What is sBTC’s product-market fit?

Week of April 21, 2023

Author

Andre Serrano
April 24, 2023

Dear Bitcoiners,

Product-market fit is when a product satisfies a strong market demand. It starts by identifying the customers who are likely to use your product and the features to build to ensure you are meeting their needs.

The following chart is a great illustration of this.

How do you know when you have product-market fit?

You know you’ve achieved product-market fit when you are experiencing exponential growth… without marketing. Your product is considered a “must have” and you are testing the boundaries of the system’s capacity.

I’ve noticed crypto sometimes confuses product-market fit by assuming that speculative growth is equivalent to real user demand. Sometimes the signal gets buried. Product-market fit isn’t likely to happen in a “big bang” style event, but rather through sustained execution over time. This is why we focus on building flywheels.

Now, let’s break this down for sBTC.

Market

Target User: As of April 2023, over 45 million unique addresses have a non-zero balance of Bitcoin. These 45M users represent over $500BN serviceable addressable market (SAM). This is a very large target market, which is the ideal place for startups to operate.

Underserved Needs: One of the most common answers I hear to “What would you like to do with your Bitcoin?” is the ability to take out a stablecoin loan without a centralized counter-party. The reasoning for this is simple. Bitcoiners don’t want to sell their Bitcoin, but they do want to access dollars without incurring a taxable event.

Currently, there are very few options on the market to do this. Over the past several years, this market has been been occupied by centralized companies like BlockFi and Celsius, which forced users to incur counter-party risk (…and we all know how that turned out.) There is a significant need for decentralized alternatives.

Large market + underserved needs = huge opportunity

Product

Value Prop: sBTC’s value proposition is to access Bitcoin DeFi without a centralized counter-party. Instead of a custodial or federated solution, sBTC relies on a decentralized set of signers that allow users to “peg in” their Bitcoin to use in smart contracts.

Feature Set: Building the right features requires a deep understanding of your target user as well as the competitive products on the market. Since sBTC is a tool to build programmable applications, one of the most important metrics to watch is how easy it is for developers to integrate it into their dapps. The GTM group is actively researching key features and scoping product milestones. You can see early discussion on the forum to align the product with Bitcoiner values.

UX: The majority of users who interact with sBTC may not need to use it directly. Ideally, a user would log into an application with their wallet and deposit Bitcoin collateral to their account, which executes a swap to sBTC on the backend. Once the user has sBTC, a smart contract may be executed to release stablecoins to the user’s account or to liquidate the collateral if the value falls below a pre-determined threshold.

Check out this recent Bitcoin Writes issue for more thoughts on how the GTM working group is approaching UX.

The goal for sBTC is to successfully deploy Bitcoin capital in apps, products, and smart contracts alike that prove that you can unlock Bitcoin into productive use cases. We’re focused on tightly scoping the product, and ensuring developer and app user growth. I think we have the opportunity to build something special that the market clearly needs.

“When a great team meets a great market, something special happens.”

💻 Engineering Updates

sBTC Workgroup Updates

  • ✅ sBTC Alpha Deployment unblocked. Thank you @mijoco!

  • ⚠️ Need to reallocate blockchain workstream resources to signer workstream to support sBTC Alpha.

Workstream Updates

  • Blockchain

    • Lead: Mårten Contributors: stjepan, soju-drinker, jacinta

    • Definition and implementation plan for commit-reveal format

      • Got a lot of good feedback on the design. Thanks to everyone who helped! 🙏

      • Next step is to formulate a SIP and implement support for the protocol in Stacks

    • Peg handoff wire formats PR is out

    • StackerDB local testing setup is taking shape

    • Started work on the first StackerDB RPC

  • Frontend

    • Lead: mijoco Contributors: Sergey, Igor

    • Moved to multinet - sBTC now supports a network toggle to switch between testnet and mainnet in-app.

    • Moved from self hosted mongodb docker containers to Cloud managed via Mongo Atlas

  • Signer

    • Lead: Jacinta

    • Work has just started on project plan. Meeting next week to review product requirements.

  • Bitcoin Builder Updates

⚒️ Go-To-Market Updates

  • Began process of procuring various legal opinions related to sBTC

  • Kicked off work with a new potential signing partner

  • Scoped launch goals, challenges, and dependencies for updated project plan

  • Presented keynote talk and sBTC panel during Bitcoin Unleashed

  • Made progress with several teams building potential ‘flagship apps’

  • Started planning for a sBTC-focused hack event in Q2

🌍 Around the Ecosystem

  • Growing the Bitcoin Economy - keynote talk during Bitcoin Unleashed (Link)

  • sBTC panel discussion featuring builders such as Zest Protocol, ALEX, and Hiro Wallet (Link)

  • ALEX launched their cross-chain bridge on Mainnet 🎉 (Link)

Many folks from the working group are heading to Austin, TX for Consensus this week. Reach out if you’re in town!

Have a great week ahead everybody.

Andre