This is a text playback of the Merlin Monday livestream from February 10, 2025. You can watch the original video HERE.

• Merlin Chain’s PoS Future:

  • Prestage: Period 1 10M MERL cap filled in 26 minutes; with Period 2 coming next week

  • Merlin’s PoS mechanism will involve decentralized node validators; malicious nodes risk slashing (rare in practice).

• Cross-Chain & Liquidity Strategy

  • Merlin bridges to Solana, Ethereum, Base, Sui, Aptos, and integrates Bitcoin into AI-driven liquidity programs.(In the future monthes)

  • M-BTC liquidity: Over $10M across EVM chains (e.g., zkSync, Mode, Core).

• AI Developments

  • AI Narrative: Current phase is "halftime"; expect more innovative AI products in 1–2 months. Focus on cross-chain AI apps (e.g., Bitcoin ↔ Solana memes).

  • Empower BTC.Fun: Attract builders who are creating truly innovative products.

• Market Outlook

  • Altcoin Challenges: Most new tokens face steep declines (80–90% drops).

  • Merlin Strategy: Focus on utility (staking, cross-chain liquidity) over speculation. and focus on total withdrawal(MERL) from CEX.

Intro: PoS Prestage

Jeff: This is a pre-stage, so it's not necessarily a huge announcement yet. We're mainly focused on getting users familiar with the future Proof of Stake (PoS) system. As I mentioned, the fully functional BitVM is still some way off. While many chains claim they can achieve this, it's actually quite challenging to implement in a short period of time.

So, as we mentioned last year, we've decided to start with the PoS model. I won’t go into all the technical details of Proof of Stake, but essentially, it involves multiple nodes running the chain. Users won’t need to run their own nodes, as with Bitcoin; instead, there are dedicated nodes that validate transactions and secure the assets. If a node behaves maliciously, it can be slashed.

Users can stake their coins on different nodes and, in return, earn rewards for helping make the chain more decentralized and secure. This is the plan moving forward. To help users get accustomed to this, we're launching the pre-stage, allowing them to stake MERL.In the future, users will also be able to stake Bitcoin, M-BTC, and other assets. But for now, the primary focus will be on MERL and Bitcoin.

Q: What changes can we expect once the BitVM is fully available?

Jeff: The change will be that, as mentioned last year, we are moving towards a zk-rollup model. This means that the chain will no longer rely on external nodes to run it. Instead, the chain sequencer will operate autonomously, submitting transactions and zero-knowledge proofs (ZKPs) to Layer 1. Bitcoin itself will verify these transactions, with the underlying Bitcoin network—composed of millions of miners—securing the process. If anyone challenges a transaction, claiming it’s not properly verified, the Bitcoin Layer 1 will eventually reward those who raise valid complaints. In essence, Bitcoin Layer 1 will secure Merlin Chain, rather than relying on nodes on Layer 2.

Q: When implementing proof of stake, similar to Polkadot and Cosmos, how much MERL is required to become a validator, and can we expect slashing to be part of the process if a validator misbehaves?

Jeff: The purpose of having multiple nodes is to prevent any malicious behavior from builders or the network itself. While slashing is a potential mechanism, it rarely occurs in networks with sufficient nodes, as it is an uncommon event.

The number of MERL for users to become a validator hasn’t been decided right now. Currently, we are in the pre-stage, and in the first phase, we plan to involve well-established, reputable entities, such as exchanges like OKX and major Bitcoin mining pools. We are closely connected with these players. Initially, it will be more institutional-focused, but in the next phase, it will become permissionless, open to everyone. However, most retail users will likely delegate staking to a validator, as they typically don't run nodes or have the necessary infrastructure to do so.

Q: Some validators charge fees, which is a common practice as they need to generate revenue. It's important for users to be aware of this. Will you be actively recommending specific validators, or will you maintain a more neutral stance, allowing users to choose independently?

Jeff: Right now, everything isn't fully decided, but we plan to start with our existing partners. To be honest, the first phase will likely last for at least six months to ensure everything runs smoothly. If the network grows to handle millions of transactions per day, the community will naturally demand greater decentralization. However, most chains don't reach such user volumes, so they don't prioritize this as much. Ultimately, this approach aligns with our long-term vision.

