Nervos Network: Bitcoin scalability solution and ecosystem development
background
Although Bitcoin is widely adopted, it has poor scalability. For example, after the Segwit upgrade, the block size is limited to 4MB, and the transaction processing capacity is limited, resulting in long confirmation time and high fees. Its scripting language lacks the flexibility to develop complex smart contracts.Nervos Network Solution
Layer 2 solutions: including payment channels, side chains, and Rollups, but with problems of increased complexity, trust assumptions, and security vulnerabilities.
Nervos Network itself：The project was launched in 2018 and adopts a layered architecture, including the L1 blockchain CKB (Common Knowledge Base). By modifying the UTXO model and improving the RGB protocol (such as the RGB++ protocol launched in 2024), it provides smart contract capabilities and asset issuance for Bitcoin.
Technical Details
CKB (Common Knowledge Base): Similar to Bitcoin, it adopts a PoW consensus mechanism (using an upgraded NC-MAX) and Eaglesong function to ensure security. Its block interval can be dynamically adjusted.
Cell Model: The core data structure of CKB, improved from the Bitcoin UTXO model, featuring Lock Script and Type Script, supporting more functions and complex computations, capable of storing various data types, with Cells operating independently to enhance scalability.
CKB-VM: Execution engine using RISC-V instruction set, compatible with various programming languages, with predictable gas fees and other advantages, facilitating development.
RGB++ Protocol: Expands Bitcoin functionality on CKB, addressing data availability and client validation dependency issues of the original RGB protocol, enabling complex smart contracts and asset management, integrating with CKB architecture for interaction between Bitcoin assets and dApps.
Payment Channels: Such as the Perun framework, utilizing CKB Cell model for off-chain transaction processing and on-chain settlement, supporting various applications, currently still in testing.
Token Economics
CKB Token (CKByte): Used for granting data storage rights, on-chain transaction fees, and block rewards. Sources include the genesis block, basic issuance, and secondary issuance.
Genesis Block: 33.6 billion CKB were minted when the mainnet launched in November 2019, with some destroyed and the rest allocated to public fundraising, ecological funds, teams, etc. in varying proportions.
Basic Issuance: A cap of 33.6 billion coins, halved every four years, with the first halving in November 2023.
Secondary Issuance: Through an inflation mechanism, user fees for data storage are collected indirectly, distributed to miners, Nervos DAO depositors, and treasury funds, with some tokens being destroyed. Through Nervos DAO, users can lock CKB tokens to avoid dilution.
Network Activity
The CKB network has been active over the past year, with daily trading volume increasing and the number of new addresses significantly increasing in April. Cell activity has increased, especially after the launch of the RGB++ protocol. Although network activity showed a downward trend in May and June, more ecological projects are expected to reverse this trend.Security and Decentralization
CKB is a PoW network that adjusts mining difficulty approximately every four hours through the NC-MAX consensus protocol. In 2024, the overall network computing power and average mining difficulty reached record highs.Ecosystem
Ecological Fund: Approximately 5.7 billion CKB reserved to support multiple ecological development plans, such as the CKB Eco Fund, the launch of the BTCKB program, incubation of CELL Studio, and the development of various ecosystem tools (CoTA, ForceBridge, Spore, etc.).
Ecological Projects: Since the launch of RGB++ mainnet in April 2024, over 15 projects have utilized it for asset issuance, such as UTXO Stack, JoyID, HueHub, etc. CELL Studio also has a development roadmap for RGB++.
Competitive Analysis
Compared with competitors such as Stacks, Rootstock, Lightning Network, and Liquid Network, Nervos Network enhances Bitcoin functionality through the RGB++ protocol, providing developers with broader functions while maintaining decentralization and security, but also has limitations such as reliance on data availability, insufficient development tools, and privacy concerns.Summary
With the development of the Bitcoin L2 market, Nervos Network stands out by expanding Bitcoin functionality through RGB++, facilitating its safer scaling. It is connecting payment channel networks and Lightning Network to improve CKB scalability. Nervos aims to strengthen its position in the Bitcoin L2 space, providing support for a broader array of assets and applications, playing a key role in Bitcoin's development.
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