The RGB Consortium has officially released the RGB Yellow Paper, presenting a formally specified design for RGB I.0, a scalable and privacy-focused smart contract protocol for Bitcoin and the Lightning Network.
RGB yellow paper is released: the first formally specified scalable smart contract system for Bitcoin & Lightning, made with client-side validationhttps://t.co/JVK4HqEc8u
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— RGB Consortium (@rgbconsortium) July 31, 2025
The paper outlines a system built on client-side validation, designed to overcome fundamental limitations of blockchain-based smart contracts.
RGB I.0 introduces a novel consensus architecture based on the separation of contract logic from the blockchain itself.
Contracts are validated only by directly involved participants, using cryptographic commitments and a mechanism known as single-use seals.
This design allows each smart contract to function as its own independent shard, avoiding the scalability and privacy challenges seen in global state systems like Ethereum.
At the heart of the protocol is the SONIC (State machine with Ownership Notation Involving Capabilities) architecture, which implements capability-based access control over contract state and leverages the zk-AluVM, a virtual machine compatible with zk-STARK zero-knowledge proofs.
This enables high levels of scalability and formal verifiability, while maintaining strong privacy guarantees and quantum resistance.
Unlike traditional smart contracts that replicate state globally, RGB contracts use partially replicated state machines (PRiSMs), meaning state is stored and processed only by relevant parties.
The protocol does not use the underlying Bitcoin blockchain for transaction ordering or global state replication, but rather as a finality layer for seal commitments.
According to the yellow paper, RGB contracts can be deployed on Bitcoin, Liquid, and the Prime blockchain.
On Bitcoin, the system uses transaction output (TxO)-based seals and embeds commitments in Taproot outputs or OP_RETURN scripts.
These innovations enable RGB to pack multiple smart contract operations and even multiple contracts into a single Bitcoin transaction without revealing sensitive details.
Dr. Maxim Orlovsky, the lead author of the paper and long-time contributor to the RGB project, describes RGB I.0 as “the first universal client-side validated distributed smart contracting system” that is scalable, secure, and formally verifiable.
With this release, RGB moves from years of research into a production-ready system. The Consortium encourages developers, researchers, and institutions to follow future updates—and notes that the consortium is open to new members who wish to contribute to the evolution of the protocol.
The yellow paper is available at: github.com/RGB-WG/yellowpaper.