Bitcoin Layer 2 Frontier: Market Adaptation and Technological Challenges of New Protocols
In the rapidly evolving cryptocurrency landscape, Bitcoin Layer 2 solutions are becoming the new favorite in the market. Particularly, the latest innovation from CKB (Nervos Network) – the RGB++ protocol – has gained widespread attention. RGB++ not only propelled the value of CKB with its innovative asset issuance mechanism earlier this year, but also achieved an astonishing monthly increase of over 300% in just a few months.
The price volatility of Bitcoin has provided a platform for multiple Layer 2 projects to showcase their technology, and CKB’s performance stands out. In the popular race of Bitcoin Layer 2, CKB has led the market trend with its unique isomorphic binding mechanism and strong background supported by the well-known public chain Nervos.
Furthermore, the RGB++ protocol was further elaborated on in a Twitter Space event hosted by Trustless Labs on February 22nd this year. During the event, Cipher, the main author of RGB++, along with CKB co-founder Cipher and ecology leader Baiyu, shared their in-depth insights into Bitcoin Layer 2, as well as the future plans for RGB++ assets and CKB ecology construction.
This article will provide a detailed introduction to the working principle of the RGB++ protocol, its position in the market, and how it may change the way we understand and utilize Layer 2 solutions.
Addressing the pain points of scaling Bitcoin, RGB++ achieves significant performance improvement and interoperability advantages through isomorphic binding: the logic and challenges behind choosing the RGB protocol.
The development team’s intention of creating the RGB++ protocol originated from a deep analysis of the competitive Bitcoin Layer 2 solution market. They specifically focused on the new protocol competition in Bitcoin Layer 1, distinguishing two types of protocols: those that utilize UTXO properties and those that do not involve UTXO. The team chose the first type, especially protocols with UTXO properties such as Atomicals, RGB, and Taproot Assets.
The reason for choosing the RGB protocol as the development foundation is multifaceted. Firstly, team member Cipher had a great interest in the RGB protocol and conducted in-depth research together with Professor Ajian. The RGB protocol is known for its elegant design and powerful scaling capabilities for Bitcoin. However, despite these advantages, the protocol has not been widely adopted due to various technical and product issues in practical applications, such as interactive operation problems, data availability issues, interoperability problems, and smart contract/script execution environment issues.
CKB’s Bitcoin Layer 2 solution
RGB++ is an asset issuance protocol belonging to Bitcoin Layer 1, along with other Layer 1 asset issuance protocols such as Ordinals, Runes, and BRC20. Its design and technological advantages reflect the long-term accumulation of CKB’s team in Bitcoin Layer 2 solutions. Compared to the traditional RGB protocol, RGB++ eliminates the need for exchanging transaction history and data through the P2P network, and directly moves all smart components such as virtual machines and smart contracts to the chain, significantly simplifying off-chain logic and accelerating the development process.
Utilizing the CKB technical platform for on-chain processing of the traditional RGB protocol
The core of the RGB++ protocol lies in transferring the complex logic that needs to be processed on the client side in the traditional RGB protocol to on-chain processing. This transition 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 non-interactive operation experience. Through this isomorphic binding mechanism, RGB++ maps Bitcoin’s UTXO to CKB’s Cell and uses the script constraints on the CKB chain and Bitcoin chain to verify the correctness of state calculation and the validity of ownership changes.
Three major weapons for revolutionizing transactions
The main advantages of RGB++ include non-interactive transactions – RGB++ utilizes the data hosting and computing platform features of CKB, allowing transacting parties to transfer funds asynchronously and non-interactively, greatly improving user experience. Transaction folding – by combining multiple CKB transactions with a single Bitcoin RGB++ transaction, the performance of the low-speed, low-throughput Bitcoin chain is improved. Direct interoperability between BTC assets and CKB on-chain assets – through the mapping association of UTXO and Cell, direct interaction between Bitcoin assets and CKB on-chain assets is achieved without complex cross-chain mechanisms.
