New Trends in the Bitcoin Ecosystem: RGB Protocol and Its Applications

The Bitcoin ecosystem has always been the focus of technological innovation, with each technological advancement injecting new vitality into it. Among them, the RGB protocol, as a remarkable technological innovation, has been dedicated to building a universal smart contract system on Bitcoin and the Lightning Network since its proposal in 2017. Recently, the RGB team released the V0.10 version client, which has attracted widespread attention.

Recently, Valestin, co-founder of Cosminmart, was interviewed to share insights on project progress, ecological development, as well as the development of the BTC ecosystem, technical achievements, and future technological roadmap. Here are the main points from the interview.

Project Introduction

Valestin introduced that Cosminmart is an ecosystem based on the RGB protocol, deployed on the Lightning Network, mainly focusing on the issuance and trading of RGB20 (fungible token issuance protocol) Tokens. The project includes the improvement of RGB infrastructure, the launch of Bifrost, Cosm Wallet, and the first smart contract-based AMM Dex on Bitcoin - Bitswap.

COSM Wallet is built on the Bitcoin Lightning Network and supports RGB protocol assets, forming a trading closed loop with Bitswap for RGB tokens. It also supports the creation, purchase, and sale of RGB21 (Non-Fungible Token Issuance Protocol) NFTs. In the future, COSM Wallet will support management of other types of Bitcoin Lightning Network assets and low-fee, real-time transfers. Currently, the wallet has launched a Chrome browser extension version, which is in the public testing phase.

Bitswap will be the first AMM Dex implemented based on smart contracts on Bitcoin, similar to Uniswap V1 on Ethereum. It can create liquidity pools between RGB tokens and Bitcoin, injecting stronger liquidity into the Bitcoin ecosystem, facilitating the issuance and trading of various project tokens, and alleviating the pressure caused by liquidity issues.

Advantages of RGB Protocol

Valestin believes that the RGB protocol has several characteristics for future success:

1. Transactions are implemented based on the Lightning Network, with a theoretical TPS of up to 40 million, almost zero transaction fees, capable of meeting various future payment needs, supporting a more advanced and larger user application ecosystem.

2. Relying on Bitcoin as the safest payment system, operating with off-chain and offline clients, without the need to modify or fork the mainnet, supporting a more powerful smart contract system, theoretically possessing unlimited scalability.

In addition, Tether CEO Paolo Ardoino is also a strong supporter of the RGB protocol. Tether and Bitfinex invested early in the development of the RGB ecosystem and participated in the development of the underlying code. Recently, Tether announced that it will issue stablecoins based on the RGB protocol.

Challenges and Responses Faced by the Project

The main issues currently facing the RGB ecosystem are a small community size, low enthusiasm, inadequate infrastructure, and lack of attention from the mainstream market and venture capital institutions. This poses challenges for startup teams in terms of financing, PR, and marketing efforts.

However, Valestin believes this is also an opportunity. The biggest problem with RGB right now is the shortage of developers. Although the core personnel and teams deeply involved in the RGB ecosystem have strong development capabilities, many aspects have only been made to work due to a lack of manpower, and the engineering implementation still needs improvement. This provides an opportunity for new teams to improve the infrastructure and implement applications.

Cooperation with RGB Official

Valestin stated that communication with the RGB official is progressing smoothly, and both parties have reached a consensus on cooperation. It is worth noting that the RGB Association (LNP/BP Association) is a non-profit organization based in Switzerland that completed the underlying development of the RGB protocol. They do not accept investments from venture capital firms, nor do they engage in commercial operations; they only accept donations. This stems from their idealistic philosophy: to ensure the purity of technology and to remain free from the control of commercial companies.

RGB is a completely open-source technology that anyone can use freely. As a member of the RGB development team, Valestin hopes to see RGB technology applied more widely without violating its original intentions and principles.

Competitive Landscape and Ecological Development

The competitive landscape of the RGB ecosystem is open and friendly, with relatively few teams having mature products. Wallet applications are the entry point to the Lightning Network ecosystem, and various startup teams are actively participating in the competition. The COSM Wallet team from Cosminmart has extensive wallet development experience and has developed a robust RGB asset communication storage standard protocol.

In terms of the development of the RGB ecosystem, DIBA-Bitmask will launch the DIBA Marketplace on November 11, enabling systematic trading of RGB21 NFT assets. Cosminmart maintains a friendly cooperative relationship with DIBA and is actively preparing to assist DIBA in the launch.

Future Outlook

Cosminmart will focus on the trading infrastructure of RGB20 Token, which includes COSM Wallet and Bitswap, and will actively promote cooperation with major exchanges to launch RGB tokens. The COSM token may become the first RGB20 token capable of systematic trading, which is a milestone for the RGB ecosystem.

Valestin hopes for more entrepreneurial teams to participate in the development of the RGB and Lightning Network ecosystems. Cosminmart will provide technical, resource, and financial support to early-stage entrepreneurial teams, and welcomes them to join the Cosminmart application ecosystem.

Cosminmart's long-term plan includes improving Token trading and entering the RGB DeFi space, such as formulating lending protocol standards, while also promoting the development of Lightning Network applications Lapp. Valestin hopes that Cosminmart can contribute to the Mass Adoption of Bitcoin, pushing the industry out of its early stage of chaotic growth and realizing more valuable applications based on blockchain technology.

The RGB protocol is noteworthy because it employs a series of advanced technologies based on Bitcoin and the Lightning Network, such as one-time seal bars, client verification, and Bitcoin-based cryptographic commitments, meeting users' demands for privacy, scalability, and programmability, without causing a fork in the Bitcoin blockchain. With the rising popularity of the Ordinals protocol, the Lightning Network is facing new opportunities, and Bitcoin Layer 2 solutions like RGB are gaining renewed attention. The combination of these technologies and new ideas may give rise to new possibilities, further advancing the Bitcoin ecosystem and expanding its functionalities and applications.