Original | Odaily Planet Daily (@OdailyChina)
“I originally spent over a decade in the gaming industry, and when I came to the Crypto industry in 2018, I did so with a semi-retired mindset, never really thinking about needing to succeed or become the industry leader,” said founder Lorenzo as he reflected on the entrepreneurial journey of UniSat in a conference room at the UniSat office in Hong Kong, his eyes revealing calmness and serenity.
During Bitcoin Asia, I had the privilege of interviewing UniSat founder Lorenzo. Upon our first meeting, the 80s-born Lorenzo was dressed simply, his gaze lacking the sharpness of an entrepreneur, instead filled with amiability. If placed in a crowd, he wouldn’t be the type to draw attention, which helped bridge the gap between us. Before the interview began, Lorenzo was reading the day’s edition of the Hong Kong newspaper, Ming Pao. In an era where print media is being phased out, it’s rare to see someone still reading a physical newspaper. Although Lorenzo has spent his career in the fast-evolving fields of gaming and Crypto, he remains quite traditional.
“Chinese traditional culture has a significant influence on me; I often study Daoist texts, so I tend to approach work in a way that is natural and unforced.”
During the boom of the Bitcoin ecosystem, UniSat occupied an important ecological position, and some of its actions could even influence price fluctuations of certain assets. But as the Bitcoin ecosystem has weakened, what is UniSat thinking and doing with its “natural” attitude? In this interview, Lorenzo introduced products like UniHexa and the UniSat cold wallet, explained the reasons behind the continuous decline in FB coin prices, expressed his stance on new protocols in the Bitcoin ecosystem for the first time, and discussed the impact of market fluctuations on the team. Odaily Planet Daily has organized the interview as follows, enjoy~
What has UniSat been doing recently?
Odaily: As the heat of the Bitcoin ecosystem has decreased this year, UniSat's attention has also relatively diminished. Many media reports have remained at the stage of no longer supporting the Atomicals protocol since April. But in fact, UniSat has made many important moves in the last month or two; could you briefly introduce them?
Lorenzo: We have experienced several small market cycles, feeling the warmth and coldness of the market. We maintain a calm mindset towards the market. However, during periods of lower attention, we actually gain more time to do meaningful things.
In the first half of this year, an important development was our support for a new protocol—Alkanes. We specifically wrote an article to explain why we support Alkanes. In the second half of the year, our main focus will be on the upgrade of BRC 20 (such as single-step transfers, BRC 2.0 upgrades), as well as our upcoming cold wallet product, and our developed Bitcoin native asset mixed trading engine—UniHexa.
Odaily: Another product iteration I noticed is that PizzaSwap announced the cancellation of deposit and withdrawal operations, allowing direct trading. But now UniSat has launched UniHexa; what is the difference in positioning between the two?
Lorenzo: UniHexa is our top priority for the second half of this year. We will conduct invite-only testing in September and publicly launch it in the fourth quarter.** As we support more protocols, there is inevitably liquidity fragmentation and disconnection between them, so we believe a unified framework is needed to integrate them.
UniHexa and PizzaSwap are complementary products within the ecosystem. UniHexa is built on the Bitcoin mainnet, while PizzaSwap is built on Fractal; UniHexa is compatible with various protocols (such as BRC 20, Runes, and Alkanes), while PizzaSwap is centered around BRC 20—one focuses on breadth, the other on depth; UniHexa uses a traditional order book model, while PizzaSwap uses an AMM model.
Odaily: You just mentioned cold wallets; what was the original intention behind UniSat creating a cold wallet? What is the product form of this wallet?
Lorenzo: UniSat currently has a browser extension wallet and a mobile app wallet, but we find it challenging to balance convenience and security. For some users, understanding the importance of mnemonic phrases and effectively protecting them is still too high a barrier. So what we can do is, on one hand, prepare more educational materials, and on the other hand, provide users with products of higher security standards.
We will soon support hardware wallets like Ledger and Trezor, but their security is not at a level we consider very “serious,” which led us to the idea of creating our own cold wallet.
“A cold wallet just needs to be cold enough,” since users are responsible for their own assets, they should use a carrier they trust. So our choice is to let users use their own mobile devices as carriers, such as an old second-hand phone; as long as it is disconnected from the internet, it becomes a very secure offline device, and this device is trusted by the user. Once they have this device, they just need to download a separate isolated app called UniSat Cold Wallet. This wallet will never request a network connection and will monitor the user's network connection status, issuing a warning if it detects the device is online.
However, it is possible that next year or later, we will collaborate with hardware manufacturers to produce a separate isolated wallet device.
Odaily: Does UniSat have plans to develop into BTCFi business in the future, such as staking BTC to earn yields?
