State channels (Lightning Network, sidechains (Stacks), Rollup (BitVM), UTXO + client validation (RGB++ Layer)... Who will stand out and truly unite the forces of the Bitcoin ecosystem, achieve scalability, interoperability, and programmability, and introduce innovative narratives and significant increments to the Bitcoin ecosystem?
Infrastructure oversupply is a community voice that cannot be ignored in this cycle. When supply > demand, we can see that both new public chains and L2 are doing everything possible to avoid becoming ghost towns, but in the Bitcoin ecosystem, we see a completely different picture:
Since the "Everyone Engraves" craze, the market has seen the community's enthusiasm for participating in the Bitcoin ecosystem, but due to Bitcoin's scalability limitations, a robust infrastructure is urgently needed before the Bitcoin ecosystem can truly explode. The large investments of institutions, often in the tens of millions, have further driven the Bitcoin city to roar with machinery and build roads and bridges during this cycle.
For a time, it seemed that everyone wanted to share in the heat of the Bitcoin ecosystem, but this opportunity is not so easily attainable.
The reason is simple: Due to characteristics such as non-Turing completeness, achieving Bitcoin scalability is not an easy task. Major projects are taking different paths, and Bitcoin's scalability journey is currently experiencing a chaotic exploratory phase.
In this process, we can see established Bitcoin scalability solutions like the Lightning Network, known for their "orthodoxy," revitalized, and we also observe the wild growth of CKB proposing RGB++ based on RGB, bringing more innovative narratives. Meanwhile, various sidechains and L2s are competing, with some directly borrowing from Ethereum's solutions and others deeply researching improvements based on Bitcoin's own characteristics.
Faced with the trillion-dollar market potential of the Bitcoin ecosystem and a dazzling array of technical implementation paths, which scalability protocols will stand out and truly unite the forces of the Bitcoin ecosystem, achieve scalability, interoperability, and programmability, and introduce innovative narratives and significant increments to the Bitcoin ecosystem?
This article aims to delve into Bitcoin scalability protocols, analyzing the future trends of Bitcoin scalability by horizontally comparing the strengths and weaknesses of various solutions.
1. Bitcoin Scalability: The Only Path to the Explosion of the Bitcoin Ecosystem#
Following the logic of "first determine whether it is, then prove why," we first discuss: Is Bitcoin scalability a pseudo-demand?
The answer is obvious: definitely not; in fact, Bitcoin needs scalability solutions more than any other blockchain.
This argument is strongly supported by reality from multiple angles.
From a market perspective, whether it is the engraving craze or the large investments from institutions, we can see the market's enthusiasm for the Bitcoin ecosystem. This enthusiasm is understandable; after all, over the past few years, a significant portion of Bitcoin holders do not just want to "hold" but are frustrated by the lack of more options for ecosystem participation. When interesting narratives emerge in the Bitcoin ecosystem, holders naturally become eager to participate.
Regarding Bitcoin itself, as the founding father of the crypto industry, Bitcoin has undergone over a decade of development, and the interests of various participants in the ecosystem are not only intertwined but also affect each other. How to achieve balance and maintain long-term attractiveness is a major topic. With the fourth halving expected to be completed in 2024, the reduction in block rewards will lead to decreased profitability for miners, further driving Bitcoin to explore ecological prosperity and achieve richer value flows. Bitcoin also needs to empower network participants and further attract incremental users.
More importantly, in developing the ecosystem, Bitcoin possesses multiple advantages that no other public chain can match: Bitcoin is community-driven and has undergone over a decade of stable operation. Today, its market value has reached $1.2 trillion, enjoying the highest recognition and visibility among the global public and investors. This endows Bitcoin with an unparalleled degree of decentralization and a strong security foundation. It is worth mentioning that due to past ecological scarcity, a large amount of Bitcoin capital has remained dormant, lacking deeper value release, which undoubtedly gives more people confidence in the explosion of the Bitcoin ecosystem.
However, unfortunately, the performance limitations brought about by Bitcoin's underlying design severely hinder the explosion of the Bitcoin ecosystem: As is well known, Bitcoin can only process about 3 to 7 transactions per second, and during peak transaction periods, the network experiences congestion. To ensure their transactions are prioritized, users must pay high fees, resulting in a series of poor experiences such as slow transaction speeds, high costs, and long confirmation times. More importantly, Bitcoin's non-Turing complete nature means it lacks the ability to execute complex logic, which significantly dampens the motivation of many developers to build complex smart contract functionalities based on Bitcoin.
