Is the last hope for the Bitcoin ecosystem dying? After two years of waiting, the RGB protocol mainnet launch is disappointing.

Original/Odaily Planet Daily

Author/Golem

At 1:00 AM on August 7th, the RGB protocol, a Bitcoin scaling solution that has been in development for two years, finally launched on the mainnet. To encourage users to experience the RGB protocol on the mainnet, Bitlight Labs, the protocol's infrastructure developer, also launched a test coin, RGB, on the mainnet. Users can claim RGB through the faucet on the Bitlight Labs website.

While RGB was only a test coin, it was still the first RGB asset on the Bitcoin mainnet, and it held a symbolic name. Consequently, 24 hours before the RGB protocol launched on the mainnet, new IPO tutorials and fear of FOMO spread widely, leaving Degen token holders scrambling in the dark, a tough battle likely unavoidable.

However, when the RGB protocol launched, FOMO quickly turned to FUD, with the RGB token's initial public offering progress currently less than 20%. What caused this shift? Is the RGB protocol still worth participating in? Odaily Planet Daily will briefly analyze this in this article.

Review of the RGB protocol

The RGB protocol was one of the most popular smart contract scaling solutions during the Bitcoin ecosystem boom of 2023, but it was also the slowest-growing. Conceived in 2016 and officially under development in 2019, it changed hands several times before regaining attention in 2023 due to strong market demand for Bitcoin scaling. However, progress remained slow, leading to the RGB++ protocol successfully taking advantage of its popularity in 2024, though RGB++ also suffered a decline. Progress truly accelerated in 2024 after the Bitlight Labs team assisted RGB in its development. After a long five-year journey, it has finally launched on the mainnet.

As time passes, for most users, the only remaining impression of the RGB protocol is its long development time, the illustrious team background, the obscure nature of the project, and the thousands of words of in-depth research reports. These impressions have been condensed into the word "awesome" in their minds, which is why it sparked such extensive discussion and preparation before the mainnet launch. Therefore, I believe it is necessary to briefly introduce the key points of the RGB protocol in this article.

Disposable seal

For the Bitcoin network, the RGB protocol is an off-chain expansion solution that stores smart contracts and transaction data off-chain, so it is Turing complete in itself and only uses the Bitcoin mainnet as a "security endorsement."

A key technology in the RGB protocol is one-time sealing, which ensures that the same information can only be used once. The UTXO model of the Bitcoin network is naturally compatible with this technology because each UTXO can only be used once. By encrypting and encapsulating RGB asset information and contract status in UTXO, these UTXOs are called containers. When the UTXO is spent, the asset ownership and contract status change, which not only effectively prevents double spending but also ensures sufficient security of the RGB ledger.

Client Authentication

Another key technology in the RGB protocol is client-side verification. RGB asset transfers are not broadcast on the Bitcoin mainnet, but are instead performed by independent off-chain clients. Therefore, whenever a transaction occurs, the client only needs to verify the correctness of the state associated with that transaction, without having to simultaneously verify all transactions on the entire network. This enhances RGB's privacy protection.

The above are two important technologies for how the RGB protocol transfers assets and ensures security. As for how it writes smart contracts off-chain and how its approach compares to EVM, it is not the focus of users.

How to get the first RGB token on the new mainnet

The RGB protocol may be complex in principle, but the operation of the new IPO on the mainnet is very simple. It is essentially an airdrop distribution model. Users transfer funds to the project party, and the project party then distributes RGB tokens to users in sequence. And because it adopts a locked order model, the same wallet cannot claim it repeatedly before the distribution is completed, effectively avoiding excessive network congestion.

As of now, there are a total of 21 million RGB tokens. Due to the slow distribution and limited availability of 50 tokens per redemption, less than 20% of the total supply has been claimed. According to community calculations, based on the Bitcoin network's block production speed, it would take at least 17 hours to redeem all the tokens. Therefore, there is still a chance for everyone to participate. Below is a detailed guide to redeem new tokens.

