04-13-2026Price:

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Quai uses Bitcoin's security to challenge its scaling ceiling

Monday, April 13, 2026 · from 1 podcast
1 SOURCEBitcoin Takeover Podcast
  • Quai’s ‘SOAP’ protocol lets miners earn its token by mining Bitcoin, then burns the proceeds to secure its own chain.
  • The network claims it can scale to over 1,000 TPS on-chain by automatically spawning new ‘shard’ chains when needed.
  • It’s betting that a programable, private PoW chain will beat Bitcoin’s store-of-value utility for daily use.

Quai Network claims it can absorb Bitcoin’s security without asking for permission, using a protocol it calls a ‘friendly Trojan horse.’

According to Dr. Karl Kreder on Bitcoin Takeover, the Subsidy Open Market Acquisition Protocol (SOAP) allows miners to earn Quai tokens while simultaneously mining Bitcoin, Litecoin, or Dogecoin. The network then automatically sells the secondary asset to buy and burn Quai. This mechanism drains some value from older chains to subsidize Quai’s security. Kreder argues this breaks Bitcoin’s competitive moat and forces a Darwinian battle where utility, not incumbency, wins.

“This mechanism effectively drains value from older networks to secure the new one. It forces a Darwinian competition where only the most efficient utility survives.”

- Dr. Karl Kreder, Bitcoin Takeover Podcast

To scale, Quai uses a hierarchical chain structure it calls a ‘lowerarchy’ of Prime, Region, and Zone chains that share the same consensus. When a single shard approaches saturation at 700-1,000 transactions per second, the system automatically spawns a new one, claiming to enable horizontal scaling without the super-exponential costs of Directed Acyclic Graph (DAG) competitors.

Kreder argues the ultimate test for any monetary network is whether a sanctioned nation-state like Iran would use it. He claims Iran would take Bitcoin or Monero but never Ethereum or a dollar stablecoin like USDT. To that end, Quai includes a private, endogenous stablecoin called ‘Qi,’ backed by the cost of mining energy rather than a bank balance.

Kreder envisions SOAP evolving to enable a trustless bridge for Bitcoin itself, blurring the line between Layer 1 and Layer 2. In his view, if Bitcoin remains a stagnant store of value, its security could eventually be harnessed to power a faster, more programable version of itself on Quai.

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Source Intelligence

What each podcast actually said

Bitcoin Takeover Podcast
Bitcoin Takeover Podcast

S17 E18: Dr. K (Karl Kreder) on Quai & Scaling Proof of Work • Apr 12

  • Quai Network achieves 5-second block times using proof of work. Karl Kreder says this gives statistical finality for small value transfers within one block, but large values require waiting for economic finality.
  • Kreder argues Bitcoin's six-block confirmation rule only provides economic security up to about $1.2 million, based on a first-order attack cost estimate of $200k per block. He says Quai reaches practical finality in 30 blocks, or 150 seconds.
  • Quai uses 'workshares' instead of full blocks to sample hash rate. Kreder claims this provides faster finality than Kaspa at much lower computational cost for node runners.
  • Quai's SOAP protocol allows merge mining with other PoW chains like Bitcoin Cash and Litecoin. Miners earn only Quai, while the network sells the merged-mined asset to buy and burn Quai, aiming for net zero emissions.
  • Kreder says Quai currently offers miners 5-10% more profit per hash than mining Bitcoin, creating an arbitrage opportunity that attracts hash rate.
  • Kreder differentiates SOAP from the Cubic attack on Monero, stating Quai actually contributes security to the merged-mined chains and appears as a regular mining pool to their networks.
  • Kreder envisions SOAP enabling trustless bridging of assets like Bitcoin to Quai, creating a system where both networks share the same hash rate and security model, blurring the line between layer 1 and layer 2.
  • Kreder argues SOAP breaks Bitcoin's proof-of-work moat and forces all PoW chains to compete on utility, which he sees as the best outcome for sound money advocates.
  • Kreder claims proof-of-stake systems cannot function as money for sanctioned states like Iran, which he calls the 'ultimate test of moneyness.' He says Iran would take Bitcoin or Monero but never Ethereum or USDT.
  • Quai's sharding is automatic and triggered by high uncle rates when a single shard approaches saturation at 700-1000 TPS. The system then adds shards without organizational intervention.
  • Quai uses a 'lowerarchy' where zone chains are primary and higher-level chains (region, prime) emerge naturally from mining with higher difficulty thresholds, serving as an inter-chain communication layer.
  • Running a Quai validator currently requires 16GB of RAM, 100GB storage, a 4-core CPU, and a 10 Mbps internet connection. Kreder says these specs support a fully loaded single shard.
  • Quai implements 'cash-like' privacy using payment codes, enforced non-reuse of addresses, fixed denominations, and native bilateral coin joins. Kreder claims this scales better than zero-knowledge or ring signature schemes.

Also from this episode:

AI & Tech (1)
  • Kreder recently changed his view on quantum computing threats after developing a physics model. He now believes logical qubit counts will reach 4,000-10,000, breaking current cryptography, and estimates a threat timeline around 2029.
Science (1)
  • Kreder claims to have unified physics by deriving all known phenomena from a singular object based on four axioms and the concept of 'distinguishability.' He used AI models adversarially to develop and critique the proof.
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