BitcoinETFs

#HEMI @Hemi #Hemi $HEMI

I have to tell you the truth about something. I have spent the last three months observing the movement of funds into a protocol that is mostly ignored by the general public. Not because it's insubstantial. Not due to the lack of established technologies. But since learning what it accomplishes in reality takes more than five minutes of investigation.

Over a billion dollars shifted into Hemi as the larger market followed stories and cycled among popular tokens. There were 100,000 confirmed users present. Integration of 90 basic protocols. Quietly, purposefully, and with the conviction that only organizations that acknowledge real infrastructure can muster, this took place.

At first, the figures did not make sense, so I spent hours investigating Hemi. Without the hype cycle mechanisms that often propel those figures, how could a protocol reach a billion in TVL in 38 days? Why do reputable DeFi protocols like Redstone, LayerZero, Pyth, and Sushi integrate right away rather than waiting to see whether it takes off?

The response altered my perspective on the upcoming stage of cryptocurrency. I'll tell you what I discovered.

There's an issue with Bitcoin that no one really discusses. It is the most safe, reliable, and lucrative cryptocurrency asset available. The market capitalization is $2.50 trillion. 15 years of flawless uptime. The only digital asset in mainstream banking that can truly compete with gold as a store of value.

However, it has no effect. While Ethereum capital moves through dozens of DeFi protocols and generates returns, it sits in wallets and cold storage producing 0% yield. This inefficiency is not a small one. This represents trillions of dollars' worth of the best cryptocurrency collateral lying idly by.

This was previously attempted to be fixed. By putting your faith in custodians to retain your actual Bitcoin and giving you a token, wrapped bitcoin enables you to utilize BTC in Ethereum DeFi. These systems received billions of dollars. Then, when those custodians failed or bridges were exploited, billions were taken. Bitcoin owners were reminded by each hack why they first shunned DeFi.

Bitcoin was created in order to eradicate the very trust assumptions that wrapping established. centralized authority. danger of custody. single points of failure. Bitcoin Maxis rejected DeFi because the implementation necessitated giving up everything that made Bitcoin valuable, not because they didn't grasp it.

The technological difficulty was always evident. The scripting language used by Bitcoin is purposefully restricted to avoid errors that might jeopardize money. As a result, it is safe yet unprogrammable. Bitcoin script cannot be used to create complicated financial products, decentralized exchanges, or lending protocols.

Ethereum used a Turing complete virtual computer to address the programmability problem. However, only Ethereum state is visible to the EVM. You need external data if you want a smart contract to respond to Bitcoin transactions or confirm ownership. That information is supplied by oracles, but oracles also convey the same presumptions about trust that wrapping does.

This made things impossible. Although they refused to take on custodial risk, Bitcoin holders desired DeFi. DeFi developers want Bitcoin liquidity but were unable to obtain it without establishing credibility.

Everything with Bitcoin DeFi suddenly becomes conceivable if you comprehend the architecture, which Hemi solved at the virtual machine level.

An whole Bitcoin node is included within the Hemi Virtual Machine, an EVM. This isn't an API connection or a smart integration. This is an actual Bitcoin node that is operating within the smart contract execution environment. Bitcoin blocks are processed by the node. It keeps the UTXO set intact. Transactions are indexed by it. Consensus rules are validated.

Hemi-based smart contracts can use precompiles to directly query this Bitcoin node. Do you want to confirm that a specific amount is held at a Bitcoin address? Ask the node a question. Do you want to see if a transaction took place? Ask the node a question. Are you curious about a block's confirmation count? Ask the node a question.

This enables direct access to the Bitcoin state for Solidity developers without the need for trusted middlemen, relays, or oracles. Similar to how Ethereum contracts react to Ethereum data, you can create smart contracts that react to Bitcoin data.

The ramifications are profound. It is possible to create non-custodial Bitcoin exchanges in which the contract uses a direct read of the Bitcoin blockchain to confirm ownership. Without using wrapped tokens, you may create lending protocols that verify collateral exists on Bitcoin itself. Instead of using artificial representations, you may create staking systems that employ actual Bitcoin.

Prior to trust assumptions, all of these applications were theoretically feasible but practically impractical. By providing contracts with direct visibility into the status of Bitcoin, the hVM removes such presumptions.

Let me illustrate what this makes possible with a specific scenario. Consider creating a loan system that allows users to borrow stablecoins secured by Bitcoin. This entails converting Bitcoin into an ERC-20 token, placing it into a contract, and having faith that the wrapper is adequately supported in conventional DeFi.

You draft a contract with Hemi that immediately confirms Bitcoin ownership. By signing a message, a person establishes authority over a Bitcoin address. To verify that address has the stated amount, the contract makes a query to the hVM's Bitcoin node. Without ever assuming possession of the Bitcoin, the contract grants a loan based on verification.

The contract dismisses its claim upon loan repayment. The contract retains enforcement mechanisms based on implementation in the event of a user default. This type of financing uses native Bitcoin as collateral and minimizes trust. No wrapping. No guardians. Only smart contract logic and cryptographic verification.

Proof of Proof is the security architecture that underpins all of this, and it merits explanation since it embodies truly innovative cryptographic innovation.