Faced with such a powerful Bitcoin, which is market-expectant but inherently lacking, scalability has become the only path for the explosion of the Bitcoin ecosystem. And in the current context of focusing less on technology and more on demand, combining Bitcoin's own strengths and weaknesses, the Bitcoin scalability protocol is gradually developing its own principles of "change" and "unchange."
Focusing on Bitcoin's own limitations, the Bitcoin scalability protocol aims to bring a series of changes: one of the core goals of the Bitcoin scalability protocol is to enhance the user transaction experience, including improving efficiency and reducing costs.
Additionally, the Bitcoin scalability protocol will also strive to help Bitcoin achieve Turing-complete smart contract functionality, allowing developers to build complex logical applications within the Bitcoin ecosystem. This functionality will enable Bitcoin to support a wider variety of financial products and services, such as decentralized finance (DeFi) applications and automated contract execution. This will greatly enrich Bitcoin's application scenarios and attract more developers and users.
Another important change that the Bitcoin scalability protocol aims to bring is enhancing interoperability between Bitcoin and other blockchains and ecosystems. By breaking the existing isolation, it will enable aggregation and collaboration between different blockchains, allowing users to transfer assets and data more conveniently across different platforms. This interoperability will strengthen the connections within the entire blockchain ecosystem, promote resource sharing and collaboration, and drive innovation and development.
Regarding Bitcoin's advantages, the Bitcoin protocol will focus on inheriting and promoting: the Bitcoin scalability protocol will pursue a greater degree of inheritance of Bitcoin's decentralization and strong security, which not only ensures security but also truly brings innovation to the Bitcoin ecosystem, rather than simply creating a bridge to bring Bitcoin assets into other ecosystems and prosper them.
One noteworthy point is that the Bitcoin scalability protocol should expand without significantly altering the mainnet. We know that the Bitcoin ecosystem has previously attempted on-chain scalability solutions and undergone multiple upgrades, such as increasing block space and Segregated Witness (Segwit), which laid a solid foundation for subsequent Bitcoin scalability. However, since most on-chain scalability solutions alter the mainnet code and sacrifice decentralization and security to some extent, on-chain scalability solutions are approached with caution. The community is increasingly inclined towards building off-chain solutions based on Bitcoin L1, which neither affect Bitcoin's underlying structure nor solve performance issues.
After understanding the "change" and "unchange" of the Bitcoin scalability protocol, we have established some specific evaluation dimensions for how to measure Bitcoin scalability protocols. Based on these dimensions, comparing the mainstream Bitcoin scalability protocols currently on the market may help readers gain a clearer understanding of the strengths and weaknesses of various technical implementation paths.
2. Introduction to Mainstream Bitcoin Scalability Solutions and Comparison of Strengths and Weaknesses#
Following different technical implementation paths, the mainstream Bitcoin scalability solutions in the market can be roughly divided into the following types:
- State Channels
- Sidechains
- Rollup
- UTXO + Client Validation
2.1 State Channels#
State channels can be considered one of the earliest attempts at Bitcoin scalability and the most orthodox solution, with the most famous representative project being the Lightning Network.
According to its definition: Establish a channel between two or more parties, and then conduct multiple transactions within the channel, with only the final state recorded on the Bitcoin main chain, thus improving speed and reducing costs.
We can explain the working principle of state channels through a very vivid example: a group of people submits a deposit to establish a WeChat payment group, where transactions not only incur low fees but also occur quickly. Finally, when the group is dissolved, all payment states that occurred in the group will be updated to the Bitcoin mainnet after confirmation.
Understanding the operational logic of state channels reveals their clear advantages and disadvantages:
The advantages are: on one hand, state channels greatly reduce the computational load on the mainnet, achieving lower transaction costs and higher transaction efficiency; on the other hand, the final state is verified by the Bitcoin mainnet, so state channels inherit the security of the Bitcoin mainnet well; additionally, since multiple transactions can occur within the channel, theoretically, state channels can achieve infinite TPS.
