About Fiber

Fiber Network is a next-generation public lightning network built on Nervos CKB. It utilizes off-chain channel technology to enable fast, low-cost, multi-currency payments and peer-to-peer transactions. The network supports RGB++ assets, offering a decentralized, fast, and low-cost payment solution that allows users to trade different digital assets instantly. On-chain settlement occurs only when channels close, ensuring high security and privacy protection.

Additionally, the Fiber Network is designed to be interoperable with the Bitcoin Lightning Network, allowing seamless asset transfers between the two networks. This expands users’ payment options and network coverage. Fiber Network aims to bring higher transaction efficiency and broader application scenarios to the Bitcoin ecosystem through these technologies.

Background

Since Bitcoin’s inception, blockchain technology has evolved to cover areas such as smart contracts, DeFi, and NFTs, but challenges remain in scalability and transaction speed. To address these issues, as a layer-2 scaling solution for Bitcoin, the Lightning Network utilizes off-chain transactions and payment channels to enable fast and low-cost micropayments.

Nervos CKB, as an innovative blockchain platform, enhances Bitcoin’s scalability and interoperability through its unique design. The Fiber Network project leverages CKB’s strengths and integrates the experience of the Lightning Network to create a fast, low-cost, decentralized, multi-asset, real-time payment network. It supports large-scale user demand, reduces transaction fees, provides second-level payment confirmation, and offers multi-asset payments with cross-chain interoperability.

Source: BitcoinVisuals

Technical Principles

The architecture of Fiber Network includes core modules such as off-chain payment channels, on-chain contracts, multi-hop routing, and monitoring services.

Payment Channels

The core idea of payment channel technology is to move the transaction process off the blockchain, only interacting with the blockchain when the final state needs to be updated.

The off-chain payment channel is the backbone of the Fiber Network. It enables multiple transactions to occur off-chain, with on-chain settlement only required when the channel closes. This mechanism bypasses the performance limitations of mainchains like Bitcoin, facilitating rapid off-chain transactions, significantly reducing the number of on-chain transactions, increasing speed, and lowering fees.

The general workflow is as follows:

• Channel Creation: Two users open a payment channel on-chain, locking in a certain amount of CKB or RGB++ assets.
• Off-Chain Transactions: While the channel is open, both parties can transact freely, updating the channel state with each exchange without broadcasting the updates on-chain immediately.
• Channel Closure: When either party decides to close the channel, the final state is broadcast to the blockchain for settlement, confirming both parties’ balances.

Let’s consider Alice and Bob as an example. They create a multi-signature (multisig) account on the blockchain and each deposit 100 units of funds to open a payment channel. Within this channel, Alice and Bob can freely conduct multiple transactions. When they decide to close the channel, their final balances are updated on the blockchain.

After a series of transactions, suppose Alice’s and Bob’s balances become 70 units and 130 units, respectively. If either party wants to close the channel, they can submit the final balance to the blockchain to complete the settlement. While this process may seem simple, it involves complex mechanisms to ensure the security of transactions and the integrity of both parties.

To prevent potential fraud, such as Bob attempting to deceive the system with an outdated transaction state, the payment channel employs two crucial concepts: “commitment transactions” and “revocation keys.” Following each transaction, both parties create a new pair of commitment transactions that reflect their current channel balances. These transactions are asymmetric, with different unlocking conditions for each party, providing a robust check-and-balance mechanism.

If Bob tries to submit an outdated commitment transaction, Alice can use the revocation key to penalize Bob by withdrawing his funds. This mechanism ensures that any attempt at double-spending will be punished, thereby maintaining the integrity of the payment channel.

The Fiber Network, implemented on CKB, further optimizes this process. Compared to the Bitcoin Lightning Network, Fiber natively supports multiple assets, including CKB, BTC, and RGB++ stablecoins, rather than just Bitcoin. Additionally, since Fiber relies on the Layer 1 CKB mainnet, the transaction fees for opening and closing channels are significantly lower, giving Fiber Network a clear advantage in user experience. Fiber Network provides a fast, low-cost, and secure payment channel solution through these mechanisms.

