TL;DR

Forward the Original Title: 比特币Layer 2的新策略：RGB++的市场定位，颠覆性进展还是市场适应？

In the rapidly developing world of cryptocurrency, Layer 2 solutions for Bitcoin are gaining significant market interest. In particular, the RGB++ protocol from the Nervos Network (CKB), has attracted widespread attention. This innovative asset issuance mechanism has not only enhanced the value of CKB earlier this year but also led to a remarkable monthly increase of over 300% in just a few months.

The volatility of Bitcoin’s price provides a stage for multiple Layer 2 projects to showcase their technology, with CKB’s performance being particularly noteworthy. In the hot race of Bitcoin Layer 2, CKB, with its unique isomorphic binding mechanism and strong background (supported by the famous public chain Nervos), has successfully bound Bitcoin’s original chain UTXO with CKB Cells, thus leading the new market trend.

In addition, the RGB++ protocol was further elaborated in the Twitter Space hosted by Trustless Labs on February 22 this year. At this event, Cipher, the main author of RGB++ and co-founder of CKB, and Baiyu, the ecological leader, shared their in-depth insights into Bitcoin Layer 2 and the future plans for RGB++ assets and CKB ecosystem construction.

This article will detail how the RGB++ protocol works, its market position, and how it may change the way we understand and utilize Layer 2 solutions.

Solving the scaling pain points of Bitcoin, RGB++ achieves significant performance improvements and interoperability advantages through isomorphic binding

In-depth analysis: the logic and challenges behind choosing RGB protocol

The team’s original intention to develop the RGB++ protocol stemmed from an in-depth analysis of the market competition for Bitcoin’s layer-2 solutions. They pay particular attention to the competition for new protocols on the Bitcoin layer, distinguishing two types of protocols: those that exploit the properties of UTXO, and those that do not involve UTXO. The team chose the first type, specifically choosing protocols with UTXO characteristics such as Atomicals, RGB, and Taproot Assets.

There are many reasons for choosing the RGB protocol as the basis for development. First of all, team member Cipher has a great interest in the RGB protocol and has conducted in-depth research with @AurtrianAjian . The RGB protocol is known for its elegant design and strong scalability for Bitcoin. But despite such advantages, the protocol suffers from multiple technical and product issues in practical applications (such as interactive operation issues, data availability issues, Interoperability issues, smart contract/script execution environment issues, etc.) and failed to achieve large-scale adoption.

CKB team’s Layer-2 Bitcoin solution

RGB++ is an asset issuance protocol that operates at Layer-1 of Bitcoin, alongside other Layer-1 asset issuance protocols like Ordinals, Runes, and BRC20. Its design and technical advantages reflect the CKB team’s long-term accumulation of expertise in Bitcoin’s Layer-2 solutions. Compared to the traditional RGB protocol, RGB++ avoids the need for exchanging transaction history and data via a P2P network by moving all smart components, such as virtual machines and smart contracts, directly to the chain. This significantly simplifies off-chain logic and accelerates the development process.

Utilize CKB technology platform to implement on-chain processing of traditional RGB protocols

The core of the RGB++ protocol is to shift the complex logic, which traditionally needs to be processed in the client of the conventional RGB protocol, to on-chain processing. This transformation benefits from the years of accumulation of the CKB technical 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 UTXO to CKB’s Cell, using script constraints on the CKB chain and the Bitcoin chain to verify the correctness of state computation and the validity of ownership changes.

Three powerful tools to innovate transactions

The main advantages of RGB++ include: Non-interactive transfer - RGB++ takes advantage of CKB’s data custody and computing platform features, allowing transaction parties to transfer asynchronously and non-interactively, greatly improving the user experience; Transaction folding - by corresponding multiple CKB transactions with one Bitcoin RGB++ transaction, the performance of the slow, low-throughput Bitcoin chain is enhanced; and Direct interoperability between BTC assets and CKB chain assets - Through the mapping association between UTXO and Cell, direct interaction between Bitcoin assets and CKB chain assets is achieved, eliminating the need for complex cross-chain mechanisms.

