* This article is a collective effort of CKB Eco Fund, and much of it was inspired by discussions with Jan Xie, Cipher Wang, Han Tang, Baiyu, and Chester Chen. This article was written by Dr. Hongzhou Chen, Research Lead, hongzhou@ckbeco.fund
1 Introduction
In recent years, a sense of nihilism has permeated the blockchain industry, with many believing that it has strayed from the original vision of a “P2P electronic cash system” as outlined in the Bitcoin white paper[1]. Innovation has stagnated, with little real value being created or mass adoption achieved. Instead, the space has been dominated by speculative gambling.
The root of this dilemma lies in the Ethereum model, which has led the entire industry down a wrong path. There is no doubt that Ethereum has ushered in a new era for programmable blockchains and has driven the prosperity of the entire industry in the past few years. However, Ethereum is now on the wrong track. In its attempt to turn blockchain into a general-purpose "world computer", Ethereum not only faces serious scalability challenges, but also spawns a large number of "decentralized in name only" (DINO) or pseudo-decentralized applications and platforms. This flawed approach has recreated the rent-seeking intermediaries and centralized bottlenecks that blockchain was supposed to eliminate. However, all is not lost. By critically examining Ethereum's mistakes and rekindling Bitcoin's P2P vision, the industry can still get back on track. Accordingly, this article argues that the correct P2P vision will lead to the Web5 future, which is a fusion of the best aspects of Web2 and Web3, with Bitcoin as its backbone (Web5 = Web2 + Web3).
First, from a socio-technical perspective, we will analyze the three key dimensions of Ethereum’s pseudo-decentralized model: participation, ownership, and distribution, and how they produce results that run counter to Bitcoin’s P2P vision. Next, we will revisit Bitcoin’s architecture and how its design can avoid or mitigate these issues. We then propose the “Public Lightning Network Solution” as a roadmap to achieving a true P2P value network based on Bitcoin. Finally, we will illustrate our understanding of concepts such as BTCFi, P2P economy, and Web5 through use cases.
The road ahead won’t be easy. But by rediscovering Bitcoin’s roots (Proof of Work (PoW) + Unspent Transaction Outputs (UTXO)) and leveraging emerging technologies like the Lightning Network, we can lay the foundation for Web5. Together, we can reclaim the P2P vision and embrace a Web5 future where innovation is unimpeded and everyone is empowered.
2 The Trap of Ethereum’s Pseudo-Decentralization
2.1 Distinguishing between decentralization and peer-to-peer (P2P)
First, we must acknowledge Ethereum’s significant contribution to the development of the blockchain industry. As the first platform to introduce smart contract functionality, Ethereum paved the way for a new era of programmable blockchains and decentralized applications (DApps). Its innovative Ethereum Virtual Machine and Solidity programming language enable developers to build complex, Turing-complete smart contracts, opening up endless possibilities beyond simple value transfers. In addition, Ethereum’s Initial Coin Offering (ICO) model, while controversial, democratized the fundraising process and accelerated the development of the blockchain ecosystem. These achievements cannot be ignored when criticizing Ethereum’s current status. However, as Nick Szabo, the inventor of the concept of smart contracts, criticized, Ethereum, which once seemed so promising, has become a garbage coin because of its degeneration into a centralized cult. What exactly happened?
Figure 1: P2P aims to avoid centralization of participation, ownership, and distribution
To understand why Ethereum went astray, it is important to distinguish between decentralization and peer-to-peer (P2P) architecture. While the two terms are often used interchangeably, there are significant differences between them. Decentralized systems may still include hierarchies or middlemen, while true P2P systems aim to eliminate them and enable direct interactions between participants[2].
This distinction also has profound social and economic implications. Economists argue that hierarchical systems, which are the antithesis of P2P, can lead to the concentration of power and the emergence of new intermediaries, which can then extract rents, restrict access, and influence the evolution of the system[3],[4]. Hierarchy in sociotechnical systems is primarily manifested in three dimensions: participation, ownership, and distribution[5],[6]. True P2P systems minimize these aspects of hierarchy, ensuring fair access, control, and rewards.
From this perspective, the industry’s emphasis on “decentralization” is actually closer to the principles of P2P than it is to its literal meaning. Figure 1 illustrates how P2P systems avoid centralization in terms of participation, ownership, and distribution. However, while Ethereum claims to be decentralized (we know it actually means P2P), it has led to the concentration of power and the emergence of new intermediaries in these dimensions, deviating from the P2P vision in Satoshi Nakamoto’s Bitcoin white paper. By analyzing pseudo-decentralization, we can identify where Ethereum has deviated from the original P2P vision and how to realign with it.
