Reimagining Bitcoin’s Future in DeFi with Persistence’s Jeroen Develter

Episode Overview

​Jeroen Develter is the Chief Operating Officer (COO) at Persistence Labs, a company at the forefront of blockchain interoperability and decentralized finance (DeFi) solutions. With over a decade of international experience in finance, consulting, and entrepreneurship, Jeroen has established himself as a thought leader in the crypto space. His journey began in traditional finance, where he worked as a consultant specializing in banking and risk management, gaining valuable insights into the complexities of financial systems. This foundation provided him with a deep understanding of the challenges and opportunities within the financial sector.

Transitioning from traditional finance, Jeroen ventured into the tech startup ecosystem, successfully building a fashion tech company over five years. This entrepreneurial endeavor honed his skills in analyzing complex business cases, establishing streamlined operations, and creating scalable processes. His international experience spans countries like France and Singapore, enriching his perspective on global markets and diverse business environments. Approximately three years ago, Jeroen immersed himself in the crypto industry, driven by a passion for innovation and the transformative potential of blockchain technology. Since then, he has been dedicated to building products, fostering relationships, and sharing knowledge within the crypto community.

At Persistence Labs, Jeroen focuses on pioneering solutions aimed at expanding the utility of Bitcoin through interoperable layer-two networks and innovative DeFi applications. He is particularly interested in the emerging Bitcoin DeFi ecosystem, exploring how Bitcoin can be integrated into decentralized financial systems to enhance its functionality beyond a store of value. Jeroen’s leadership at Persistence Labs involves addressing the challenges of scaling Bitcoin’s infrastructure and developing intent-based transactions to simplify cross-chain operations. His vision encompasses creating a productive Bitcoin economy that leverages interoperability and security to drive mass adoption.

Episode Transcript

Jeroen Develter: I think that’s the biggest problem we’re facing at the moment in crypto, because if this is very common that you do something and it’s like,  tokens lost or like,  I can’t find this, I don’t know where it ends up. Right. And I think that the biggest issue at the moment is a bit like the trust and the faith that actually it will end up well. And even if it fails, someone can help me. Which in crypto is not always that easy because all of the keys, it’s like.

Kevin Rosenquist: Hey there, welcome to PayPod where we bring you conversations with the trailblazers shaping the future of payments in fintech. My name is Kevin Rosenquist. Thanks for being here. My guest today is the CEO of persistence, a company at the forefront of transforming Bitcoin’s role in decentralized finance. Persistence is unlocking new possibilities for Bitcoin with BTC by making it more than just a store of value. From cross-chain swaps to their groundbreaking approach to interoperability, Jordan shares insights on how they’re redefining what’s possible for blockchain technology and financial systems. We also talk about balancing innovation with regulation, which is not always easy. So joining me now from Lisbon, Jeroen Develter. All right. So let’s start with the basics or as basic as we can get when talking about blockchain interoperability. For those unfamiliar, can you explain what cross chain swaps are and how persistence is tackling challenges that come with the interoperability across blockchains?

Jeroen Develter: Yeah, absolutely. I mean, for those who don’t know, like blockchains are pretty much like standalone environments, so they can’t really talk well to each other, which means that if you have a specific asset that is in one wallet, let’s say on one blockchain, and you want to get that asset to another wallet on another blockchain, it’s very hard to do that. So you need some sort of a bridge or a connection between those different networks or different blockchains to move assets between. And that’s actually what we’re doing. So rather than moving the physical assets between the two different chains, we find for every buyer or for every seller of one asset on one side, we find a buyer on the other side. So we basically match a buyer and a seller on each of these networks so that they are happy with the transaction across both. And they basically offset. I’m not sure if that makes sense. It’s like a very simple explanation of a cross chain swap. It’s just finding a buyer and a seller for the same trade but opposite sides on two different chains.

Kevin Rosenquist: Okay. And how does persistence approach to just say is it BTC five? Is that kind of what you say like.

