Revisiting the design logic of the Bitcoin Lighting Network from the Thunderbolt Network.

Author: YBB Capital Researcher Ac-Core

1. Why can't Bitcoin buy coffee?

When it comes to Bitcoin, most people first think of its "decentralized" and "immutable" properties. But when you actually want to use it to buy a cup of coffee, you quickly encounter an awkward issue: the transaction confirmation time takes longer than waiting for the coffee, and sometimes the transaction fee is even more expensive than the coffee itself. The assets on Bitcoin are still "as immovable as a mountain"—mainly relying on HODL, they cannot be loaned, cannot be combined, and cannot interoperate.

The scripting structure of Bitcoin Script is extremely conservative, limiting most off-chain interaction scenarios. It was not designed to handle tens of thousands of transactions per second. However, the reality is that people want Bitcoin to be usable, even if it's just to buy a game skin, watch a video, or give a tip, and they don't want to wait ten minutes.

2. Lightning Network: A Double-Edged Sword

Image source: Cointelegraph

The Bitcoin main chain is like a highway, while the Lightning Network is akin to a toll express lane built alongside it. Its core concept stems from a compromise on the efficiency of main chain transactions: since on-chain transactions have speed bottlenecks, there is no longer a fixation on recording every single transaction on the chain. Instead, it establishes exclusive "payment channels" between users to achieve high-frequency bookkeeping, ultimately synchronizing the funds' status to the blockchain only when the channel is closed. This model is similar to how friends take turns treating each other weekly—the payments are not settled immediately after each meal, but rather accumulated over ten meals and settled in one go. Essentially, the Lightning Network is a transaction network woven together by tens of thousands of such payment channels.

However, this seemingly intricate system exposes multiple dilemmas in practical applications. Firstly, there is a high threshold for channel construction; users need to lock funds in advance to establish a trading channel, which means that to trade with any counterpart, a dedicated channel connection must be established beforehand. Secondly, there is the complex routing problem. When user A lacks a direct channel to B, even if an indirect path A-C-B exists, if the intermediate channel has insufficient funds or the path nodes are unavailable, the transaction will still fail. More severe is the security risk; the system requires users to remain online to prevent the counterparty from submitting expired transactions for fraud when the channel is closed, which imposes unrealistic demands on the operational capabilities of ordinary users' devices.

Despite the fact that the Lightning Network has been operational for many years, these structural defects have made it difficult for its actual application to break through bottlenecks. Public data shows that the current total amount of funds locked in the Lightning Network is only around $100 million, which is nearly marginalized in relation to the trillion-dollar market value of the Bitcoin system. This raises deep reflection in the industry: Can we build a more complete off-chain payment protocol to break through the existing predicament?

According to news from Chain Catcher on April 15, HSBC disclosed in an official press release that Bitcoin Thunderbolt is the most significant technological upgrade for Bitcoin in the past decade. The overall observation of Thunderbolt resembles "Lightning Network 2.0," but it is not just an upgrade; it is more like a reconstruction of the off-chain Bitcoin interaction paradigm.

3. What is the Thunderbolt Protocol?

Image source: Nubit | Bitcoin Thunderbolt

Bitcoin Thunderbolt is a soft fork upgrade method based on the Bitcoin base layer. It does not rely on second-layer networks or cross-chain bridge compromises, but instead makes changes directly at the protocol level of the Bitcoin main chain, fundamentally enhancing Bitcoin's scalability, transaction performance, and programmability.

From a performance standpoint, Nubit has achieved significant optimizations over Bitcoin's traditional transaction processing model with the help of UTXO (Unspent Transaction Output) Bundling technology. The traditional Bitcoin network is significantly limited in transaction speed and throughput due to the single-transaction UTXO model. UTXO Bundling, on the other hand, allows multiple UTXOs to be aggregated together, which compresses the amount of transaction data and increases transaction speed by about 10 times without sacrificing security.

In terms of programmability, Bitcoin Thunderbolt reintroduces and extends the OP_CAT opcode (which originally existed in early versions of Bitcoin and was later removed). OP_CAT allows for concatenation operations on data, enabling developers to build more complex script logic, thereby directly implementing smart contracts on the Bitcoin main chain. The most direct benefit of this upgrade is that developers can deploy decentralized applications (dApps) on the native Bitcoin network without relying on sidechains, Rollups, or cross-chain bridges.

