BTC Layer2 ecosystem has not receded.
Written by: Haotian
Many people believe that the BTC Layer2 ecosystem, which has been booming for over a year, has actually receded. However, this is not the case. If we look solely from the perspective of asset issuance, it does feel like a bubble. But from the perspective of practical application value, the situation is quite different. Recently, @utxostack released a set of DLSP (Decentralized Liquidity Staking Protocol) solutions, and various features suggest that it may accelerate the implementation of the native Lightning Network. Here are my observations:
1) UTXO Stack, aptly named "stack," has always been a strategic ace for @NervosNetwork:
On one hand, it aims to "promote" the CKB UTXO framework in BTC Layer2 into a large ecosystem, providing a modular toolkit that allows developers to deploy UTXO BTC Layer2 with one click. The ultimate vision is to gain a voice in the competition with EVM BTC Layer2, which many people are aware of.
On the other hand, many people overlook that it aims to bring the innovative RGB++ asset issuance protocol and the enhanced Fiber Network Lightning Network core features from the backend technical infrastructure to the frontend by accelerating the application of the Lightning Network, allowing the market to more intuitively feel the technological innovation significance of RGB++ and Fiber Lightning Network.
2) The innovation of RGB++ lies in allowing users to issue various assets on BTC L1 and then leap into the programmable BTC smart contract Layer2 environment built on CKB, where they can find practical application value. This was undoubtedly a "dimensionality reduction attack" on the original RGB protocol, which was focused on the original BTC ecosystem.
RGB++ not only validated the feasibility of the RGB client verification protocol but also utilized the existing infrastructure of CKB, such as wallets and chains, allowing everyone to see the actual use cases of RGB after its implementation. To some extent, RGB++ serves as a "substitute" for the slow progress of RGB's implementation;
Fiber Network is CKB's solution for the Lightning Network, achieving support for multi-asset transmission (ecosystem assets beyond BTC) and cross-domain atomic payments (in contrast to the original Lightning Network's atomic interoperability) through modular expansion technology. It will also accelerate the deployment of physical nodes in the Lightning Network to provide a faster, lower-cost, multi-asset, and high-privacy secure payment network.
Objectively speaking, the RGB++ protocol may be affected by the narrative silence surrounding inscriptions and other assets, but the vision of Lightning Network payments that Fiber Network aims to pursue will not become outdated;
3) Based on the above background, it is not difficult to understand the content of UTXO Stack. In simple terms: UTXO Stack, based on the RGB++ asset issuance protocol and Fiber Network, has built an enhanced protocol focused on "payment" scenarios. In addition to introducing stablecoin solutions for the Lightning Network, I believe its main function is DLSP (Decentralized Liquidity Staking Protocol):
Zero-cost node channels, where Node nodes can prepay funds from the DLSP liquidity layer to help users open channels, lowering the entry barrier for users;
Automated liquidity management, using an AMM model to reduce the management costs for Node operators;
Liquidity staking derivative features, which can incorporate diverse financial plays such as Staking and Restaking, issuing liquidity tokens like LnBTC, LnUSD, LnCKB, allowing users to earn returns without sacrificing liquidity;
For example, to operate a large-scale Channel, a significant amount of funds typically needs to be pre-deposited, which not only locks up liquidity but also imposes considerable cost pressure. With the support of the DLSP financial derivative platform, nodes can directly borrow from the DLSP platform without needing to pre-deposit a large amount of BTC and can pay borrowing costs through transaction fees, which will directly accelerate the emergence of Lightning Network node operators and address the fundamental issue of the slow development of the traditional Lightning Network.
In addition, this is another solution, alongside @babylonlabs_io and @GOATRollup, that brings native non-custodial yields to BTCFi application scenarios.
The construction of this DLSP layer is akin to a brand new "Eigenlayer" taking shape within the Bitcoin Lightning Network system.
Once the first goal of accelerating the implementation of Lightning Network scenarios is achieved, the stablecoin circulation support, decentralized exchange node solutions, wallets (JoyID), P2P payment SDKs, and mixed Lightning Network infrastructure it provides will also be applied within the Lightning Network ecosystem.
Essentially, it builds a native expansion layer support for the Lightning Network. As for how much it can push the Lightning Network application market to a new level and how many innovative plays based on the Lightning Network will emerge, we will have to wait for its subsequent development. (The recent large-scale airdrop incentive plan by UTXO Stack targeting the Lightning Network is worth paying attention to.)
In summary, although the name UTXO Stack is quite technically abstract, it has already made the supporting infrastructure for the Lightning Network and the subsequent acceleration of the Lightning Network ecosystem's implementation process very clear.
Of course, its market valuation expectations after the TGE will also be "positively correlated" with the progress of the Lightning Network. Whether it can redefine the UTXO framework of the BTC Layer2 ecosystem remains unknown, but it seems that the large ecosystem of the Lightning Network as a payment scenario channel is about to be grasped?
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