Driving Bitcoin Layer 2 to the forefront: Market adaptation and technical challenges of new protocols.
Original author: DeMan
In today's rapidly evolving cryptocurrency landscape, Bitcoin Layer 2 solutions are becoming increasingly popular. In particular, the latest innovation fromCKB (Nervos network)—theRGB ++ protocol—has garnered significant attention. RGB++ not only drove up CKB's value earlier this year through its innovative asset issuance mechanism, but also achieved an astonishing monthly increase of over 300% in just a few months.
Bitcoin's price volatility has provided a stage for many Layer 2 projects to showcase their technologies, with CKB standing out in particular. In the popular Bitcoin Layer 2 arena, CKB, with its unique isomorphic binding mechanism and strong backing (supported by the renowned public chain Nervos), has successfully bound UTXOs from the original Bitcoin blockchain to Cells on the CKB chain, thus leading a new market trend.
Furthermore, the RGB++ protocol was further elaborated at a Twitter Space hosted by Trustless Labs on February 22nd of this year. At the event, Cipher, the lead author of RGB++ and co-founder of CKB, along with ecosystem leader Baiyu, shared their insights into Bitcoin Layer 2 and future plans for RGB++ assets and the CKB ecosystem.
This article will detail how the RGB++ protocol works, its position in the market, and how it may change the way we understand and utilize Layer 2 solutions.
Deep Analysis of RGB++'s Significant Performance Improvements and Interoperability Advantages Through Homogeneous Binding : Addressing the Scaling Pain Points of Bitcoin; The Logic and Challenges Behind Choosing the RGB Protocol
The team's motivation for developing the RGB++ protocol stemmed from an in-depth analysis of the competitive market for Bitcoin Layer 2 solutions. They focused particularly on the competition among new Bitcoin Layer 1 protocols, distinguishing between two types: those utilizing UTXO features and those not involving UTXOs. The team chose the first type, specifically protocols with UTXO features such as Atomicals, RGB, and Taproot Assets.
The reasons for choosing the RGB protocol as the development foundation are multifaceted. First, team member Cipher had a great interest in the RGB protocol and conducted in-depth research with Professor A-Jian. The RGB protocol is renowned for its elegant design and powerful scalability for Bitcoin, but despite these advantages, it has failed to achieve widespread adoption due to several technical and product issues in practical applications (such as interactive operation problems, data availability problems, interoperability problems, and smart contract/script execution environment problems).
CKB Team's Bitcoin Layer 2 Solution
RGB++ is a Layer 1 asset issuance protocol for Bitcoin, operating at the same level as other Layer 1 asset issuance protocols such as Ordinals , Runes, and BRC20. Its design and technical advantages reflect the CKB team's long-term experience in Layer 2 Bitcoin solutions. Compared to the traditional RGB protocol, RGB++ avoids the need to exchange transaction history and data through a P2P network, moving all smart components, such as virtual machines and smart contracts, directly onto the blockchain, thus significantly simplifying off-chain logic and accelerating the development process.
Implementing on-chain processing of traditional RGB protocols using the CKB technology platform
The core of the RGB++ protocol lies in transferring the complex logic that traditional RGB protocols required client-side processing to on-chain processing. This transformation benefits from years of accumulation of the CKB technology platform, including an independent P2P network, shared data, a virtual machine capable of verifying transactions, and a non-interactive operating experience. Through this isomorphic binding mechanism, RGB++ maps Bitcoin's UTXOs to CKB's Cells, utilizing script constraints on both the CKB and Bitcoin chains to verify the correctness of state calculations and the validity of ownership changes.
Three key tools to unlock trading innovation
The main advantages of RGB++ include: non-interactive transactions—RGB++ leverages the data hosting and computing platform features of CKB, allowing both parties to transfer funds asynchronously and non-interactively, greatly improving the user experience; transaction folding—by mapping multiple CKB transactions to a single Bitcoin RGB++ transaction, it improves the performance of the slow, low-throughput Bitcoin chain; and direct interoperability between BTC assets and CKB on-chain assets—through the mapping between UTXOs and Cells, direct interaction between Bitcoin assets and CKB on-chain assets is achieved without the need for complex cross-chain mechanisms.