Jeroen Develter: Yeah. So we call this entire like industry that we’re in like BTC five. I call it like Bitcoin powered decentralized finance. Okay. So that’s a pretty broad term.  so obviously when I say bitcoin powered I mean, everything that uses Bitcoin somewhere in this form of decentralized finance. I’m kind of assuming that your audience is familiar with decentralized finance. Sure. Of course. So basically, BTC fi is kind of short for Bitcoin DeFi in a way. And  so when we talk about BTC fi, it’s like wherever Bitcoin, the asset is used in DeFi. Traditionally DeFi actually started on there right? Like Ethereum was the first place where you had a lot of smart contracts. You had that programmability. And the first, like DeFi boom was actually really on Ethereum a couple of years back.  Bitcoin didn’t have that, you know, and bitcoin, always started off and actually started off as a means of payment, but then kind of moved into this entire thing of like a store of value digital gold type of narrative. Right? Which everyone knows Bitcoin is supposed to be held and kept only and nothing else. And that’s kind of the core for, for a lot of Bitcoiners.  but more recently Bitcoin, DeFi or BTC DeFi became a thing because Bitcoin has moved, although slowly over the last couple of years to become more programmable. There’s been a few upgrades to the Bitcoin network, which have allowed for additional programmability of the Bitcoin blockchain. On top of that, there’s a whole bunch of what we call layer twos that have kind of popped up who are building some sort of a scaling solution, I would say for Bitcoin, because one of the biggest problems with Bitcoin is that it’s not easy to scale. It’s quite slow.

Jeroen Develter: And that’s kind of the trade off they make with, like the security and the decentralized aspect of, of the chain. But so with these like layer twos, scalability and programmability are kind of addressed. Now all of these like layer twos are actually additional blockchains on top of or on top of the Bitcoin blockchain. And instead of doing the actual transaction on the Bitcoin blockchain, you can now do your transaction way cheaper, way faster, on these like different networks of chains on top of the Bitcoin chains on these layer two. Now that’s great for people who want to actually do Bitcoin DeFi and still use the security of the Bitcoin network to do DeFi transactions like including Bitcoin the assets. So let’s say using Bitcoin as a collateral asset right. Or Bitcoin as a trading asset. So that’s all great. But the issue that it creates,  with all this development of layer two, is that these are all separate networks, although they’re all connected to the Bitcoin layer one. They’re all kind of separate ecosystems in themselves. And if we want to grow the pie when it comes to Bitcoin DeFi and really want to make this a booming ecosystem, it can’t be that you have to go from a or let’s say from layer two to the main layer to then go back to another layer two. That’s just too slow. And it takes a lot of time and a lot of gas like cost for transactions. So what we’re doing is really building that bridge between all the layer two to make it very easy to move around these different layer twos so that you don’t have to use the layer one, actually.

Kevin Rosenquist: Wow, that’s pretty cool. And you said that. So Ethereum already kind of has something in place for this. Is that correct?

Jeroen Develter: Correct. On Ethereum it’s been added for quite a while  and a lot of these bridges exist. I’m not sure how familiar you are with bridges, but there’s kind of different ways of bridging. Right.  So the traditional bridge is typically the canonical bridge is what we call that is between the main layer or the main network, which is the layer one. So in this case would be Ethereum. Right. And there’s a lot of layer twos networks on top of Ethereum. So talking about let’s say an arbitrum and optimism you might be familiar with with those names even  base for example  is a layer two. And these have canonical bridges directly with the layer one itself, Ethereum. But they also have a network of different bridges between those and there’s different like standards for this like it’s bridging standards. But typically how it works is like it’s a lock and burn mechanism. So let’s say you want to move an asset from one side to another because you can’t actually exchange the asset or actually bridge the asset. You lock it on one side and then on the other side of the bridge or on the other network, you mint a new one or you create a new one, actually and you cannot unlock this one on the first side until you get the original one back, actually. So that’s how the bridge works. It’s like a typical lock and burn, but that’s quite risky because you have this like honeypot of all these assets that are still stuck in the bridge in one formal way.

