats about it. Or you can do, like, financial engineering tricks, which I think, you know, like the micro strategy approach, which I think is more of an arbitrage opportunity that probably won't last very long, but it's just because of where we are in the adoption phase. You have to assume that if you are not a profitable business, you will fail.
This is not a complicated concept. Somehow, this was lost on people. You need to be a profitable business. And you have to assume that Bitcoin is going to go up forever because that is what has been happening. It is a scarce asset. And as price as as adoption increases, so should price. So what does that mean? That means that if price if if Bitcoin is is is gonna continue to go up with adoption, earning Bitcoin today can be worth earning 10 times, you know, in in ten years. Right? You need to earn it sooner rather than later. So this idea this is what Fiat VC built out. This idea of grow at all costs, lose a ton of money, maybe not be profitable for twenty plus years, and then eventually turn on this this the profit drivers.
That doesn't work under a Bitcoin standard. You need to make money as quickly as possible. You need to be as sustainable as possible as quickly as possible. So in a Bitcoin world, this might be what a successful business looks like. Only loses money very little in the beginning, and then in Bitcoin terms that's denominated in Bitcoin. In Bitcoin terms, they might actually look flat. Like, their revenue, their profits, they might actually look flat. But because Bitcoin's increasing in purchasing power, that's actually a successful growing business on the right hand side. Now, that's the hard part about building a Bitcoin business.
There's good news, and the main good news is that we have this open protocol to build on that aligns incentives across all companies that are building on it. You can almost think of it as this this shared equity pool. Right? If you're in a startup, let's say you're startup at Google or you're startup, you know, Facebook, when Facebook was a startup, you only have your own internal equity. You have to hope that Google is successful that you'll eventually get liquidity. But if you're in a Bitcoin startup, most employees own Bitcoin.
Most successful Bitcoin businesses own Bitcoin. They have this shared equity. They have this shared alignment. And because it's an open protocol, there are many areas for partnerships. The collaboration we see between the many successful Bitcoin companies in the world is absolutely beautiful to watch, and it's just very interconnected. Like, everyone at the end of the day is using this open protocol together. This is just a quick snapshot of some of the companies that we've supported across the entire ecosystem. And what's interesting here is what fascinates me the most is this idea of companies that maintain and build open source software, and then have a separate profit model attached to it. And the reason that this is nice is because it's sustainable. So you have open source software that is able to get built out and maintained without relying on donors, without going and begging for government grants.
That is massively powerful and, as a result, should pay big dividends in terms of freedom. With all that said, I think I did pretty well on time. If anyone has questions, I I I enjoy Q and A the best, so thank you.
[00:14:01] Unknown:
Hello. Hey. Thank you for your, talk. So you had a layer two investment in your, deck. So I wanna know because, you know, I know you're, a little bit more maybe specific or, like with your investments. So what does an ideal layer two or meta protocol or whatever you call it investment look like in your again, that, you know, kinda uses your thesis the same way. But do you have any other criteria for investing, let's say, a successful SaaS flowing layer two? Jim West?
[00:14:32] ODELL:
So layer two, it's, the hot topic or at least it's been the hot topic for the last four months, five months, talking to investors. The only layer two that we really focus on right now is lightning. It's actually being used at scale. I think there is some other promising proposals, and initiatives, but, we're kind of doing a wait and see approach and seeing, you know, how it how it plays out and where adoption happens. And, specifically, we will not invest in anything that requires a Bitcoin soft fork or any kind of change of the protocol up layer. I just think that's a recipe to burn capital really quickly, and Bitcoin is very hard to change by default, and that's a feature, not a bug. So you you kinda need to you kinda need to lean with that.
[00:15:35] Unknown:
Thank you. That was awesome. One of your graphs showed how in a Bitcoin world, the company looks successful even though it's flat because of the increasing purchasing power of Bitcoin over time. Yeah. Traditional finance is so used to talking about yield. And I'm just wondering what your thoughts are in a hyper Bitcoin noise world. How do we wrap our heads around value, you know, and growing value? Is there something better than just thinking about increasing purchasing power?
