Bitcoin Native DeFi The Future of Metaprotocols | Adam Krellenstein - Kontor & Counterparty

Hello everyone. Hi, my name is Adam Krellinstein. I'm here to talk about Contour. Contour is a new meta protocol on Bitcoin for DeFi. Um, and it has a number of, I think, interesting features which defy what people think meta protocols are capable of.

I'd love to tell you about that today. As as I said, I'm Adam Krellinstein. I've been in the Bitcoin space since really the end of 2013. Um, I guess I I bought my first Bitcoin right before that. Um, and notably, I'm the the creator, uh, lead developer and architect of Counterparty.

Counterparty was a very, very early what's now called DeFi Protocol. And it had a lot of firsts. It had the first decentralized exchange. It had the first prediction market. Uh it had the first financial derivatives, contracts for difference.

It had online trustless um peer-to-peer gaming and betting. Uh and it really had smart contracts before Ethereum did. They weren't programmable, but they could do all of these things. And what's interesting is that this was all on Bitcoin. It was all interoperable on Bitcoin.

was all a layer on top of Bitcoin uh called a meta protocol. A meta protocol. What is a meta protocol? A meta protocol is a kind of blockchain protocol that works by really extending the functionality of the underlying L1 by building directly on top of it. So instead of building another blockchain, another chain, another network, you embed data inside of the L1 and then you parse it out of the that ledger out of Bitcoin in this case deterministically.

This allows you to sort of interpret Bitcoin transactions in a way that you otherwise would not be able to do and to add functionality directly to the Bitcoin network. Meta protocols, unlike many other ways of sort of extending Bitcoin, bridging off of Bitcoin, keep all your value on chain. Um, and they inherit the security of Bitcoin. Really, Bitcoin miners secure the Meta Protocol network. And they're natively, fully compatible with Bitcoin.

You can use your Bitcoin wallets, your Bitcoin infrastructure, your Bitcoin um tooling, all natively with with a Meta Protocol. Interestingly, meta protocols were first described all the way back in 2010 by Hal Finny, who uh if you don't know was um really the the second user of Bitcoin after Satoshi himself. Uh and here you can see a post from Bitcoin talk that old forum describing a meta protocol. You might not have heard the term. Uh meta protocols are out there and they're being used.

Um, some of the most popular ones are Counterparty, Ordinals, Runes, BRC20, which is actually embedded within ordinals inscriptions. And then there are a couple of of newer ones that are coming out uh recently. Alcanes is an example of a meta protocol, the one that sort of uses the UTXO model pretty heavily. Interestingly, uh the very first versions of Ethereum were uh meta protocols. Um, and you can see here a quote from Vitalic a few years back saying that uh that was indeed the case that he was originally going to build Ethereum and the smart contract system that is Ethereum on top of Bitcoin as a meta protocol.

He ended up not doing so because of the opera turn wars of I guess 2014 and 2015 and uh yeah and then here we are today. The rest is history. [snorts] I want to tell you about contour. Contour is a new meta protocol. Um, so I I after working on Counterparty back in really end of 2013, launching in 2014 and leading the development of that for about a year or so, I left the blockchain space for about eight years and then came back a couple years ago, took back up the mantle of uh developing Counterparty and uh have been supporting it.

But uh I saw a lot of interesting things that one could do in the meta protocol space and in the Bitcoin space for DeFi that are not currently possible actually because of technological limitations. Contour is my attempt to solve a lot of these problems and it has a lot of I think nifty features that again you're used to seeing associated with side chains or rollups or other off-chain solutions. Contour has uh interesting architecture which allows for one to two second confirmations, rich smart contracts using web assembly, scalable file storage where the file storage system is entirely on Bitcoin trustless decentralized. It allows for very high scalability. You can actually get much better scalability with this meta protocol with count with contour than you can with a side chain uh or with a rollup.

And all the data is entirely on Bitcoin which I think is a very important thing. How do we do two second latency? Well, the interesting thing is that the question of whether or not a transaction is going to confirm on Bitcoin is actually pretty predictable. You can look at the mempool and say, "Hey, look, blocks are not entirely full and these transactions have reasonable fees. Therefore, they're pretty likely to confirm in some window, one block, six blocks, 12 blocks, maybe.

