RGB Protocol for Bitcoin Smart Contracts and Tokens

Clients want private smart contracts but don't want to leave Bitcoin or move to sidechains. RGB Protocol solves this: state is stored with owners, while Bitcoin guarantees consensus. Our engineers develop solutions on RGB v0.11 — from simple tokens to Lightning integration. We have completed 30+ projects, saving clients up to 100x on transaction costs.

How client-side validation works in RGB

In RGB, consensus rules are executed not by network nodes but by clients. The token seller proves ownership history to the buyer by providing a chain of consignments from the genesis contract. The buyer validates each transition independently — without trusting a third party and without publishing data on the blockchain. This is a key difference from Ethereum: contract state never appears publicly.

Alice → Bob (RGB asset transfer):

1. Bob generates a UTXO "seal" (Bitcoin UTXO to which the RGB right will be attached)
2. Alice creates a state transition: "transfer N tokens to Bob's seal"
3. Alice creates a Bitcoin tx containing a commitment to the state transition
4. Alice sends Bob the consignment: state transition + history back to genesis
5. Bob validates: checks each transition, anchoring in Bitcoin
6. Bob confirms receipt

Key point: the content of the state transition (how many tokens, to whom) never appears publicly. In the Bitcoin blockchain — only a 32-byte hash commitment. An external observer sees a Bitcoin transaction but doesn't know it contains an RGB transfer.

Why RGB is better than Ethereum for private tokens

RGB is justified when there are hard requirements for Bitcoin settlement and confidentiality; stable tokens without complex contract logic; Lightning-native applications; ideological requirement to work on Bitcoin. Compared to Ethereum, RGB wins in privacy (data is not public) and fees: for mass transfers, savings reach 100x due to no state publication cost. However, the ecosystem is still forming, and we take on all risks — we guarantee 3 months of support after delivery.

How to create an RGB20 token

RGB20 — standard for fungible tokens (analogous to ERC-20). Creating a new token via rgb-cli or programmatically via SDK:

use rgb_schemata::rgb20;
use rgbstd::interface::rgb20::Rgb20;
use rgbstd::stl::{Amount, Precision, RicardianContract};

let contract = rgb20::issue(
    ticker: "MYTKN",
    name: "My Token",
    precision: Precision::CentiMicro,  // 8 decimal places
    issued_supply: Amount::from(1_000_000_00000000u64),
    seal: genesis_seal,
    terms: RicardianContract::new("Token Terms..."),
)?;

let contract_bytes = contract.to_strict_serialized::<{ u24::MAX as usize }>()?;

For development, we use the RGB Core Library in Rust as the primary SDK. The high-level wrapper RGB Std provides interfaces for working with specific standards.

RGB21 — standard for unique assets with optional media attachments. Media files are stored off-chain, only the hash is in state.

use rgb_schemata::rgb21;

let nft = rgb21::issue_unique(
    name: "Rare Art #1",
    token_id: TokenId::from_random(),
    media: Some(EmbeddedMedia {
        media_type: MediaType::from("image/png"),
        data: SmallBlob::try_from(image_bytes)?,
    }),
    seal: nft_genesis_seal,
)?;

What's included in the work and guarantees

The process includes requirements analysis, security audit, schema design, contract development in Rust, Lightning integration (optional), wallet customization, testnet/mainnet deployment, documentation, and team training. We deliver:

• Source code of contracts (Rust) with tests
• Deployment and usage instructions
• Access to a private repository
• 2 hours of training for your developers
• 3 months of warranty support

Timelines: from 3 weeks for a basic token to 5 months for a custodial service with Lightning. Cost is calculated individually. Contact us — we will assess your project for free. Order an audit of your current prototype: we will find problems before production.

Wallet and state storage

To work with RGB assets, an RGB-aware wallet is required. A standard Bitcoin wallet does not see RGB balances. Existing implementations: Bitmask (web/mobile), BitLight (Lightning-first), MyCitadel (desktop from LNP/BP team). For server-side — integration via RGB Node or direct use of RGB Core.

RGB state is stored in a stash — the owner's local database. The stash contains all received consignments, history of state transitions, and necessary witness data.

let stash = RgbStash::new(stash_path, bitcoin_provider)?;
let balance = stash.contract_state::<Rgb20>(contract_id)?
    .fungibles()
    .filter(|a| a.owner == my_seal)
    .sum();

Integration with Lightning Network: how it works

RGB-over-LN allows micropayments in RGB tokens over Lightning channels. Pay in USDC over Lightning in milliseconds — no bridges or wrapped tokens. Technically: HTLC is extended with an RGB state transition. During routing, the invoice encodes not only the satoshi amount but also the RGB asset transfer. Routing nodes see only regular HTLCs. Implementation: LDK with RGB extensions from Bitfinex (Iris project).

