Author: Chester, Research Lead at UTXO Stack; Original article: RGB++ Layer: Pioneering a New Era for the Bitcoin Ecosystem
RGB++ Layer is a concept derived from the RGB++ protocol, representing a higher level of abstraction that extends homomorphic binding, smart contract capabilities, and bridgeless cross-chain functionality to all UTXO chains. With the help of RGB++ Layer, the Bitcoin ecosystem will undoubtedly become more enriched. In particular, driven by RGB++ Layer, the rise of Bitcoin Finance (BTCFi) will lead the Bitcoin ecosystem into a prosperous new era.
RGB++ Layer has multiple functionalities that bring many outstanding features to the Bitcoin ecosystem. Its importance can be explained from the following three aspects:
- RGB++ Layer is the asset issuance layer of Bitcoin.
- RGB++ Layer is the smart contract layer of Bitcoin.
- RGB++ Layer is the interoperability layer of the entire UTXO world.
Asset Issuance Layer of Bitcoin#
Currently, asset issuance protocols on the Bitcoin chain, such as Ordinals or BRC20, are far from being well-designed and heavily rely on centralized indexers. Unlike any previous solutions, RGB++ Layer can serve as a powerful asset issuance layer for Bitcoin.
RGB++ Layer supports the issuance of various RGB++ assets, including user-defined tokens (UDTs) similar to ERC20 and digital objects (DOBs) similar to ERC721. Unlike Ethereum, where ERC20 and ERC721 are issued and stored by smart contract accounts, UDTs and DOBs are stored in Turing-complete UTXOs, meaning that they are first-class assets on the RGB++ Layer, with a status equivalent to Ether (ETH) on Ethereum.
Thanks to the advantages of the UTXO model, RGB++ Layer can create a new paradigm for asset issuance - allowing the same asset to be issued on multiple chains, with different proportions of issuance on each chain. This will provide asset issuers with a high degree of flexibility. When project teams issue tokens, they don't have to worry about losing users on other chains by issuing on one chain. Instead, they can issue a portion on BTC, a portion on BCH, and even a portion on the Dogecoin chain, thereby expanding their influence to the communities of all UTXO chains.
In addition, RGB++ Layer will introduce a new asset issuance model called IBO (Initial Bitcoin Offering). This can be understood as the launchpad for all RGB++ assets. The IBO platform supports the creation of liquidity pools directly on UTXOSwap (a UTXO-based decentralized exchange), allowing newly issued assets to be traded with high liquidity. The IBO issuance model strikes a balance between venture capital (VC) mode and fair launch mode, providing a more sustainable approach. It avoids the problem of lack of interest from the community while ensuring that project teams remain motivated.
Smart Contract Layer of Bitcoin#
RGB++ Layer utilizes CKB's smart contract stack to provide Turing-complete programmability for Bitcoin. With smart contracts, the Bitcoin ecosystem can build various DeFi protocols and create a unique panorama of Bitcoin Finance (BTCFi).
For example, UTXOSwap, as a decentralized exchange (DEX) protocol, is the central hub of RGB++ Layer, aggregating liquidity from various UTXO chains. UTXOSwap adopts intent-based transactions as its core, implementing off-chain matching and on-chain verification processes, leveraging the parallelism of UTXOs to improve transaction efficiency.
If you think UTXOSwap is just the Uniswap of the Bitcoin ecosystem, you are mistaken. In addition to basic swaps, it also supports limit orders and TWAP (Time-Weighted Average Price) trading because it is intent-based. For example, users can actively express their trading intentions, such as "exchange 10 A tokens for at least 20 B tokens," instead of passively accepting market prices.
Another example is Stable++, a decentralized over-collateralized stablecoin protocol. It will issue the first stablecoin USDPP on the RGB++ Layer. Stable++ efficiently builds over-collateralized insurance vaults and liquidation modules using the powerful Turing-complete programmability of RGB++ Layer. As a user, you can collateralize BTC or CKB to mint USDPP. USDPP is a stablecoin compatible with all UTXO chains, allowing it to freely circulate within the Bitcoin ecosystem.
Overall, the atomicity of the UTXO model allows UTXOs to operate like LEGO blocks, enabling assets from different chains to interact and combine, thereby stimulating more DeFi innovations. This will drive the development of BTCFi and benefit the entire Bitcoin ecosystem.
Interoperability Layer of the UTXO World#
RGB++ Layer, as an inclusive layer, can connect all UTXO chains and create a universal interoperability layer for the entire UTXO world. This allows various assets from UTXO chains such as Cardano, Dogecoin, BSV, and BCH to seamlessly integrate into the Bitcoin ecosystem, breaking down asset islands.
The unparalleled feature of RGB++ Layer is bridgeless cross-chain (Leap). This mechanism allows assets on UTXO chains to cross to another UTXO chain without the need for cross-chain bridges. For example, if Alice wants to transfer her RGB++ asset from the Bitcoin chain to the Litecoin chain, she first needs to spend the Bitcoin UTXO bound to her RGB++ asset. Then, she constructs a transaction on the RGB++ Layer, changing the unlocking condition of the Turing-complete UTXO to her Litecoin UTXO. This successfully transfers the asset from the Bitcoin chain to the Litecoin chain.
With this feature, technically, all RGB++ assets can be considered universal assets of the entire UTXO world, as there are no longer barriers between chains, and assets can move freely.
Imagine: you can use A tokens issued on the BTC chain to exchange for B tokens on the Cardano chain through a decentralized exchange. You can use Meme coins on the Dogecoin chain to play GameFi on the Bitcoin L2 DApp chain. You can use DOBs on the CKB chain to subscribe to services on Nostr, and so on. This elevates the interoperability of RGB++ assets within the UTXO world to unprecedented heights.
Looking to the Future#
Looking to the future, with the presence of RGB++ Layer, the Bitcoin ecosystem will be interconnected as an organic whole. Various UTXO-based assets, including inscriptions and runes, will flow seamlessly on the RGB++ Layer, significantly enhancing the liquidity of the Bitcoin ecosystem. BTCFi protocol innovations based on the UTXO model, such as decentralized trading, lending, and mining, will continue to emerge. Ultimately, BTCFi will thrive and lead the Bitcoin ecosystem into a prosperous new era.