The disadvantages are: on one hand, the creation of channels has a high technical and cost threshold; on the other hand, users can only transact with other users within the channel, which brings many limitations; additionally, state channels require funds to be locked in advance, which affects the liquidity of those funds; more importantly, state channels do not support smart contracts, which clearly does not meet the needs of the Bitcoin ecosystem.
2.2 Sidechains#
In fact, the concept of sidechains has been around for a long time. This solution is essentially an independent chain that runs in parallel with the main chain and supports users to transfer assets from the main chain to the sidechain for interaction, connected through a two-way peg mechanism.
There are many projects adopting this technical implementation path, not only the well-known old project Stacks but also the rapidly rising newcomer Fractal Bitcoin, which has attracted the community's attention.
Since sidechains operate independently from the Bitcoin mainnet, they can theoretically break through Bitcoin's own technical framework limitations, selecting the most advanced designs to achieve higher performance and better experiences.
However, due to the independence of sidechains from the Bitcoin mainnet, sidechains cannot inherit Bitcoin's strong security foundation well; their trust basis is built on their own consensus mechanisms, and there are significant centralization issues in the early stages of operation. Of course, many sidechain projects are currently proposing innovative solutions around this issue, striving for better binding with Bitcoin's security foundation in their respective consensus mechanisms.
2.3 Rollup#
Many people’s understanding of Rollup primarily comes from Ethereum L2. In the competitive Ethereum L2 arena, projects adopting Rollup solutions are numerous, occupying a significant portion of the market. In this round of Bitcoin infrastructure boom, Rollup technology paths are also shining in the Bitcoin ecosystem, with projects like B² Network and Bitlayer becoming popular in the Bitcoin ecosystem.
Regarding the specific operational logic, Rollup executes transactions off-chain, aggregates multiple transactions into batches, and then publishes these batches to the main chain all at once. This mechanism places data availability on the main chain to inherit its security and decentralization while significantly reducing the amount of data that must be stored on-chain, potentially alleviating congestion on the Bitcoin network and lowering transaction costs.
However, unlike Ethereum Rollup, Ethereum has a virtual machine, which means most Ethereum Rollups use the Ethereum blockchain as a data availability layer and consensus layer. Bitcoin lacks a virtual machine, so how does Bitcoin L1 verify the validity of Rollup proofs? This presents more challenges for Bitcoin scalability projects choosing the Rollup technology solution.
Currently, there are three main types of Rollup in the Bitcoin ecosystem, but none of the three models are perfect:
- OP Rollups are based on trust principles, where transactions are assumed to be valid by default but have a challenge period. This model is simpler, easier to integrate, and allows for greater scalability, but the existence of a dispute window can lead to delays in final transaction confirmations.
- Sovereign Rollups take a more independent approach, placing data availability on the main chain but verifying and executing transactions through their own consensus mechanisms. This model allows Rollups to share Bitcoin's security foundation while not being constrained by Bitcoin's scripting limitations, but it places high demands on the consensus mechanisms of the Rollups themselves.
- Validity Rollups (including ZK Rollups) use cryptographic proofs to verify the correctness of off-chain transaction batches without revealing underlying data. This method balances efficiency and security; however, the complexity and computational demands of generating ZK proofs have always been a challenge.
2.4 UTXO + Client Validation#
If Rollup is seen as an "imported product" from Ethereum in the eyes of most people, then UTXO + client validation seems more like a customized solution designed based on Bitcoin's own characteristics.
To intuitively introduce UTXO + client validation, more explanation is necessary, partly due to its technical complexity and partly due to the multiple optimizations and evolutions this solution has undergone in recent years.
We know that Bitcoin does not have the concept of accounts but uses the UTXO (Unspent Transaction Output) model, which is the core concept of Bitcoin transactions and the design basis for the UTXO + client validation technical path. Specifically, this solution attempts to perform off-chain ledger calculations based on Bitcoin UTXO and ensures the authenticity of the ledger through client validation.
This concept originated in 2016 from Peter Todd's ideas of Single-use seal and Client-Side Validation, ultimately leading to the birth of the RGB protocol.
As the name suggests, Single-use seal is like an electronic seal that ensures a message can only be used once, while client validation aims to move the verification of token transfers from Bitcoin's consensus layer to off-chain, verified by specific clients related to the transaction.