Jeroen Develter:  So that’s like a traditional bridge between networks. Now, that’s I mean, it has been great in a way to be able to use that and move assets. But it’s the number one hack in crypto has been bridge hacks. Right. Because just of this, attraction. Like, there’s just so much money locked into these things and you actually meant a duplicate of that on the other side, which is then used. It’s like an IOU of sorts. Right. And people are then using these IOUs on the other side, which is fine because it creates liquidity, but it also creates that risk. And so most of these hacks that have happened is around bridges, which is why we prefer this cross-chain swap mechanism, which I which I explained to you, where you actually have to have the native asset or the original asset on each of the sides, and then you let people trade them without actually having to move the assets between the different chains. But you actually find that the opposite side of the trade on the other side, which is a function that we get performed by professional market makers who, yeah, who actually make sure there is always like someone to take that opposite side.

Kevin Rosenquist: You know, before we hit record, you were worried that you weren’t going to be able to explain this in terms that people, the average person, could understand that was perfect. That makes perfect sense. I mean.

Jeroen Develter: It just did, I think, Well, thank you, I hope so it’s clear. But you can always ask more questions.

Kevin Rosenquist: Yeah, well, one of the things that I saw, one of the core innovations, is the intense feature. Is that correct? Can you kind of explain how that works and what problem does that solve as far as the cross chain landscape goes?

Jeroen Develter: Yeah for sure. So intense. It’s actually it’s I mean it’s a word that everyone is actually familiar with. Like, you know, like this is my intention, right? This is what I want to do. That’s literally where it comes from. And,  basically, I think the easiest way to explain this is with an example like let’s say you want to order something on, on UberEats, right?  and it means you’re hungry and you want to, let’s say, order a spaghetti from a specific restaurant and you want to get it delivered within like 30 minutes. Right? And that’s your, like, intent. I want this spaghetti to be delivered within 30 minutes. And then you don’t have to tell to Uber like, okay, I want this driver to go and pick that up. I want him to take this route like the highway, or I want him to take the shorter road. I like you all, don’t care about this because it’s not part of what you care about. What you care about is delivered warm, ideally within 30 minutes. And currently in a lot of things in crypto, you actually have to say exactly which route are you taking. So if you want to bridge from one side to another, you have to say, well, I want to bridge through that contract, then I want to use this chain to then send the tokens through to another place, which then will end up on the other side. So you have to kind of define the entire route in a way. It’s almost like if you would do a bank transfer right between international banks and you want to transfer money, you also you just have to give the destination like bank address in a way, and your bank will do like the wiring for you, but often it goes through one or 2 or 3 different banks like to actually get to the final destination. I don’t actually know if it’s still that that way, but it is.

Kevin Rosenquist: Still it’s still pretty complex. A lot of ways. Yeah, I’ve seen that. Like the flowchart. It’s, . It’s a little. It’s a little chaotic.

Jeroen Develter: So it’s in a way, it’s similar, but you like, you don’t have to say, actually, I want to root through all of these things. I just want this to happen, and, like, you don’t care how it happens. And the beauty of this is that, I mean, obviously with bridging or with, with cross-chain swapping, it’s a very easy thing. Like as a user, you just say, this is what I want. And then anyone who can actually make your wish come true can just fulfill that. He just says, okay, I want this token on that chain. They just send it to you, knowing that they will get the ones in the original chain.  But this can go way further than this. You can actually have very complex transactions that you say, okay, I want this and I want to deposit it there. And whatever. You have very complex like requests or like, intents where complex players in this space, like professional players can actually compete to, to fulfill that intent and actually, charge a little fee for that typically.  So it is a great way of abstracting away the complexity from the user, because the user just has to say, this is what I want to achieve. Whoever does it, how it’s done, I don’t care. But this is what I want. That’s kind of the purpose of intents. And currently in crypto, maybe 10% or so of transactions is currently intent based, but I expect that to go up quite, quite a bit because it just abstracts away the complexity to more professional users.

Kevin Rosenquist: Yeah, I recently talked to somebody in the crypto industry and I asked the question, does the average person need to understand how the blockchain works? And he said no. And that’s kind of what you’re saying is it’s like, I don’t care how my spaghetti gets to me. I just want it to get to me ideally warm, like you said, and in 30 minutes and that and that’s like it’s you know, he made that comment to like, we don’t most people don’t understand what happens when you swipe a credit card. You know, like where everything goes and how it works. So I mean, I assume are you on that team too? Like, people don’t really need to understand how it works, because one of the things that I think is interesting about blockchain and Web3 is that it still, like, makes people’s heads explode. Like, you know, I try to talk to people about it with my somewhat limited knowledge of it, and I think they’re so confused by what I say. So like the question is do people need to understand how it all works, or do they just need to say, does it need to get to the point where it’s just user friendly so you can just boom, do that, like what you’re talking about?