The other interesting thing is that with a meta protocol, you can sort of change the rules. You can sort of have this degree of freedom in terms of determining how you want to order the execution of your transactions. And the order of the transactions as they are processed is actually the most important thing when it comes to, I don't know, double spend attacks because that's how you make sure that you actually get the money that you were supposed to be paid. If someone sends you money and then they frontr run you by producing a new transaction which double spends that th those those bitcoin then you don't get paid. So what contour adds is a optional layer on top of it using a staking network a a byzantine fault tolerant consensus protocol that allows for the creation of an actual effective prediction market on the bitcoin mempool and thereby allows for the creation of two-cond confirmations of these transactions.

If that network fails in any way, then you just fall back to Bitcoin. The order of transactions in contour is determined by that BFT consensus network. But finality is 100% determined by Bitcoin. If the transactions do not get confirmed by Bitcoin, they do not confirm in contour period, end of story. Uh if they don't and they're but they are batched and ordered, then you just simply roll back.

And so you end up with this really strong economic signal saying, "Hey, look, this transaction is very likely to confirm. some people have put money behind it and it's going to happen in this order. So you can actually receive transactions on Bitcoin moving contour contour assets and get confirmation, meaningful confirmation that it's going to confirm that you're not going to get double spent very fast. And we have other protections for RBF and that kind of thing. That's all sort of built in there.

There's a user griefing bond, all the things that you'd expect. You can see here on the diagram sort of how the ordering system works. Um and uh of course there are some interesting details there as well. But the security model is Bitcoin finality period end of story. Scalability.

I think I mentioned scalability is actually very very achievable on Bitcoin. The reason that Bitcoin is not very scalable is not because it's conservative or um because it's old or slow or something like that, but really because it was never designed to be fast or scalable. Uh the signature algorithm in particular is really very inefficient. You have to produce a new like large signature for every input that is inside of a Bitcoin transaction. And in 2026, we have much much better solutions for actually producing cryptographic signatures and aggregating them efficiently.

So you can have compact signatures for multiple transactions. So we use this signature algorithm called BLS which is aggregable and we've taken it from Ethereum 2.0. This is what's used by the validator set in Ethereum and we've added this as an optional wallet mechanism optional signing algorithm within Contour. So you can just use your vanilla Bitcoin transactions and Bitcoin wallets and all of that, but you can also embed contour transactions inside Bitcoin transactions, multiple contour transactions inside of a single Bitcoin transaction and use a shared signature so that you can get to an amortized whatever six to five to eight weight units per transaction over 100x improvement in throughput and cost.

all on all on Bitcoin, not offchain, not a rollup, not a side chain, uh just by using a pretty conservative signature algorithm. There are other optimizations we add in there like compression wild idea uh binary encoding uh a registry of addresses. You don't have to actually like use the same pub key hash over and over and over again. With these kinds of optimizations, you can get to very very high throughput within Bitcoin transaction within like the 4 megabyte uh block limit. Another major feature uh of contro of course is that it is that by by the by by virtue of the fact that it is a meta protocol you can do you can have much tighter integration with bitcoin itself bitcoin the token than with um side chains effectively um or roll-ups where you often have to embed a sp proof verifier inside your system.

The fact that you're actually on Bitcoin means you can actually look at Bitcoin transactions and have those transactions determine behavior of smart contracts on Contour directly. So, we're able to do a actually very simple and direct Bitcoin bridge on Bitcoin into the Meta Protocol. So, you can actually have KBTC, right? So you have a you have a 1:1 peg between Bitcoin and KBTC on contour and using optimistic consensus using the scalability features I talked about you can actually have very very high throughput and very low latency for moving in and out of this bridge much faster than with any more complicated cryptographic system where you have to worry about all these lockup periods um uh fraud proofs etc etc you don't need to worry about any of that and the way you handle withdrawals is very simple you just do over collateralization with core the contour native token So that gets you all all all of the things you sort of need and it's all very simple and direct and onchain. Here you can see a protocol for the deposit flow.

Contour of course has a smart contract system. This is table stakes in 2026. We have actually a lot of experience on the team uh building smart contract systems. We worked in the enterprise blockchain space for a long time. Um web assembly is really a like I think it should be the default at this point.

Um, I think it's pretty boring. Uh, and I think that it should be boring. Smart contract systems should be boring. Tooling should be boring. It should all just sort of work.