In terms of asset protocol integration, Nubit advocates and implements a unified standard called Goldinals. Goldinals provides an asset issuance framework based on zero-knowledge proofs and state commitments. Simply put, this is a set of "Bitcoin-native" token standards that can verify the existence and status of each token on-chain without relying on external trust institutions or requiring complex cross-chain bridges. BitMM, which runs on Bitcoin, integrates scattered protocol assets such as BRC-20, Runes, and Ordinals as an on-chain automated market maker. Nubit has also made significant breakthroughs in trustless trading. Its launched BitMM (Bitcoin Message Market) system supports users in conducting trustless trade matching and information verification on the Bitcoin chain.

Unlike traditional scalability approaches (such as using sidechains, Plasma, Rollup, or bridging wrapped tokens), Nubit adopts a "mainchain-native scalability" path. BitVisa provides a decentralized identity and credential system. Whether it's transaction compression, smart contract support, or asset standard integration and on-chain transaction matching—all run directly on the Bitcoin mainchain. It uses native BTC instead of cross-chain mapped tokens.

3.1 Core Mechanism Analysis

This chapter's content is explained based on the article "Stateless and Verifiable Execution Layer for Meta-Protocols on Bitcoin" (see reference link 1). Personally, I understand that Bitcoin Thunderbolt and Bitcoin Lightning are similar; both are proposed extension solutions to address the slow transaction confirmation issue of the Bitcoin main chain, with the core goal of improving efficiency and reducing costs. The differences between the two are:

• The design of the Lightning Network is more inclined towards "payment channels" — it can only be used for transfer payments, does not support smart contracts or complex logic, and its setup and maintenance have a high threshold, which is not conducive to large-scale adoption.
• Thunderbolt is launched by Nubit, dedicated to providing a programmable off-chain protocol that supports Turing-complete operations, capable of building more complex state assets, liquidity protocols, and financial applications.

Flexible Adjustable Multisignature

Imagine splitting a Bitcoin "signature" in half: one half in Alice's hands and the other half with the committee. Each time it is transferred to a new user, Alice and the committee each add a "little secret" to their respective halves of the signature—only the new user receiving it knows this secret. The receiver can use the little secret they know to "piece" the two halves back together to obtain the complete signature, without needing Alice and the committee to communicate online.

Asynchronous Fault-Tolerant Committee Ledger

A "service group" composed of several nodes (such as 4n+1) is responsible for bookkeeping, and everyone confirms who the current owner is. Even if a few nodes fail, as long as the majority are still online, the ledger can continue to operate normally. These nodes only handle "helping to sign" and "keeping accounts" and cannot casually use funds, ensuring security and decentralization.

Atomic Swap Finalization

When it comes time to spend this money on-chain, it goes through three steps of "atomic swaps": 1. Alice and the committee spend the original locked output, temporarily giving the money to the committee; 2. The committee locks an equivalent amount in a vault that can only be accessed by both "Zenni and the committee" together; 3. Finally, Zenni takes the money from the vault using a two-part signature. This way, neither Zenni nor the committee can run off with the money, ensuring that the off-chain reconstruction and on-chain redemption happen seamlessly.

3.2 Design and Key Innovations of the Thunderbolt Protocol

• Non-interactive, recursive signature delegation Designed a tweakable threshold Schnorr signature structure, traditional payment channels often require several back-and-forth messages, while Thunderbolt only needs to "send a signature with a small secret" each time to get it done, significantly reducing online requests.
• Change the "new lock" for each transfer
  Every time a transfer occurs, Alice and the committee update the signature with a new small secret, rendering the old "lock" completely invalid. This way, no one from before can obtain the new signature, preventing the old signature from being reused.
• Leave a mark on the chain only once Only "lock" it on-chain once at the beginning, and all subsequent changes are made off-chain, with the final spending of this amount occurring on-chain. Compared to the Lightning Network, which requires constant opening and closing of channels, Thunderbolt has fewer on-chain operations and better privacy.
• You won't lose money even when offline Even if Alice or Zenni are offline and inactive, as long as the majority of the committee is online, transfers or redemptions can be completed at any time without worrying about time locks expiring or adversaries maliciously closing the channel.
• True "Proof of Machine" Security All key steps in the agreement have been "formally verified" using Tamarin Prover, which means these security guarantees are not just theoretical but have been repeatedly tested by automated tools.

