DLCs are “Discreet Log Contracts,” a technology that was invented at MIT by Tadge Dryja who later co-invented the Lightning network. The whitepaper was published 4 years ago but just became feasible with Bitcoin's Taproot update. Last Fall, I was cycling out of my first startup MarketMuse and was looking for a way to build something meaningful in crypto. DLCs allow you to build an escrow contract around Bitcoin which enables tremendous utility.

A DLC lets you use your Bitcoin without needing to transfer it elsewhere. The solution to using Bitcoin in other systems has been to send it over to a custodian - you can either bridge it to another protocol, but you then send it to that protocol to lock up/secure. Or you can wrap it, which is basically sending it to a trust. Both require you to send it to a custodian, which goes against everything Bitcoin is about. As soon as you send Bitcoin to a custodian, you lose sovereignty and you put your Bitcoin at risk. Most hacks and issues in crypto have to do with custodians making mistakes on other people's capital.

Our vision is to connect Bitcoin to every app on every chain. We see the value of Bitcoin as an easy to understand digital reserve asset that a lot of people believe in, that’s proven to be safe and reliable. We want to increase the utility of that by connecting it to everyone at Stacks and other chains. We’re incubating at Stacks, and Stacks has this front row seat to this project.

Absolutely. DLCs allow you to lock your Bitcoin in a wallet. Sovereign Bitcoin for anywhere else. When you fulfill the contract, you release your funds.

It’s really powerful because - when you look at financial services, escrow is used in a number of places. For any kind of value transfer, large ticket items - this process usually takes days in traditional finance. We have the opportunity to build all of this on Bitcoin without custodians – cutting out the middleman.

This is the best, safest, most Stacks-native way of doing business - instead of trying to write to all these systems. You can just use all Stacks applications with native Bitcoin using DLCs.

The common use case that people think of is lending. You’re using your Bitcoin as collateral for a loan. So the first prototype we’re building is with Arkadiko.

Stacks mining, daily auctions, NFT auctions paid in Bitcoin, DAO treasury stuff used in Bitcoin… synthetic assets, real-world assets… there are so many use cases. On the app side, knowing you have a proof of collateral/proof of reserve, is big. There’s a lot of risk mitigation for the app developer.

It’s very hard to hack. You have to fool the application. When the escrow is created, you have to hack it - you can’t just rip and run, you have to hack the application, wait a long time for people to sign up into the app and lock funds into a compromised application, and then hack the 3rd party network that secures each escrow. There isn’t one place to hack; you have to go through multiple places in the system. It’s a very safe, resistant, and useful construct.

It’s been great – we’ve had a great ride. It’s a testament to Stacks, the Foundation, and the community and energy beyond the quality of the idea. It’s an important innovation…a luminary invented it, and we had this opportunity to prove it out. We’re the team that delivers on what we promise, and we don’t promise things we don’t deliver.

The first thing we did as a company was go to Chainlink, where we received a grant that got us started. Then the Foundation offered us a grant. Will, Trevor, investors in the Stacks community….so many people have supported us. It’s been a 1+1 = 5 relationship.

The biggest goal we have is to create as many Bitcoiners as possible. We are talking to Bitcoin miners, large currency funds that do a lot of Bitcoin work, individuals, anyone doing anything on Bitcoin should be aware of this. Over time, it’s these DLC features that are built into more wallets. The wallets will then have more sophisticated capabilities.

DLCs is kind of like a movement. We want to build as much open source stuff as possible. DLCs will take off on their own, so we want to make sure that they are easy to understand. Tooling, education - we’re working on this to help adoption. If we bring the power of Bitcoin and the utility of other chains, it will rise all boats and resolve so many political disputes.

Announcements/upcoming
We had our first hackathon with the Stacks Pre-accelerator less than a month ago. It was huge and we had a lot of ideas come out of this.

The other big thing we’re working on - the main product we're offering, with any escrow you need a 3rd party escrow agent. So we’re offering an oracle system - our own 3rd party escrow basically - you can make API calls. We want to offer free API calls to help developers get started just hacking on it. This will be later this quarter.

The Bitcoin wallets that people use have to support signing extensions. We’re really working on templatizing that and building DLC support into more and more wallets. There’s only 1 or 2 wallets right now that support DLCs so we’re building our own and adding this to a library to allow other wallets to integrate this support. There’s a standard DLC signing flow that we anticipate that people can just import. There’s a specific contract as well, we need to configure this piece. We will be working on easy to understand ways to build this too.

A big thing that we’ve been running into - we’ve been trying to educate around is how DLC oracles work and how they differ from other oracles. A DLC consists of two parties and an oracle (a 3rd party source of data). But the DLC oracle that we’re building is different - our DLC oracles only open and close DLCs, they don’t have any 3rd party data.

When you connect a Redstone or Chainlink oracle, you get more sophistication and trigger things based on prices of assets… in our Github, we have a Clarity DLC contract with a Redstone integration. We’re focusing on making that work for all the teams.

DLC Link website - Docs page is a great place to learn more: https://docs.dlc.link/

Our Twitter is also a great way to connect and hear more updates. There's also a #dlc channel in Stacks Discord.