Q: I personally don't like holding tokens without earning yield. I prefer options like LPs, but with LPs, there's the risk of selling into Bitcoin as its price rises. With single staking for MERL, I absolutely love this approach. Can you elaborate more on how this will work in terms of yield generation and potential risks?

Jeff: Right now, the staking rate for MERL is 15%, but imagine if we had 5% for Bitcoin — that would be even better. Bitcoin will definitely be one of the two major tokens that will attract people to stake. In the first week, there was a 10 million cap, which was reached in just 26 minutes. For the next week, we’ll increase the cap to 20 million, and the week after that, it will be unlimited. The first week’s high APY was intentional to avoid complaints about it being too high. A positive sign is that, after the announcement, over 25-30 million MERL tokens were withdrawn from centralized exchanges within half an hour. This indicates that users are withdrawing their MERL to either stake or wait for the long-term rewards. I strongly believe that the number of withdrawals will continue to rise in the coming weeks.

Q: Is the MERL locked or liquid staking?

Jeff: I would describe it as a form of liquid staking, but with a seven-day waiting period for withdrawals. This is why we refer to it as "Prestage" When we launch the official PoS, there will be a waiting period for withdrawals, as validators need to verify transactions and balance their staking pools. Most chains implement similar mechanisms, though not necessarily Ethereum.

In our case, users will need to wait seven days to withdraw their funds. It's a hybrid model between liquid staking and locked staking, as users are appointing their MERL to third-party validators. Initially, we planned for a 4.2 million cap, but we decided to increase it to 10 million in order to keep the process open for at least 24 hours. We did not expect the cap to fill so quickly. I can confirm that I did not take any tokens myself, even though I hold many. My goal was to ensure that users could benefit from this opportunity, and it has clearly exceeded our expectations.

Q: There's been a lot of talk about bridging runes to other chains, something we've been considering for almost two years. It seems Layer 1 maximalists are realizing the need to make Bitcoin assets more accessible to everyday users.

What are your thoughts on this initiative? Will it succeed for runes or other Bitcoin Layer 1 tokens, or is it too late?

Jeff: I think it's crucial to have your assets in a more liquid market, which is why you aim to get listed on Binance, rather than on some third-tier exchanges(like in Nigeria).

Second, if this had happened earlier—if not just bridging but also using active chains like Solana or Ethereum—there would be more support for liquidity. Most people who first learn about crypto through Bitcoin/Ordinals aren’t familiar with other chains. Looking at Solana right now, they have various decentralized exchanges (DEXs), platforms like Pump.fun Launchpad, Jupiter,Raydium, Meteora, Tether, lending protocols, and over 20 other protocols. These products create a robust ecosystem to support liquidity.

When you launch a token on Solana, for instance, you want that contract to be reliable because users trust that it's safe. The reason people are willing to move millions of dollars into tokens is because they believe platforms like Pump.fun are secure—at least, they minimize the risk of being "rug-pulled." Ethereum has similar dynamics, and I'm sure you’re familiar with this from past experiences.

What I'm saying is that bridging isn’t the main issue; it’s about what people are actually willing to buy into. These kinds of dynamics don’t just happen on their own. Last year, my approach was to focus on the trading aspect. We could even leave the launch phase behind, as the launch process is relatively easier on smart contract chains, as seen with Pump.Fun or BTC.Fun.

However, all of these steps need to be integrated to create a thriving, liquid market for trading. At this moment, it’s difficult because Solana is the dominant chain for bridging, holding about 90% of the liquidity. Meanwhile, on larger chains, millions of new tokens are created every day, making it hard to capture people’s attention, especially when it comes to Bitcoin-related projects.

Q: Do you think DOG could be listed through an EVM chain like Merlin, given that it's been available on MerlinSwap since April last year, but has not received much attention from the Leonidas team, and that Merlin is already on exchanges, making it easier to switch from Ethereum to Merlin?

