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2024 kicked off at full speed in the Bitcoin world: we celebrated the 15th Bitcoin anniversary on January 3rd; Bitcoin ETFs were approved and have recorded record-breaking trading volume; and, of course, we are heading towards the next Halving after block 840,000, which is estimated to happen around April 19th.

While this alone is already plenty to digest, we at 10101 will continue pushing the boundaries of self-custodial trading on Bitcoin using Discreet Log Contracts (DLCs).

2023 - A Year in Review: Achievements and Growth

2023 was the biggest year for us ever.

Winning $750k in NY

At the beginning of April, we packed our bags and flew to New York to participate in the first edition of the prestigious Bitcoin startup accelerator, Wolf (https://wolfnyc.com/). After completing the 8-week program and pitching in front of potential investors, we emerged victorious, securing an additional investment of $500k. Combined with the $250k cheque that every startup got for participating, we earned a whopping $750k. We are very proud of our achievements at Wolf, but that is just one small step in our journey towards untethering the power of self-sovereign Bitcoin finance.

Giving back to the community

During the summer, we shared our expertise on DLCs at various conferences, including BTC Prague, Baltic Honeybadger in Riga, The Bitcoin Conference in Innsbruck, and Adopting Bitcoin in El Salvador. It is one of our primary goals to not only develop groundbreaking technology, but also contribute to the wider community by imparting knowledge and educating others on how to continue growing the Bitcoin ecosystem.

Public launch of our beta program

In October, we reached a significant milestone with the eagerly awaited public launch of our mobile application, 10101, now available on both Android and iOS platforms. This marked a pivotal moment in our journey, bringing us closer to our audience and allowing users to experience firsthand the innovative features we had been working on.

The positive response from our initial users has kept us motivated as we refine and enhance the app based on all the valuable feedback.

USDP: Pioneering the World's First Self-Custodial Stablecoin on Lightning

In late 2023, we came second in second edition of the Legends of Lightning Tournament (https://bolt.fun/project/10101) organised by bolt.fun. During this event, we achieved a gret feat by launching the world's first self-custodial stablecoin on Lightning—USDP.

Checkout our video here: https://rumble.com/v40mwq7-usdp-the-first-usd-on-lightning.html

USDP meets the longstanding demand within the Bitcoin community, seamlessly blending the stability of a traditional "stable coin" with the censorship-resistant network of Bitcoin. Users can now send and receive satoshis around the Lightning Network while maintaining stability in USD value which makes USDP natively interoperable with any Lightning wallet.

This unique feature ensures users experience the benefits of a stablecoin while retaining full control over their private keys. USDP marks a significant stride in providing a secure and censorship-resistant financial experience on the Lightning Network.

2023 presented its fair share of challenges, as pushing the boundaries of self-custodial trading proved to be a formidable task. Our commitment to bringing self-custodial trading to the masses led us to integrate DLCs into Lightning. This allowed users to engage in self-custodial trading without counterparty risk, directly from their Lightning wallets.

The convergence of these cutting-edge technologies, however, introduced several hurdles: code complexity, protocol complexity and the number of transactions which have to be broadcasted when force-closing a DLC/Lightning channel.

Other challenges included random channel force-closures stemming from fee rate negotiation failures, dealing with amounts that risked pushing channel balances below dust values, and navigating high transaction fee environments that unexpectedly complicated Lightning transactions.

During this journey we learned a lot about Lightning, fee management, and the intricacies of the Bitcoin mempool. Despite the challenges, we remain convinced that DLCs are the ideal tool for self-custodial trading on Bitcoin. However, recognizing the need for Lightning improvement, we've adjusted our course to focus on building DLC Channels.

Building on the groundwork laid two years ago with ItchySats (https://comit.network/blog/2022/01/11/cfd-protocol-explained), we are now bringing DLC Channels to mobile devices, simplifying and enhancing accessibility. Today we are using the more advanced library rust-dlc (https://github.com/p2pderivatives/rust-dlc).

This strategic shift was driven by the complexity of merging both technologies seamlessly.

It's important to note that we are not abandoning Lightning. In an upcoming release later this year, we will connect DLC Channels with Lightning, offering users the best of both worlds: the simplicity of DLC Channels and access to Lightning’s large payment network.

For a more technical deep dive on this topic, stay tuned for an upcoming blog post on this topic.

Looking Ahead: Our Vision for 2024

We have very ambitious plans for 2024:

We've just relaunched our app with simplified DLC Channels. We have removed the ability to fund the wallet using Lightning, but this change is only temporary. In an upcoming release, we'll reintroduce this feature, and we will bring back USDP too. Users will once again be able to transact in stable coins on Lightning – fully self-custodial.

Having initiated a pilot program code-named DLC Connect, we're now also catering to institutional investors seeking counterparty-risk-free Bitcoin derivatives trading. This self-hosted solution aligns with our 10101 app, which is aimed at retail investors.

In anticipation of the next bull market, we foresee not only high volatility but also escalating on-chain fees for Bitcoin. Recognizing how this can prevent new users from setting up DLC or Lightning Channels, we are exploring looking at technologies like Fedimint or Liquid, as we aim to provide a more cost-effective and risk-reduced option as an alternative to layer-2 protocols on Bitcoin.

Join Us on the Journey: Your Role in Our 2024 Plans

To our valued retail users, your participation in self-custodial trading is not just about transactions – it's an opportunity to shape the early stages of our journey. We welcome your opinions, thoughts, and feedback as we continue to refine and improve.

Join us on Telegram (https://t.me/get10101) and follow us on X.com (https://x.com/get10101).

To our esteemed institutional investors, explore a new era in Bitcoin derivatives trading through our pilot program, DLC Connect. Your input is invaluable as we navigate these early stages. Share your insights, thoughts, and feedback to help us shape a secure and robust platform. Together, let's chart the course for a collaborative and successful future in 2024.

Charting a Bold Course: Together into 2024

As we enter 2024, several companies are delving into the topic of on-chain DLC protocols. Notable players like Atomic Finance, DLC.link, Mutiny, and LNMarkets, are making strides in various areas, from Bitcoin yield products to bridging blockchains and on-chain social betting.

However, it's essential to anticipate that the rise of on-chain transaction fees will pose a challenge for on-chain DLC protocols, ruling out small trades and retail investors.

At 10101, we take pride in pushing the boundaries of self-custodial trading using layer two protocols. Our recent relaunch features simplified DLC Channels, a testament to our commitment to reducing on-chain footprint while enhancing privacy and speed.

Read more on 10101.finance, join us on Telegram (https://t.me/get10101/1) and follow us on X.com (https://x.com/get10101) as we collectively steer towards a future marked by innovation, collaboration, and self-custodial excellence.

Download our app here:

Cheers, Philipp and the whole 10101-team