In this bull market, the Bitcoin ecosystem has become the focus of the entire market. In today's unshakeable position and consensus cohesion of Bitcoin, whoever can successfully implement Bitcoin's L2, bringing Bitcoin to life and activity, will grasp the winning formula of this bull market. In my view, $CKB has already taken a significant lead over its competitors in this field.
The biggest challenges for Bitcoin's L2 are its scalability and programmability. To solve these issues, various solutions including but not limited to payment channels and sidechains have been proposed. In the first half of this year, the market was flooded with BTC L2 solutions, most of which adopted the sidechain approach—linking another independent blockchain with the BTC main chain through the staking of centralized bridge smart contracts, allowing assets to flow on another chain.
However, such L2 solutions have not been accepted by mainstream BTC whales, primarily due to the complexity of the solutions, long cross-chain times, and the introduction of centralized bridge security risks.
Nervos Network takes a different approach, proposing a more Bitcoin-native way by linking its own L1 public chain CKB with BTC, inspired by the RGB protocol concept, creating the RGB++ protocol, using CKB as the data availability layer and execution layer for Bitcoin to realize smart contract capabilities and asset issuance capabilities.
What is the RGB++ protocol, how is it different from other protocols, and why is it so unique? For specific details, you can refer to my previous article: Drawing Hamburgers with Cipher—Overview of Bitcoin Layer 1 Asset Protocol
In simple terms, historically, there have been countless Layer 1 asset protocols for BTC, from colored coins to inscriptions, all of which attempted to insert asset representation information into various aspects of the Bitcoin network—its smart contracts, UTXOs, transfer records, etc. Because the asset information of these protocols needs to be written on the Bitcoin network, their richness of information and asset playability are greatly limited by the Bitcoin network itself.
The RGB protocol proposes that asset information can be stored off-chain from the Bitcoin network, and then linked to Bitcoin through the specific UTXO that can only be opened once, using 'single-use seals' technology to associate off-chain asset information with Bitcoin. This ensures the security of the assets by the main network while allowing the off-chain asset information to be unrestricted by the main network itself. However, how to utilize and innovate on the off-chain asset information relies on extensive infrastructure development, which is why the RGB protocol has not yet been implemented.
At this point, Nervos found the key breakthrough. Since BTC is a blockchain system that uses POW mechanisms and UTXO models, CKB is also a blockchain system that employs POW mechanisms and UTXO models (UTXOs on the CKB chain are called 'cells', which is a further improvement on the UTXO model. Through the introduction of dual scripts and collaboration with the virtual machine, Cells allow for more flexible data storage, can execute complex smart contracts, and build flexible applications). Therefore, BTC and CKB are architecturally similar, and CKB, as a well-proven public chain, has complete infrastructure.
Thus, CKB improved, innovated, and ultimately implemented the ideas of RGB, using the RGB++ protocol and 'single-use seals' technology to store asset information in the Cell model of the CKB chain, binding it with the UTXO model on BTC, making CKB a Layer 2 for BTC. On this L2, the security of assets is guaranteed through the binding relationship with the main network, while the playability of assets is endowed by the Turing-complete smart contract capabilities of the CKB chain. At the same time, if one wishes to switch the location of asset information storage, it only takes about an hour (to ensure security) for direct transfer of asset information across different chains (as opposed to bridge-based pseudo-cross-chain), and this technology is summarized as 'isomorphic binding.'
Through 'isomorphic binding', asset information can flow freely between the CKB chain and the BTC chain, using all dapps on the CKB chain. Currently, $Seal, as a token issued on the RGB++ protocol, has seen L2 transaction volumes far surpassing L1, allowing community members to avoid the high fees of L1 and the torture of waiting for trades in the order book market; they can migrate to L2 cross-chain without bridges and immediately sell on Dex, or use CKB to buy on Dex and then migrate back to L1 for asset management.
At the same time, the $Seal community has also created the Initial Bitcoin Offering (IBO) platform seal2earn, which is a brand-new platform for launching projects on Bitcoin. It has just completed its first project—the launch of the over-collateralized stablecoin project Stable++ on BTC. During different launch phases, community members can participate in the launch process by staking their Layer 1/Layer 2 $Seal to receive airdrops of project tokens, which also allows the project to gain substantial community attention from the outset (Stable++ went live on the mainnet at the end of last month, with a large number of users participating in the minting of RUSD, a native BTC stablecoin), and all projects launched through IBO have tokens that are native to the RGB++ protocol, allowing free movement on both Layer 1 and Layer 2. These practices fully demonstrate the superiority of the RGB++ protocol in asset issuance and subsequent asset flow, opening up new ideas for the L2 of the BTC ecosystem.