Analyze the innovative mechanism of RGB++ and look forward to the future development of Bitcoin Layer 2 technology

The core mechanism and challenges of the RGB protocol

The RGB protocol is a unique P2P asset protocol that mainly operates under the Bitcoin chain, and its computing system is similar to a payment channel in some aspects. It requires users to run the client and personally verify the transfer behavior related to themselves. This method is called “interactive transfer”. Even as the recipient of assets, the user needs to confirm that the sender’s transfer statement is correct before the statement can take effect. The advantage of this approach is enhanced privacy protection, because unlike the broad-node consensus protocols adopted by traditional blockchains such as Bitcoin and Ethereum, the RGB protocol protects the privacy of each transaction through “client-side validation.”

However, this design of the RGB protocol also poses significant challenges. The lack of a common consensus process means that different clients may hold inconsistent data, creating “data silos.” In addition, users must verify the historical source of each transaction to confirm the legality of the transaction and the authenticity of the assets, which increases the operational complexity for users and may limit the widespread adoption of the protocol.

Innovation and advantages of 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 UTXO with CKB’s Cell through the “isomorphic binding” mechanism to achieve on-chain management of assets and transaction information. This mechanism allows all relevant verification logic to be executed directly on the CKB chain, rather than just on the user’s local client. This not only simplifies the process for users to verify assets and transactions, but also solves the problem of data inconsistency through centralized on-chain validation.

Another big advantage of RGB++ is the non-interactive nature of transfers. In the RGB protocol, if Alice wants to transfer money to Bob, she must send the transaction information to Bob for him to personally check and verify. In RGB++, this process is automatically completed by the CKB chain, and users do not need to manually intervene, which greatly simplifies the transaction process and improves efficiency. In addition, RGB++ utilizes the computing power of the CKB chain to allow the execution of more complex smart contracts and extended functions, which not only strengthens the functionality of the protocol, but also provides developers with more room for innovation.

In summary, RGB++, while maintaining the privacy advantages of the RGB protocol, greatly improves the convenience of transactions and data consistency through centralized processing and on chain validation, and solves the main pain points in 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++ debuts: Can it stand out in the fierce competition of Bitcoin L2?

Market potential and strategy

The current Bitcoin L2 solution is growing rapidly, and various projects such as BounceBit, Merlin Chain, and B^2 have accumulated considerable total value locked (TVL). Faced with this explosive growth, how does 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 makes full use of the technical advantages of the CKB chain to provide a seamless transaction experience. While operations 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 transfers.

Integration strategy on CKB Layer 2

On CKB’s layer 2, RGB++ focuses on the issuance of native assets and the support of cross-chain assets. Bitcoin and Ethereum assets can be safely transferred to CKB through advanced bridging technology, and we have collaborated with several large institutions to ensure the security and reliability of transactions. Moreover, the assets we launched on CKB follow a unified standard, such as the FT standard XUDT and NFT standards, which have already been applied on the main network. We also plan to launch a specific trading platform, like the Omega Market, to support the issuance and trading of native inscription assets on CKB.

Challenges and uncertainties

Although RGB++ has clear advantages in technology and market strategy, its development process is not without challenges. The development of the original RGB was affected by many factors, such as the need to be built on the Lightning Network but the existing Lightning Network standard does not fully support the RGB protocol. In addition, the improvement of RGB development tools and virtual machines (AluVM) also takes time, which may lead to slow development progress and missed market cycles.

To sum up, RGB++ not only carries the hope of technological innovation, but also faces multiple challenges in practical applications. As we continue to push the technology frontier and strive to overcome these challenges, can RGB++ hold its own in this highly competitive market?

Disclaimer：

1. This article is reprinted from [Panews]. Forward the Original Title: 比特币Layer 2的新策略：RGB++的市场定位，颠覆性进展还是市场适应？. All copyrights belong to the original author [DeMan]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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