The majority of layer twos use rollup methods to inherit Ethereum's security. Until contested, optimistic rollups are presumed to be accurate. ZK rollups validate state transitions using cryptographic proofs. Both post information to Ethereum in order to facilitate withdrawals and verification.

Hemi uses a different method to inherit security from Bitcoin. Hemi block headers are taken by participants known as PoP miners, who then incorporate them into Bitcoin transactions. Bitcoin blocks include confirmations of certain transactions. A Hemi block becomes Superfinal after it has enough Bitcoin confirmations.

At that time, Bitcoin itself must be reorganized in order to reorganize that Hemi block. To reverse those confirmations, 51 percent of Bitcoin's hashrate would be required. The proof of work for Bitcoin is the priciest security mechanism yet developed. Without requiring consent from Bitcoin miners or modifications to the Bitcoin system, Hemi inherits that security.

This system is decentralized and permissionless. A PoP miner may be operated by anybody. You pay Bitcoin transaction fees, create transactions with Hemi block data, and receive incentives in HEMI tokens. A block's finality guarantees get stronger the more PoP publishing it receives.

Proof of Proof was created by Maxwell Sanchez. He has spent years developing cross-chain interoperability and Bitcoin security. The other co-founder, Jeff Garzik, was a pioneering core developer of Bitcoin who helped shape the software in its early years.

This is not a group of outsiders attempting to expand on Bitcoin without knowing its underlying principles. These individuals contributed to the creation of Bitcoin and are extending it in ways that uphold its fundamental principles. This background is important because it clarifies the rationale behind the technological choices.

They have no intention of altering Bitcoin. They are not attempting to integrate Bitcoin with smart contracts. Without changing the foundation layer, they are creating distinct infrastructure that makes use of Bitcoin's current security features to allow for additional features.

The financing is indicative of a strong institutional belief. The entire amount raised was $30 million. YZi Labs, formerly known as Binance Labs, was one of the investors who contributed $15 million to the most recent expansion round. Republic Digital took part. HyperChain Capital did the same. Breyer Capital, Big Brain Holdings, and several other companies that make infrastructure investments rather than speculation were part of the previous seed round.

That amount of money committed by skilled investors indicates a preference for long-term viability over narrative trading in the near term. These organizations have access to all cryptocurrency transactions. They selected Hemi because the technology unleashes enormous capital by resolving a real-world issue.

That thesis is supported by the growth data since the mainnet debut. On the first day, 50 million TVL. In just seventy-two hours, that increased to two hundred fifty million. In 38 days, it surpassed one billion. At the moment, it is more than 1.2 billion.

That speed is uncommon. Only when capital finds real use instead of merely speculative opportunity does that occur. Bitcoin is not being brought to Hemi by users in order to farm tokens and then leave. They are using Bitcoin to get access to previously unattainable financial infrastructure.

In the first few months, there were 100,000 verified users. Hemi filters out the bot activity that inflates metrics on the majority of new protocols by using Demos for human verification. These are actual people who are consciously choosing to transfer money.

At launch, 90 protocols were merged or deployed. not haphazard endeavors. fundamental DeFi infrastructure. Sushi for DEX features. For cross-chain communications, use LayerZero. Redstone and Pyth for oracle services. Swell for infrastructure related to liquid staking.

It is not theoretical for these teams to merge. Where they observe consistent user engagement and building momentum, they integrate. Hemi's attainment of product-market fit is indicated by their existence.

On Hemi, what are people really doing with their Bitcoin? It is more important to comprehend the use cases than the technology.

The most apparent use case is staking. Owners of Bitcoin may now generate income by staking their currency without the need for custodial services or centralized exchanges. In the same way that ETH staking produces yield by safeguarding Ethereum, returns come from offering economic security to protocols that build upon Hemi.

BitFi provides staking solutions that use delta-neutral funding rate arbitrage to provide income on deposited Bitcoin. Instead of inflationary token emissions, this is the natural return from real trade activity. Because the technique is market-neutral, returns are unaffected by changes in price.

For Bitcoin yield, Spectra developed fixed rate markets. For institutions, this is crucial since predicting becomes unpredictable due to fluctuating rates. Returns cannot be modeled when rates change every day. By separating the principal and yield tokens, fixed rates allow you to lock in guaranteed returns for certain times.

There are new lending marketplaces where you can deposit Bitcoin to earn interest or borrow against it. ZeroLend established marketplaces exclusively for liquid restaking Bitcoin tokens. This allows you to borrow without unstaking, which unlocks capital efficiency.

Leverage looping methods were introduced by Gearbox. You borrow more Bitcoin, exchange it for more staking tokens, deposit more Bitcoin liquid staking tokens as collateral, and so on. Exposure to both staking yields and price appreciation is increased by each loop. Without centralized platforms, Bitcoin holders have never had access to this advanced capital management.

River Protocol created satUSD, a stablecoin that is at least 110 percent backed by Bitcoin collateral. This is comparable to DAI on Ethereum, except it is supported by the most reliable cryptocurrency collateral. Resistance against censorship is important. Centralized issuers have the ability to freeze USDC and USDT. Bitcoin-backed decentralized stablecoins can't.