Create a Bitlight wallet and transfer BTC

First, download the Bitlight plugin wallet, create a new wallet, and transfer 0.0003-0.0005 BTC from another address to the wallet. It doesn't need to be too much. It's best not to import from an old wallet to avoid asset burn accidents due to incompatibility between wallet asset protocols.

Create a container

Next, we need to create an RGB UTXO, which is a container for storing RGB assets. First, click on the wallet "UTXOs", as shown below.

Then click “Create UTXO” in the upper right corner.

Click "Custom" to customize the amount of Bitcoin contained in the UTXO. Since this UTXO is used as a container for RGB assets, a large amount of Bitcoin is not required; 0.0001 BTC is sufficient. Then, select an appropriate fee rate, click Next, and sign.

It's recommended not to create multiple containers in succession, as creating a container requires paying Bitcoin network gas, and unlocking the container (converting it into a usable UTXO) also requires paying gas. Furthermore, this new issue utilizes a locked order model and has an extremely slow distribution rate. Therefore, creating multiple UTXOs in advance for a specific order number is meaningless and may even increase costs.

claim RGB tokens

Once the container creation transaction has been processed, you can access the Bitlight official website, link your wallet, and click Claim. As shown below, once a wallet claims, the user cannot continue and must wait for the "Claiming" process to complete before making the next claim.

From FOMO to FUD

RGB's mainnet IPO experience was actually quite smooth, but it still received strong FUD from the community. The reasons are as follows:

The number of RGB that can be cast at a time is too small

The total supply of RGB tokens is 21 million, and the project has stipulated that only 50 tokens will be distributed per claim. Therefore, 420,000 transactions are required to redeem all RGB tokens. Even if 4,000 transactions are performed per block, it will take 105 blocks, or approximately 17.5 hours, to redeem all RGB tokens.

Therefore, the community complained that the project team stretched the battle line too long and that the market sentiment and enthusiasm would be exhausted.

Project party charges

Another reason for the hype surrounding RGB is Bitlight Labs' fees. According to on-chain information, each user claim transaction requires transferring 0.00003636 BTC (approximately $4) to a fixed address. With 420,000 mints, the project could collect approximately $1.68 million in total.

 A transaction to claim RGB tokens

Although the project team ultimately explained that these fees would cover future transaction fees for distributing RGB assets and serve as market-making and repurchase fees, the plan is a plan, and the collection of money is a reality, leaving many players unconvinced.

Adding the $1.68 million in fees to the gas fees for container creation and transactions, and using cost estimation, the market capitalization of the first RGB token has already been inflated to around $2 million. Given the current level of capital and enthusiasm in the Bitcoin ecosystem, $2 million is not a low estimate. This may be the real reason for the FUD among many players.

Write to the end

I was surprised by the attention the RGB protocol attracted this time. In addition to the familiar faces who are always at the forefront of "losing money on the new Bitcoin protocol", many users who usually don't pay much attention to the Bitcoin ecosystem also participated.

The Bitcoin ecosystem has been quite lively recently, with a surge in new protocol startups. From Spark, BRC 2.0, Rune 2.0, Labitu, and now RGB, some of these may be unfamiliar to you, but don't worry; you might just be missing out on opportunities to lose money.

New protocols emerge endlessly, each carrying a clichéd yet grand narrative. The reality is, however, that most projects remain stuck in the early stages of conception or airdrops, with only a handful truly achieving real implementation. While innovation is crucial, the pace of today's blockchain industry resembles a high-speed industrial assembly line.

The player group remains unchanged, pouring into the "new agreement carnival" again and again. Wealth is harvested and circulated among this group of people, just like a subculture group that is not paid attention to by the mainstream but formed because of common beliefs and passion for technology and gambling.

Today, when Bitcoin has become a household name, how can we not call it magical when we think that there are still such a group of people in the world who entertain themselves with it?