Original author: Grapefruit, ChainCatcher
Recently, due to the wealth effect of ordi tokens, a large number of users have been attracted to the Bitcoin network to trade BRC-20 tokens, resulting in severe congestion on the Bitcoin chain and a surge in Gas fees. On May 7th, Binance suspended bitcoin withdrawals twice within a day due to the huge number of withdrawal transactions and the surge in handling fees; on May 8th, the Bitcoin network stopped producing blocks for 1 hour due to congestion, and the gas fee for each transaction on the chain was the highest It once rushed to $30.
As of May 10, according to BTC.com, there were 300,000 unconfirmed Bitcoin transactions. According to the Mempool website, the gas fee for each transaction on the Bitcoin network chain is about 282 Satoshi, which is equivalent to 11 US dollars.
Solving the congestion on the Bitcoin chain and reducing Gas fees have become the consensus of users participating in transactions on the chain.
There are also more and more discussions about Bitcoin expansion. Among them, the RGB protocol, which is dedicated to providing smart contract support for Bitcoin, and the Lightning Network, which focuses on reducing Bitcoin transaction fees, have once again been placed high expectations by users, hoping that they can There are new developments to solve the current dilemma of Bitcoin as soon as possible.
first level title
Lightning Network works to reduce Bitcoin transaction gas fees and increase throughput
The reason why Bitcoin is congested is that its main network TPS can only conduct 7 transactions per second, while third-party payment platforms such as Alipay can process up to 100,000 transactions per second. And the block size of Bitcoin is 1 MB (the number of transactions included), and the miners sort and package according to the Gas level when the user submits the transaction. At this time, in order for the user to package the transaction submitted by himself as soon as possible, he needs to increase the payment of Gas fee to obtain the miner's packaging priority. This is why under the BRC-20 upsurge, the more transaction users on the chain, the more expensive the Bitcoin Gas fee.
image description
Gas fee on BTC chain
According to past history, there are two expansion methods, one is to increase the size of the block, the so-called large block, so that it contains more transactions, this expansion method adopted by Bitcoin Cash (BCH), but this method The block generation time remains unchanged, which will increase the pressure on node operations. The other is to not change the relevant content of Bitcoin, and transfer the small amount of Bitcoin transaction payment or related data to the off-chain through off-chain expansion, and the main network only conducts key transactions. The Lightning Network (Lightning Network) adopts this method under the chain.
The Lightning Network is also known as Bitcoin's Layer 2 solution. It is mainly used in Bitcoin payment scenarios. The Lightning Network can help users save costs and improve efficiency. The core idea is to place user transactions off-chain, and only the final transaction results are confirmed on the Bitcoin main network chain, thereby improving the transaction efficiency of the Bitcoin network and allowing users to trade at a lower cost and faster. Complete the payment.
Its working principle is: when a user initiates a transaction to another user, first of all, the Lightning Network opens an off-chain payment channel between the two parties, which is essentially a bookkeeping book held by both parties to be traded to save the transaction Record. Then, both parties to the transaction lock a certain amount of funds in the channel and sign the transaction through the private key. The small amount of funds transfer between the two parties does not need to be carried out on the chain, but is only stored on each other's ledger. When one or both parties decides that the channel is no longer needed, that is, when the channel is closed, the final settlement between the two The balance is then broadcast on the Bitcoin mainnet.
For example, if A and B want to conduct BTC transactions, they need to establish a channel first. The two parties lock a certain amount of bitcoins on the Bitcoin main network, and the channel is opened. The two can use it to send BTC instantly. The transfer fee is almost zero, and There is no need to broadcast each transaction to the Bitcoin main network. When any party closes the channel, both parties will liquidate the final asset amount of the transaction account and publish it on the Bitcoin main network.
image description
The picture comes from Youtube blogger @币圆小林子
image description
The structure diagram of Lightning Network, from the network
In the Lightning Network, the network will find the path with the fewest nodes and the least transaction fees to complete the transaction.
image description
Lightning Network related data
The application scenarios of the Lightning Network are mainly in the payment field, which can mainly solve the problem of high gas fees and instant arrival of small transactions on the Bitcoin chain, such as social platform reward payment, cross-border remittance, merchant payment, transfer transactions, etc. The average settlement time on the Lightning Network is less than a minute, mostly in milliseconds, and data shows that the fee per transaction on the Lightning Network is about $0.0001. All in all, the payment experience of the Lightning Network is not inferior to that of centralized electronic payment, especially in cross-border transfers.
first level title
Lightning network representative application
Strike——It is a bitcoin lightning network payment platform that provides instant bitcoin payment. Users can use Strike to pay with BTC, purchase goods and services online, make micropayments, reward content creators, and buy and sell BTC, etc. . Its predecessor is Zap, a bitcoin ecological wallet.