And our philosophy around smart contracts is make it easy to use to the point that you don't even think that you're using it. We've been able to engineer some very nice, I'd say, features into our implementation of Web Assembly as a smart contract system which make it dramatically easier to use even than other Web Assembly systems. In particular, we use the web assembly component model which lets you have really crosscontract module native calls with strong typing, type checking, tooling integration, ID integration, etc., etc. All to the extent that writing a smart contract in Contour feels exactly like writing regular software.

You don't have to feel like, oh, okay, I'm writing a blockchain. I'm writing something for a blockchain. I'm writing a smart contract. I have to be super careful about X, Y, and Z. You really can just write it much more like regular software.

uh we have it this is live uh today there's an SDK we uh are so far out with Rust support but really anything that works that compiles to web assembly will be supported and um so we'll be adding additional language support later you can see an example of what the code looks like there it's super duper readable file storage because uh if you didn't think Contour had enough features um there's one more for you uh there's a system that we've developed using um uh effectively data availability sampling to create a scalable file storage system pay once store forever entirely on Bitcoin. This is an interesting complement to storing all of your data in Bitcoin incriptions which is sort of how most people do it. There have been over a 100 million Bitcoin incriptions using ordinal so far. There are major limitations to that. First of all, it outsources data storage to the rest of the Bitcoin network.

Secondly, it's still really expensive per per bte. Third, it has hard limits on the size of your data, right? You can't store more than 400 kilobytes without going directly to a minor. Then you're capped at four four megabytes. What if you want to store a 100 megabyte file with Bitcoin?

What if you want to use Bitcoin to secure some data that is important to you that is sizable and you want to make sure it never ever ever goes away and the network is securing it? This provides that solution. And the key is that even though the actual like file data is not inside of a Bitcoin encryption, the entire file the entire file file storage system is secured by Bitcoin, the Bitcoin block hashes are used to generate the seeds for the pseudo random function that challenges these nodes that are storing your data to make sure that they're always storing that data. If they don't, they get slashed. Hard slashed.

They'll store it forever. Economic guarantees there that are pretty strong.

[snorts]

Uh I mentioned the Bitcoin bridge. This is an important feature um that sort of comes with Contour and the fact that it's on Bitcoin as a meta protocol makes it very easy to put a bridge directly on Bitcoin. What this allows for is actually earning Bitcoin on Bitcoin native yield. So you can stake your Bitcoin. You could lock it up with a bridge operator and then you can use and then that actually generates core.

That's actually one of the processes that creates core. The contour native currency is staked Bitcoin. Then you can use that core to collateralize your Bitcoin bridge or to delegate the stake to an operator who uses that to collateralize their Bitcoin bridge. And then by staking for a bitcoin bridge, you earn a percentage of the deposit in withdrawal fees for that bridge and thereby bot which is in KBTC which is pegged one to one to bitcoin. So you get this really really really nice closed system where you stake your bitcoin and then you earn bitcoin yield bitcoin denominated yield directly from that.

This is not really otherwise possible. other Bitcoin staking solutions, they tend to pay out in the native token of that other protocol. They tend to use that to like secure the staking protocol of some other network somewhere. This is all on Bitcoin and the fees are derived for the Bitcoin bridge. You also actually can get yield in core in the contour native token as well which is derived from other fees for like ordering and um transaction aggregation and so on and so forth.

But you do get Bitcoin native yield which I think is an very important thing and has been neglected by the industry uh to everyone's disappointment. So where are we today? Contour [snorts] is of course an open- source freely licensed pro uh uh software uh suite. Uh it's all on GitHub. The indexer is in alpha.

Um, you run it, you run Bitcoin, you run the contour indexer, bam, you're using contour. Uh, there's a alpha block explorer called core.space. Check it out. It's awesome.

It you can start to use it to use it to interact with like basic DeFi contracts, AMM contracts, token contracts. You can write contour smart contracts with the SDK and publish them to Bitcoin Signet where we're live. Sigil, by the way, is the name of the of the SDK and the and the language framework. Um there's a lot of documentation out there, full specs for all of this sort of stuff, stuff that we haven't fully implemented yet, including the optimistic consensus stuff. Um but it's all coming out very very shortly.

Um and I encourage everyone to to get involved and start building with it. This is uh I think a very exciting way of building directly on top of Bitcoin and extending its functionality and scaling it in a natural native way, keeping keeping really true to what Bitcoin is and letting Bitcoin be Bitcoin and yeah, also supporting all of the other things that people want to do and can do and have imagined doing with blockchains. Thank you.