Source: Nervos

WatchTower

The WatchTower is a crucial component of both Fiber Network and the Bitcoin Lightning Network, acting as a 24/7 security guard. In payment channels, participants need to constantly monitor each other to prevent the submission of outdated commitment transactions to the blockchain. However, since users cannot stay online all the time, the design of the WatchTower becomes essential.

The primary function of the WatchTower is to monitor on-chain activity on behalf of users. If it detects that someone has submitted an outdated commitment transaction, it will immediately act to ensure the safety of the channel and funds. Specifically, Alice or Bob can pre-construct a corresponding penalty transaction (using the revocation key to handle the outdated transaction and declare themselves as the beneficiary) and send the plaintext of the penalty transaction to the WatchTower. If the WatchTower detects an outdated transaction being submitted, it will promptly submit the penalty transaction to enforce punishment.

To protect user privacy, Fiber Network only requires users to send the hash of the outdated commitment transaction and the plaintext of the penalty transaction to the WatchTower. This way, the WatchTower does not initially know the specific contents of the commitment transaction, only its hash. Unless someone submits an outdated commitment transaction on-chain, the WatchTower will not see the plaintext and will only submit the penalty transaction if needed. This design ensures that, unless misconduct occurs, the WatchTower typically won’t see the transaction history of channel participants, and even then, it will only see one specific transaction.

Compared to the traditional Bitcoin Lightning Network, Fiber Network optimizes the design of the WatchTower. In the Bitcoin Lightning Network, the penalty mechanism tied to revocation keys is known as “LN-Penalty.” However, it has drawbacks, such as requiring the WatchTower to store all outdated commitment transaction hashes and the corresponding revocation keys, leading to significant storage demands. Fiber Network improves on this by implementing the Daric protocol, which enhances the revocation key design by allowing a single revocation key to apply to multiple outdated commitment transactions, greatly reducing the storage burden on both the WatchTower and user clients.

In both Bitcoin’s Lightning Network and Fiber Network, the WatchTower acts as a security monitor, protecting users’ funds when they are offline. Let’s assume Alice and Bob open a payment channel to understand this better. They can transact instantly with each other without writing every transaction to the blockchain. However, this mechanism carries risks—either party could attempt to submit an outdated commitment transaction in an unfair attempt to steal funds.

For example, when Alice and Bob complete a transaction, they generate a new commitment transaction to ensure the payment channel reflects the latest state. But if Bob acts maliciously and submits an outdated commitment transaction that has already been replaced and invalidated, he could try to gain an unfair advantage based on Alice’s previous balance. Alice may not immediately notice Bob’s malicious action if she is offline.

This is where the WatchTower becomes crucial. Alice can pre-send the relevant penalty transaction’s plaintext to the WatchTower and its hash. When Bob attempts to submit the outdated transaction, the WatchTower immediately recognizes it and submits the pre-constructed penalty transaction. As a result, Bob not only fails in his attempt to steal funds but is also punished, and Alice receives compensation.

Through this process, the WatchTower protects Alice’s interests while reducing the need for her to monitor the payment channel constantly.

Source: Geek Web3

Multi-Hop Routing and HTLC/PTLC

Multi-hop routing and HTLC/PTLC technologies are core mechanisms in blockchain payment networks, enabling secure and flexible value transfer:

• Multi-hop routing allows users to transfer funds through multiple intermediary nodes, even without a direct payment channel between the sender and receiver. This ensures greater network coverage and flexibility.
• HTLC (Hashed Time-Locked Contract) ensures that each intermediary node provides the correct key within a specified time to complete the transaction, preventing malicious parties from withholding funds. If the transaction is not completed on time, it is automatically canceled, and the funds are returned to the sender.
• PTLC (Point Time-Locked Contract) is a privacy-enhanced version of HTLC. It uses different keys at each node to unlock the transaction, preventing outsiders from inferring the transaction path and enhancing user privacy.

Combining multi-hop routing with HTLC/PTLC improves the network’s flexibility, security, and privacy in the Fiber Network. Multi-hop routing allows funds to flow through multiple nodes, even when no direct payment channel exists between users, using a public network structure and Dijkstra’s shortest path algorithm to find the optimal transfer route for efficient transactions.

HTLC uses time and hash locks to ensure that intermediary nodes complete the transaction on time, or else the funds are returned, preventing malicious behavior. PTLC further strengthens privacy by using different keys at each node, preventing the exposure of transaction paths.