Comparison: RGB vs Ethereum for typical tasks

Tool table: what we use

Practical limitations and when to choose RGB

No public mempool visibility: RGB state is visible only to participants. This is a plus for privacy but a minus — no public block explorer. Verification works only with a full consignment. UTXO as seal: when spending a UTXO, you must explicitly transfer the RGB asset to a new output — a forgotten transfer means loss of asset. The ecosystem is still forming: tooling is less mature than Ethereum, documentation is incomplete. No EVM equivalent: AluVM is less expressive than Solidity; complex DeFi on RGB requires significant effort.

Choose RGB when: hard requirements for Bitcoin settlement and confidentiality; stable tokens (transfer, issuance, burn); Lightning-native applications; ideological choice of Bitcoin without sidechains. For DeFi, NFT marketplaces, DAO — Ethereum or L2 remain the right choice due to maturity.

Official RGB documentation: rgb.technology

Blockchain Infrastructure Deployment: Nodes, RPC, Indexing

Subgraph fell at 3:47 AM. By morning users saw outdated balances, transactions "hung" in the UI, support received 47 tickets in an hour. Cause: the handler in the subgraph failed on a transaction with a non-standard event log — and the entire index stopped. We have encountered such situations dozens of times. Our experience shows: blockchain infrastructure does not forgive gaps in observability. Guaranteeing uptime without multi-layered monitoring and fault-tolerant architecture is impossible. Over 8 years working with Ethereum, Polygon, and Solana, we have developed an approach that allows predictable deployment of infrastructure of any scale — from a single node to a multichain grid with dozens of subgraphs.

RPC Layer Architecture

Every dApp interaction with the blockchain goes through RPC — the JSON-RPC API provided by a node. Three options:

Managed providers — Alchemy, QuickNode, Infura, Ankr. Minimal operational costs, SLA, built-in monitoring. Limits: rate limits (Alchemy Free: 300 RU/sec), vendor lock, potential downtime during provider incidents. For most projects — the right choice at the start.

Self-owned nodes — full control, no rate limits, no third-party dependence. Cost: archive Ethereum node requires 2.5–3TB SSD, a strong server, and DevOps support. Sync from scratch on Ethereum via Geth/Nethermind — 3–7 days. Justified under high load or latency requirements.

Hybrid — self-owned node as primary, managed provider as fallback. Standard for protocols with high TVL. Proper load balancing can reduce costs by 20–30% compared to pure managed setup. Under high monthly request volume, hybrid saves significantly.

How to Set Up an RPC Layer Without a Single Point of Failure?

At least two providers, DNS round-robin with health check every 5 seconds, automatic fallback when latency >500 ms. In practice, this gives 99.99% availability during any provider failure. For protocols with high TVL, we recommend a custom HA-proxy (nginx or Envoy) in front of two managed providers.

Why Is a Hybrid RPC Scheme More Cost-Effective Than Pure Managed?

At high request volumes, managed providers can be very expensive; a hybrid using a self-owned node as primary and a managed fallback cuts costs significantly without losing SLA.

Ethereum Node Clients

Execution clients: Geth (most used), Nethermind (C#, fast sync), Besu (Java, enterprise), Erigon (fastest sync, efficient archive mode ~2TB instead of 3TB).

Consensus clients (post-Merge): Lighthouse (Rust), Prysm (Go), Teku (Java), Nimbus (Nim). Each node after The Merge requires a pair of execution + consensus clients.

For DevOps: eth-docker — Docker Compose configurations for all client combinations. Setting up monitoring via Grafana + Prometheus is mandatory; a standard dashboard is available in each client's repository.

The Graph: Event Indexing

The Graph Protocol — decentralized indexing. A subgraph describes which events from which contracts to index and how to transform them into a GraphQL schema.

Subgraph structure:

• subgraph.yaml — manifest: contract addresses, startBlock, events to handle
• schema.graphql — GraphQL schema of entities
• src/mapping.ts — AssemblyScript event handlers

dataSources:
  - kind: ethereum
    name: UniswapV3Pool
    network: mainnet
    source:
      address: "0x88e6A0c2dDD26FEEb64F039a2c41296FcB3f5640"
      abi: UniswapV3Pool
      startBlock: 12370624
    mapping:
      eventHandlers:
        - event: Swap(indexed address,indexed address,int256,int256,uint160,uint128,int24)
          handler: handleSwap

AssemblyScript handlers — not TypeScript. No nullable types, no closures, no many standard APIs. An error in the handler stops the subgraph indexing on that transaction. Important: add try-catch for operations that can fail (e.g., store.get() for an entity that may not exist).

