In-depth analysis of the evolution between RGB, RGB++, and RGB++Layer

Author: Jason Chen

The RGB++ protocol has recently completed the upgrade of RGB++ Layer, 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 has also been launched on the mainnet simultaneously. According to the plan, the subsequent ecology 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 discuss the relationship between RGB++ and RGB, and why RGB++ should be upgraded to RGB++ Layer.

First of all, we need to understand the difference between RGB and RGB++. The founder of RGB is dr_orlovsky, a doctor from the National Academy of Sciences of the United States, and the boss of the technical committee of the non-profit Bitcoin development organization LNP/BP Association, while the founder of RGB++ is @crypcipher, 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 Bitcoin transactions. The core idea is to call the Bitcoin blockchain only when necessary, and all valid verifications of token transfers are moved from the consensus layer to the off-chain, and 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, it is completed by only allowing some nodes related to a specific transaction to participate in the work, thereby completing the validity verification of the transaction, which to a certain extent also strengthens the privacy of the RGB protocol.

As an 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 the rules of Bitcoin, 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 "skillful" processes of using existing things to dig out more unexpected functions on the Bitcoin network that has been changed.

So RGB itself is just a client verification technology for expanding 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 realized 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 a new UTXO to be created. 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 in 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" and 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 UTXO 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 the shadow chain of Bitcoin. All RGB++ transactions will appear as 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, but can directly provide their own independent wallet address, which also improves the user experience.

And this time RGB++ The upgrade of Layer is to expand the relationship between Bitcoin and CKB to all UTXO chains, that is, CKB used the RGB++ protocol as Bitcoin's shadow chain before, and 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 an indexer for 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 all kinds of inscriptions, runes and other assets 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 mints 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 such thing as "cross-chain". Your operations on Layer2 will directly affect Layer1. Therefore, based on the UTXO model, the RGB++ Layer can be used as a "bridgeless" 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.

Therefore, the main purpose of the upgrade of RGB++ Layer this time is to promote the development of Bitcoin Finance (BTCFi). The main use cases currently include UTXOSwap and IBO platform. UTXOSwap will be used as the core hub of RGB++ Layer to aggregate the 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. There is no need to pay Gas fees for unmatched transactions, and any Token can be selected as Gas payment. The IBO platform is developed and operated by the community of RGB++'s first asset Seal. It is also the first IBO tool in the Bitcoin ecosystem and the Launchpad for the entire RGB++.

In addition to importing the existing UTXO chain 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 assets and create incremental assets at the asset and public chain levels, and the BTCFi application scenarios it brings are worthy of attention.