Analyzing the innovative mechanism of RGB++ and envisioning the future development path of Bitcoin Layer 2 technology: The core mechanism and challenges of the RGB protocol.
The RGB protocol is a unique peer-to-peer asset protocol that primarily operates off-chain with Bitcoin, and its computational system is similar in some ways to a payment channel. It requires users to run a client and personally verify transfers involving themselves, a process known as "interactive transfers." Even as the recipient of the asset, the user must verify the sender's transfer claim before it becomes valid. The advantage of this approach is enhanced privacy protection because, unlike the widespread node consensus protocols used by traditional blockchains like Bitcoin and Ethereum , the RGB protocol protects the privacy of each transaction through "client verification."
However, this design of the RGB protocol also presents significant challenges. The lack of a common consensus process means that different clients may hold inconsistent data, creating "data silos." Furthermore, users must verify the historical origin of each transaction to confirm its legitimacy and the authenticity of the assets, which increases operational complexity and may limit the protocol's widespread adoption.
Innovations and advantages of the RGB++ protocol
In contrast, the RGB++ protocol significantly improves user experience and system efficiency while maintaining the privacy advantages of the original RGB protocol. RGB++ combines Bitcoin's UTXOs with CKB's Cells through a "homogeneous binding" mechanism, enabling on-chain management of asset and transaction information. This mechanism allows all relevant verification logic to be executed directly on the CKB chain, rather than solely on the user's local client. This not only simplifies the process of verifying assets and transactions for users but also solves the problem of data inconsistency through centralized on-chain verification.
Another major advantage of RGB++ is the non-interactive nature of transactions. In the RGB protocol, if Alice wanted to transfer money to Bob, she had to send the transaction information to Bob for him to check and verify. In RGB++, this process is automated by the CKB chain, eliminating the need for manual user intervention and greatly simplifying the transaction process while improving efficiency. Furthermore, RGB++ leverages the computational power of the CKB chain, allowing for the execution of more complex smart contracts and extended functionalities. This not only enhances the protocol's functionality but also provides developers with more room for innovation.
In summary, RGB++, while maintaining the privacy advantages of the RGB protocol, significantly improves transaction convenience and data consistency through centralized on-chain processing and verification, addressing the main pain points of the traditional RGB protocol. These improvements not only enhance the user experience but also lay a solid foundation for the widespread adoption and future development of RGB++.
RGB++ Makes its Debut: Can it Stand Out in the Fierce Bitcoin L2 Competition? Market Potential and Strategies
The current Bitcoin Layer 2 (L2) solution is growing rapidly, with various projects such as BounceBit, Merlin Chain, and B^2 accumulating substantial Total Value Locked (TVL). Faced with this explosive growth, how can RGB++ enter this market? The key lies in its unique market positioning and strategic deployment. RGB++ not only exists as an NFT and FT issuance protocol but also fully leverages the technological advantages of the CKB chain to provide a seamless transaction experience. While operating on the Bitcoin mainnet may face higher gas fees and slower transaction speeds, the RGB++ protocol optimizes these operations by directly utilizing CKB's DEX for asset transactions.
Integration Strategy on CKB Layer 2 Chain
On the CKB layer-2 blockchain, RGB++ focuses on the issuance of native assets and support for cross-chain assets. Bitcoin and Ethereum assets can be securely transferred to CKB using advanced bridging technology, and we collaborate with several large institutions to ensure the security and reliability of transactions. Furthermore, the assets we launch on CKB adhere to unified standards, such as the FT standard XUDT and the NFT standard, both of which are already implemented on the mainnet. We also plan to launch a dedicated trading platform, such as the Omega Marketplace, to support the issuance and trading of CKB's native inscription assets.
Challenges and uncertainties
Despite RGB++'s clear advantages in technology and market strategy, its development process was not without challenges. The original RGB development was affected by numerous factors, such as the need to build on the Lightning Network, but the existing Lightning Network standard does not fully support the RGB protocol. Furthermore, the development tools and virtual machine (AluVM) for RGB required time to mature, all of which could have led to slow development progress and missed market opportunities.
In conclusion, RGB++ not only embodies the hope of technological innovation but also faces multiple challenges in practical applications. As we continue to push the boundaries of technology and strive to overcome these challenges, will RGB++ be able to secure a place in this highly competitive market?