Jeroen Develter: Well, I think if we want to reach mass adoption, they shouldn’t have to know, you know, like it’s like with credit cards, if everyone who uses a credit card would have to know how it works. I mean, no one would be using.

Kevin Rosenquist: No one would use them.

Jeroen Develter: No, it’s very true. I think it’s about, in a way like understanding the risks that come with it so that people can confidently use it without knowing what’s under the hood. And I think that’s the biggest problem we’re facing at the moment in crypto, because if this is very common that you do something, it’s like,  tokens lost or like,  I can’t find this. I don’t know where it ends up. Right? And I think that’s the biggest issue at the moment is a bit that like the trust and the faith that actually it will end up well. And even if it fails, someone can help me, which in crypto is not always that easy because all of the keys, it’s like custodial like you have your own custody, right? So if you lose your password or you lose your seed phrase like nothing, no one can help you, right? That’s a bit the risky part. So I’m definitely like you in that it needs to be so easy. Like if we really want to make this industry grow, it needs to be to a point where, yeah, you should actually not care about it, but you have to have that like trust assumption somewhere, which is like almost the same way. Like you probably when you travel, you probably see ATMs that you want to use that you trust, and there’s ATMs that you don’t want to use because you don’t trust them. I think at the moment people don’t have that like knowledge of like which chain to use or which like, I think Bitcoin, you can pretty much assume like it’s going to be safe, but then everything else. I mean, like there are trust assumptions with everything and like people are, I think, not ready yet to make the trust assumptions quick enough to to yeah to use the products continuously without worrying.

Kevin Rosenquist: Yeah. Yeah especially I mean you’re dealing with people’s money and that’s always going to make that trust a little bit tougher. So you kind of call this bridging without bridging. You talked a little bit about how, the lack of security in, in the typical bridging methods. How does your product improve security as well as scalability in cross-chain transactions?

Jeroen Develter: Yeah. So when it comes to I mean security, I think it’s the point that I touched upon briefly earlier is so when you have these bridges with like lock-in and mint mechanism, you have these big TVL honeypots. Tvl stands for like total value locked.  It’s those big honeypots of massive amounts of money that are just locked there in that bridge contract. Tract,  which are there for hackers to see. And they can see,  there’s 100 million in that bridge. It’s 200 million in that bridge. I’ll try and hack this. Right. Like it’s just a honeypot. It’s attractive. What happens with an intent based bridge because you’re not actually bridging, but you’re swapping the amount of risk that you take is always limited to the size of the transaction. So if we decide let’s say you’re on chain A and you have one Bitcoin there I’m on chain B, I have one Bitcoin there. And you want to actually have bitcoin on chain B instead of chain A. And I’m saying okay that’s fine for me I’ll send you my bitcoin and I’ll take yours on chain. On the other side, the size of our transaction is limited to one Bitcoin. And it’s just for the amount of the swap. Right.  Once the transaction is over, the risk is gone because we’re both happy and we’re both satisfied with the outcome of the transaction, and there’s nothing locked anywhere. So that’s how it massively improves, like security, because there’s just so much less risk, less assets that are there. In terms of scalability,  typically how bridges work as well as like there’s an amount of liquidity that is present on specific chains, and typically it routes through the different like decentralized exchanges where there is sufficient liquidity for that token, which means there have to be tokens in that like liquidity pool to make the swap happen.