The core idea of RGB is that users need to run the client themselves and verify the changes in assets related to themselves. In simple terms, the asset receiver must first confirm that the transfer statement from the asset sender is correct before this transfer statement can take effect. This series of processes occurs off the Bitcoin chain, placing complex smart contract calculations off-chain to achieve efficiency and privacy protection.
So how does it inherit Bitcoin's strong security? RGB uses Bitcoin UTXO as a seal, linking RGB state changes to the ownership of Bitcoin UTXO. As long as the Bitcoin UTXO is not double-spent, the bound RGB assets will not experience double spending, achieving inheritance of Bitcoin's strong security.
Indeed, the birth of RGB is significant for the Bitcoin ecosystem, but things are always rough in the initial stages of development, and RGB still has many flaws:
For example, ordinary users using simple client products do not have the ability or resources to save all historical transactions, making it difficult to provide proof of transactions to counterparties. Additionally, different clients (users) only store data related to themselves and cannot see the asset status of others, which easily leads to client data islands. This lack of global visibility and data transparency severely hinders the development of applications like DeFi.
Moreover, RGB transactions, as Bitcoin's extended transactions, rely on a P2P network for propagation. Users need to perform interactive operations when conducting transfer transactions, which depend on a P2P network independent of the Bitcoin network.
More importantly, the virtual machine of the RGB protocol primarily uses AluVM, lacking comprehensive development tools and practical code, and there is currently no complete interaction solution for ownerless contracts (public contracts) within the RGB protocol. This makes multi-party interactions difficult to achieve.
It is precisely because of these issues that the well-established public chain project Nervos Network, known for its technical prowess, began exploring more optimized solutions, leading to the emergence of RGB++.
Although RGB and RGB++ are closely related in name and both stem from important concepts like single-use seals and client validation, RGB++ is not an extension of RGB. In fact, RGB++ does not use any RGB code; more rigorously, RGB++ is a complete reconstruction based on the RGB concept to achieve a series of optimizations.
The core idea of RGB++ is to delegate the data verification work originally done by users to achieve global verifiability. Of course, users can also run clients themselves to verify the data and related transactions of RGB++.
Who is it delegated to? Public chains and platforms that support UTXO and extend UTXO to give it programmability, such as CKB, Cardano, etc.
How to delegate? This involves the important concept of "isomorphic binding": Bitcoin is the main chain, while CKB and Cardano act as shadow chains of the Bitcoin main chain, using the extended UTXO on CKB and Cardano as containers for RGB asset data, writing the parameters of RGB assets into these containers, achieving binding between the main chain and shadow chains, and directly displaying the data on the blockchain.
Taking CKB as an example, due to the properties of Cell extended UTXO, Cells can establish a mapping relationship with Bitcoin UTXO, allowing CKB to serve as a public database for RGB assets and an off-chain pre-settlement layer, replacing the RGB client to achieve more reliable data hosting and RGB contract interaction.
In this way, on one hand, RGB++ inherits Bitcoin's strong security foundation; on the other hand, the non-interactive RGB transactions, the promise of aggregating multiple transactions, and the ability for BTC assets to interact directly with CKB chain assets without cross-chain transactions will further unlock more use cases like DeFi.
The outstanding advantages in security, efficiency, and programmability have made RGB++ highly praised in the industry since its inception, despite having a high cognitive threshold, and it has become one of the mainstream Bitcoin scalability protocols. With the upgrade to RGB++ Layer expected to be completed in July 2024, Bitcoin scalability is once again ushering in a moment of innovation.
From the name of this upgrade, we can capture a lot of information: From protocol to Layer, RGB++ will undoubtedly develop towards a broader service scope, deeper aggregation, and more seamless interactions.
Just like each country (blockchain) initially had its own operational rules, RGB++ Layer aims to find a common point (UTXO) and leverage this common point to connect important elements of ecological development, achieving a higher degree of "common language and common tracks," building a stronger foundational infrastructure layer for the development of the Bitcoin ecosystem.
First, as an infrastructure, RGB++ Layer must be easy to understand and widely accepted: RGB++ Layer has a complete native AA solution that can well accommodate the account standards of other public chains. This feature not only facilitates support for some key scenarios but also clears obstacles for UX.
