ABCDE: Why We Should Invest in UTXO Stack

Author: ABCDE Capital

UTXO Stack, led by ABCDE, can technically help project developers issue BTC Layer2 based on the UTXO architecture with one click, and natively integrate RGB++ protocol capabilities. In terms of security, it combines staking BTC, CKB, and BTC L1 assets to ensure Layer2 security.

In simple terms, UTXO Stack is the "OP Stack + EigenLayer" of the Bitcoin ecosystem.

1. The BTC Layer2 Competition and RGB++

To explain UTXO Stack clearly, one cannot avoid discussing RGB++.

Currently, there are more than 20 BTC Layer2 solutions on the market, but the vast majority are EVM solutions, essentially using the ETH tech stack + bridges to address BTC's scalability issues. While this can quickly build an ecosystem in the short term, in the long run, such solutions do not have a strong binding relationship with the BTC main chain in terms of security and heavily rely on bridges. Additionally, ideologically, using ETH's account model and EVM virtual machine to scale UTXO-based BTC seems somewhat "not Bitcoin Native."

Solutions that are highly correlated with BTC L1 in terms of security and sufficiently BTC Native have not achieved ideal results despite the Lightning Network operating for years, and it has a natural scalability shortcoming of not supporting smart contracts. Client verification paradigms like Taproot and RGB also face many issues such as long implementation times and slow technological progress. This is the main reason why EVM scalability solutions are currently thriving.

Nervos, which has been deeply involved in the public chain field for many years, utilizes the natural structural advantages of both BTC and POW+UTXO, along with innovative "isomorphic mapping" technology, to "seamlessly migrate" the RGB client verification paradigm onto CKB, naming it RGB++. By sacrificing a bit of privacy, it gains significant functionality and flexibility, while ensuring strong binding with BTC L1 security. More importantly, RGB++ was truly launched just a few days ago! This means it is no longer a narrative of scalability that remains at the conceptual or development level, but a tangible product that can start building ecosystems and solutions.

If the above terms like client verification and isomorphic binding seem too abstract, you can understand RGB++ with the following analogy --- a user initiates a transaction on BTC L1 to trigger a transaction of RGB++ assets belonging to that user on CKB. When this transaction is completed on CKB, a Commitment is written back to BTC L1.

You might wonder --- doesn't this still incur Gas fees? The user still has to initiate a transaction on BTC L1 and pay Gas fees on BTC, and now they also have to add the Gas fees on CKB, making it feel more expensive?

Actually, that's not the case. There are four benefits:

• RGB++ as an asset issuance protocol allows BTC L1 to issue new RGB assets (think of Merlin's BRC420).
• Transactions of RGB++ assets on CKB are fully Turing complete and programmable.
• You can wait for multiple RGB++ transfers to complete and then aggregate them to send a Commitment to Bitcoin L1, which is called "transaction folding." Doesn't this give a strong Rollup vibe and save a lot of Gas fees?
• Not only can RGB++ assets be mapped to CKB, but assets with UTXO characteristics like Atomical and Rune can also be mapped to CKB for Turing complete transactions.

Because only UTXOs on Bitcoin L1 can operate or update RGB++ UTXOs, CKB becomes the "execution + DA" layer for BTC in RGB++, while BTC L1 becomes the true "settlement layer." This is something that no current EVM or non-EVM BTC scalability solution can achieve.

What if you think this solution is still not fast enough or the fees are still too high? After all, transactions on BTC L1 are still unavoidable, and CKB, as a POW L1, has a maximum TPS of only a few hundred. Is there a more flexible and faster scalability solution, like… an Appchain in the ETH ecosystem?

Thus, we have UTXO Stack, based on BTC and RGB++, the "OP Stack."

2. UTXO Stack --- BTC's OP Stack + EigenLayer

If you are familiar with the OP Stack and RAAS (Rollup as a Service) protocol stack, you should find UTXO easy to understand.

With UTXO Stack, you can issue a homomorphic UTXO Appchain for BTC with one click, and these Appchains have the following characteristics:

• UTXO model, extremely high TPS (UTXO inherently supports parallel processing), and very low Gas fees.
• POS mechanism, with security provided by staked BTC/CKB on BTC (similar to EigenLayer).
• The asset protocol adopts RGB++, and due to the existence of isomorphic mapping technology, assets can jump freely between Appchain/CKB/BTC without the need for cross-chain bridges.
• Can reuse the CKB smart contract stack.
• Can reuse BTC wallets (users are unaware of the CKB chain).

Finally, we have a Bitcoin-native, UTXO-based one-click chain issuance infrastructure, which also integrates the Restaking concept proposed by EigenLayer, empowering BTC and CKB while safeguarding the cold start and security of Appchains.

It is foreseeable that in the near future, BTC EVM layer2 and BTC UTXO layer2 will engage in a direct confrontation on multiple levels, including technology, ecology, and even ideology.

From the formal proposal of RGB++ in February to its launch in April, it took less than two months, showcasing the team's extremely strong engineering capabilities. The launch of UTXO Stack alongside RGB++ further provides the BTC ecosystem with more diverse and Bitcoin Native possibilities for asset issuance and gameplay. We believe in and will work hand in hand with UTXO Stack to push the Bitcoin ecosystem towards a better and more prosperous future.

About ABCDE

ABCDE is a VC focused on leading top Crypto Builders, co-founded by Huobi Cofounder Du Jun, who has been in the Crypto industry for over 10 years, and former internet and Crypto entrepreneur BMAN. The co-founders of ABCDE have built companies with a market value of billions of dollars from scratch in the Crypto industry. Because we are entrepreneurs, we understand entrepreneurs better. We have built end-to-end ecosystems for ABCDE's Builders, including a listed company (1611.HK), an exchange (Huobi), a SAAS company (ChainUP), media (CoinTime.com), and a developer platform (BeWater.xyz).

Twitter: https://twitter.com/ABCDLabs

Website: www.ABCDE.com