CKB and RGB++ transform into Bitcoin's second layer: Why did it increase by 300% in one month?

Bitcoin has finally stabilized above $70,000.

With the continued efforts of ETFs, the total market value of Bitcoin has successfully surpassed silver and jumped to the eighth largest asset in the world. The voices of some institutions have begun to be almost crazy, and even the slogan "Bitcoin will exceed 100 million US dollars per piece" has been heard in the community, and the market sentiment is unprecedentedly hot.

However, the performance of Bitcoin that far exceeded expectations also shows that the expectations of narratives such as halving and interest rate cuts are likely to have begun to be consumed in advance. Judging from the on-chain activities, miners are not optimistic about the halving, and many teams are reducing their reserve cash flow for the income after the halving. The next step for Bitcoin is to turn to supporting the construction of the entire payment network, and the development of L2 is crucial.

In this article, Bailu Living Room will share with readers the recently popular Bitcoin second-layer protocol: CKB. Through the innovative asset issuance protocol RGB++, CKB has achieved an impressive monthly increase of over 300%. What are the advantages of RGB++ and why can it lead the market? The following article will explain why CKB has become a model for the transformation of public chains into Bitcoin second layers.

Team and financing history

In early 2018, the market focused on the Ethereum ecosystem, and CKB was officially launched as a public chain challenger. In July of the same year, CKB completed a $28 million financing, with participation from many well-known investment institutions such as Polychain Capital, Sequoia China, Wanxiang Block, and Blockchain Capital. Subsequently, on October 24, 2019, CKB completed an oversubscription of $67.2 million on Coinlist. On November 16, 2019, the CKB mainnet "Lina" was launched.

The CKB team is strong, and the founders have been working in the industry for many years.

- Chief Architect Jan Xie: He has long contributed to the development of Ethereum clients Ruby-ethereum and pyethereum, and has worked with Ethereum founder Vitalik Buterin to develop Casper consensus and sharding technology. In addition, he also founded Cryptape, a company engaged in the development of underlying blockchain platforms and consensus algorithm research.

- Co-founder Kevin Wang: He worked on enterprise data solutions at IBM Silicon Valley Lab and co-founded Launch School, an online school for software engineers. In addition, Kevin Wang is also the co-founder of Khalani, an intent-driven centralized solver infrastructure. (Khalani is a versatile "collective solver" that can be seamlessly integrated into a variety of intent-centric applications and ecosystems.)

- Co-founder and COO Daniel Lv: Co-founder of Ethereum wallet imToken and former CTO of crypto exchange Yunbi. In addition, Daniel Lv has organized the Ruby China community for 10 years and co-founded ruby-china.org.

- CEO Terry Tai: He was a core developer at the crypto exchange Yunbi and co-founder of the tech podcast Teahour.fm.

PoW+UTXO

In the context of the community's general concern about TPS and PoS, the CKB team insisted that there should be no compromise on the issues of censorship resistance and permissionlessness. Therefore, it chose to reduce L1 performance to maintain sufficient decentralization, and adopt improved PoW and simple hash functions to ensure the security and permissionlessness of the network.

Layered Concept

The Internet has built a relatively stable trust network through a layered and decoupled architecture, but its trust level is limited and lacks the inherent support of self-protection protocols. CKB's ideal cryptoeconomic network infrastructure should also adopt a layered and decoupled architecture. Therefore, the team decided to build a secure and scalable layered network, where Layer1 focuses on providing security and decentralization, and Layer2 uses the security of Layer1 to provide unlimited scalability.

As Layer 1, CKB stands for "Common Knowledge Base". "Common Knowledge" is defined as general and widely recognized knowledge that everyone or almost everyone knows and knows that others know. In the context of blockchain, "common knowledge" refers to a state that has been verified by global consensus and accepted by everyone in the network. This property is also the reason why we can use cryptocurrencies stored on public chains as currency. Nervos CKB is designed to store all types of common knowledge, not just currency. For example, it can store user-defined crypto assets, including FT, NFT, etc.

The Layer2 protocol can use CKB to ensure security while providing unlimited scalability. The layered architecture proposed by CKB was later recognized by Ethereum. Since 2019, Ethereum has abandoned its previous sharding research and switched to expansion based on Layer2, which continues to this day.

PoW mechanism ensures decentralization

CKB firmly believes that Layer1 is the cornerstone of the crypto economy and therefore must be a permissionless network. In contrast, PoS determines the block distribution ratio based on the staked weight, which leads to a conflict with the goals of decentralization and neutrality. In contrast, PoW is completely permissionless, and users only need to purchase mining machines and electricity to participate in block production. In addition, in terms of security, it is extremely difficult to forge or reconstruct a PoW chain because the computing power of each block needs to be recalculated. Therefore, the CKB team believes that although PoS is indeed superior to PoW in performance, if you want Layer1 to be as decentralized and secure as possible, PoW is more suitable than PoS.