Lorenzo: We have a partnership with Babylon, but we will not consider developing in this direction in the short term. Because the current environment has not reached a very prosperous state for the Bitcoin ecosystem, and we also do not have such strong cash flow, making it difficult to provide a sustainable funding basis for models that earn yields for this type of user.
Response to the continuous decline in FB coin prices
Odaily: How is the activity level of Fractal, the Bitcoin expansion solution under UniSat, currently? According to official data, Fractal's permissionless mining hash rate has fallen below 1 EH/s; does this indicate a decrease in the number of participants?
Lorenzo: From the perspective of miner hash rate, it is indeed not as high as it was at the beginning of the launch. But I believe that to measure whether a chain is active, we should focus more on on-chain behavior, which is whether people are genuinely using it; this is a more important indicator. The on-chain transaction data for Fractal is still quite good. Some community members may doubt whether we are inflating the transaction numbers, but since Fractal's launch on September 9 last year, we can confidently say that we have not inflated a single transaction.
Additionally, whether miners decide to spend hash power to mine is determined by returns. For Fractal, its coin price determines how much hash power miners are willing to invest, and unfortunately, since FB's launch last year, its inflation rate has indeed been too high. The initial inflation caused a sharp price drop, which is indeed a responsibility we cannot evade.
We are also approaching the one-year anniversary of FB's launch. In the second quarter of this year, FB's inflation level was the highest, reaching 5% to 10% per month, but now in the third quarter, the inflation rate is gradually returning to 3% to 5%, and by the fourth quarter, it will return to a normal level of 1% to 2%.
Odaily: So for FB, is UniSat considering taking some market value management actions, such as actively listing on more exchanges to boost the coin price?
Lorenzo: Although we are a team focused on technical development, it does not mean we are completely indifferent or irresponsible towards the market. “Ignoring external affairs and focusing solely on reading classics” is not feasible. We have been actively making adjustments in this area during this time.
Since Fractal's launch last year, it has experienced significant peaks and troughs. Key events at certain special nodes have also had a substantial impact on us. We have indeed communicated with some trading platforms, but frankly speaking, it is easier to add icing on the cake than to provide timely assistance in a snowstorm; when a project is in a downturn, communication is often counterproductive. Only when the project gradually enters a stable period and begins to turn in a positive direction, if on-chain indicators further improve, then I believe the possibility of reaching cooperation will greatly increase.
Fractal is a long-term and complex project; we hope to continue delivering well and gradually improve the project's fundamentals, forming a sustained push from a long-term perspective. We believe the market will evaluate the effectiveness of our work.
Attitude towards new Bitcoin protocols: Open yet cautious
Odaily: Can you briefly talk about why you chose to stop supporting the Atomicals protocol at that time? Was there significant controversy in the community regarding this?
Lorenzo: Actually, our initial motivation for supporting the Atomicals protocol was consistent with our current support for the Alkanes protocol, which is to hope that they can expand smart contract capabilities on the Bitcoin mainnet.
However, later we observed that the ideas of the Atomicals protocol designers were very advanced, which also meant they were very complex, making integration quite challenging for us. In the second half of last year, the pace of iteration for the Atomicals protocol began to slow down, which we considered a signal; the excessive complexity of the design made it difficult for it to advance. So we decided to stop supporting it. However, throughout the entire lifecycle of the Atomicals protocol, UniSat's support for it was comprehensive and sufficient.
Odaily: Do you feel regret for the Atomicals protocol?
Lorenzo: If there is regret, since we started working on the Bitcoin ecosystem two years ago, there have been too many projects that we feel regretful about—not just one or two, but possibly dozens. When they appeared, they were quite eye-catching, and we invested a lot of energy into researching them, only to find that they did not last long, especially some projects that aimed to improve BRC 20, which later did not persist in executing their ideas.
There are too many such things in the ecosystem, so I think it is really difficult to find a team that can consistently do things well, adhere to its own bottom line and principles, and not back down when facing difficulties.
Odaily: UniSat has publicly expressed support for the BRC 2.0 upgrade. Did you previously design a BRC 20 smart contract upgrade plan, which you have now abandoned?
Lorenzo: That's right. When Pizzaswap was just being productized, we did some research on how to run a complete smart contract on Bitcoin. We hoped to move in that direction, but we encountered a dilemma beyond product and design.
This dilemma is that as one of the main promoters of BRC 20, if we do too much, users will say we are too centralized; but if we completely ignore this matter, users will say we are not taking responsibility for promoting BRC 20. We have long been criticized by both sides. Later, we realized that we cannot be both the referee and the athlete, so we stepped back from this awkward position and instead encouraged small teams to innovate, using the technology we have accumulated to help them.
Odaily: Recently, many new protocols in the Bitcoin ecosystem have made moves, such as Spark and RGB, but UniSat has only integrated the Alkanes protocol. I read your blog about why you chose to support the Alkanes protocol, but my question is why not expand support for these new protocols?