4. How does Thunderbolt differ from existing Lightning Network solutions?

Let's take a look at the comparison between Thunderbolt and existing solutions (such as the BOLT protocol, Breez SDK, and Phoenix) to see what improvements it has made.

The difference between Thunderbolt and existing Lightning Network solutions:

We can see that the main advantages of Thunderbolt lie in its "security" and "theoretical completeness." It is one of the few that can achieve this:

• The protocol design can be proven to be secure
• Malicious users cannot profit unilaterally under any circumstances

But its disadvantages are also very obvious:

• Complex Deployment: To use Thunderbolt, you currently need to run the complete protocol stack, which is difficult for ordinary wallet users to get started with.
• Main Chain Compatibility: The scripting language of the Bitcoin main chain is too simplistic, and Thunderbolt must implement functionality through clever workarounds, increasing the difficulty of implementation.
• Lack of Ecosystem Support: Unlike BOLT, which already has a large number of wallets and nodes supporting it, Thunderbolt is still in the "early research stage".

Five, The Potential Impact of Thunderbolt: A Catalyst for BTCFi?

Image source: homemade

So is Thunderbolt the optimal solution for BTCFi? Let's throw out a bold idea:

Thunderbolt is currently the theoretically optimal solution for BTCFi, but in practice, it is still in the "Alpha stage". In other words, it is like the "Ethereum 2.0 white paper" of the Bitcoin world, full of vision but has not yet entered the "engineering system level" implementation phase. Based on observations at this stage, I believe there are three possible development paths for Thunderbolt:

1. Integrated as a Rollup: Serving as the DeFi engine on the Bitcoin side

The scalability of the Bitcoin main chain itself is insufficient, and Thunderbolt may eventually become an off-chain module on some Bitcoin L2s (such as BitVM, Nomic, BOB). This is similar to "integrating Thunderbolt as a general contract execution layer in a Rollup."

For example:

• BOB can integrate the Thunderbolt channel layer to achieve native BTC transactions.
• The RGB ecosystem may also introduce Thunderbolt state management logic.
• BitVM itself supports more complex logic, and Thunderbolt will become one of the contract standards.
• Services like Babylon, Bitlayer, and other systems

2. Establish an independent standard ecosystem that runs in parallel with the main chain

Thunderbolt's greatest possibility is to develop its own network ecosystem, node operation and maintenance system, aggregator, etc., similar to the Lightning Network, and even form Thunderbolt-LSP operators. At the same time, Nubit, in conjunction with the miners from the Satoshi Nakamoto era, is promoting a soft fork upgrade at the protocol layer, introducing two major features: UTXO Bundling and OP_CAT, which can also directly accommodate BTC protocol assets (BRC20, Runes, Ordinals), creating a vast space for imagination. Perhaps in the future it may have:

• Thunderbolt Wallet (similar to Phoenix)
• Thunderbolt Node (Light Node Operation Channel)
• Thunderbolt DEX (Off-chain Order Matching)
• Thunderbolt AMM (Liquidity Pool)

3. Replaced by simpler solutions

Of course, if in the future a system emerges that can achieve similar functions without state channels, formal languages, or off-chain protocol collaboration, then Thunderbolt may just be a transitional product, much like:

• If BitVM achieves a more efficient contract execution environment
• Cross-chain ZK technology enables BTC assets to be fully trustworthily deployed on other chains.
• A certain native Bitcoin protocol integrates payment + lending + contract into a unified model.

Finally, from an ecological perspective, the greatest significance of Thunderbolt is not that it can facilitate payments, but that it gives Bitcoin assets the ability for "off-chain contract composability" for the first time. This sounds abstract, but we can see how crucial this "composability" is from the explosion of DeFi on Ethereum. The explosion of Ethereum is attributed to the complete ecosystem of Solidity + Hardhat + Ethers.js + Metamask.

The biggest attraction of Thunderbolt is the introduction of UTXO Bundling and OP_CAT features, OP_CAT introduces native programmability to the Bitcoin network, and UTXO Bundling ( bundling) bundles multiple small transactions together for processing, compresses the size of transaction data, and improves on-chain throughput, similar to Ethereum Rollup. It seems that the unification of all Bitcoin ecological protocols and the inclusion of various assets and BitMM implementations is no longer empty talk, but Thunderbolt still seems to have "written a strong mathematical paper" at this stage, and the overall "use" may still be a long way from being "usable" by developers.

Reference link:

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