Recently, the BTC derivatives market ecosystem seems to be in a dilemma: 1) The expected big turnaround after BTC halving has not yet arrived; 2) The wealth creation effect after the launch of Runes protocol is not as expected; 3) The BTC layer2 focus project Merlin is temporarily silent after TGE. However, while they are all waiting to "let the bullets fly", I am more bullish @NervosNetwork. Why? Next, let me share my opinion:
In my opinion, there are two major problems in the BTC derivative ecosystem market:
1. The native RGB Lightning Network, EVM-Conpatible, and UTXO isomorphic binding chain share the world, and there is no main line layer2 direction;
2. The issuance of assets such as Ordinals, Brc20, Arc20, and Runes has fallen into a dead end where the more the technology improves, the weaker the wealth creation effect, because the fundamental problem of poor liquidity has not been solved;
Builders are competing for hegemony, and Marketing has already had high expectations and has backfired and collapsed. The current BTC ecosystem must hand in an answer sheet on solving the liquidity problem of layer 1 derivative assets.
Therefore, the Bitcoin derivatives market urgently needs to come up with a closed-loop layer2 solution that can be quickly formed in terms of technical architecture, market operation, and ecological implementation.
The implementation of native RGB protocols and lightning networks is too slow, and many EVM-Compatible protocol frameworks are still under construction. In comparison, only the CKB public chain, as a paradigm of UTXO isomorphic binding chain, is gradually "accelerating" the implementation of the market's imagination of BTC layer2: RGB++, UTXO Stack, lightning network, DOB assets, full-chain games and other landing ecosystems are gradually emerging.
In the short term, CKB public chain can quickly "train" the BTC layer2 industry, allowing everyone to see that the BTC derivative assets on the first layer can be expanded and circulated in the Turing-complete environment of the second layer; in the long term, CKB may be able to rely on the inherent technical advantages of "isomorphic binding" to establish a UTXO structure layer2 mainstream unified market for the BTC layer2 market.
The fundamental reason why CKB public chain can do this is that the UTXO Cell model of the CKB chain itself can include tokens, JavaScript codes, JSON strings, smart contracts, and a complete Bitcoin UTXO state. Therefore, the CKB public chain can be regarded as a complete off-chain state machine of the BTC main network.
It can synchronously store all states that occur on the BTC mainnet, which is equivalent to an extended DA layer of the BTC mainnet; and based on its Turing complete characteristics, it runs all calculations, which is equivalent to a high-performance VM execution layer; the isomorphic binding characteristics of its UTXO structure provide secure interoperability for BTC.
In short, if we believe that the BTC mainnet can only do asset settlement, CKB will cover the extended functionality such as the DA layer, execution layer, and interoperability. It is precisely because of this foundation that CKB has realized some things that are difficult for BTC original chain Native to land, such as RGB and Lightning Network.
Take RGB as an example, to understand it simply: its complete implementation requires some off-chain clients to store part of the "state" respectively, and then send a Commitment commitment (a Hash formed by hashing the original state data) to the main network through a one-time sealing technology. The commitment contains the spending conditions of UTXO, which cannot be tampered with and can only be triggered by another matching commitment to "unlock".
If Alice wants to send BTC assets to Bob through the RGB protocol, Alice initiates a commitment agreement that Bob can unlock the UTXO for spending. After receiving the commitment, the BTC full node will wait for another corresponding commitment to be unlocked. The matching of the two commitments realizes a UTXO spending (settlement) on the main chain.
Therefore, for the RGB client verification system, the key lies in the fact that independent P2P individuals such as Alice and Bob must each maintain a "state copy" and prove to the main network online that they legally own a certain state, and complete the asset division by matching the old commitment and updating the state of the new commitment.
The problem is that in order for these individuals to have this kind of collaboration ability, a very complete "infrastructure" is usually required. The crux of the RGB protocol network that cannot be implemented on a large scale at this stage is that it is too difficult to build this infrastructure to uniformly manage the status, requests, and communications of off-chain clients.