[00:16:08] ODELL:
Yield. Yield is what screwed over this guy. First off, I I forgot to mention, just for a comparison's sake on OpenSats and ten thirty one, there's a lot more capital flowing into for profit businesses as well. So it's, like, maybe $40,000,000 has been raised into OpenSats, while a hundred and 50,000,000 has been raised into ten thirty one, just to give you a little bit of context there, and why both are incredibly important. So, the question is yield on Bitcoin or thinking about saving on Bitcoin and a Bitcoin standard. I think, first and foremost, this idea that your money loses value over time is kind of a perverse thing. Like, I think most people like, the average person probably doesn't want to deal with investments or hire an investment adviser or pick stocks or figure out which high yield savings account is the right one for them. I think they just wanna work hard, care for their family, do the things they love, and just save save their money in something that goes up in purchasing power over time, and they just don't have to think about it.
But on the investor side, we hear a lot of people wanting yield, and now what they say is they say safe yield, because everyone got wrecked last cycle chasing yield. I think one of the interesting models, I see we have Rob, here in the audience. He's one of the founders of AnchorWatch, which is a self custody insurance focused product. So they offer insurance on self custody. Hopefully, one day, there'll be an example of a company that's building out an open source stack with a profit motive on top. But, he hasn't open sourced his wallet yet, but, hopefully, he will do that soon.
They right now, they denominate their, policies. They have a Lloyd's cover holder, Lloyd's of London, and they denominate their policies in dollar terms. Now I think there could be a world where it's denominated in Bitcoin terms. Right? So if you have one Bitcoin, it's insured as one Bitcoin. And then you could basically have a one to one Bitcoin coverage. And then if you put Bitcoin into that, on the opposite side of that, on the insurance side, then you could take a cut of the premiums. And then you kinda have a non degen yield pool that is lower risk than basically what we've seen up until this point, which is just you take money and you just bar you lend it to degens, and the degens just lose all the money.
So you have that. And I think, you know, profitable businesses is is is a way to look at it. Sats flowing businesses. Businesses that have positive cash flow, and those are either coming in as as Bitcoin directly or they're coming in as dollars, and then they're converting it to Bitcoin and storing it as Bitcoin long term.
[00:19:22] Unknown:
I, my wife and I are are veterinarians, and we're kind of, one of these for profit businesses operating in a a kind of an industry that's turned more, like, hyperfiatized and hyperfinancialized. So it's made us made it really easy for us to stay humble, StackSats.
[00:19:40] ODELL:
We recently
[00:19:41] Unknown:
bought a just a super ugly veterinary hospital and are running super lean. But, we I'm just kind of just thinking about the the kind of way to operate. We built a farm and kind of plugged our extra Bitcoin into spreading meat through farmers markets and donating to soup kitchens. And I thought I'd be happy just doing that, but this kind of makes me wanna scale up and, like, kneecap all the super corporatized things that are taking over our industry. Are there any funds like, you guys specifically fund, like, Bitcoin building companies, but do you know of any funds that fund, like, an anti fiat, anti corporate Bitcoin standard for profit company? Like, is that Not yet. Yep.
[00:20:28] ODELL:
It's something that interests me a lot. It almost like it's it's almost more of like a private equity strategy, but, like, a non predatory one, of, like, the idea of, like, small bit like, investing in just profitable small businesses that run on a Bitcoin standard. I think there's a lot of opportunity there. I think what people don't realize, like, everyone loves Saylor. But I think, like, the Bitcoin treasury strategy actually benefits small businesses the most. So, like, if you're just running, like, a profitable dentistry office and you just keep your profits in Bitcoin, you're probably gonna be, one of the most valuable dentist office in, like, ten years.
Next question. Howdy.
[00:21:11] Unknown:
Funding software maintenance has been a theme of today and yesterday. Does OpenStack support core devs or what, how how is how do you contribute to that?
[00:21:21] ODELL:
Yeah. So, we have we've approved about 230 grants in total. We have rejected about 1,200 grants, just to give you a idea of scale, which is pretty crazy. And those grant recipients cross the gamut. So there's some are, like, very small projects and very small grants that are external to core. We probably are funding, depending on what you count as core or not, like, 10 to 20 ish core adjacent people. I have here 20 long term support grants. So that's one of our newer initiatives that we're trying to scale up, which is this idea of of a two year term rather than a one year term, gives some of the really fundamental contributors that are doing a lot of the maintenance and a lot of the review, a little bit more security in terms of what they can expect. And that also comes with an easier, like, review and renewal process. So all of our grant recipients, they submit quarterly reports to us as well. So we've we have, like, 200 outstanding grants right now. That means we have 800 reports coming in every year.