2.2 Pseudo-decentralization of participation: the fallacy of “everything on the chain”
Ethereum has ushered in a new era for programmable assets and decentralized applications, attracting many developers and users. However, Ethereum’s pursuit of becoming a “world computer” and its extreme adherence to the principle of large blocks have led to a worrying trend of centralization[7]. The “everything on the chain” mindset overwhelmed Ethereum’s base layer, leading to network congestion, slower transaction speeds, and increased fees. This forced it to shift from proof of work (PoW) to proof of stake (PoS), which not only compromised the security of the ledger, but also concentrated power in the hands of a few large stakeholders[8]. The rise of the staking model has exacerbated centralization, and the introduction of the PoS mechanism into Bitcoin, attempting to use Bitcoin’s security to provide guarantees for PoS-based blockchains rather than enhance Bitcoin’s security, undermines the principle of decentralization and raises concerns about its effectiveness.
Attempts to turn blockchain into a “world computer” are misleading. In reality, blockchain enhances social circulation rather than creates it, and is a technological advancement of production relations rather than productivity[9]. Even Vitalik admits that blockchain is inefficient in terms of computation and storage, trading performance for censorship-resistant and trustless consensus[10]. Ironically, Ethereum has fallen into the trap it knows how to fall into by putting everything on the chain. Blockchain should focus on its socio-technical mission: providing a neutral, censorship-resistant settlement layer, rather than trying to be everything. Most computation and data storage should happen off-chain, and only critical state updates should be on-chain.
2.3 Pseudo-decentralization: The trap of blockchain as a “middleman”
In the 1970s, Chile’s Project Cybersyn attempted to manage the economy through central computer control, but failed due to elitism and centralization[11]. Ethereum’s development is similar, with its account-based model and smart contract-centric design giving rise to a new technocratic elite, particularly among L2 solution providers and core developers of the Ethereum Foundation (EF). These groups control critical infrastructure, extract economic rents, and gradually concentrate power and wealth. The account model abstracts and obscures true asset ownership, creating the illusion of decentralization. Furthermore, the revolving door between EF and prominent L2 projects, such as EF researchers “re-staking” to projects such as EigenLayer, exacerbates conflicts of interest and entrenches a funding culture in which projects endorsed by Vitalik and EF are seen as legitimate, while others are marginalized[13].
From a technical perspective, Ethereum’s account model and state design contribute to this centralization. The account model tightly couples asset ownership with application-layer logic, transforming peer-to-peer interactions into peer-to-contract relationships[14]. This global state model not only introduces a central point of control, but also leads to rapid state growth as the number of transactions and smart contracts increases, further centralizing power. The extraction of MEV (maximum extractable value) through L2 solutions further demonstrates this centralization. Initially, MEV was seen as an attack, but through a “democratic” distribution among major stakeholders, MEV has been legitimized, causing Ethereum to increasingly resemble traditional financial systems. In addition, most current Ethereum L2 solutions rely on multi-signature wallets or committee-authorized upgradeable contracts, introducing centralization risks[15]. The rise of enterprise-dominated chains like Soneium is a stark warning of a potential future: in the future, decentralization will become a cover-up to hide the fact that power is concentrated in the hands of a few.
To avoid this dystopian future, we must move beyond Ethereum’s flawed model. Returning to the original P2P vision, emphasizing individual sovereignty over centralized intermediaries, provides a path to a more open and fair system.
2.4 Pseudo-decentralization of distribution: speculation-driven token economy
The launch of Ethereum in 2015 ushered in a wave of ICOs, enabling projects to issue tokens as a means of democratizing funding and value distribution. While this has led to broader opportunities for new businesses, it has also led to a large number of “shitcoins” with little utility and value[16]. Token-oriented business models blur the line between speculation and real value creation. Many ICOs are little more than get-rich-quick scams. Even legitimate projects face distorted incentives as they are judged more on the price performance of their tokens than on actual adoption or impact.
Decentralization is further weakened by the project team’s centralized control over token minting and distribution. As scholar Angela Walch has pointed out, this creates severe information asymmetry, giving insiders an advantage over ordinary users[17]. The concentration of tokens in the hands of early investors has led to wealth inequality and the centralization of governance power, and Ethereum’s value proposition has been criticized as a “veil of decentralization”[18], similar to the hierarchy and middlemen we discussed earlier.