RGB++ Layer is also committed to achieving unified asset issuance: RGB++ Layer supports the issuance of various RGB++ assets, including user-defined tokens (UDT) similar to ERC20 and digital collectibles (DOB) similar to ERC721. Thanks to the advantages of the UTXO model, RGB++ Layer can create a new paradigm for asset issuance, supporting the issuance of the same asset on multiple chains simultaneously, with different proportions on each chain. This not only achieves coordination and unity between different chains but also provides high flexibility for asset issuers.
Since asset issuance can be unified, asset interaction will also be more seamless: Through RGB++ Layer's bridge-less cross-chain (Leap), assets on UTXO chains can cross to another UTXO chain without a cross-chain bridge, bringing not only stronger security but also achieving higher interoperability. Various assets based on UTXO chains like Cardano, Dogecoin, BSV, and BCH can be seamlessly integrated into the Bitcoin ecosystem.
After breaking through the two major barriers of asset issuance and asset interaction, RGB++ Layer also aims to bring a unified smart contract framework and execution environment to the Bitcoin ecosystem through CKB-VM, endowing Bitcoin with more powerful programmability: Any programming language that can support the RISC-V virtual machine can be used for contract development on RGB++ Layer, enabling the construction of applications with complex logic, making the explosion of BTCFi and the landing of more innovative scenarios possible.
At this point, this article has introduced the basic operational logic, representative projects, and strengths and weaknesses of the four mainstream Bitcoin scalability protocols. Readers can review the content through the chart below and gain a more intuitive and clear understanding of the comparative advantages and disadvantages of various Bitcoin scalability protocols.
Of course, the above content is derived from the analysis and summary of the past performance of various solutions. In the current cycle, as the Bitcoin ecosystem is poised for action, the representative projects in various technical implementation paths are not idle but are continuously seeking innovation and breakthroughs to secure better ecological positions.
Therefore, after comparing the past, we should focus on the future, exploring the "seeking change" principles of leading projects in various solutions to gain insight into the future competitive landscape of Bitcoin scalability solutions.
3. Ecological Status and Future Potential of Major Protocols#
3.1 Lightning Network: A Symbol of "Orthodoxy," Moving Towards a Multi-Asset Network#
The orthodoxy of the Lightning Network can be traced back to 2009 when Bitcoin's creator Satoshi Nakamoto included a draft of payment channel code in Bitcoin 1.0, which was the prototype of the Lightning Network.
After over a decade of development, the Lightning Network has matured significantly. According to 1ML statistics, there are currently 12,700 nodes in the Lightning Network; 48,300 payment channels; and approximately 5,212 bitcoins in channel funds, with collaborations established with multiple social and payment projects.
Comparing this to May of this year, when there were 13,600 nodes, 51,700 channels, and 4,856 bitcoins in funds, it can be observed that the growth rate of funds in the Lightning Network has slowed, and the number of channels has even declined. Additionally, community sentiment has heard some negative comments in recent years.
On one hand, during the early development phase of the Lightning Network, many developers recognized the numerous limitations and challenges of this technology in terms of scalability, and the Lightning Network protocol is overly complex, making the development process slow, difficult, and time-consuming.
On the other hand, after several years of development, most people's understanding of it has been limited to payment aspects. Anton Kumaigorodski, a core developer of the Lightning Network, once candidly stated on social media that aside from payments, people should look for other directions. This further pushed the Lightning Network to a crossroads of transformation.
What is even more lamentable is that it seems team disagreements have always accompanied the development of the Lightning Network. Over the past year, several developers have left, further complicating the already challenging development process.
Of course, in the face of difficulties, the Lightning Network has not sat idly by. In addition to continuing to leverage its advantages and delve into the micropayment track, it has gradually realized that compared to Bitcoin assets, the narrative of the Bitcoin monetary network is more attractive and has begun to move towards building a multi-asset network.
On July 23, 2024, Lightning Labs released the first mainnet version of the multi-asset Lightning Network, officially introducing Taproot Assets into the Lightning Network.
Before the emergence of the Taproot Assets protocol, the Lightning Network only supported Bitcoin as a payment currency, and its application scenarios were very limited.
With the launch of the mainnet version of the multi-asset Lightning Network, anyone or any institution can use the Taproot Assets protocol to issue their own tokens, which also supports the issuance of stablecoins corresponding to fiat currencies. The assets of the Taproot Assets protocol are fully compatible with the Lightning Network, enabling applications such as global instant settlement of foreign exchange transactions and payments for goods using stablecoins to become a reality, further promoting the Lightning Network to become the infrastructure for a global payment network.