Jeff: For the first few months, Merlin's address was the number one address for DOG. People frequently asked why it held so many DOG tokens. During that time, I believed that if both communities had worked together, we had a strong chance of pushing the token to many exchanges. I personally had several conversations with centralized exchanges, as DOG was one of the most popular tokens I was involved with. At that time, most exchanges didn’t support Rune deposits, which made it easier to engage with them. However, exchanges wanted a representative to advocate for the project, as they couldn't list an anonymous token. Regardless of its community-driven nature, when it comes to listing tokens, exchanges need someone to represent it. When they asked me, I explained that I wasn't the founder of DOG, and we were waiting for approval from the DOG community. I suggested they reach out to the community for a representative. I understood the exchanges' position, but they told me they couldn’t proceed without someone stepping up, especially given the regulatory sensitivity at the time. Without a clear representative, we couldn't move forward with listing DOG on centralized exchanges.

At that time, everyone was excited about DOG due to its significant trading volume—millions on Merlin from day one, and millions more on Magic Eden. People were very enthusiastic about it. Exchanges were generally very interested in the token, but some didn’t support Rune deposits and withdrawals. Additionally, they required a representative for KYC purposes, not just market makers. However, after the first couple of months, interest in the token from these exchanges started to wane.

Q: Could Merlin support bridging DOG from Merlin to other chains like Base, especially if it's whitelisted, given that there are currently bridges from Merlin to all the EVMs?

Jeff: Yes, of course. Currently, DOG on Merlin still has a liquidity pool of half a million, with a daily trading volume of 150,000 15,000 to 50,000. It's ranked second after Magic Eden. So, there is still a significant amount of DOG on Merlin, and we have various bridges that can transfer this token to other chains. We even have bridges to Solana, Ethereum, Base, and many other chains. Additionally, we can bridge to other networks like Sui, Aptos and Move. Currently, there is around $2.1 to $2.2 billion worth of Bitcoin being bridged from Merlin to other chains, which mirrors the situation with Bitcoin itself.

When you have Bitcoin on Layer 1, it offers limited utility. However, if you have Bitcoin on Merlin, you can purchase memes from Solana or BNB Chain, bridge them to various chains for farming, and unlock greater liquidity. Additionally, through programs like Solv Bitcoin Jupiter many may not be aware, but if you participate in their Bitcoin liquidity program, they use your Bitcoin to provide liquidity on Jupiter, offering a 15% to 20% APR, which has been steady for over six months. With Bitcoin on Layer 1, you have no such options. It's a no-brainer, and I’m glad that Bitcoin Layer 1 users are finally recognizing that having assets on other chains or platforms isn't necessarily a bad thing.

If you check the liquidity of M-BTC on Ethereum, zkSync, Mode, Core, and other EVM chains, you'll see that mBTC has over $10 million in liquidity across these platforms. While it's not mBTC itself, but the pairing, it still represents significant liquidity with Ethereum, stablecoins, and BTC trading. This is beneficial because having assets bridged to other chains and attracting liquidity providers makes it easier for Bitcoin Layer 1 users to access liquidity. This is especially important since Bitcoin Layer 1 users and the users on other chains represent two distinct groups.

Q: Any updates on BTC.Fun that you can share? Last time we spoke, AI was absolutely insane, especially last month when it was crazy. It has since come down a bit, so I’m curious if there are any new developments for what you’re building with BTC.Fun.

Jeff: I still believe AI is the biggest narrative for this cycle, or even for humanity as a whole. It's not just about its potential to change the world in every way possible. However, I think we are currently in what feels like halftime. Last night, while having dinner with some friends, I realized that this is a crucial point in time.

In the first half, people recognized that AI could do many things with crypto, and no one expected something like AIXBT or the ai16z to emerge. But now we’re in the second half. I've met many builders who are focused on creating something much better and different. In the beginning, we saw a lot of AI agents, and it was impressive. But after a couple of weeks, it became clear that many of them looked the same, and it’s hard to understand why some were valued at $300 million or $500 million. It just didn’t make sense.

Now, in the second half, we’re seeing many new builders who are creating truly unique products—very different from AIXBT or bots on Twitter and Telegram. I believe this is where we stand right now. We’re looking for special builders who didn’t just create typical AI products but are aiming to do something innovative.

Personally, I think in the next one to two months, the AI market will get crazy again. The second half is always much more exciting than the first.