This combination expands network coverage while ensuring secure and private transactions, addressing vulnerabilities in traditional lightning networks, such as replacement attack loops. Thus, Fiber Network is a more secure and efficient payment system.

Suppose Alice wants to transfer 100 units to Daniel, but they don’t have a direct payment channel. With multi-hop routing and HTLC/PTLC in the Fiber Network, Alice can rely on intermediary nodes to complete the transaction.

For example, Alice has a channel with Bob, Bob has a channel with Carol, and Carol has a channel with Daniel. Using multi-hop routing, Fiber applies Dijkstra’s shortest path algorithm to find the optimal route: Alice → Bob → Carol → Daniel. Alice then creates a conditional transaction through an HTLC (Hash Time-Locked Contract), requiring Bob to provide a key “R” within 30 minutes to claim the funds. Bob creates a similar HTLC with Carol, giving her 25 minutes to provide the key. Finally, Carol sets up an HTLC with Daniel, requiring him to submit the key “R” within 20 minutes.

Since Daniel knows he holds the key R, he submits it within the allotted time and receives 100 units from Carol. Carol, having received the key, then passes it to Bob within the required time, and Bob provides it to Alice, completing the transaction. Bob and Carol each earn a transaction fee, while Alice successfully transfers 100 units to Daniel. During this process, PTLC (Point Time-Locked Contracts) enhances privacy by ensuring each hop uses an independent key. This way, Bob and Carol are unaware of the full transaction path and cannot infer the relationship between Alice and Daniel, protecting both parties’ privacy.

Fiber Network ensures transaction security and optimizes efficiency through Dijkstra’s algorithm, enabling swift and cost-effective completions. Moreover, Fiber’s storage optimization enhances HTLC/PTLC implementation, significantly reducing the network’s storage requirements and boosting overall performance.

Cross-Domain Atomic Payments

Fiber and the Bitcoin Lightning Network support cross-domain payments through HTLC (Hashed Time-Locked Contract) and PTLC (Point Time-Locked Contracts), ensuring atomicity—meaning that all payment steps must either succeed or fail. This prevents partial failures, ensuring the safety of users’ assets.

This design enables seamless interoperability between Fiber and Bitcoin Lightning Network, allowing users to transfer funds between the two networks. For example, users can send payments from Fiber to a Bitcoin Lightning Network user or exchange CKB or RGB++ assets for Bitcoin via Fiber.

Here’s how the process works: Suppose Alice wants to transfer CKB from the Fiber Network to Bob, who is on the Bitcoin Lightning Network. She can do this through a cross-domain intermediary, Ingrid, who operates nodes on both networks. Ingrid acts as a bridge between the two networks. Alice pays CKB to Ingrid, and Ingrid sends Bitcoin to Bob.

For instance, if Bob wants to receive 1 BTC, Alice and Ingrid agree on an exchange rate of 1.1 CKB for 1 BTC. Alice sends 1.1 CKB to Ingrid, including a 0.1 CKB fee for Ingrid’s service. Ingrid then sends 1 BTC to Bob through the Bitcoin Lightning Network. Using HTLC, the transaction is secured—Ingrid must know Bob’s key R to complete the payment. This ensures that Alice’s funds are not lost mid-transaction, providing a secure way to perform cross-network transfers.

Application Scenarios

Fiber Network, built on Nervos CKB, showcases significant potential across core business models in the crypto industry, including cross-chain payments, cross-chain liquidity mining, cross-chain lending, and decentralized exchanges (DEX). The network’s technical design provides the foundation for efficient, secure operations in these scenarios.

Cross-Chain Payments

Cross-chain payments are a key use case of Fiber Network. Leveraging off-chain payment channels and HTLC contracts, Fiber enables fast, low-cost, multi-currency cross-chain payments. Users can instantly transfer assets between Bitcoin and other networks (e.g., Nervos CKB) without intermediaries or third-party trust.