Perpetual futures on Bitcoin and Ethereum with leverage of up to fifty times were introduced by Satori Protocol. Traders do not own the underlying assets when they take directional trades. Trading fees are how liquidity providers make money. This eliminates the need for centralized exchanges and introduces capital-efficient derivatives to Bitcoin DeFi.

For institutional adoption, a secure integrated multisig infrastructure is essential. Transactions in serious treasuries need several clearances. For organizations transferring Bitcoin funds into DeFi, native multisig functionality eliminates obstacles.

Every application stands for hitherto unattainable financial infrastructure. Bitcoin is converted from passive storage to active producing capital by each of them.

Tunnels are the infrastructure that makes asset movement possible, and it is crucial to comprehend the security model.

Conventional bridges use custodians who manufacture tokens on other chains to lock Bitcoin. You have faith that custodians won't take your bitcoin. You have faith that they will respect redemptions. The breach of such confidence has resulted in billions of dollars being stolen via bridge exploits.

Verification in Hemi Tunnels is based on evidence. The receiving contract uses the native Bitcoin visibility of the hVM to confirm the transaction when Bitcoin passes through a tunnel. The contract verifies that transactions took place by looking at the Bitcoin blockchain. Beyond cryptographic verification, no faith is necessary.

Overcollateralized custodianship is added in the present implementation. Bitcoin-owning entities post more collateral than they really have. They lose more when they misbehave than when they steal. In this way, cryptographic security is stacked on top of economic security.

According to the plan, security is becoming better. One-of-N security is implemented by the BitVM2-based tunnel that will deploy later this year. Theft may be contested and stopped by one sincere individual. A majority is not required. There is no threshold needed. One person who is paying attention is enough.

This follows the fundamental tenets of Bitcoin by shifting custody from reliable parties to pure cryptography.

The network's economic activity is coordinated by the HEMI token. Transaction fees are paid by it. PoP miners are encouraged to secure the chain. In order to inherit security, projects are constructing layer threes on Hemi pay in HEMI.

Participation in decentralized sequencing and governance rights are granted by staking HEMI in the veHEMI system. You may earn fees by giving Tunnels liquidity. Applications might be directly given financial security.

About 9.78 percent of the ten billion units in total supply were in circulation at launch. To finance the expansion of the network, emissions range from 3 to 7% every year. Twenty-eight percent went to key partners and investors who contributed thirty million dollars in finance.

Tokenomics generates a feedback loop. Network activity rises with more apps. PoP incentives and costs increase with more engagement. HEMI demand is increased by higher incentives. Staking is driven by increased demand. Decentralization is enhanced with more staking. More applications are drawn to enhanced decentralization.

Numerous attempts that have tried to bootstrap network effects have been seen by me. Most fail because they compete in crowded marketplaces or tackle issues that don't exist. Hemi is essentially unique as it tackles the biggest unresolved issue in cryptocurrency.

Without wrappers, how can Bitcoin be made programmable? Without custodians, how can Bitcoin DeFi be granted access? How can the yield of Bitcoin be unlocked without sacrificing its value?

Not altering Bitcoin is the solution. Infrastructure that anchors security to Bitcoin itself and provides native Bitcoin visibility to smart contracts is the solution.

That is the function of the hVM. Proof of Proof makes that possible. Tunnels make it possible.

There is no slowdown of the expansion. As more developers become aware of what has become feasible, it is, if anything, accelerating. For fifteen years, Bitcoin has been waiting for this infrastructure.

There is no theoretical market opportunity. There are currently 2.5 trillion dollars in Bitcoin capital. Most people sit around doing nothing at all. Not because it is mistrusted by holders. Not because it's worthless. but due to the lack of secure productive outlets.

Those outlets are provided by Hemi. Bitcoin may now access financial primitives that Ethereum has provided for years, as well as stake, lend, generate yield, and take part in governance. all the while upholding the security concept and presumptions of Bitcoin.

Where HEMI trades in the short term is unknown to me. Markets don't make sense. Stories change. The focus shifts. However, I am aware that the infrastructure that unlocks the productive value of the biggest and most reliable cryptocurrency asset is an opportunity that most people aren't taking advantage of.

Institutions are discreetly strengthening their positions in protocols that address pressing issues as speculators pursue the next memecoin or narrative token. In 38 days, a billion dollars changed hands. There were one hundred thousand users. 90 protocols were combined.

It's not hype. This is large-scale infrastructure. Bitcoin is being staked. Bitcoin is being lent by people. People are using Bitcoin to earn yield. All of this is now taking place without the use of wrappers, custodians, or centralized middlemen.

HEMI is not traded against other layer twos. Bitcoin is being traded from active to idle. Dormant versus productive capital.

A sum of 2.5 trillion dollars is awakening. The infrastructure is operational. Applications are being delivered. The money is coming in.

Digital gold is no longer all that Bitcoin is. It is infrastructure that can be programmed. It is capital that bears yield. It serves as the cornerstone for the subsequent development of decentralized finance.

The architecture that makes it feasible is called Hemi. And it had already occurred while everyone was preoccupied.