Jeroen Develter:  Now with, intent based mechanism, you’re not only limited to the amount of liquidity that is on those liquidity pools, that is on these chains. You actually as a sole like a solver. I don’t think I’ve used the term solver so far. But solvers are the professional market makers that I’m talking about. These professional players that can fulfill your trade. They actually have access to all the liquidity that they can have access to, not only on that particular chain. What I mean by this is that let’s say we’re again, same same scenario here. Like you’re on chain A with your bitcoin and you want to go to chain B with your bitcoin. Let’s say I don’t have bitcoin on chain B. I can still send you bitcoin on chain B if I can source it elsewhere very quickly. Right. So if I have access to say, 100 centralized exchanges where there is Bitcoin that is connected to chain B, I can very quickly source that and send it to you, or even I can borrow it from someone who has it on chain B, I can send it to you and then repay my loan from the sourcing that I do on these centralized exchanges, for example. Right. As long as I charge you a fee for that, it will be still profitable for me. So it actually gives you access to a full liquidity network, like the full liquidity network is now available to fulfill that trade, rather than just a specific amount of liquidity which is locked onto that chain or that pool. So that’s why it’s a lot more scalable and secure than a traditional bridge.

Kevin Rosenquist: Okay. That makes sense. That does make sense. And you have your own blockchain, right. Persistence core one.

Jeroen Develter:  Yes we do.

Kevin Rosenquist: Why? Why do you think that ? That’s an advantage. And why is that necessary for your goals?

Jeroen Develter: So I mean, I’ll give you a bit more context about this. So the blockchain actually has been there for almost four years now. Actually the the chain has been live for three and a half years, three and a bit more even. And we didn’t start by doing this product. We actually started off with other things in the past. We actually,  when we launched the chain in 2021, we were heavily focused on everything that was staking. So proof of stake and everything around liquid staking was a very interesting period of time. Also like lighter started to pop up, on the Ethereum side.  and so we saw this opportunity to work in that space. And we’ve actually I think we did reasonably well. We got like to a point where we had 50, $60 million in TVL on the chain grew that like wanted to build an ecosystem around that, around liquid staking. So we So we had a we built a Dex. So decentralized exchanges on top of the chain.  We were part of the cosmos ecosystem. Not sure if your users are familiar with that. But it’s an ecosystem of app chains. So every app kind of has its own chain. It’s like a specific area within crypto that says it’s more efficient to do it that way what’s very important in that ecosystem is interoperability, because every app has its own chain. These chains need to all talk to each other. So interoperability was at our core from from the start.

Jeroen Develter: And  so we have this Dex, that we like know obviously quite well. So we know quite well how trading and swapping goes. We know interoperability quite well. And earlier this year we saw literally all these Bitcoin l2’s coming up with all these like different forms of Bitcoin across these chains. And we say we know trading quite well. We know interoperability quite well. Maybe we can actually solve this problem. And at the same time we can actually work for an ecosystem which we are all big believers in. Like most of the people in the team are like Bitcoiners at heart. I think many people in the industry are. And for us, it was like an opportunity to start actually building for Bitcoin, the asset which I’m very comfortable in, like holding for a very long time. I’m very comfortable building for it for a very long time. Happy to say like build Bitcoin for the next five or 10 or 20 years even though we have such a faith and belief in Bitcoin, the asset even more now that DeFi on top of Bitcoin is possible. So that’s kind of how the chain existed. And now we moved to Bitcoin. Now the product on the bridge side we actually can start and we can actually launch. We’re launching very soon. We actually launched on our testnet. We can launch without our chain. So um so far we obviously use the tech and the skill set and the knowledge that we’ve built running the chain.

Jeroen Develter: Now there are limits to how much we can run with the infrastructure that is there, right? So the infrastructure that we use most, like a very important piece of the puzzle, is like something called layer zero. It’s a cross chain communication network, which we leverage quite, quite a bit to make these transactions happen. It’s great to start off with, it’s very quick for us to go to market with that, but it’s not as customizable as we want it to be. So that’s where our chain actually will come in in the future, where we can customize a lot of the logic. So I’ll tell you, like let’s say there’s not only our transaction, but let’s say there’s 100 transactions at the same time. And you have these professional players all coming in. They have to put up these capital, the capital, for a short while. You can actually optimize that. You can like net off these different trades. So that’s actually capital efficient for these players in the different ecosystems so that they don’t have to rebalance their books in a way across the chains. If you can actually net it off before. So those things like to incorporate the logic. We’re actually going to use our chain on top of that. Also like to use our own token and like to put in additional security for the product. We can also leverage our chain, but I think that’s all a bit more technical. But yeah, that’s kind of the story there.