In the first half, people were getting acquainted with AI and trying to understand its potential. The second half, however, is when people go all in because they know there's no extra time. We are preparing for this shift and are always looking for ways to do something innovative. Additionally, we’re not trying to build this alone.

We’re working with various platforms, which will be launching in March and April, and will support Solana and Base, among others. Our goal is to make Merlin one of the top three or five chains they support. These platforms will bring together different users and communities through AI products across various chains. As I mentioned before, with Universal X, you can use Bitcoin to buy memes, or Solana to buy memes, and so on.

The second half will be very different. All these platforms will work together to create new and exciting things. We don’t want to do this alone, as building in isolation leads to division, as we’ve seen with many struggling communities and projects. Trying to go it alone only causes fragmentation, which is a poor approach.

Q: Is there any other updates, that Merlin has, currently?

Jeff: Right now, we are focused on finding a new group of builders. If you look closely at Merlin, you'll be surprised by how many developments occurred last February. Solv was on Binance, Avalon is being listed tomorrow on Bybit—these may not be points you’ve noticed, but all these users collected them and will receive a fair share of tokens. If you held Bitcoin last February and staked it on Merlin, you earned more, as opposed to staking it in different DeFi protocols for an APY. Bitcoin rose from 40K to 100K, and users received tokens from Merlin, Solv, and Avalon.

I don’t think many ecosystems have achieved this, with such great builders coming together to build from scratch. For example, Solv had no major focus on Bitcoin, and Avalon was a new concept. Day 1 for Merlin and Solv was about pioneering new things. MerlinSwap was the first team to build on Merlin. All of these efforts were fresh and contributed to the development on the platform.

Now, we are looking to find another group of builders to introduce them to the successful track records of last year's teams and encourage them to get involved this year. When you look at all these new chains, very few have their own native builders who have created products over the past year, gotten listed, and generated significant volume.

I think that's the right mindset. In the third month, all the builders start exploring other chains. Whenever they ask me about this, I tell them I feel very comfortable with it. Solv and Avalon, for instance, are on B^Square, on other Bitcoin Layer 2 solutions, and across 20+ chains. We feel confident because it's about building together and helping these builders succeed.

If an ecosystem has this kind of mindset, it will ultimately have a much longer journey, with a supportive community. It's not about being closed off with a network that’s popular on day one but fades away after three months when no one is engaging with it.

Q: What kind of products is Merlin Chain looking for in terms of new builders to come?

Jeff: If you look at the entire Bitcoin ecosystem, how many projects have been listed on exchanges like Bybit or Binance? I can't think of many off the top of my head. I’m not trying to be overly formal, but the fact is, Merlin started later than others. Solana, for example, is four years ahead of us and was supported by SPF, Base is backed by Coinbase, and Ethereum has been around for over 10 years. Starting late means we have to find something new and different. We can't simply compete with them head-on.

Q: How do you see Merlin's price and liquidity in the context of the broader altcoin market, especially with most altcoins pulling back, while some exceptions manage to avoid this through strategies like putting fees directly into the coin, and do you think staking with POS could help stabilize the price?

Jeff: I want to add to that. First, I think the entire altcoin market this cycle is in a tough situation. If you look at the graphs of any new token on the largest exchanges, you’ll see the same trend — a sharp decline of 80%, 85%, even 90% over 21 days. It's a difficult environment for everyone, and to be honest, none of us expected this. Hyperlink had a great team; they are based in Singapore, and their founder, also named Jeff. We know them well. They've been working hard for years, building a dedicated community. They're experienced traders from Wall Street and major trading firms, and they've caught a strong narrative with on-chain trading, attracting users from platforms like DYDX with a solid U.S.-based community.

Despite that, I still think some projects are doing well, but most of the altcoins are struggling. Right now, everyone wants the price to go up — Leonidas wants the price up, we want the price up, Vitalik wants Ethereum to rise, too. But we all know this is a tough phase, and we have to push through it. The key metric we are focusing on is how many tokens are being withdrawn from centralized exchanges to the blockchain. Currently, there are about 200 million MERL tokens on centralized exchanges, and we want to track how many are being withdrawn. This will show how many people are holding the tokens with diamond hands, rather than rushing to sell them on exchanges. We will monitor this number over the next few weeks. Our goal is to unite the community and get through this challenging period together.