Original author: Day
Original source: Vernacular blockchain
Recently, BEVM, BOB and other Bitcoin Layer2 have completed as little as millions and as much as tens of millions of financing, coupled with the recent launch of Nervos's RGB++ and the minting of Seal, making the CKB (CKB, translated public knowledge base, is the Nervos Network). Layer 1 networks, which store all transaction data and smart contracts) are soaring.
Today, let's take a look at Bitcoin Layer 2. At present, there are many Bitcoin Layer2s on the market, and we simply divide them into four categories, namely Bitcoin sidechain, UTXO+ client verification, Roullp and Taproot Consensus.
01
The goal of Bitcoin Layer 2
Bitcoin, as a crypto leader, can outperform 95% of assets in a round of market after holding Bitcoin, but everyone is still not satisfied with the status quo and hopes to give Bitcoin more things. Compared with other public chains, Bitcoin has problems such as slow transaction speed, long confirmation time, expensive transaction fees during congestion, and limited smart contract functions, which cannot directly build complex applications.
Whereas, Bitcoin Layer2 is an additional layer built on top of Bitcoin with the aim of increasing transaction speed, reducing transaction costs, and increasing scalability. It achieves these goals by processing transactions off-chain and preserving intermediate state. This results in faster transaction confirmations, reduced transaction fees, and increased capacity and throughput across the system. Layer 2 aims to improve Bitcoin's performance and make it more suitable for a wide range of applications.
02
Bitcoin sidechains
Bitcoin sidechain is an independent blockchain system connected to the main chain of Bitcoin, generally an independent blockchain connected to the main chain through a two-way cross-chain bridge. It allows users to lock Bitcoin on the main chain and then trade and operate on the sidechain.
With sidechains, users can achieve more flexible and diverse features such as support for payments for other crypto assets, stateful smart contracts, faster settlements, and greater privacy. However, because the sidechain needs a set of independent validators and needs the sidechain to verify the transactions by itself, it will face problems related to too few nodes, centralization, and inability to inherit the security of Bitcoin. Here are some of the representative projects of sidechain development:
- Stacks
Stacks is positioned as Bitcoin's smart contract layer, aiming to introduce smart contracts and Dapps to the Bitcoin system, connecting itself to the Bitcoin main chain through a unique Proof of Transfer (PoX) consensus mechanism. Stacks allows developers to build smart contracts and Dapps. In Stacks' technical architecture, there are core layers and subnets to choose from. The core layer has a high degree of decentralization but low throughput, while the subnet has a lower degree of decentralization but can achieve higher throughput.
Stacks uses the Clarity smart contract language to create Dapps, and the Nakamoto upgrade to improve network performance, which allows Stacks to not only settle Bitcoin transactions, but also achieve 100% resistance to Bitcoin restructuring and speed up block generation. Issuance of SBTC-based stablecoins to increase DeFi composability. Stacks is designed to be highly decentralized and scalable, and to bring smart contract functionality and the power of Dapps to Bitcoin.
The Stacks ecosystem has been in development for 5 years, but most of the projects have received mediocre or stagnant responses. Stacks' Nakamoto upgrade has been in development for a long time and is expected to roll out on mainnet by the end of the month. Its Token STX is currently a Bitcoin Layer 2 leader, with a market value of nearly $5 billion.
- RSK
RSK (Rootstock) is positioned as a Bitcoin Layer 2 that supports smart contracts and focuses on DeFi. RSK does not have a native token and introduces RBTC as a payment for transaction fees, with the goal of becoming a cornerstone of financial inclusion.
RSK leverages the security of Bitcoin to protect smart contracts and transactions by merging producing blocks, where Bitcoin block producers mine both Bitcoin and RSK blocks. It is compatible with the Ethereum Virtual Machine (EVM), and developers can use Solidity to write smart contracts and port Ethereum's Dapps to RSK. In addition, RSK has established the RIF network, which provides a variety of infrastructure services such as DeFi, storage, domain name services, and payment solutions to meet the needs of users.
With no other ecosystem projects emerging and weak performance other than RIF, RSK launched the third batch of funding last month, totaling $2.5 million.
- Liquid Network
Liquid is Blockstream's Bitcoin sidechain and transaction settlement network. Its goal is to provide functions such as fast settlement, strong privacy and digital asset issuance, and the service is aimed at institutions and asset issuers, providing asset issuance and circulation services based on Bitcoin sidechains, and promoting faster Bitcoin transactions and digital asset tokenization. Liquid focuses on simplicity, security, and privacy. Liquid is similar to the RSK mentioned above in that it relies on the alliance multi-signature issuance of anchor tokens, but the degree of decentralization is different. In addition, Liquid is more focused on security, while RSK is more focused on usability.
Liquid is considered a consortium chain because of its institution-oriented sidechain, and it is mainly used for asset issuance and trading, and it is not friendly to smart contract functionality.
- Lightning Network
The Lightning Network is a scaling solution built on top of the Bitcoin network to increase the speed of Bitcoin transactions, but its network does not support smart contracts. It enables fast, inexpensive micropayments by introducing a second layer of payment channels. In the Lightning Network, participants can open a special payment channel that allows multiple transactions to be made inside the channel without having to record each transaction on the Bitcoin blockchain. Only when the channel is closed will the final transaction result be submitted to the Bitcoin main chain for settlement.