For example, User A can transfer CKB or other supported RGB++ assets from the Bitcoin network to User B through Fiber. Technically, the HTLC contract ensures secure execution: User A locks the funds and initiates the transaction, while User B unlocks the funds by providing the correct hash preimage. If User B fails to do so within the required time, the funds are automatically returned to User A. Fiber’s interoperability with the Bitcoin Lightning Network further expands payment coverage, supporting more asset types and offering higher flexibility.

Source: Nervos

Cross-Chain Liquidity Mining

Using Fiber’s cross-chain channels and multi-hop routing, users can provide liquidity for multiple network assets and earn rewards.

For instance, users can lock Bitcoin within Fiber’s payment channels to provide liquidity for meme coins or other tokens in the Bitcoin ecosystem, facilitating cross-chain issuance and trading. With off-chain payment channels, liquidity providers can update channel states without frequent on-chain operations, lowering transaction costs and enhancing liquidity efficiency. Fiber’s WatchTower service also offers security by monitoring channels in real-time and preventing malicious actors from exploiting outdated channel states.

Cross-Chain Atomic Lending

Fiber’s cross-chain swapping capability enables users to leverage mainstream assets like Bitcoin as collateral to borrow stablecoins or other tokens on the CKB network or other blockchains.

In this lending scenario, HTLC contracts play a key role. A borrower locks Bitcoin on the Bitcoin network and initiates a lending transaction. The borrowed stablecoins are transferred to the CKB network through Fiber. HTLC’s hash and time locks ensure secure, trustless operations—if the off-chain transaction fails, users can safely reclaim their locked assets through on-chain contracts. This structure establishes a decentralized, permissionless cross-chain lending market, removing the limitations of traditional lending systems.

Cross-Chain Decentralized Exchange (DEX)

Fiber also supports cross-chain decentralized exchanges (DEX), allowing users to trade Bitcoin, CKB, and RGB++ assets without relying on centralized matching services.

Using Fiber’s multi-hop routing, users can transfer assets across multiple nodes without needing a direct payment channel with the counterparty, enhancing transaction flexibility. HTLC contracts secure the trading process by locking funds with hash and time locks at each node, ensuring safe execution at every step. This fast, low-cost cross-chain trading feature boosts liquidity across the Bitcoin and CKB ecosystems, driving the expansion of DeFi applications.

Through these capabilities, Fiber Network demonstrates strong potential across cross-chain payments, liquidity mining, lending, and decentralized trading, becoming an essential infrastructure for innovation and development within the Bitcoin and Nervos CKB ecosystems.

Conclusion

Current State and Future Prospects

Fiber Network has completed prototype development and released demos demonstrating basic functionality between two nodes, including opening, updating, and closing channels. It has also validated cross-chain interoperability with the Bitcoin Lightning Network. The project code is available on the following GitHub repositories:

• Fiber Network GitHub
• Fiber Scripts GitHub

The team’s future plans include developing multi-hop routing and WatchTower services, improving RPC interfaces, and refining SDKs to facilitate easier access for developers.

Based on Dijkstra’s algorithm, the multi-hop routing protocol will reduce routing fees and increase the success rate of multi-hop payments. Once Fiber Network launches, the team will optimize routing algorithms based on real-time traffic and operational data, offering two to three routing strategies to meet users’ preferences and needs. Fiber Network will also introduce multi-path payment strategies, breaking large payments into smaller parts sent through different paths to improve payment success rates further.

The WatchTower service will be provided by specific Fiber Network nodes, which will stay online to monitor network anomalies and protect channel assets. They will also track cross-chain hub services to ensure successful transactions with the Lightning Network, even if users are temporarily offline.

Furthermore, the team aims to enhance the Fiber Network by implementing privacy-preserving algorithms using CKB’s programmability. These improvements will optimize routing algorithms and WatchTower services, bolstering the security and confidentiality of users’ payment information.

Final Thoughts

Fiber Network, built on Nervos CKB, offers fast, low-cost, multi-currency payments and transactions across Bitcoin and CKB ecosystems. Its off-chain payment channels and multi-hop routing increase transaction speed, reduce costs, and support cross-chain interoperability, enhancing network scalability and asset liquidity. The introduction of monitoring services also boosts security, laying a solid foundation for DeFi applications and fostering ecosystem innovation. In short, the Fiber Network is a critical infrastructure project driving efficiency and flexibility within the Bitcoin and CKB ecosystems.