Kevin Rosenquist: That’s really cool. When did you become interested in crypto and bitcoin.

Jeroen Develter: Interested early on actually but really only made it like my full time job in 2021. So I mean always kind of been looking at it and decided, you know, I think I actually at some point, you know, when Bitcoin mining on your computer, like personal computer at home was still possible when I was still young, I actually did some of that,  so very early but then kind of left it for a very long time.

Kevin Rosenqvist: Were you successful? Were you able to, to get to grab some?

Jeroen Develter: I don’t even remember. Like. No, I was too young. I had no clue what I was doing. So like, you can do this is like, yeah, that’s nice.  And I just, like, I was a bit of a geek at that, like, at that stage. Maybe. Still, I’d like to try these tech things out. And,  that was fun, you know? But I never really thought of it, and I actually never realized it until, I think 2017, 2018. I see it again. Like coming up again. It’s like,  there’s this Bitcoin white paper. It’s like, I’ve seen this before. And it was like then I realized,  this is what I was doing so long ago. And then but I mean I mean I’m kind of a bit much so I like I don’t regret it at all.  but yeah. So 2017, 2018 came kind of back. And then just more as an investor trader on the side a little bit, you know, different coins, you know, like,  having some some fun. But then yeah, 20, 21 really, started to, to look into it, like with the focus and really determined to kind of go into the industry and yeah, made that happen.

Kevin Rosenquist: That’s cool. Yeah. I had some fun and played around with Bitcoin or with just crypto in general. And it didn’t go well. Like I didn’t put a ton of money in. I didn’t make anything, but I was lucky enough to at least like to get out a little bit of on this Bitcoin surge that’s going on right now. So I was able to get a little bit of something there.

Jeroen Develter: You know what they say the first cycle you have to lose everything in the second cycle. You have to make your money. And the third cycle is to give back. It’s like to pass it on.

Kevin Rosenquist: Okay. When’s the cycle? That’ll make me rich.

Jeroen Develter: I think it’s the second one. Okay this.

Kevin Rosenquist: I need to get to that.

Jeroen Develter: Just survive now.

Kevin Rosenquist: So there’s a lot of talk about regulation, you know, especially here in the United States. You know, we elected a new president. And we don’t talk politics on this show, but are supposedly very crypto friendly. Is the regulation of crypto titans really worldwide? How do you adapt and stay innovative when there’s so many questions?

Jeroen Develter: Yeah. I mean I think it’s hard, you know, like,  because you never know you’re operating in this kind of gray zone in a way, because regulation is not quick enough to catch up with the innovation. Right.

Kevin Rosenquist: Absolutely.

Jeroen Develter: And I think it’s tough. I think, you know, you take the safe route in that way. Like, I think in this industry you need to know, look, survival is more important. Like time in the game I think is more important than trying to grow very quickly. We’ve seen so many things that grow very quickly.  And just too quickly. And they blow up. Right? Because they’re, they’re doing things that are outside of the normal in a way. And I think you have to use judgment like obviously good legal and compliance teams to kind of keep things in check because obviously, like sometimes you’re, you’re very passionate about something. You say  this looks like a great idea and we want to do this, but then it’s like, it’s maybe not super smart to do it because there are, like, regulatory risks involved and definitely don’t want to take any risks on that side. I don’t want to end up in jail. I’m trying to create some cool products. Like, I think that nothing is worth that, right? So I think be cautious. Be smart about it. And  yeah, try to innovate. But within the barriers of what’s legal. Right. And definitely push boundaries. But yeah, within reason I would say.

Kevin Rosenquist: Yeah. Always know always that you’re right about the legal and compliance team. That’s important.

Jeroen Develter: For sure. The most important role in the company.

Kevin Rosenquist: Right. Yeah. At least in this company, at least in this industry.

Jeroen Develter: At least in the US.

Kevin Rosenquist: Yeah. Right. All right. Well, Jordan, thank you so much for being here. Really appreciate your time. It was a great conversation.

Jeroen Develter: Thank you so much for having me. It was a fun.