Strike previously completed an $80 million Series B round in September 2022, led by Ten 31. In addition, Strike has cooperated with Shopify, NCR, etc. to establish a bitcoin payment system, which allows merchants to quickly convert to US dollars after customers pay with cryptocurrency.
Taro——It is a protocol supported by Bitcoin Taproot, which defines the standard of how to issue and use Token on the Bitcoin blockchain. It is mainly used to issue assets on the Bitcoin blockchain, including homogeneous tokens and NFT assets.
Assets issued through Taro can be circulated on the Lightning Network, currently only supported by developers. Using Taro, developers will be able to issue assets on the Bitcoin blockchain and then transfer them to the Lightning Network.
However, the Taro product is currently in beta.
Lightning Labs, the developer behind Taro, is a developer of the Bitcoin Lightning Network. It provides relevant software support for the Lightning Network, such as Lightning Network node management tools, wallets, etc., such as the self-developed test version software "LND". Supporting users can directly share with other users Send Bitcoin and Litecoin without having to process these transactions on the blockchain. In April 2022, Lightning Labs received $70 million in financing.
Lightspark——It is a Lightning Network payment solution provider, founded by former PayPal President David Marcus, which mainly provides enterprise users with lightning payment solutions, such as providing relevant API and SDK toolkits, and supporting enterprises to integrate Lightning Network and other functions. In April of this year, Lightspark announced the Bitcoin Lightning Network product suite,
first level title
RGB is mainly used to support smart contract functions on Bitcoin and Lightning Network
RGB is a scalable smart contract system with privacy features. Developed by the LNP/BP Association, it is mainly used to support the smart contract deployment of Bitcoin and Lightning Network. Support developers to create, deploy and execute smart contracts on Bitcoin or Lightning Network, while maintaining the security of their data.
Compared with Bitcoin, the biggest innovation of Ethereum is to support smart contracts (Smart Contract). The so-called smart contract is a program running on the blockchain (also known as a programmable contract automatically executed by a piece of code).
The biggest difference between Ethereum and Bitcoin is that it can perform complex logical operations through smart contracts. Today, DeFi and other DApp applications on Ethereum are all implemented through smart contracts. However, since Bitcoin does not support the deployment of smart contracts, the ecological development on the chain is limited. The recently popular BRC-20 tokens on the chain are also realized through the inscriptions of the third-party Ordinals protocol, and the token issuance process is relatively simple and only deployed , minting, and transfer three processes, does not support token destruction, or additional issuance, etc.
RGB aims to make Bitcoin realize all possibilities based on smart contracts like Ethereum or other block networks (Solana, BNB Chain, etc.). Developers can deploy tokens, NFT asset issuance contracts, and decentralized finance on Bitcoin. Apps (DEX, lending), DAO, etc. The protocol promises to support complex smart contracts running on Bitcoin and the Lightning Network.
From this point of view, RGB is not a specific block network nor a token issuance protocol, but an infrastructure that provides smart contract support for the Bitcoin network.
As a smart contract system, the scheme proposed by RGB is also different from previous smart contract schemes such as Ethereum.
RGB modularizes the process of smart contract issuance, data, status, etc., puts smart contract code maintenance and data storage off-chain, and uses the main network (Bitcoin) as the final state commitment layer. This means that RGB stores all the data of the smart contract off-chain through the off-chain smart contract mode, and the Bitcoin main network is only used as the final state confirmer, which reduces the use of block space and can greatly improve throughput quantity.
secondary title
What can RGB be used for now?
Developers can use RGB to deploy the RGB 20 of the homogeneous token and the NFT contract of the non-homogeneous token; and it is compatible with the Lightning Network.
Just because RGB can support users to issue Bitcoin or homogeneous tokens on the Lightning Network by deploying smart contracts, it is also considered an alternative to BRC-20 tokens.
secondary title
What are the applications supported by the RGB protocol, and how can users participate?
Bitcoin NFT market DIBA - is the first Bitcoin NFT trading market built using the RGB smart contract platform, allowing users to create and trade NFTs on Bitcoin (this asset is often referred to as UDA unique digital assets). Currently, DIBA is still in beta.
In addition, users can experience RGB smart contracts and related assets through wallets related to the Bitcoin network.