Cell model achieves scalability

With the rise of the Bitcoin ecosystem, the debate between the account model and the UTXO model has once again attracted attention. In the early days, both models were interpreted around assets, but over time, UTXO still regards assets as the core (peer-to-peer), while the account model has evolved to serve contracts, where users' assets are hosted in smart contracts and interact with them. This has led to a higher security level for assets issued on the UTXO chain than ERC-20 assets issued on Ethereum . In addition to security, the UTXO model has better privacy , changes addresses for each transaction, and naturally supports parallel transaction processing. Most importantly, unlike the account model, which performs calculations and verifications on the chain at the same time, the UTXO model puts the calculation process off-chain and only verifies on the chain, thereby simplifying the implementation of the application, which means that there is no need to consider optimization issues on the chain .

CKB not only inherits the idea of ​​Bitcoin architecture, but also abstracts the UTXO model and creates the Cell model. While retaining the consistency and simplicity of Bitcoin, it has the ability to support smart contracts. Specifically, Cell abstracts the nValue field in UTXO that represents the value of the token and divides it into two fields: capacity and data. Data saves the state and can store any data. At the same time, the Cell data structure also contains two fields, LockScript and TypeScript. The former mainly reflects ownership, while the latter can customize many rich functions.

In summary, the Cell model is a more general UTXO model, which enables CKB to have smart contract functions similar to Ethereum. However, unlike other smart contracts, CKB adopts an economic model for common knowledge storage rather than an economic model designed for payment of decentralized computing.

High-level "abstraction"

The concept of "abstraction" is not unfamiliar to crypto users. It refers to removing the particularity of the system, creating universality, and making the system applicable to a wider range of scenarios. The development from Bitcoin to Ethereum is actually a process of abstraction. Bitcoin lacks programmability and is difficult to build applications. Ethereum, on the other hand, introduced a virtual machine and operating environment, providing a platform for building various types of applications. Ethereum has also been constantly abstracting during its development, whether it is the "account abstraction" repeatedly mentioned by Vitalik, or the addition of pre-compiled "cryptographic abstraction".

Just as Ethereum is an abstraction of Bitcoin, CKB is also an abstraction of Ethereum to some extent, providing smart contract developers with more freedom to play.

1. Account abstraction

CKB realizes account abstraction through the Cell model. For example, Nervos ecosystem wallet UniPass has created an identity authentication system based on email and mobile phones. Users can log in with email and password, similar to traditional Internet accounts. The decentralized domain name protocol .bit developed by the decentralized identity service provider d.id team also uses the characteristics of Nervos abstract accounts, allowing Internet users, Ethereum users, and EOS users to directly operate applications, rather than just CKB users.

2. Cryptographic Abstraction

The core of cryptographic abstraction is an efficient virtual machine. CKB uses CKB-VM. With the characteristics of the RISC-V instruction set, CKB-VM allows developers to implement cryptographic algorithms using languages ​​such as C and Rust. For example, the JoyID wallet built on CKB takes full advantage of the custom cryptography of Nervos CKB, and can create wallets and confirm transactions directly using biometric technologies such as fingerprints without passwords and mnemonics.

3. Run Abstraction

The goal of CKB is to build a higher level of abstraction to improve performance and throughput. As the level of abstraction increases, the Nervos network will be able to migrate more work to off-chain or Layer2. For example, although XBOX is an abstract general platform, there are still some limitations, such as the inability to change hardware. PC allows users to replace hardware such as graphics cards, CPUs, memory, and hard drives. Therefore, PC is a more abstract system. The goal of CKB is to transform from XBOX to PC, so as to meet more needs and provide more convenience for developers.

RGB Pros, Cons, and Opportunities

On February 13, 2024, CKB officially released RGB++ Litepaper, which quickly gained widespread attention in the market.

The RGB protocol is old news. In 2016, Peter Todd first proposed the concepts of client-side validation and single-use-seals, which became the predecessor of RGB. The core concept of the RGB protocol is to call the Bitcoin blockchain only when necessary, that is, to use proof of work and the decentralization of the network to achieve double-spending protection and anti-censorship. All verification of token transfers is removed from the global consensus layer and placed off-chain, and is only verified by the client of the receiving party.

The main characteristics of RGB are summarized as follows:

1. High confidentiality, security and scalability;

2. There is no congestion in the Bitcoin time chain, because transactions only retain homomorphic commitments that require additional storage;

3. Future upgrades without hard forks;

4. It has higher censorship resistance than Bitcoin: miners cannot see the flow of assets in transactions;

5. There is no concept of blocks and chains.

Although the RGB protocol is excellent in design, its technical complexity has slowed down its progress over the years. The main problems include:

DA problem: Transaction information is only transmitted between the sender and the receiver, and the information needed (such as the historical branch of the UTXO) is difficult for ordinary users to obtain and generate. In addition, the data stored by each client is independent of each other, resulting in data island problems, and it is impossible to view the global status of the contract.

P2P network issues: As an extension of Bitcoin transactions, RGB transactions need to rely on a P2P network for dissemination. When users conduct transfer transactions, they also need to interact with each other, and the recipient needs to provide a receipt. All of these rely on a P2P network independent of the Bitcoin network.