While we cannot generalize about ICOs, it is important to recognize that ICOs marked an important shift in the cryptocurrency space from traditional equity financing to a token economy. ICOs provided important seed funding for the development of decentralized protocols and applications, providing investment opportunities to a wider audience[19]. The problem lies in the abuse of ICOs, where tokens are forced into business models, causing speculative bubbles and misaligned incentives. For tokens to have real value, the industry must shift from a token-centric model to a service-centric model. Stablecoins are key to this shift. Stablecoins act as a bridge between the traditional financial system and the crypto economy, providing a stable medium of exchange that supports cooperation and economic specialization[20],[21]. This reflects a broader historical shift from focusing on asset price appreciation to prioritizing utility and user experience. We believe that Bitcoin-native stablecoins will go a step further and enable an innovative P2P economy.
3 Return to Bitcoin: The True Path to the P2P Paradigm
To realize the original P2P vision and address the flaws of the Ethereum model, we must return to the roots of Bitcoin and build on its strong technology stack. Bitcoin's unique combination of PoW consensus, programmable UTXO model, Lightning Network, and native stablecoins provide a strong foundation for realizing the true potential of cryptocurrencies and blockchain-based systems. By leveraging these key components, we can create a more open, secure, and scalable ecosystem that empowers users and enables true P2P interactions.
3.1 Enabling Participation: PoW and Programmable UTXO Model
A key advantage of the Bitcoin technology stack is its ability to achieve true decentralization (actually, we should call it P2P), enabling users to participate in the network equally. This is achieved through a combination of PoW consensus and the programmable UTXO model.
PoW consensus is not only the most secure, but also the most cost-effective mechanism for achieving distributed consensus in a decentralized network. It is even the cheapest way to implement a protocol that is resistant to 51% attacks [22]. Unlike PoS systems, which have a series of problems such as "nothing at stake" attacks, long-range attacks, and equity concentration, PoW ensures that the cost of attacking the network is proportional to the computing power that the attacker must obtain. In contrast, PoS has a circular logic vulnerability, where the largest holder determines the state of the ledger, and the state of the ledger determines who is the largest holder. In addition, cooperation is inherently based on trust, and trust requires participation and commitment through labor. Participation is not only about participating or having a say, but also about contributing actual value [23], [24]. PoW consensus is not only a technical mechanism, but also a social contract that aligns the incentives of participants with the security and stability of the network. This social science perspective explains why PoW is so powerful. It ensures that participants have a tangible interest in the system and incentivizes them to act in the best interests of the system. PoW ensures that participation in the network is open to anyone willing to contribute computing power and energy, ensuring the security of the blockchain in what may be the only fair dimension (time, obviously the essence of energy is also time), thereby achieving a more decentralized and democratic form of participation. This is in line with the basic principle of the P2P system, which is to minimize reliance on trusted intermediaries and enable direct interaction between participants.
Regarding programmability, the UTXO model provides a unique approach for building certain types of applications and services on top of the base layer. Unlike Ethereum’s account-based model, which maintains a global state and requires all nodes to process all transactions, the UTXO model treats each transaction output as a discrete “first-class” asset[25]. While this model may be less flexible for complex smart contracts, it provides a more scalable and privacy-preserving approach to transaction verification, as nodes only need to verify the specific UTXO they are interested in, rather than the entire global state. Additionally, the concept of “first-class” assets gives users greater control and ownership over their digital assets, just like cash or coins. In the UTXO model, users have direct custody of their own assets, as each UTXO is controlled by a specific set of private keys. This is in stark contrast to the account model, where assets are often held by contracts controlled by a third party, similar to traditional banks. By giving users direct ownership and control of their assets, the UTXO model promotes a more decentralized and user-centric approach to digital asset management. To fully realize the potential of the programmable UTXO model, new protocols such as RGB++ Layer [26] are being developed to extend the functionality of Bitcoin without compromising the security of its base layer. RGB++ introduces the concept of “isomorphic binding”, which allows smart contracts to be executed off-chain while still anchored to the Bitcoin base layer through UTXO. This allows for more complex computations and data storage without adding burden to the base layer, thereby improving the scalability and flexibility of Bitcoin [27].
Combining PoW with the programmable UTXO model also enables a unique form of governance that emphasizes individual free competition. First, in the PoW model, miners compete for rewards through individual efforts. This is different from PoS, which requires a cooperative collective institution to vote or stake. Second, because each UTXO is a discrete asset, users can transfer and interact freely without the permission of a central institution. In contrast, the account model manages assets in a centralized manner, similar to authoritarianism, where a few large stakeholders influence the direction of the network. Therefore, as shown in Figure 2, we can put POW + UTXO and POS + Account into the political spectrum. PoW + UTXO belongs to the Libertarian-Individual quadrant. POS + Account belongs to the Authoritarian-Collaborative quadrant. The sharp contrast between the two approaches highlights the fundamental differences in their basic ideas and the types of systems they belong to. The PoW + UTXO combination is consistent with Bitcoin's P2P vision, advocating individual freedom, decentralization, and direct interaction between participants, while the PoS + Account model is very different from these principles. By understanding the political and philosophical foundations of different blockchain designs, we can make more informed decisions about which system to build and participate in, ensuring that we always stay true to the transformative potential of the P2P model.