How to Avoid Subgraph Indexing Stops?

Graph Node logs are monitored in real-time; on hasIndexingErrors = true an alert fires and an automatic node restart (via systemd or Kubernetes). Typical downtime on error — 150–300 seconds to recover. Additionally, for production we set up a watchdog that restarts Graph Node if subgraph lag exceeds 50 blocks.

Choosing Between Hosted Service and Decentralized Network

Graph Hosted Service (free, centralized) is deprecated in favor of Subgraph Studio + Graph Network. For production: deploy on Graph Network with GRT curation signal — the subgraph gets indexers proportional to curation.

Alternatives to The Graph: Ponder (TypeScript, self-hosted, easier to debug), Envio (ultra-fast indexer, supports EVM + non-EVM), Subsquid (TypeScript, own network), Moralis Streams (managed, webhook-based). Our experience shows: for high-load projects with unique logic, Ponder or Envio are more effective — they give full control over the process and do not require GRT tokenomics.

Webhooks and Real-Time Notifications

Alchemy Webhooks and QuickNode Streams allow receiving events in real-time via HTTP webhook or WebSocket. For monitoring addresses, new transactions, mints — this is faster than polling RPC.

Tenderly — platform for monitoring and alerts. You can set up an alert for a specific contract event, balance change, function call with certain parameters. Transaction simulation via Tenderly API is invaluable for debugging.

Monitoring and Observability

Minimum monitoring stack for a protocol:

On-chain: OpenZeppelin Defender Sentinel — watches contract events, triggers webhook or Autotask when conditions are met. Forta Network — community-maintained bots detect anomalies (large withdrawals, flash loans, governance attacks).

Infrastructure: Grafana + Prometheus for nodes, Datadog or Grafana Cloud for managed metrics. Alerts on: node is 10+ blocks behind, RPC latency >500ms, subgraph lag >100 blocks.

Uptime: Better Uptime or PagerDuty on RPC endpoint and subgraph health endpoint (The Graph provides _meta { hasIndexingErrors, block { number } }).

Why Is Monitoring Without Tenderly Insufficient?

Tenderly provides transaction simulation and detailed traces — critical for debugging subgraph and smart contract errors. Forta focuses on network anomalies, not your infrastructure. The combination of Tenderly plus a custom Grafana dashboard covers 90% of incident scenarios.

Multichain Infrastructure

A protocol on 5 chains = 5 separate RPC endpoints, 5 subgraphs, 5 monitoring configs. Manageable but requires deployment automation.

For subgraph multi-network deployment: graph deploy --network mainnet, graph deploy --network arbitrum-one etc. with a unified codebase and network-specific addresses in separate config files.

Chainlink CCIP and LayerZero for cross-chain messaging require monitoring of both chains and transactions on intermediate relayers. A reorg on the source chain after a confirmed mint on the target chain is a classic bridge problem. Solution: wait for finality (on Ethereum ~15 minutes after Merge for economic finality) before confirming on the target chain.

Infrastructure Setup Process

1. Audit current stack — determine chains, request volume, latency and availability requirements.
2. Architecture design — select providers, load balancing, redundancy.
3. Subgraph development — manifest → schema → handlers → testing on local Graph Node → deploy to testnet → mainnet.
4. Monitoring configuration — Tenderly alerts, Grafana dashboard, PagerDuty integration.
5. Documentation and runbook — what to do when: subgraph falls behind, RPC downtime, node desync.
6. Handover to operations — team training, access transfer, first month support.

What's Included

• Deployment of managed or self-hosted Ethereum, Polygon, BNB Chain nodes
• RPC layer setup with primary/fallback and load balancing
• Subgraph development and deployment for your protocol
• Monitoring connection (Tenderly, Grafana, alerts)
• Runbook and operations documentation
• Team training (up to 4 hours online)
• 30-day support after delivery

Timeline

All projects are managed in a GitHub/GitLab repository with CI/CD; configuration code stays with you. Order infrastructure deployment — we'll show how to cut costs by 20–30% without losing reliability. Get a consultation — we'll demonstrate how we deployed infrastructure for a protocol with large TVL on Ethereum and Arbitrum. Contact us.