3.2 Stacks: An Established Sidechain Project, Nakamoto Upgrade Completed#
In the Bitcoin ecosystem, Stacks is a very unique existence. It is not only an OG project launched in 2017 but also became the first token sale approved by the U.S. Securities and Exchange Commission (SEC) under Regulation A+ in 2019.
According to DeFi Llama data, with the heat of engravings, Stacks' TVL has continued to grow since the beginning of 2024, surging to $183 million in early April. However, with the retreat of the engraving craze, Stacks' TVL has fallen back to around $100 million. It is worth mentioning that after several years of development, the DeFi activity on the Stacks chain is remarkable. For instance, the liquidity staking project StackingDao, which ranks first in TVL, has over 30,000 real staking users, and the cumulative number of independent wallets on Stacks has exceeded 1.21 million.
However, as a sidechain project, Stacks' development also faces many challenges:
On one hand, the security of the chain is highly dependent on the budget of Stacks miners. While the connection structure between the Stacks chain and the Bitcoin network (such as the transfer proof mechanism) helps improve decentralization and security, it limits on-chain performance and scalability.
On the other hand, although sidechains have greater flexibility, they essentially build a new chain outside of the Bitcoin chain, with an independent governance structure and transaction model. Therefore, some people believe that Stacks does not possess orthodoxy and lacks strong recognition within the Bitcoin community.
Recently, a milestone moment in the Stacks ecosystem was the completion of the Stacks Nakamoto upgrade: this upgrade not only brings stronger security to Stacks but also significantly improves block confirmation times, achieving transaction speeds of around 5-10 seconds, which is about 100 times faster than the current transaction speed.
At the same time, the core team of Stacks is also developing sBTC, a trustless solution that bridges BTC from the Bitcoin main layer to another chain. sBTC establishes a bridge for BTC assets between the Bitcoin network and the Stacks chain, and its permissionless, open participation characteristics will further release DeFi innovation for Stacks, bringing a $10 billion TVL opportunity.
3.3 BitVM: Directly Introducing Expressive Logic into Bitcoin#
As mentioned earlier, Bitcoin lacks a virtual machine, making it difficult to verify the validity of Rollup proofs. The birth of BitVM aims to directly introduce expressive logic into Bitcoin without requiring any changes to Bitcoin itself, helping to achieve off-chain computation and verify any computation on the Bitcoin blockchain. This development not only emphasizes security and efficiency but also opens the door to Bitcoin programmability (such as Turing-complete smart contracts).
Although BitVM is in its early stages, it has attracted attention from projects and the community. Currently, multiple projects, including Bitlayer, Citrea, Yona, and Bob, are adopting BitVM.
Currently, BitVM is still working on perfecting its mechanism, with the upcoming significant upgrade BitVM2 and BitVM Bridge being notable examples:
BitVM2 aims to achieve off-chain execution of complex computations and on-chain fraud proofs. This design cleverly implements Turing-complete computation verification within Bitcoin's limited scripting capabilities.
BitVM Bridge adopts a new 1-of-n security model, where as long as there is one honest participant, theft can be prevented. It is seen as a catalyst for significantly enhancing the cross-chain security and decentralization of Bitcoin and promoting the development of BTCFi.
It is worth noting that while BitVM2 greatly simplifies the verification process, the on-chain verification gas costs remain high. Additionally, BitVM is essentially an unimplemented virtual computing concept, and its operational logic does not fundamentally break through the limitations of ZK Rollup and Optimistic Rollup. Therefore, many members remain cautious about BitVM.
3.4 RGB++ Layer: Bitcoin Asset Issuance Layer, Smart Contract Layer, and UTXO Interoperability Layer#
After completing the RGB++ Layer upgrade, RGB++ Layer has shifted its focus from brand narrative to more refined implementation paths, choosing BTCFi as the construction focus to carry out a series of technical iterations and ecological construction. It subsequently announced a series of important updates and innovative products, aiming to integrate the Bitcoin asset issuance layer, smart contract layer, and interoperability layer into one, rapidly advancing towards a safer, more seamless, and more efficient Bitcoin infrastructure layer.