Figure 2: Comparison of governance models
3.2 Eliminating intermediaries: Lightning Network
Bitcoin’s base layer provides a secure, decentralized foundation for storing and transferring value. However, it faces limitations in terms of scalability and transaction speed. To address these challenges and enable true P2P interactions without relying on intermediaries, the Bitcoin community launched the Lightning Network, a second-layer solution that runs on top of the Bitcoin blockchain[28]. The Lightning Network enables instant, low-cost, and scalable micropayments while maintaining the core principles of decentralization and security. By using off-chain payment channels and smart contracts, users can conduct transactions directly without broadcasting each transaction to the main chain. This approach significantly reduces the load on the Bitcoin network, making transactions faster, cheaper, and more private for a variety of use cases.
The design of the Lightning Network perfectly fits the concept of a P2P electronic cash system. By enabling direct bilateral payment channels between users, the Lightning Network eliminates the need for intermediaries at the most basic level of blockchain transactions - value transfer - which is a key step towards a truly P2P socio-technical system. To truly realize the vision of a P2P system, a solution must have four key characteristics: high throughput, low latency, low cost, and privacy protection. The Lightning Network excels in all four aspects and is the most viable way to achieve crypto payments. In contrast, while Ethereum's L2 solutions aim to improve scalability and reduce transaction costs, they even introduce new middlemen, as we discuss in Section 2.3. In addition, the inherent multi-node consensus of blockchain systems makes them more expensive and slower than fully centralized systems, especially in payment scenarios. Given the global population of 8 billion, the Ethereum model is unlikely to replace traditional payment systems like VISA due to their inherent limitations in scalability and transaction costs.
Figure 3: Evolution of energy, information and value channels
The first industrial revolution established a global energy transmission channel, and the second industrial revolution established an information transmission channel. However, we still lack a dedicated value transmission channel. Existing value transmission methods, such as the VISA system, are built on the application layer on top of the information channel. Blockchain has the potential to become this missing value channel, but blockchain alone is not enough. To truly revolutionize value transmission, we need to combine blockchain and lightning networks. In this value network, blockchain handles large transactions, while lightning networks handle small, high-frequency transactions. Just as information channels have expanded to the world, value channels should also be built simultaneously, and wherever information channels are laid, value channels should also be built.
As shown in Figure 3, the introduction of a dedicated value channel in addition to the existing energy and information channels is a major leap forward. This innovation in payment methods is essentially a revolution in production relations, with the potential to change business models and ways of collaboration. Just as it would have been impossible to produce a modern financial system using shells, the fundamental impact of the Lightning Network is that it can change pricing models and expand imagination. Many scenarios that are difficult to price based on subjective human judgment can now be transformed into more atomic and granular pricing mechanisms. This transformation is particularly relevant to Internet of Things (IoT) and artificial intelligence (AI) applications, and the Lightning Network's microtransaction capabilities can enable new forms of machine-to-machine interaction and data monetization [29].
Another key advantage of the Lightning Network is its ability to preserve transaction privacy. While traditional payment systems have become a “digital panopticon”[30] where users’ financial activities are subject to surveillance and potential abuse, the Lightning Network’s off-chain payment channels allow for private transactions that are not broadcast to the public blockchain. This privacy feature is critical for many real-world payment scenarios, as businesses and individuals often require confidentiality of their financial transactions. While privacy-focused cryptocurrencies such as Zcash and Monero attempt to address privacy concerns, they are often associated with illegal activities[31]. In contrast, the Lightning Network’s privacy features are built on top of payment channels, and users can benefit from enhanced privacy infrastructure without the stigma or risks associated with specific privacy coins. In addition, the Lightning Network has the potential to promote financial inclusion and narrow the digital divide in access to financial services. All of these efforts to disintermediate others could have a significant impact on remittances, e-commerce, and access to digital goods and services in emerging economies.
3.3 From Token-Oriented to Service-Oriented: Bitcoin Native Stablecoin
The RAND Corporation has stated that Bitcoin and stablecoins are sufficient to support mass adoption of cryptocurrencies and drive industry growth[32],[33]. While this is somewhat subjective, this combination is critical to overcoming financial speculation and bringing the industry back into alignment with its original P2P vision.
