This article is reproduced from "陈剑 Jason" on Twitter, original link: https://x.com/jason_chen998/status/1813836697534361956
RGB++ protocol recently announced an upgrade to RGB++ Layer, which can extend bridgeless cross-chain and smart contract capabilities to UTXO chains such as BCH, BSV, Dogecoin, and support other Layer 1 asset protocols such as Runes and BRC20. The first DEX of RGB++ Layer, UTXOSwap, has also been launched on the mainnet (link). According to the plan, the subsequent ecosystem will continue to launch separate browsers, IBO, and other platforms. Let's talk about RGB++ and the dark horse of this bull market, CKB, and discuss the relationship between RGB++ and RGB, as well as why RGB++ is being upgraded to RGB++ Layer.
First, let's understand the difference between RGB and RGB++. RGB was founded by Dr. Maxim Orlovsky, a member of the technical committee of the non-profit Bitcoin development organization LNP/BP Association and a Ph.D. from the National Academy of Sciences in the United States. The founder of RGB++ is Cipher, co-founder of CKB.
RGB is defined as a scalable smart contract system for Bitcoin and the Lightning Network. It completes off-chain scaling through UTXO combined with client-side verification, which means that all data is stored outside of Bitcoin transactions. The core idea is to call the Bitcoin blockchain only when necessary. All token transfer validation is moved out of the consensus layer and verified only by the recipient client related to the transaction. Therefore, client verification is different from broadcasting a transaction to the entire network. It only involves specific nodes related to the transaction to complete the validation of its validity. This also enhances the privacy of the RGB protocol to some extent.
As a client-side verification off-chain and on-chain Bitcoin network, RGB has created the concept of "one-time seal" for state transitions in 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 a UTXO, it is equivalent to sealing it, and when spending it, the seal is opened. RGB uses UTXO to provide the ability to verify the uniqueness of any party with a smart contract. Although the data is stored off-chain, it is bound to the chain through UTXO. In other words, RGB uses Bitcoin's native script as the source of security for ownership and access rights. In fact, when reading this, it feels similar to the Ordinals protocol. Both are processes of using existing things on the unchangeable Bitcoin network to explore unexpected functions through "clever tricks".
So RGB itself is just a client-side verification technology for extending Bitcoin, not a network or a blockchain in a strict sense. Strictly speaking, RGB cannot be called BTC Layer2. However, through RGB, Bitcoin can have some of the capabilities implemented by Ethereum and other smart contracts, including issuing tokens, NFTs, DeFi, and even games.
However, even though ARC20, BRC20, and other asset issuance protocols in the Bitcoin ecosystem have not used the off-chain client verification architecture of RGB, mainly because the off-chain business logic is complex and the engineering workload is huge, and the user experience is difficult to understand. As mentioned above, when transferring assets using the RGB protocol, instead of providing their Bitcoin address, users provide their Bitcoin UTXO. Each transfer I receive from someone requires creating a new UTXO. The privacy advantage in the peer-to-peer client verification process also becomes a disadvantage in some scenarios. When there are more than two roles or the need for third-party participation in a certain scenario, the limitation of only the transaction parties being able to see the data will require a lot of additional work to implement the corresponding business logic, which reduces composability and scalability.
RGB++ is a real "chain". Its idea still follows the idea of creating a transaction on-chain and off-chain and binding them separately, but the difference is that since the purpose of client-side verification is essentially to move more data that cannot be stored in the Bitcoin network and cannot be implemented by smart contracts to off-chain, and create corresponding transactions and bind them to the chain, why not directly use a ready-made Turing-complete UTXO chain to "package" and replace what the client-side verification is doing, and combine it with Bitcoin, a Turing-incomplete UTXO chain? Unlike other EVM-based BTC Layer 2 solutions, which all use the UTXO model, it is possible to bind the UTXOs of these two chains one-to-one. We call this chain the shadow chain of Bitcoin. In this way, when a Bitcoin UTXO is moved, the UTXO of the shadow chain also moves synchronously, thereby achieving Turing completeness of the Bitcoin chain through this method. RGB++ also calls this process "homomorphic binding".
As a Turing-complete UTXO chain, CKB naturally becomes the shadow chain of Bitcoin. All transactions of RGB++ will appear simultaneously on Bitcoin and CKB. CKB replaces the process of client-side verification, and users only need to check the relevant transactions on CKB to verify the correctness of the RGB++ state calculation, greatly simplifying the work of client-side verification. The ownership of assets is still held by the UTXOs of the Bitcoin main chain, and the CKB shadow chain stores asset states, smart contracts, and other information, so the security of Bitcoin is still maintained. And because CKB itself is a public chain, users do not need to provide new UTXO addresses for each transfer like RGB client verification, but can directly provide their own independent wallet addresses, which also improves the user experience.
The purpose of this upgrade of RGB++ Layer is to extend the relationship between Bitcoin and CKB to all UTXO chains. Previously, CKB used the RGB++ protocol as the shadow chain of Bitcoin, and now the RGB++ protocol is abstracted and separated as a layer, which can be combined with all UTXO chains to create a universal and cross-chain interoperable UTXO middle layer. It is no longer just using CKB as the indexer of RGB++, but can use any Turing-complete UTXO chain as its indexer. In addition, assets from any UTXO chain such as BTC, CKB, BSV, BCH can enter the RGB++ ecosystem, and various types of inscriptions, runes, and other assets can be transformed into assets on the RGB++ Layer. It is worth noting that it is not only Bitcoin and its ecosystem that use the UTXO model. For example, Ethereum's modular Layer 2 Fuel also uses UTXO, and the veteran Layer 1 public chain Cardano also uses UTXO. All of these can enter the RGB++ ecosystem.
Traditional cross-chain bridges lock or destroy assets on the main chain and mint a corresponding amount of "fake coins" on the side chain. All asset interactions are completed on the side chain before crossing back to the main chain, unrelated to the main chain. The characteristic of RGB++ using UTXO homomorphic binding is that the interaction between the two chains is completely 1:1, and there is no "cross-chain" concept. Your operations on Layer 2 will directly affect Layer 1, so based on the UTXO model, RGB++ Layer can serve as a "bridge" for cross-chain transactions without the need for bridges. This bridges the interoperability and asset liquidity of all UTXO chains, enriches the asset content, and aggregates liquidity, thus creating the prerequisite for more Bitcoin DeFi gameplay in the future.
Therefore, the main purpose of this upgrade of RGB++ Layer is to promote the development of Bitcoin Finance (BTCFi). The main use cases currently include UTXOSwap and IBO platform. UTXOSwap will serve as the core hub of RGB++ Layer to aggregate the liquidity of various UTXO chains. Thanks to the characteristics of UTXO, it implements the off-chain matching and on-chain verification process, which allows liquidity providers other than AMM to be integrated during the matching stage. Unmatched transactions do not need to pay gas fees and can choose any token as gas payment. The IBO platform is developed and operated by the community of the first asset Seal of RGB++, and it is also the first IBO tool in the Bitcoin ecosystem, focusing on the entire RGB++ Launchpad.
In addition to bringing existing UTXO chains into RGB++, the one-click chain issuance platform UTXO Stack (whose founder is also the founder of RGB++) can release BTC Layer 2 based on the UTXO architecture and natively integrate the capabilities of the RGB++ protocol, thus creating incremental UTXO chains into RGB++. UTXO Stack has also received investments from OKX, ABCDE, SNZ, and others.
Therefore, RGB++ Layer 2 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 deserve attention.