With the Lightning Network, users can make almost instant payments without having to wait for confirmation from the Bitcoin main chain. This can greatly increase the speed of transactions and reduce transaction fees. The Lightning Network utilizes smart contract technology and a multi-signature mechanism to ensure the security of transactions between participants.
Use cases for the Lightning Network include micropayments and gaming. It provides users with a convenient, fast, and low-cost payment method, while also providing a platform for developers to build LNN-based applications.
On April 3, Coinbase partnered with Lightspark, a payment solutions provider on the Lightning Network, to integrate the Bitcoin Lightning Network for all of its customers. Currently, there is nearly $320 million in dollar capacity in the Lightning Network payment channel.
On the whole, the second layer of the Bitcoin sidechain track are some relatively "old" projects, and although they have been done for a long time, the actual progress is actually unsatisfactory, and they are relatively backward in terms of technology and landing.
03
UTXO+ client validation
UTXO+ client verification is a scaling scheme of the Bitcoin UTXO account model (UTXO: Unspent Transaction Output, which can be simply understood as unspent transactions), which attempts to perform off-chain ledger calculations based on Bitcoin UTXOs and ensure the authenticity of the ledger through client verification. The goal of this solution is to preserve the original characteristics of Bitcoin while enabling Layer 2 ledger sharing and security.
But in practice, the implementation of this program is very difficult. Because Bitcoin's design does not support complex calculations, it becomes very complex to integrate additional tasks into the UTXO model. This solution emphasizes the originality of Bitcoin, but may ignore the feasibility and practical difficulty.
At present, most of the projects in this track are still in the white paper stage and have not made much progress. The following are representative projects:
- RGB
RGB is a Bitcoin Layer2 solution that aims to build based on the Bitcoin UTXO model and the Lightning Network. Its goal is to compress and encapsulate data into each of Bitcoin's UTXOs and ensure asset security through client-side verification.
RGB is designed to tie off-chain RGB transactions to UTXOs for Bitcoin transactions. It combines RGB's asset ownership and state with Bitcoin's UTXO operations and control by sealing proof of RGB transactions and asset ownership in Bitcoin's UTXO. However, the development of RGB has been slow because of the difficulty of implementing several technical points involved. Although RGB is considered to be an orthodox solution, its implementation difficulties and functional limitations have slowed its development.
- RGB++
The RGB++ protocol is a protocol inspired by the RGB protocol proposed by Nervos at the beginning of the year, and its main idea is similar to RGB, by computation, execution and verification of transactions off-chain, and then settlement on the Bitcoin chain. The difference is that RGB++ takes a different approach to the verification of transactions and assets.
Nervos leverages the same POW+UTXO structure as Bitcoin, combined with innovative "isomorphic mapping" technology, to successfully replace the RGB protocol's client-side verification with CKB, and in this way, Nervos has achieved the same security as Bitcoin, while achieving the same functionality and flexibility of the RGB protocol. This migration doesn't sacrifice too much privacy, while providing users with more ways to consume and manage their digital assets. RGB++ reuses the security of Bitcoin while obtaining Turing's complete smart contract execution capabilities.
In this way, CKB becomes the execution layer and DA data layer of RGB++ assets, but it can not only support the RGB++ protocol, but also other Bitcoin layer 1 assets, such as Runes and Atomical, as long as it is based on the UTXO accounting model.
Recently, CKB has become more popular, and here is a brief introduction to the UTXO Stack, developed by a company incubated by the Nervos Ecological Fund, UTXO Stack is a Bitcoin Layer2 issuance platform based on the UTXO model, aiming to help developers quickly build a Bitcoin Layer2 chain based on the UTXO architecture. It provides a modular toolkit that makes it easy for developers to build their own layer 2 chains and integrate them into the Nervos ecosystem.
UTXO Stack supports the RGB++ protocol and leverages CKB as a data availability layer, bringing more application scenarios and development opportunities to the Bitcoin ecosystem. This architecture enables the RGB++ protocol and the UTXO Stack to work together to provide strong technical support for the development of the Bitcoin ecosystem.
- BitVM
BitVM is a Bitcoin Virtual Machine concept solution proposed by Robin Linus, project leader of ZeroSync. It aims to enhance Bitcoin's programmability, enabling developers to run complex contracts on the Bitcoin network without changing Bitcoin's basic rules and consensus mechanism, and is still in the theoretical stage.
BitVM provides a way to implement complex contracts on the Bitcoin network while maintaining Bitcoin's secure and decentralized nature. It gives developers more programming power and room to innovate by introducing new virtual machine concepts and roles. To increase flexibility, BitVM needs to move most of the computation process off-chain and only put the relevant proofs on-chain. The core idea is to abstract complex smart contracts into fraud proofs and execute those proofs on Bitcoin Script. Users can initiate a whistle-blowing report when there is a problem with an asset transaction and verify the authenticity of the transaction with fraud proofs.
At present, the practical feasibility and technical details of BitVM are still controversial and require further observation and research.
04
brief summary
The above is today's content, although everyone is optimistic about the next development of Bitcoin Layer 2, but the current old Bitcoin Layer 2 project is in a tepid state. However, due to the complexity of the technology, most of the new projects are in the white paper stage, and there is still some distance to be truly implemented.
The recent emergence of RGB++ has attracted the attention of some people, what do you think about the subsequent development of RGB++?