Analyzing the innovative mechanism of RGB++ and looking forward to the future development path of Bitcoin Layer 2 technology – the core mechanism and challenges of the RGB protocol
RGB protocol is a unique P2P asset protocol that mainly operates on the Bitcoin chain, and its computational system is similar to payment channels in some aspects. It requires users to run clients and personally verify the transfer transactions related to themselves, which is called “interactive transfer”. Even as the recipient of the asset, the user must confirm the sender’s transfer statement before it becomes effective. The advantage of this approach is enhanced privacy protection because unlike widely adopted node consensus protocols used in traditional blockchains like Bitcoin and Ethereum, the RGB protocol protects the privacy of each transaction through “client-side verification”.
However, this design of the RGB protocol also brings significant challenges. The lack of a common consensus process means that different clients may hold inconsistent data, resulting in “data islands”. Additionally, users have to verify the historical sources of each transaction to confirm the legitimacy of the transaction and the authenticity of the assets, increasing the complexity of user operations and potentially limiting the widespread adoption of the protocol.
Innovation and advantages of the RGB++ protocol
In contrast, 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, enabling on-chain management of assets and transaction information. This mechanism allows all relevant verification logic to be executed directly on the CKB chain instead of just 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 RGB protocol, if Alice wants to transfer funds to Bob, she has to send the transaction information to Bob for him to personally check and verify. In RGB++, this process is automatically completed by the CKB chain, eliminating the need for manual intervention from the user, greatly simplifying the transaction process and improving efficiency. Additionally, RGB++ utilizes the computing power of the CKB chain, allowing for more complex smart contracts and extended functionality, which enhances the protocol’s functionality and provides more innovative space for developers.
In conclusion, RGB++ improves transaction convenience and data consistency by leveraging on-chain centralized processing and verification while maintaining the privacy advantages of the RGB protocol. These improvements not only enhance user experience but also lay a solid foundation for the widespread adoption and future development of RGB++.
RGB++ making its debut: Can it stand out in the fierce competition of Bitcoin Layer 2? Market potential and strategies
Currently, Bitcoin Layer 2 solutions (L2) are rapidly growing, and various projects such as BounceBit, Merlin Chain, and B^2 have accumulated considerable Total Value Locked (TVL). How does RGB++ enter this market? The key lies in its unique market positioning and strategic deployment. RGB++ exists not only as an NFT and FT issuance protocol but also fully utilizes the technical advantages of the CKB chain to provide a seamless trading experience. Although operating on the Bitcoin mainnet may incur higher gas fees and slower transaction speeds, the RGB++ protocol optimizes these operations by directly utilizing CKB’s Dex for asset trading.
Integration strategy on the CKB Layer 2 chain
On the CKB Layer 2 chain, RGB++ focuses on the issuance of native assets and supports cross-chain assets. Bitcoin and Ethereum assets can be safely transferred to CKB through advanced bridging technology, and we are collaborating with multiple large institutions to ensure the security and reliability of transactions. Additionally, the assets launched on CKB follow unified standards, such as the FT standard XUDT and NFT standard, which have already been applied on the mainnet. We also plan to launch specific trading platforms, such as Omega Market, to support the issuance and trading of CKB native inscription assets.
Challenges and uncertainties
Although RGB++ has significant advantages in technology and market strategy, its development process is not without challenges. The development of the original RGB was influenced by various factors, such as the need to build on the Lightning Network, but the existing Lightning Network standards do not fully support the RGB protocol. Additionally, the improvement of RGB’s development tools and virtual machine (AluVM) will require time, which may result in slow development progress and missing market cycles.
In conclusion, RGB++ not only carries the hope of technological innovation but also faces multiple challenges in practical applications. As we continue to push the technological frontier and work to overcome these challenges, can RGB++ carve out a place in this fiercely competitive market?
Tags:
CKB
RGB
Ethereum
Bitcoin
Source: https://www.panewslab.com/zh/articledetails/d9sbw0k0k25e.html