In terms of asset issuance, RGB++ Layer is introducing a new asset issuance model called IBO (Initial Bitcoin Offering), characterized by supporting the creation of funding pools directly on UTXOSwap, allowing newly issued assets to be traded with high liquidity, balancing fairness while mobilizing community enthusiasm, bringing a new paradigm for asset issuance for RGB++ assets and the Bitcoin ecosystem.
As a decentralized exchange built on RGB++ Layer, UTXOSwap adopts intent-based trading as its core, implementing off-chain matching and on-chain verification processes, utilizing the parallelism of UTXO to improve trading efficiency, aiming to become the central hub of RGB++ Layer, aggregating liquidity from various UTXO chains and laying a solid foundation for DeFi development.
Stablecoins, as one of the three driving forces of DeFi development, have also been strategically planned by RGB++ Layer: Stable++, as a decentralized over-collateralized stablecoin protocol, can efficiently construct over-collateralized vaults and liquidation modules using the powerful Turing-complete programmability of RGB++ Layer, allowing users to use BTC and CKB as collateral to mint stablecoins pegged to the U.S. dollar (RUSD). Thanks to the strong interoperability of RGB++ Layer, RUSD is compatible with all UTXO chains and circulates freely within the Bitcoin ecosystem, becoming an important component of BTCFi liquidity.
Beyond being an innovator, RGB++ Layer is also committed to becoming an enabler of the Bitcoin ecosystem, further integrating liquidity and application scenarios through strong collaborations, promoting the further explosion of the Bitcoin ecosystem. UTXO Stack and Fiber Network are prime examples of this.
In September, UTXO Stack announced its transformation into a staking layer for the Lightning Network, launching a corresponding token incentive mechanism to encourage users to stake CKB and BTC to enhance the liquidity of state channels. This series of measures aims to provide better liquidity and yield models for the Lightning Network, paving the way for its large-scale adoption.
Fiber Network, on the other hand, is an L2 network based on CKB, with initial functions similar to the Lightning Network, aiming to become a high-performance, low-cost micropayment network. However, compared to the Lightning Network, Fiber Network benefits from the Turing completeness of CKB, offering greater flexibility in liquidity management, higher efficiency, lower costs, and better user experience. More importantly, unlike the Lightning Network, which focuses on a single asset (BTC), Fiber Network supports multiple assets, including BTC, CKB, and RGB++ assets like the Bitcoin-native stablecoin RUSD, paving the way for complex cross-chain financial applications.
However, the birth of Fiber Network is not intended to replace the Lightning Network. The ultimate pursuit of Fiber Network is to become a scalability solution for Bitcoin programmability, and in this process, Fiber Network will closely collaborate with the Lightning Network. The technical stack of Fiber Network mainly includes CKB's Cell, RGB++ Layer, Bitcoin script's HTLC, and the Lightning Network's state channels. The first test version released by Fiber Network has already validated the feasibility of transferring assets from the BTC Lightning Network to CKB in a decentralized manner, allowing more BTC assets to circulate on CKB.
Due to the technical isomorphism between Fiber Network and the Lightning Network, there is a natural foundation for achieving cross-chain atomic swaps between the two. This combination of "Bitcoin-level security + Ethereum-level functionality + Lightning Network-level speed" will not only shine in the payment field but also promote the implementation of native stablecoins, native lending, and native DEX applications in the Bitcoin ecosystem, further driving the explosion of BTCFi.
Conclusion#
Through this article, we have explored the diverse landscape of Bitcoin scalability solutions: state channels theoretically can achieve infinite TPS; sidechains have outstanding flexibility advantages; Rollup's success in the Ethereum ecosystem has led to more expectations for its development in the Bitcoin ecosystem; and UTXO + client validation has undergone multiple iterations, with RGB++ Layer emerging as a comprehensive solution that not only inherits the security of the Bitcoin mainnet but also possesses multiple advantages in user experience, programmability, and interoperability, making it a relatively mature and complete Bitcoin scalability solution from a technical theoretical perspective.
However, it is worth noting that while RGB++ Layer has been iterating and optimizing and has a clear development path, its specific performance still needs to be further validated in the practice of ecological construction. With the roadmap of multiple projects in the ecosystem being implemented and products being launched, will RGB++ Layer become a significant driving force in releasing the potential of BTCFi?
The competition for Bitcoin scalability is still undefined, with various solutions showcasing their strengths. Ultimately, who will stand out remains to be seen by the community.
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