As we all know, one of the biggest challenges facing Bitcoin as a universal medium of exchange is its volatility. This is where stablecoins come in. Stablecoins provide a price-stable asset that can serve as a bridge between the traditional financial system and the crypto economy by being pegged to a reference (such as a fiat currency)[20]. Stablecoins, like fiat currencies, provide a stable medium of exchange, which is the foundation of cooperation, specialization, and organization throughout human history[21]. In this historical development, we shifted our focus from asset price appreciation to actual utility and experience, giving birth to the basic paradigm of the modern economic system: using a stable medium to exchange the services of others[34],[35].
The history of stablecoins is marked by the development of various types of stablecoins, each with its own unique characteristics and challenges. Tether (USDT) and USD Coin (USDC) have gained significant traction but have faced criticism over issues of transparency and centralization. In contrast, decentralized stablecoins such as MakerDAO’s DAI were once considered a promising alternative. However, most existing decentralized stablecoins are built on the Ethereum model and face the problem of pseudo-decentralization, which has been discussed above. In particular, MakerDAO’s recent brand upgrade and introduction of an account freezing feature further highlight the need for a truly decentralized, censorship-resistant stablecoin solution.
To realize the potential of stablecoins in a service-oriented P2P economy[36], we need Bitcoin-native stablecoins that align with the core principles of the Bitcoin network. These stablecoins, such as Stable++ (RUSD), can be built on the RGB++ layer, leveraging the security and decentralization of Bitcoin while providing a stable medium of exchange and unit of account. By eliminating the need for a centralized platform or institution to manage issuance, redemption, and account freezes, Bitcoin-native stablecoins promote a more inclusive and censorship-resistant ecosystem. Notably, there is room for both decentralized and centralized stablecoin solutions in the Bitcoin ecosystem. Decentralized stablecoins are more censorship-resistant and more in line with the spirit of Bitcoin, while centralized solutions can provide more convenience and liquidity. The coexistence of these different solutions reflects the vibrant and competitive nature of the Bitcoin community, where multiple solutions can flourish and meet the preferences of different users.
In addition, integrating Bitcoin native stablecoins with the Lightning Network will unleash powerful synergies and enable a wide range of P2P financial services and applications. The instant, low-cost, and scalable micropayments of the Lightning Network, combined with the stability of Bitcoin native stablecoins, create an ideal environment for daily transactions, remittances, and complex financial products. This combination allows entrepreneurs to focus on creating valuable services and user experiences without having to issue tokens or face the risk of potential security violations.
In short, from a distribution perspective, the success of Bitcoin native stablecoins and the Lightning Network will have a broader impact on the distribution of power and control in the cryptocurrency industry. By providing a stable and accessible infrastructure for P2P transactions, this approach empowers individuals and businesses to interact directly without relying on centralized middlemen. This service-oriented paradigm shift is in line with the original P2P vision, promoting greater financial inclusion, innovation, and value creation.
3.4 Summary
In this section, we explored how Bitcoin's technology stack, including PoW, the programmable UTXO model, the Lightning Network, and Bitcoin's native stablecoins, provide a strong foundation for realizing the true potential of cryptocurrencies and blockchain-based systems. By examining these components, we have shown how they address the shortcomings of Ethereum's pseudo-decentralized model in the dimensions of participation, ownership, and distribution. Table 1 summarizes Bitcoin's core technologies and how CKB's innovations can help realign the blockchain industry with the P2P vision.
Table 1: Bitcoin’s advantages and CKB’s innovations in realizing the P2P vision
Social progress depends on reducing cognitive costs, increasing the value of information flows, minimizing loopholes, and discovering new mutually beneficial actors. The foundation of this process is trust minimization[37]. As human societies have evolved, this trust minimization has undergone a series of transformations, from kinship and ethnicity to legal systems. However, even today’s widely accepted legal frameworks remain fragile and difficult to apply universally across the globe.
This is the socio-technical mission of blockchain technology. The ultimate goal of blockchain is to achieve true P2P interaction, allowing two people without any other trust mechanism to establish secure and efficient transactions. However, Ethereum's pursuit of becoming the world's computer has deviated from this original vision to a certain extent. Ethereum emphasizes on-chain computing and smart contracts, but sacrifices decentralization and social scalability. In contrast, Bitcoin's technology stack was designed from the beginning to minimize trust in P2P scenarios. Admittedly, Bitcoin faces challenges such as slow confirmation time, limited programmability, and large price fluctuations. However, as the technology continues to develop and mature, these problems are gradually being solved. Innovative projects like Nervos CKB are further optimizing and expanding the Bitcoin model. The Bitcoin ecosystem is moving towards greater social scalability and the vision of achieving P2P.
