In-depth analysis of the evolution between RGB→RGB++→RGB++Layer: What happened?

The RGB++ protocol recently completed the RGB++ Layer upgrade, which can extend bridgeless cross-chain and smart contracts to all UTXO chains such as BCH, BSV, and Dogecoin, and support other Layer 1 asset protocols such as Runes and BRC20. The first DEX UTXOSwap of RGB++ Layer was also launched on the mainnet at the same time. According to the plan, the subsequent ecosystem will continue to launch separate browsers, IBO and other platforms. Let’s talk about RGB++ and CKB, the dark horse of this bull market, and explore the relationship between RGB++ and RGB, as well as why RGB++ should be upgraded to RGB++ Layer.

First, we need to understand the difference between RGB and RGB++. The founder of RGB is Maxim Orlovsky, a Ph.D. from the National Academy of Sciences of the United States, and the head of the technical committee of the non-profit Bitcoin development organization LNP/BP Association, while the founder of RGB++ is Cipher, the co-founder of CKB.

RGB is defined as providing a scalable smart contract system for Bitcoin and Lightning Network, which completes off-chain expansion through UTXO combined with client verification, which also means that all data is stored outside of Bitcoin transactions. The core idea is to call the Bitcoin blockchain only when necessary. All valid verification of token transfers is moved from the consensus layer to the off-chain, and is only verified by the payee client related to this transaction. Therefore, client verification is different from the familiar transaction broadcast to the entire network. Instead, only some nodes related to a specific transaction are involved in the work to complete the validity verification of the transaction, which also strengthens the privacy of the RGB protocol to a certain extent.

As the off-chain client verification and the on-chain Bitcoin network itself, the original UTXO magic modification creates the concept of "one-time seal" for the state transition of smart contracts. According to Bitcoin rules, each UTXO can only be spent once, so its characteristics can be cleverly used as a seal. When creating UTXO, it is equivalent to locking the seal, and when spending it, the seal is opened. RGB uses UTXO to provide any party with a smart contract with the ability to verify its uniqueness. Although the data is stored off-chain, it is bound to the chain through UTXO. In other words, RGB uses Bitcoin native scripts as the source of security for its ownership and access rights. In fact, reading this will feel very similar to the Ordinals protocol. Both are "tricks and tricks" that use existing things to the fullest extent to dig out more unexpected functions on the Bitcoin network that has been unchangeable.

So RGB itself is just a client verification technology used to expand Bitcoin, not a network or a blockchain. Strictly speaking, RGB cannot be called BTC Layer2, but through RGB, Bitcoin can be given some of the capabilities achieved by smart contracts such as Ethereum, including issuing Tokens, NFTs, Defi and even games.

However, despite this, the asset issuance protocols such as ARC20 and BRC20 that have become popular in this round of Bitcoin ecology do not use RGB's off-chain client verification architecture. The main reason is that the business logic under the chain is very complex and the workload is huge, and the user experience is also difficult to understand. Because of the binding of UTXO mentioned above, that is, when two users use the RGB protocol to transfer assets, they do not provide their own Bitcoin addresses, but their own Bitcoin UTXO. Every transfer from each person to me requires the creation of a new UTXO. In addition, the privacy advantage of the previously mentioned peer-to-peer client verification process has become a disadvantage in some scenarios. When there are more than two roles in a scenario or a third party is required to participate, the limitation that only the data visible to the two parties to the transaction will result in a lot of additional work to implement the corresponding business logic, which in turn reduces the composability and scalability.

RGB++ is a real "chain". Its idea is still to create a transaction on the chain and off the chain and bind them separately. The difference is that since the purpose of client verification is essentially to move more data that cannot be stored and smart contracts that cannot be implemented on the Bitcoin network to the off-chain, and create corresponding transactions to bind to the chain, why not directly use a ready-made Turing-complete UTXO chain to "package" to replace what the client verification is doing, and combine and bind with a Turing-incomplete UTXO chain like Bitcoin? Unlike other EVM-based BTC Layer2, because both use the UTXO model, the UXTOs of these two chains can be bound one by one. We call this chain the shadow chain of Bitcoin. In this way, every time a Bitcoin UTXO is moved, the UTXO of the shadow chain is also moved synchronously, so that the Turing completeness of the Bitcoin chain can be achieved in this way. RGB++ also calls it isomorphic binding.

