Written by: Haotian
Many people believe that the BTC layer 2 ecosystem, which has been booming for over a year, has already receded, but it actually has not. If viewed solely from the perspective of asset issuance, there is indeed a feeling of dancing in a bubble. However, from the perspective of practical application value, it is quite different. Recently, @utxostack released a DLSP (Decentralized Liquidity Staking Protocol) solution, and various features suggest it may accelerate the native Lightning Network's implementation? Let me share my observations:
1) UTXO Stack, as its name suggests, has always been an ambitious strategic ace of @NervosNetwork:
On one hand, it aims to expand the UTXO framework of CKB on BTC layer 2 into a large ecosystem, providing a modular toolkit that allows developers to deploy UTXO BTC layer 2 with one click. The ultimate vision is to gain a voice in the competition with EVM BTC layer 2, 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 Fiber Network's enhanced Lightning Network core features from the behind-the-scenes technical infrastructure 'backend' to the 'frontend' by accelerating the implementation of Lightning Network applications, 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 layer 2 environment built on CKB, where they can find practical application value. This was undoubtedly a 'dimensionality reduction attack' on the RGB protocol, which was originally dedicated to BTC's ecological integrity.
RGB++ not only validated the feasibility of the RGB client verification protocol but also allowed everyone to see the actual use cases after RGB's implementation, thanks to the existing wallets and infrastructure on the CKB chain. In a sense, RGB++ is a 'replacement' for the slow progress of RGB's implementation;
Fiber Network is a solution implemented around the Lightning Network by CKB, achieving support for multi-asset transmission (ecological assets beyond BTC) and cross-domain atomic payments (with the original Lightning Network atomic interoperability) through modular expansion technology. It will also accelerate the deployment of physical Nodes for the Lightning Network to provide a faster, lower-cost, multi-asset, and highly private secure payment network.
Objectively speaking, the RGB++ protocol may be affected by the narrative silence of assets such as inscriptions, but the vision for Lightning Network payments that Fiber Network is trying to pursue will not go out of date;
3) Based on the above background, it is not difficult to understand the content of UTXO Stack. Simply put: UTXO Stack is an enhanced protocol focused on 'payment' scenarios built on the RGB++ asset issuance protocol Fiber Network. In addition to introducing stablecoin solutions for the Lightning Network, I believe its main function is DLSP (Decentralized Liquidity Staking Protocol):
1. Zero-cost node channels, Node operators can prepay funds from the DLSP liquidity layer to help users open channels, lowering the entry barrier for users.
2. Automated liquidity management, using AMM model liquidity management to reduce the management costs of Node operators;
3. Liquidity staking derivative features can incorporate diverse financial plays such as Staking and Restaking, issuing liquidity tokens like LnBTC, LnUSD, LnCKB, allowing users to earn yields without sacrificing liquidity;
For example, to operate a large-scale Channel, it usually requires a significant amount of funds to be pre-deposited, which not only locks up liquidity but also puts considerable cost pressure. With the support of DLSP's 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 accelerate the emergence of Lightning Network node operators and solve the fundamental problem of the slow development of the traditional Lightning Network.
In addition, this is another solution, besides @babylonlabs_io and @GOATRollup, that brings native non-custodial yields to BTCFi application scenarios.
The construction of this DLSP layer is like a brand new 'Eigenlayer' emerging within the Bitcoin Lightning Network system.
Once the first goal of accelerating the implementation of the Lightning Network scenarios is achieved, the stablecoin circulation support, decentralized exchange node solutions, wallets (JoyID), P2P payment SDKs, hybrid Lightning Network, and other infrastructures it provides will also be applied to the Lightning Network ecosystem.
It is equivalent to building a native expansion layer support for the Lightning Network. As for what level the Lightning Network application market can be pushed to and how many accompanying innovative plays based on the Lightning Network will emerge, we will just wait for its subsequent development. (The recent large-scale airdrop incentive program by UTXO Stack targeting the Lightning Network is worth paying attention to.)
That's all.
In summary, although the name UTXO Stack is quite technically abstract, the supporting infrastructure it builds for the Lightning Network and the upcoming acceleration of the Lightning Network ecosystem's implementation process are already very clear.
Of course, its market valuation expectations after TGE will also be 'positively correlated' with the progress of the Lightning Network. Whether it can redefine the UTXO framework's BTC layer 2 ecosystem remains unknown, but the vast ecosystem of the payment scenario channel of the Lightning Network seems to be grasped?