4 Regaining the P2P vision and welcoming the future of Web5: solutions, trinity, use cases and Web5
4.1 Public Lightning Network Solution
The Common Lightning Initiative is an ambitious plan to realign the blockchain industry with Satoshi Nakamoto's original vision of a P2P electronic cash system. Bitcoin has proven that a blockchain network built on P2P mining nodes can provide a solid foundation for consensus on digital gold. The decentralized nature of the Bitcoin network, enabled by its globally distributed mining nodes, ensures the security, immutability, and censorship resistance of the blockchain. For the Lightning Network, a large number of widely distributed nodes is also critical to its security, capacity, and resilience.
However, the current Bitcoin Lightning Network has only about 15,000 nodes and has seen limited growth since 2022. Due to insufficient infrastructure, its capacity is only about 5,000 BTC and it supports very few assets, making it unable to replace the traditional financial system on a global scale. Therefore, based on the Fiber Network, we propose to combine the Lightning Network with the DePIN hardware infrastructure. By using DePIN hardware to produce dedicated Lightning Network nodes, we can create a powerful and geographically distributed infrastructure to support the continued growth and use of the Lightning Network.
The word "public" in the proposal represents a more inclusive Lightning Network that promotes participation in two key dimensions: cross-chain compatibility and diverse implementations. First, the proposal aims to expand the Lightning Network beyond Bitcoin, encouraging other blockchains to develop their own Lightning Network implementations. For example, CKB launched the Fiber Network (CFN), Liquid also has lightning channels, and Cardano is developing Hydra, all of which are inspired by the payment channel scheme. Second, the initiative emphasizes interoperability between different implementations. For example, CFN is designed to be compatible with the Bitcoin Lightning Network, allowing smooth cross-network transactions. The goal is to create a globally interconnected Lightning Network, of which Bitcoin's Lightning Network is one of many subnetworks. By promoting interoperability, the proposal envisions the establishment of a highly liquid global value network that facilitates the seamless transfer of assets between various channels.
The public Lightning Network solution consists of three key components:
Fully develop CFN: CFN is a high-performance, multi-asset lightning network designed to enhance the scalability, interoperability, and user experience of the existing Bitcoin Lightning Network. CFN will support multiple assets, including BTC, stablecoins, and RGB++ assets, enabling seamless cross-chain swaps and multi-asset transactions within a single payment gateway. CFN will also implement advanced features such as channel factories, watchtowers, and multi-path payments to improve the efficiency, security, and reliability of the network. In short, CFN is a lightning channel on CKB.
Integration with DePIN Hardware: To ensure the decentralization and robustness of the Lightning Network, we will integrate CFN with the DePIN hardware ecosystem. By significantly increasing the number of DePIN hardware nodes, we expect to create a globally distributed, censorship-resistant network that can support the growing demand for fast and low-cost payments. More importantly, by leveraging the security and reliability of DePIN hardware, we can provide Bitcoin native yield opportunities for end users who contribute BTC, stablecoins, or RGB++ assets to the network liquidity pool.
Building a P2P application ecosystem: The ultimate goal of the public lightning network solution is to build a thriving P2P application ecosystem that leverages the lightning network and DePIN hardware. By providing a fast, low-cost and scalable payment infrastructure, we aim to enable a wide range of innovative applications and services that will reshape traditional business models and create new opportunities for value creation and exchange. This may include DEX based on the lightning network, content platforms based on micro-transactions, etc. We will actively support and incentivize developers and entrepreneurs to build on top of the CFN and DePIN infrastructure, create a vibrant, self-sustaining P2P ecosystem, and promote the application and development of the lightning network.
By focusing on these key aspects, the public Lightning Network solution aims to lay a solid foundation for a thriving P2P economy, enabling individuals and businesses to transact directly, securely, and efficiently without relying on centralized middlemen.
4.2 Realizing the Trinity
It is important to note that the public Lightning Network solution is not just an isolated project. It is the final piece of a comprehensive, interconnected trinity ecosystem designed to solve the core problems plaguing the blockchain industry and bring it back in line with Bitcoin's original P2P vision. This trinity consists of three key parts, each of which solves a specific challenge facing the industry: participation, ownership, and distribution. As shown in Figure 4, the core part is a pizza (the Venn diagram looks like a pizza), and the three overlapping circles represent the key elements of the solution. The first circle is PoW + programmable UTXO, which solves the participation problem. The second represents stablecoins, which are the main solution to the distribution problem. The third represents the Lightning Network, which is the key innovation to solve the ownership problem.