The CKB public chain itself has the DA state storage capability and the interoperable capability of isomorphic binding. If this difficult infrastructure project is replaced by the ready-made CKB chain, wouldn't the crux of RGB client verification be solved? Yes, this is the fundamental reason why RGB++ came into being.
Following this line of thought, the payment network of the state channel model such as the Lightning Network can also be implemented on the CKB public chain. After all, the crux of the Lightning Network is also the problem of interactive state management between decentralized Lightning Network nodes. Imagine that if the originally decentralized and complex off-chain operation "black box" can be efficiently implemented under an existing public chain, the landing and application process will naturally be faster. For example, state channel cycle management, UTXO account suspension and settlement, on-chain state storage, P2P communication simplification, etc.
Take the issuance of Inscription assets as an example. The inscription assets originally issued on the BTC L1 main network fell into an extremely high-cost turnover and low circulation state after the MINT under the Fomo tide. How can these assets be efficiently circulated with the help of the CKB public chain?
1. Issue and mint inscription assets on the main network first, or you can mint through the CKB network, but the CKB public chain actually undertakes the "proxy" function of infrastructure, helping users to send transactions from the CKB public chain to the main network. Mint inscription assets;
2. All inscription assets will coexist on the BTC main network and CKB. When the main network inscription asset mint is successful, asset twins can be realized through Leap's trusted L1 and L2 interoperability. CKB's DA network will become a huge "indexer" to manage shadow assets;
3. These shadow assets can be circulated on the CKB public chain at low cost based on the RGB++ (one-time sealed commitment) interaction method. When users Leap the mainnet assets to the CKB public chain, the shadow assets represent the original assets on the CKB public chain for efficient circulation in DeFi, games and other application ecosystems. CKB will fully record every state change record and complete the state update on the mainnet when the user requests to Leap the assets back to the mainnet. (It is understandable that the handling fee of Mint behavior occurs on the mainnet, but the subsequent circulation interaction can greatly reduce the handling fee.
In my opinion, the CKB public chain itself is a UTXO structure layer2 with a complete technical framework. Its Cell model can be isomorphically bound to the UTXO on BTC, allowing BTC and CKB layer2 to achieve asset intercommunication Leap without a cross-chain bridge (not migration, but abstractly understood as quantum entanglement state synchronization). In addition, the high performance of the CKB chain itself to execute Turing-complete contracts will make up for the problem that UTXO cannot achieve state management without a master contract.
How to do it? This is because CKB's Cell state has global management capabilities. If there is a conflict in the state of different Cells, such as two usage commitments with conflicting states, CKB will reject the issuance of one of the Cell commitments to protect the security of asset status updates. In essence, it is a manifestation of the strong programmability of the CKB public chain. It should be noted that Ethereum's layer2 solution Plasma cannot achieve similar Turing-complete extensions.
Therefore, if you want to accelerate the landing of BTC layer2, I will vote for the camp representing UTXO isomorphic binding.
Although the CKB public chain is a successful UTXO paradigm BTC layer2, how can it represent the mainstream camp alone? Therefore, CKB launched the UTXO Stack to expand the scale of its camp.
The above
In short, the recent coldness of the secondary market will bring more or less pressure to the builders of the primary market. Previously, a mess would also be regarded as prosperity, but when it calms down, BTC layer2's lack of standards, norms, mainstream narratives, and core problem solutions (liquidity) will become a must-solve problem. Therefore, the downturn in Runes undoubtedly gave the UTXO isomorphic binding camp represented by the CKB public chain a "send east wind" moment.
Note: This article is purely from the perspective of technical logic, and is a call for the UTXO isomorphic binding of BTC layer2 represented by the CKB public chain. It is not a reference for secondary market investment advice.
If you want to have a more systematic and comprehensive understanding of CKB, RGB++, isomorphic binding, and UTXO Stack, you can subscribe to web3Caff's research report:
https://research.web3caff.com/zh/archives/17210?ref=743 (Read the original text in the lower left corner
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