And we do all of this. I don't know if I mentioned it or not, but we're a % pass through. So we have a separate operations budget where people can donate just operations. So our operations is incredibly lean. It's like it's a couple salaries, basically, is the majority of our operations. So we're trying to scale that up in the most lean way possible, and there's been some growing pains. But, yeah, we love we love funding maintenance. We had Roger up here earlier. Like, we provided some funding to tour that was for that focus. But but, yeah, maintenance is is incredibly important. I thought Adam did a really good job yesterday. Or people just don't realize. Like, it's like a small town fire department, and you just need these people need support, and the burnout's real as well.
And it's easy to get disenfranchised, and so we have a lot of focus there.
[00:23:37] Unknown:
So you've got these two funding orgs that are kind of separate concerns between VC and open source. What do you think is the relationship between Bitcoin businesses and open source projects that a lot of times they rely on? And how can some of the value that the businesses create kind of accrue back to open source, even not just monetarily, but, like, technical contributions and other things? Well, I think
[00:24:03] ODELL:
I think there's two pieces here. Right? The first thing is, unfortunately, we haven't really seen broad ecosystem support for open source contributors from, like, the the for profit businesses. You know? Like, Coinbase historically, for instance, probably one of the most successful, quote, unquote, crypto businesses in the world, hasn't really given much back to to Bitcoin developers and Bitcoin open source contributors. They do a little bit, and it's appreciated. Every bit is appreciated. But in general, this idea of providing sustainable funding and sustainable support for the people that are actually building out the protocol has been less than desired. So what first of all, what I'm hoping is we do have this new breed of Bitcoin businesses that have only been launched in the last three or four years. As they start to become more profitable, hopefully, they will start this trend of of really contributing in size.
The second piece is only until recently has there been any kind of real funding for Bitcoin businesses that are building out more self custody, open source kind of focused verticals. Historically, where you see the majority of funding goes in two directions. It's KYC exchanges, so just buy, sell Bitcoin, charge 1%, very easy not easy business, but straightforward business model, and mining, which is a brutal business, very capital intensive, but is easy for capital allocators to wrap their head around. Businesses like a Start Nine, for instance, right, which is a completely open source stack where you can host things at home, right, basically a server at home, and then build premium services that you sell on top of that is a harder business to raise money for.
And we're just starting to see capital allocators willing to take that risk willing to take that risk and and support those types of projects. Mempool.space is another perfect example of that. Like, mempool is a completely open source stack. Anyone can run their own mempool instance at home. Convincing investors that that could actually be a profitable SaaS flowing business is much harder hurdle than convincing them that Stripe can be incredibly profitable, for instance. I think I have time for one more question. Otherwise, we'll wrap.
Good morning. Thanks for the talk. Just curious, how do you think about your funding priorities, themes, etcetera? On which side? On ten thirty one? Either or. OpenSats OpenSats is kinda beautiful because we hold our treasury in Bitcoin, and, we're not beholden to anybody else. I mean, raising money for it has been, a slog. And fortunately, there's, like, one or two players that provide the overwhelming majority of funding into the ecosystem, and we need to broaden that donation pool. But the nice thing about OpenSats is it's just open application. So we don't really have to think that closely about what we necessarily wanna see. We see what applications come in. We review them, and then we decide if if we're gonna pay or, if we're gonna approve the grant or reject the grant. On the ten thirty one side, I mean, I I I want to see more businesses that are focused on self custody and freedom focused Bitcoin usage, that are focused on trust minimization in terms of third parties, and that can still have a sustainable business model.
I think we saw the early days of that, with the two main CoinJoin wallets, with Wasabi Wallet and Samura Wallet. They were open source stacks that had a sustainable SatsFlow model. Now, they ran into legal trouble, which is one of the issues with centralization is that you have a central party that you can prosecute and put in jail. But the general premise of an open source stack that because of Bitcoin, you are actually able to monetize directly in a sustainable ethical way is relatively new. So I just I wanna see more of those things happen, and we have been allocating to those types of projects. Projects like mempool. Space, projects like Primal, projects like StartMine.
Anyway, guys, thank you. My time is up. Appreciate you all.
Introduction and Personal Journey
Focus on Money, Education, and Policy
OpenSats: Supporting Open Source Contributors
The Role of Ten31 in Bitcoin Capital Allocation
Bitcoin Adoption and Business Strategy
Challenges and Opportunities in Bitcoin Business
Layer Two Investments and Protocols
Funding and Supporting Bitcoin Businesses
Relationship Between Bitcoin Businesses and Open Source