Figure 4: Bitcoin P2P Trinity Diagram, a Human-Centered Framework
The intersection of the PoW + Programmable UTXO and Lightning Network circles forms the foundation of BTCFi. BTCFi unlocks a wide range of decentralized financial applications and services, driving innovation and value creation within the Bitcoin ecosystem. Where the PoW + Programmable UTXO circle intersects with the stablecoin circle, a new P2P economy powered by Bitcoin is generated[36], driving the industry towards a service orientation. The intersection of the stablecoin and Lightning Network circles gave birth to PayFi, a Bitcoin-native P2P payment infrastructure. PayFi leverages the stability of stablecoins and the efficiency of the Lightning Network to facilitate smooth, low-cost and secure P2P transactions, allowing users to participate in direct economic interactions without relying on traditional financial intermediaries. The above intersections promote each other, forming a virtuous cycle of growth and adoption. BTCFi provides the financial infrastructure and tools needed to support the development of the P2P economy, while the P2P economy creates demand for BTCFi services and drives the development of PayFi. In turn, PayFi is an important entry point for users to access BTCFi and participate in the P2P economy, further driving adoption and network effects.
It is worth noting that, as can be seen from the description, in our framework, people (users, communities, society) are always the primary consideration and the foundation of all components and processes. In other words, Bitcoin’s P2P “marketplace” [38] can accommodate diverse voices and ideas, demonstrating the infinite power of the community. This is fundamentally different from the Ethereum model, where the core is smart contracts and people are just accessories.
4.3 Web5 = Web2 + Web3
At the center of this trinity, where the three circles intersect, is our ultimate goal: to realize Bitcoin’s P2P vision and usher in a new era of Web5, a paradigm that combines the best aspects of Web2 and Web3. Built on the solid foundation of Bitcoin, Web5 represents a P2P future where users can interact, transact, and create value freely and directly without being restricted by centralized platforms or middlemen. While the term “Web5” was originally coined by Jack Dorsey[39], our understanding and vision for Web5 goes beyond his definition. While Jack Dorsey’s proposal may have been tongue-in-cheek, we take the concept of Web5 seriously because it fits perfectly with our vision for the future of the Internet.
Figure 5: Web5’s layered approach and our focus
For a long time, we have been struggling to find a term to accurately express the ecosystem we are building, which should be fundamentally different from Ethereum's solution. Before Jack Dorsey proposed Web5, we lacked a suitable term to express our goal of creating a decentralized future that is different from Web3. The emergence of Web5 aptly describes our vision. The equation "Web5 = Web2 + Web3" succinctly summarizes our belief that the future does not lie in putting everything on the blockchain, but in combining the best aspects of Web2 and Web3. In addition, there are many ways to achieve this integration. For example, account abstraction (AA) and passkey can be used, while Nostr is another way to connect Web2 and Web3. If there is a spectrum with P2P at one end and centralized at the other, these solutions occupy the middle of the spectrum. In the end, the term "Web5" is not only meaningful, but also fascinating and thought-provoking. At first glance, it seems to be a light-hearted joke. However, upon further reflection, the concept will reveal its profound meaning and potential. This makes “Web5” an ideal slogan for our vision.
Regarding the implementation of Web5, Nervos Chief Architect Jan Xie proposed a layered approach[40] that builds on a unique combination of Bitcoin core features and innovative technologies developed by the CKB ecosystem. As shown in Figure 5, the foundation of this stack is the Bitcoin base layer, which is the most secure and reliable asset issuance platform. However, Bitcoin’s limited programmability means that users cannot fully utilize these assets beyond simple ownership and transfer. To unlock the full potential of Bitcoin-based assets, we introduced a programmable layer on top of the base layer. This is where the RGB++ Layer comes into play, which is the financial center for issuing assets on the Bitcoin chain. To ensure a secure and efficient connection between the base layer and the programmable layer, we adopted the isomorphic binding technology of the RGB++ protocol to achieve seamless cross-chain interoperability without the need for a bridge, eliminating a major pain point in current cross-chain solutions.
On this foundation, we can now build more layers with a focus on scalability, privacy, and usability. One solution is to use client-side verification (CSV) technology, which creates a "Merkle tree" that allows transactions and state updates to be processed off-chain while still maintaining the security guarantees of the underlying blockchain. Other technologies, such as Open Transactions, Chaumian electronic cash, and P2P markets, can further enhance the capabilities of the Web5 stack to support a wide range of use cases and applications. To tie all these components together and provide a smooth user experience, we introduced channels. Channels are bridges between the components of the Web5 protocol stack and are also connections between Web2 and Web3 technologies. The Lightning Network is a type of channel.
The main advantages of Web5 are P2P payments and social networks. With the next-generation public lightning network CFN, we can achieve fast, secure, and low-cost P2P payments between different blockchains and assets. By integrating CKB with Nostr through RGB++, we can create a smooth and user-friendly experience for P2P social interactions and micropayments[41]. We believe that these areas will create countless opportunities.