As a Turing-complete UTXO chain, CKB naturally becomes a shadow chain of Bitcoin. All RGB++ transactions will appear in a transaction on Bitcoin and CKB at the same time. CKB replaces the client verification process. Users only need to check the relevant transactions on CKB to verify whether the status calculation of this RGB++ is correct, which greatly simplifies the client verification work. Asset ownership is still held by the UTXO of the Bitcoin main chain, and the CKB shadow chain stores information such as asset status and smart contracts, so it continues to use the security of Bitcoin. And because CKB itself is also a public chain, users do not need to provide a new UTXO address every time they transfer money, as in RGB client verification. Instead, they can directly provide their own independent wallet address, which also improves the user experience.

This time, the upgrade of RGB++ Layer extends the relationship between Bitcoin and CKB to all UTXO chains. That is, before, CKB used RGB++ protocol as the shadow chain of Bitcoin, but now the RGB++ protocol is abstracted and separated as a layer, which can be combined with all UTXO chains to create a universal, cross-chain interoperable UTXO middle layer. CKB is no longer just the indexer of RGB++, but any Turing-complete UTXO chain can be used as its indexer. In addition, assets of any UTXO chain such as BTC, CKB, BSV, BCH, etc. can enter the RGB++ ecosystem, and various assets such as inscriptions and runes can be turned into assets on the RGB++ Layer. And there is a misunderstanding here, that is, not only Bitcoin and its ecosystem will use the UTXO model, such as Ethereum's execution layer modular Layer2 Fuel also uses UTXO, and the old Layer1 public chain Cardano is also UTXO, all of which can enter the RGB++ ecosystem.

Because the traditional cross-chain bridge locks or destroys assets on the main chain and casts a corresponding number of "fake coins" on the sub-chain, and then all asset interactions are completed on the sub-chain before crossing back to the main chain, which has nothing to do with the main chain. The characteristic of RGB++ using UTXO isomorphic binding is that the interaction between the two chains is completely 1:1, and there is no "cross-chain". Your operation on Layer2 will directly affect Layer1, so based on the UTXO model, RGB++ Layer can be used as a "bridge-free" cross-chain bridge to open up the interoperability and asset liquidity of all UTXO chains. After the asset content is enriched and the liquidity is gathered, the barren soil will become fertile, which will create the prerequisite for more subsequent Bitcoin Defi gameplay.

So the main purpose of this RGB++ Layer upgrade is to promote the development of Bitcoin Finance (BTCFi). The main use cases include UTXOSwap and IBO platforms. UTXOSwap will be used as the core hub of RGB++ Layer to aggregate asset liquidity of various UTXO chains. Thanks to the characteristics of UTXO, it realizes the process of off-chain matching and on-chain verification, so that liquidity providers outside AMM can be connected during the matching stage. Unmatched transactions do not need to pay Gas fees, and any Token can be selected as Gas payment. The IBO platform is developed and operated by the community of Seal, the first asset of RGB++. It is also the first IBO tool in the Bitcoin ecosystem and the Launchpad for the entire RGB++.

In addition to bringing existing UTXO chains into RGB++, the one-click chain-issuing platform UTXO Stack (whose founder is also the founder of RGB++) can release the UTXO-structured BTC Layer2 and natively integrate the RGB++ protocol capabilities, thereby creating incremental UTXO chains to enter RGB++. UTXO Stack has also received investments from OKX, ABCDE, SNZ, etc.

Therefore, RGB++ Layer2 currently has the ability to import existing stocks and create incremental assets and public chains, and the BTCFi application scenarios it brings are worthy of attention.

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