Virtual machine and contract language: The virtual machine of the RGB protocol currently mainly uses AluVM. As a new virtual machine, it currently lacks complete development tools and practical codes.

Ownerless contract problem: The RGB protocol currently does not have a complete interaction solution for ownerless contracts (public contracts). This makes multi-party interaction difficult to achieve.

The advantages and disadvantages of the RGB protocol are obvious. People who have high demands for privacy and security will tend to run their own clients and back up their data, but long-tail users obviously do not have this patience (for example, most Lightning Network users will rely on third-party nodes instead of running their own clients).

For this reason, Cipher, a co-founder of Nervos CKB, proposed a solution called RGB++, which attempts to delegate RGB's asset status, contract release, and transaction verification to the CKB public chain. CKB acts as a third-party data hosting and computing platform, and users no longer need to run the RGB client themselves.

RGB++

RGB++ is an extended protocol based on the RGB principle. It takes advantage of the fact that the core point of RGB, UTXO, and the underlying architecture of CKB are homologous, and combines two key points in the RGB protocol with the architecture of CKB:

- Isomorphic binding: UTXO as RGB container can be bound and mapped with CKB Cell.

- RGB's off-chain client verification can be transformed into CKB's on-chain public verification, and the verified data and status can correspond to the data and type in the Cell.

It is particularly important to note that RGB++ and RGB are two different concepts. RGB mainly uses the concept of one-time seals for expansion; while RGB++ focuses more on the possibility that other UTXO chains can serve as RGB++ clients, and its core contribution lies in the concept of isomorphic binding.

In the RGB protocol, the two most important components are UTXO for ownership verification and commitment for state management and one-time seals. RGB++'s isomorphic binding maps the Bitcoin UTXOs one by one to CKB's Cells, uses Bitcoin lock to synchronize ownership, and uses cell data and type to maintain state.

This not only solves the above-mentioned problems faced by RGB, but also gives RGB more possibilities:

- CKB blockchain will serve as an enhanced verification client: all RGB++ transactions will appear in a transaction on both BTC and CKB chains simultaneously. The former is compatible with transactions of the RGB protocol, while the latter replaces the client verification process. Users only need to check the relevant transactions on CKB to verify whether the status calculation of this RGB++ transaction is correct. There will no longer be the above-mentioned DA problem and data island problem.

- Improved security and reliability: The synchronization process does not rely on any trusted cross-chain bridge or multi-signature mechanism, but is based on the direct binding between two UTXOs. According to the security standard of proof of work (PoW), transactions on the Bitcoin chain cannot be reversed after 6 blocks, while on CKB, through an equivalent calculation formula, it takes about 24 blocks to achieve the same security guarantee. This method ensures the security of "jumping" or migrating assets between the two levels.

- Transaction Folding: Bitcoin   UTXO isomorphically bound to CKB Cell, realizing Turing-complete Bitcoin UTXO transactions supported by CKB Cell verification. If the programmability of CKB Cell is further utilized, multiple CKB transactions can be mapped to one Bitcoin RGB++ transaction, so that the low-speed and low-throughput Bitcoin mainnet can be expanded using the high-performance CKB chain.

- Non-interactive transfer: One problem with the original RGB protocol is that the payee must be online to complete a normal transaction, which increases the difficulty for users to understand and the complexity of the product. RGB++ can take advantage of the Turing complete environment, place the interactive behavior in the CKB environment, and use the send-receive two-step operation to implement the non-interactive transfer logic.

In general, RGB++ inherits the core idea of ​​the RGB protocol and adopts different virtual machines and verification schemes. Users do not need independent RGB++ clients, but only need to access Bitcoin and CKB light nodes to complete all verifications independently. RGB++ can also bring Turing-complete contract extensions and dozens of times performance expansion to Bitcoin. It does not use any cross-chain bridges, but uses a native client verification scheme to ensure security and anti-censorship.

From CKB's perspective, compatibility with more protocols in the future will be the driving force for CKB's continued development.

The Future of CKB

CKB chose to follow the PoW+UTXO technology school of the Bitcoin network, standing on the "orthodox high ground" in terms of technology, and thus gained wide attention from the community and the market. The community generally believes that compared with the EVM compatible school, RGB++ inherits the orthodoxy of Bitcoin UTXO, and the team is deeply involved in the Bitcoin ecosystem. Whether it is the layered architecture, UTXO abstraction, or the recently proposed OTX protocol CoBuild Open Transaction, they are all extensions and innovations of Bitcoin ideas.

However, there are also some opinions that CKB has too many positioning. From the cooperation with Huobi from 2019 to 2020, to the game direction from 2020 to 2022, no substantial progress has been made. Therefore, this shift to the Layer2 direction may be suspected of hype.

But in any case, CKB has undoubtedly ignited the enthusiasm of the market. In the flourishing second-layer Bitcoin protocols, market pioneers are bound to have more advantages in funds and traffic, and are more likely to break through the siege. However , compared with most EVM competitors, whether it can attract enough developers to support the entire ecosystem still needs to wait for CKB's subsequent performance.