ABCDE: Why should we invest in the UTXO Stack?

Original author: ABCDE Capital

The UTXO Stack led by ABCDE can technically help project developers issue BTC Layer 2 based on the UTXO architecture with one click, and natively integrate RGB++ protocol capabilities. In terms of security, it combines staking BTC, CKB, and BTC L1 assets to ensure Layer 2 security.

To put it simply, UTXO Stack is the “OP Stack + EigenLayer” of the Bitcoin ecosystem

1. BTC Layer 2 Controversy and RGB++

If you want to make sense of the UTXO Stack, you can’t get around RGB++

At present, there are more than 20 BTC Layer 2s on the market, but most of them are EVM solutions, which are basically using ETH’s technology stack + bridge to solve the problem of BTC scaling. Although the ecosystem can be quickly built in the short term, in the long run, this solution has no strong binding relationship with the BTC main chain in terms of security, and relies heavily on bridges, and secondly, it ideologically uses ETH’s Account model and EVM virtual machine to scale UTXO’s BTC, which is somewhat insufficient “Bitcoin Native”

However, the security is highly correlated with BTC L1 and is sufficient for BTC Native, but the Lightning Network has been running for many years and has failed to achieve the desired results, and has a natural scaling shortcoming that cannot support smart contracts. Client-side verification paradigms such as Taproot and RGB also have many problems, such as long implementation time and slow technical progress. This is the main reason why EVM scaling solutions are so popular

Nervos, which has been deeply involved in the public chain field for many years, uses the natural structural advantages of POW+UTXO, which is the same as BTC, + innovative “isomorphic mapping” technology, to “seamlessly relocate” the client-side verification paradigm of RGB to CKB, named RGB++. On the premise of sacrificing a little privacy, it has been greatly expanded in terms of functionality and flexibility, and the security has formed a strong binding with BTC L1. What’s more, RGB++ actually landed just a few days ago, which means that this is no longer a scaling narrative that stays at the concept or development level, but a product that can actually start building ecosystems and solutions.

If the above terms are like client-side verification, and isomorphic bindings are still too abstract, then the following approximate analogy can be used to understand RGB++ - the user initiates a transaction on BTC L1 to trigger the transaction of RGB++ assets belonging to the user on CKB, and when the transaction is completed on CKB, it writes back to the previous commitment on BTC L1

You may wonder — this doesn’t save the gas fee, does it? Users still have to initiate transactions on BTC L1, and they still have to pay the gas fee on BTC, and now they have to add the gas fee on the CKB side, which feels more expensive?

Actually, there are four benefits

• RGB++ as an asset issuance protocol gives BTC L1 the ability to issue new RGB assets (think Merlin’s BRC 420)
• RGB++ asset trading on CKB is fully Turing-complete and programmable.
• You can wait for multiple RGB++ transfers to be completed, and then send a commitment to Bitcoin L1 in aggregate, which is called “transaction folding”, which is not very Rollup, which saves a lot of gas fees
• Not only RGB++ assets can be mapped to CKB, but also assets with UTXO features such as Atomical and Rune can also be mapped to CKB for Turing-complete transactions

Because the UTXO on Bitcoin L1 can only operate or update RGB++ UTXO, in RGB++, CKB becomes the “execution + DA” layer of BTC, and BTC L1 becomes the “settlement layer” in the true sense, which is currently impossible for any EVM and non-EVM BTC scaling solutions

After all, transactions on BTC L1 are still unavoidable, and the limit TPS of CKB as a POW L1 is only a few hundred. Is there a more flexible and fast expansion solution, like … Appchain on the other side of the ETH ecosystem?

So we have the UTXO Stack, the “OP Stack” based on BTC and RGB++

2. UTXO Stack — OP Stack+EigenLayer for BTC

If you are familiar with the OP Stack and the RAAS (Rollup as a Service) protocol stack, UTXO should be very easy for you to understand

With UTXO Stack, you can issue BTC isomorphic UTXO Appchains with one click, and these Appchains have the following features

• UTXO model, ultra-high TPS (UTXO is born with parallel processing), ultra-low gas fees
• POS mechanism, security is provided by BTC/CKB staked on BTC (similar to EigenLayer)
• The asset protocol adopts RGB++, because of the existence of isomorphic mapping technology, assets can jump between Appchain/CKB/BTC at will, without the need for cross-chain bridges
• The CKB smart contract stack can be reused
• BTC wallet can be reused (users are not aware of the CKB chain)

Finally, we have Bitcoin’s native UTXO-based one-piece blockchain infrastructure, which also integrates the restaking concept proposed by EigenLayer to better empower BTC and CKB while escorting the cold start and security of Appchain

It is foreseeable that in the near future, BTC EVM layer 2 and BTC UTXO layer 2 will start a round of head-to-head confrontation at the technical, ecological, and even ideological levels.

RGB++ was officially proposed in February and landed in April in less than two months, demonstrating the team’s extremely strong engineering capabilities. The launch of UTXO Stack at the same time as the landing of RGB++ gives BTC the possibility of more diverse asset issuance and gameplay + Bitcoin Native. We believe in and work with UTXO Stack to push the Bitcoin ecosystem to a better and more prosperous future.

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