Iris Wallet— This is a wallet application for issuing, sending and receiving RGB assets, developed by Bitfinex Labs, and users need to download it from the Google Play Store.
My Citadel——Support RGB asset wallet, currently users need to download the installation package.
Bitmaskimage description
BitMask Wallet
secondary title
Bitcoin sidechain
The side chain is to create a separate public chain separately, with its own customized ledger, consensus mechanism, transaction type, script and contract support, etc., and then connect to the Bitcoin main network through specific cross-chain technology. Simply put, it is to transfer and circulate BTC between the Bitcoin main network and the side chain through the cross-chain bridge.
Bitcoin side chains such as Stacks, Rootstock, OmniLayer, etc., all transfer BTC between the side chain and the main network through cross-chain bridges.
secondary title
Bitcoin smart contract platform Stacks (STX)
Stacks (STX) realizes the function of deploying smart contracts and decentralized applications on the Bitcoin network by building a new blockchain network. And issued the native token STX on the blockchain network to pay for smart contract fees and transaction fees on the blockchain. Developers can build any application based on Stacks.
In 2021, Stacks will release the V2 version, which is committed to innovating around the Bitcoin settlement protocol without changing Bitcoin itself, and enabling native Bitcoin smart contracts and decentralized applications.
The core mechanism in Stacks 2.0 is mainly divided into two parts. One is PoX, which is based on the consensus mechanism built on the Bitcoin chain. PoX is similar to PoS equity pledge. Nodes can obtain STX by locking BTC, and can also obtain BTC by locking STX. Coordinate the income between miners and pledgers through this dual token exchange. The second is the native programming language Clarity, which allows smart contracts to operate according to the behavior on the Bitcoin chain. For example, A completes a transaction transfer on Bitcoin, and Stack 2.0 can track and detect this transaction as part of the smart contract on Stacks 2.0, and use this transaction as the condition for the next step of the smart contract, etc.
secondary title
OmniLayer, a Bitcoin network asset distribution platform
Omnilayer (OMNI) is a blockchain network based on Bitcoin, which is mainly used to issue tokens based on the Bitcoin network. The principle of Omnilayer issuing Bitcoin network Token is based on some information attached to the Bitcoin transaction output (UTXO), which is based on the data on the Bitcoin chain.
Among them, the original stable currency USDT was issued by Tether based on Omnilayer.
Compared with the RGB protocol, the data related to the tokens issued by Omnilayer are stored on the Bitcoin main network chain, which has poor privacy and scalability.
secondary title
Bitcoin Alliance Sidechain Liquid Network
Liquid Network (Liquid for short) is more like a consortium sidechain of Bitcoin, maintained and governed by the Liquid Joint Committee, which includes exchanges, financial institutions, and other Bitcoin-focused companies. Designed to solve the liquidity problem of Bitcoin and provide users with a faster and more convenient Bitcoin transaction experience, the network was launched in 2018 by Bitcoin infrastructure developer Blockstream.
The LBTC issued on the Liquid chain is still anchored 1:1 by Bitcoin. According to the official website, the number of LBTC circulating in the Liquid ecosystem has been maintained at more than 3,000 for a long time, and it was 3,280 on May 10.
secondary title
EVM Compatible Bitcoin Sidechain Rootstock
Rootstock (RSK for short) is an EVM-compatible sidechain on Bitcoin. This means that RSK developers can use Ethereum's Solidity to deploy smart contracts, and users can also add the RSK mainnet to the Ethereum wallet Metamask, just like in Ethereum or EVM-compatible Polygon, BNB Chain to interact with the RSK ecosystem DApps.
The RSK platform does not have its own native token, but uses smartBTC (RBTC), where RBTC is issued 1:1 by BTC on the main network through the cross-chain bridge.
Because of this, RSK is not well-known in the encryption community, and users are more familiar with RIF tokens.
RIF tokens are issued by Rootstock Infrastructure (RIF), a platform built on Rootstock, which aims to provide developers with blockchain infrastructure and services, including domain names, storage, authentication, etc., to support the development of dApps and deploy. Although Rootstock does not issue tokens other than RBTC, Rootstock and RIF are developed by the same company, IOV Labs, and RIF tokens are often mistaken by users as Rootstock’s native tokens.
In fact, many well-known DeFi applications have appeared on the RSK chain, such as Sovryn (SOV), a platform that supports trading and lending Bitcoin, and in March this year, the application announced the launch of Sovryn Dollar (DLLR), a stable currency supported by Bitcoin. ). In addition, there are DEX platform RSK Swap, lending application Tropykus, etc.