4.4 Use Cases
To achieve Web5, we built the RGB++ Layer and stablecoins. CFN and the public lightning network solution are the last pieces of the puzzle that put these elements together. In addition, we have also witnessed the growth of the first RGB++ asset Seal, and the Seal community has driven the adoption and development of the trinity. Let's further illustrate with 3 use cases:
P2P Economy - Decentralized Cloud Storage with Lightning Network Incentive Mechanism. In this business model, users who need storage services can sign a smart contract with a cloud storage provider on the RGB++ Layer and agree to pay for storage capacity and bandwidth based on usage. The platform uses CFN to facilitate fast, low-cost payments between users and cloud storage providers, and automatically triggers payments based on actual usage. In turn, cloud storage providers are incentivized to provide reliable, high-quality storage services because they can be compensated directly from users through the Lightning Network. This creates a virtuous cycle of supply and demand, where users benefit from low-cost, secure storage solutions, while cloud storage providers receive revenue for their contributions to the network. Users retain full control over their data and can grant or revoke access as needed. This decentralized cloud storage platform addresses the limitations of traditional P2P file sharing networks, such as lack of incentives, free-riding, and the dilemma between poor performance and centralized platform control [42], [43], and it leverages the power of the Lightning Network and smart contracts to re-establish a strong, self-sustaining P2P economic system.
BTCFi - Use "UTXO Lego" to capture market opportunities. Imagine a scenario where a user sees the price of Seal on the Bitcoin network soar and a significant market opportunity arises. To take advantage of this opportunity, users wish to borrow their ccBTC (pegged 1:1 with BTC and issued on CKB) as collateral to borrow the stablecoin RUSD and buy Seal immediately. Security is paramount, so users cannot accept centralized cross-chain bridges. RGB++ solves this pain point. Executing this transaction within a single block is also innovative. Here, UTXO LEGO refers to the modular and programmable nature of UTXO, which allows the creation of complex automated transactions across different blockchains. Based on UTXO, we can securely connect operations between CKB and the Bitcoin network, ensuring that collateral locking, stablecoin lending, and Seal purchases occur as atomic swaps: either all operations succeed, or none succeed. This programmability is a distinguishing feature of UTXO, allowing for more granular control over transaction execution than the account-based model used by Ethereum. Finally, the UTXO model often reduces transaction costs due to its ability to process transaction data more efficiently in parallel, especially when interacting with multiple blockchains. This approach demonstrates how BTCFi can offer a more powerful, secure, and cost-effective alternative to current DeFi solutions.
PayFi — Lightning-based DEX for smooth P2P payments. One of the most promising applications brought about by the fusion of Bitcoin Lightning Network and CKB CFN is the creation of a Lightning-based DEX for BTC, stablecoins, and RGB++ assets. By leveraging CFN’s ability to facilitate trustless, cross-Lightning atomic swaps, users can easily swap between BTC and stablecoins like USDT or RUSD within the CKB ecosystem without the need for centralized exchanges or KYC procedures. In essence, this Lightning-based DEX can be seen as a decentralized, P2P alternative to traditional financial networks like VISA, where nodes act as “bank branches” and are rewarded for their collateralized liquidity. This DEX enables users to conduct fast, secure, and private P2P transactions (rather than interacting with smart contracts), allowing them to seamlessly switch between the stability of stablecoins and the digital gold standard of BTC. The atomic swap mechanism ensures that both parties receive their respective assets at the same time, eliminating counterparty risk and enhancing the overall security and reliability of the platform. In addition, CFN's multi-asset capabilities open up exciting possibilities for instant, zero-fee transactions of RGB++ assets within lightning channels. For example, users can create markets for trading RGB++ NFTs (DOB) or RGB++ tokens. These markets provide a real-time, frictionless trading experience, allowing creators, collectors, and traders to exchange value directly without incurring high transaction fees or waiting for long confirmation times.
5 Conclusion
The blockchain industry is at a crossroads. One path leads to the continuation of the Ethereum model, which is full of centralization, rent-seeking, and deviates from the core principles of blockchain. The other path is to return to the original vision of Bitcoin, a P2P system that empowers individuals and achieves true decentralization.
The choice is clear. We must embrace the Bitcoin Renaissance and the innovations it brings. These include the RGB++ Layer, CKB Fiber Network, and native stablecoins. We must work to create a fairer and more sustainable model for value creation and distribution, moving away from the token-centric model of the past and toward a service-oriented future. This future is the future of Web5, which combines the best of Web2 and Web3.
The road ahead will be challenging, but the rewards will be great. So let’s unite as a community and commit to the vision of Bitcoin P2P. Let’s build, innovate, and create with the passion and vision of the early pioneers. Let’s show the world the true power of the P2P future.
The choice is ours. The future is ours.
Let’s get started.
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