Lorenzo: It's not that we don't support them; we won't favor one over the other. We have always maintained an open yet cautious attitude towards new things in the Bitcoin ecosystem. Being open means we won't set a standard that a protocol must meet our criteria or aesthetic; being cautious means that while we learn and study these new protocols, when it comes time to support them, we will exercise restraint. We cannot transform from a technical team into a team focused on the hype of new protocols.
Specifically, we have been paying attention to protocols like Spark and RGB. We will support or integrate them at an appropriate time because their development is phased, and we need time to learn and absorb them.
The Bitcoin ecosystem is insignificant compared to Bitcoin and needs 5-10 years of development
Odaily: How do you view this round of Bitcoin bull market? Will it bring more attention to the Bitcoin ecosystem?
Lorenzo: I tend to agree with the view that the four-year cycle theory of Bitcoin is gradually weakening. We are currently at a rather unique point in time where Bitcoin is significantly influenced by external factors, and Bitcoin is becoming a game outside the small circle of crypto. Of course, I cannot judge whether this is a good or bad thing.
My view on the relationship between the Bitcoin ecosystem and Bitcoin is that Bitcoin itself has a history of over a decade, while the Bitcoin ecosystem has only emerged in the last two years. In the entire history of Bitcoin, the Bitcoin ecosystem is insignificant. However, the Bitcoin ecosystem is not entirely inconsequential; its development requires time. Due to its rapid development in the first two years, it has created an illusion of maturity. In fact, its growth will take much longer than we imagine and will require necessary stages of catalysis.
I believe that any conclusions we draw about the Bitcoin ecosystem now are also insignificant. From a long-term perspective, I think it will take another 5 to 10 years for the Bitcoin ecosystem to find its own place, a reasonable ecological niche.
Odaily: What do you think the current Bitcoin ecosystem looks like? Are you still optimistic?
Lorenzo: I feel that compared to two years ago, the development direction and threads of the Bitcoin ecosystem are much more numerous now. Two years ago, people only focused on new assets. However, starting in 2024, we see more development threads, and we are very willing to help these teams engage in some truly interesting explorations.
So we invest in some projects within the ecosystem, including those focused on wallets and security. From the perspective of an infrastructure provider, we actually hope for a better combination structure. We aim to develop a better foundational layer, making it easier for everyone to develop applications on top of that layer, and we hope to conduct more research in this area.
Monthly revenue has decreased by 90% compared to peak periods, but we have reserved enough development funds for 10 years
Odaily: How do you think this year's Bitcoin Asia compares to last year's?
Lorenzo: Last year's Bitcoin Asia venue was small but had a great atmosphere. I have a deep impression of a panel that included myself, Domo, and Casey, discussing the pros and cons of Runes and BRC 20, which had just launched. This topic garnered a lot of attention, and many joked with me to be careful not to get caught in the middle.
This year, Bitcoin Asia moved to a larger exhibition center, but perhaps the atmosphere is not as good as before. However, for us, we continue to support this conference as always. Last year, UniSat's booth was right at the entrance, and this year it is the same; everyone can see it as soon as they enter.
Odaily: When the Bitcoin ecosystem was bustling, or when Fractal launched, UniSat was a prominent presence, but now UniSat's attention has sharply declined. In the face of this situation, has the team experienced a reduction in income, layoffs, or significant personnel changes? How do the atmosphere, behavior, and working style of the team differ between these two different periods?
Lorenzo: There have been no layoffs; on the contrary, our team is gradually growing, currently with over 20 members. I hope the team does not fluctuate too much with market conditions; growth is based on the needs of the project.
As for our current revenue compared to peak times, it has even decreased by 90% in a single month. This is a characteristic of this industry; the amplitude of boom and bust cycles is very large, so we remind ourselves that the more pronounced these industry characteristics are, the more we need to pay attention to financial health. Therefore, we are also cautious and restrained when expanding the team.
I believe that if we did not enter a very frenzied state during the hot period of the ecosystem, then now we are not too likely to feel this gap and can still maintain a calm mindset. That said, whether in life or in projects, the low point is actually the norm. “Flowers do not bloom for a hundred days, and people do not remain young forever.” We cannot be red flowers every day; when we need to be green leaves, we should be good green leaves.
Odaily: In any case, UniSat is a Bitcoin ecosystem project that has traversed cycles. What insights would you like to share?
Lorenzo: Frankly speaking, we are still a very young team. We have not truly traversed the bull and bear markets, nor have we experienced real dark moments, but we have made very adequate preparations for such moments. Most of our revenue has been reserved to prepare for future dark times, and our current financial reserves can support the team to develop for over ten years.
Additionally, it is essential to value the growth of team members, allowing the members of this team to accumulate and grow through long-term practice, enabling this industry to bring them truly valuable things.
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