In the world of blockchain, liquidity is king. Recently, Nervos DAO staking tool NervDAO completed integration with the iCKB protocol. This milestone progress not only enables Nervos DAO depositors to get rid of the minimum 30-day deposit cycle limit and effectively solves liquidity problems, but also opens the door for users to achieve higher returns through "BTCFi Lego".

This article will introduce in detail the working principle of the iCKB protocol and its importance in the market.

CKB economic model, Nervos DAO and NervDAO

Before taking a deeper look at the iCKB protocol, let’s briefly review the basic situation of CKB’s economic model, Nervos DAO and its staking tool NervDAO.

As of December 8, 2024, the total circulation of CKB has reached 46.202 billion, of which 8.133 billion CKB is locked in Nervos DAO. These CKB mainly come from three channels:

Genesis block: a total of 33.6 billion, of which 8.4 billion entered the black hole address at the beginning of issuance (equivalent to (due to "destruction"), the remaining 25.2 billion CKB are mainly allocated to institutional investors, ecological funds, development teams and public investors. These CKB have time locks, but they have all been unlocked.

Level 1 issuance (basic issuance): 33.6 billion in total, all awarded to miners, its issuance mechanism is similar to Bitcoin, and is halved approximately every four years , until all are issued.

Secondary issuance: A fixed issuance of 1.344 billion is issued every year. This part is distributed to miners, Nervos DAO depositors, and the treasury in proportion (currently this part is directly destroyed).

For a more detailed introduction to the CKB economic model, please read "Understanding CKB in One Article" Economic Models and Their Clever Designs”.

Nervos DAO is a smart contract written at the bottom of the system that can automatically allocate secondary issuance of CKB to Nervos DAO depositors. In other words, if currency holders are willing to sacrifice the liquidity of the token and lock CKB in the Nervos DAO contract, they can obtain compensation from the system and avoid asset dilution caused by secondary issuance.

NervDAO is the staking tool of Nervos DAO, aiming to provide users with convenient staking and withdrawal services. Compared with other tools that support Nervos DAO staking, such as Neuron wallet and CKBull wallet, the advantages of NervDAO are mainly reflected in the following two aspects:

Lower operations Threshold: Users can operate directly on the web page without downloading additional apps or wallet software, or synchronizing block data.

Supports multi-chain wallet login: currently supports JoyID, MetaMask, OKX Wallet, UniSat, UTXO Global Wallet, and will also support SOL, DOGE and Nostr in the future Other major ecological wallets.

With NervDAO integrating the iCKB protocol, users can not only choose the "traditional" Nervos DAO staking method, but also pledge through the iCKB protocol.

Detailed explanation of iCKB protocol

iCKB The protocol was proposed and developed by Nervos community developer Phroi to solve the liquidity problem of Nervos DAO deposits: it allows users to deposit and quickly withdraw any amount of CKB at any time.

So, how does the iCKB protocol work?

From a user perspective, depositing CKB into Nervos DAO through the iCKB protocol only requires one step: exchanging CKB for iCKB. When withdrawing, just exchange iCKB back to CKB. Therefore, we can think of iCKB as the user’sDeposit certificate of CKB deposited in Nervos DAO.

Currently, 1 CKB can be exchanged for approximately 0.86287995 iCKB, and 1 iCKB can be exchanged for approximately 1.15890975 CKB. The CKB deposited in Nervos DAO enjoys the compensation of secondary issuance (the current annualized yield is about 2.26%). Therefore, the iCKB representing the deposit certificate will also increase in value over time, that is, as time goes by, the number of CKB exchanged by iCKB will also increase. will gradually increase.

iCKB protocol will decompose the user's CKB deposit into two parts: large deposit and small deposit. Each large deposit is equivalent to 100,000 iCKB. And introduce the Market Maker mechanism to solve the liquidity problem of small deposits.

Below, we use an example to illustrate the working principle of iCKB (to simplify the calculation, assume that the exchange rate is 1 CKB = 0.8 iCKB, 1 iCKB = 1.25 CKB) ：

Suppose Alice has 300,000 CKB in her hand, and she deposits it into Nervos DAO through the iCKB protocol. The iCKB protocol will decompose these 300,000 CKB into: 125,000 CKB + 125,000 CKB + 50,000 CKB. Among them, 125,000 CKB is exactly equivalent to 100,000 iCKB. This part of CKB will be deposited into Nervos DAO (that is, 2 copies, each of 125,000 CKB). The remaining 50,000 CKB will be taken by Maket Maker after the order is placed. . Finally, Alice will receive 240,000 iCKB.

What needs special explanation here is that these 240,000 iCKB will be temporarily in the state of contract custody on the chain. If you want to return to Alice's wallet immediately, you still need to Alice initiates the "Extract" operation; if she does not initiate the "Extract" operation, the next time Alice deposits CKB in exchange for iCKB or uses iCKB to exchange CKB, the 240,000 iCKB will automatically be released from custody and returned to Alice. in the wallet. iCKB in custody cannot be directly exchanged for CKB, nor can it be directly transferred to other wallets or participate in BTCFi.

A few days later, Alice decided to exchange back to CKB. For the convenience of calculation, we assume that the exchange rate remains unchanged, and the iCKB protocol receives Alice After the 240,000 iCKB is obtained, it will be decomposed into: 100,000 iCKB + 100,000 iCKB + 40,000 iCKB. Among them, the two 100,000 iCKB will be destroyed, and the iCKB will be removed from the system. Select 2 deposits in Nervos DAO that can be withdrawn in the fastest time. After the remaining 40,000 iCKB is placed, the order will be taken by Maket Maker. Finally, Alice will receive 300,000 CKB (same as above, these CKB are also in the chain. Once the contract is in custody, it can be returned to the wallet immediately through the "Extract" operation, or it can be automatically released from custody and returned to the wallet during the next exchange)

Through this example, we can clearly see how iCKB can effectively solve the liquidity problem of Nervos DAO deposits: The liquidity of small deposits is achieved by aggregating the deposits of other users, while the liquidity of small deposits is guaranteed by Market Maker. It should be noted that anyone can become a Market under the iCKB protocol. Maker, whose main revenue comes from service fees paid by users

The far-reaching impact of the iCKB protocol

The "traditional" Nervos DAO staking method has two major limitations:

Amount limit: minimum deposit 102 CKB (excluding mining fees).

Time limit (liquidity issue): There is a minimum deposit period of about 30 days, and withdrawals are also affected by the compensation cycle. (That is, after initiating a withdrawal transaction, you may not be able to withdraw money immediately)

The iCKB protocol allows users to deposit and quickly withdraw any amount at any time through clever design. CKB successfully resolved the “tradition” The amount and time limits of Nervos DAO's pledge method greatly improve the liquidity of Nervos DAO deposits.

In addition, iCKB tokens are also RGB++ assets, which means that iCKB holders can not only obtain interest from Nervos DAO, but also participate in various BTCFi applications to earn more profits. For example, iCKB holders can build a pool on UTXOSwap and become a liquidity provider (LP) to earn transaction fees. The next step for the RGB++ protocol is to expand to DOGE, and will be expanded to other UTXO chains in the future. Through RGB++'s Leap bridgeless cross-chain technology, iCKB can be safely transferred to UTXO chains such as DOGE and participate in the ecology of these chains.

Not only that, after CKB’s Lightning Network Fiber Network mainnet is online, iCKB can also enter the Lightning Network and enjoy the low cost and low cost brought by the Lightning Network. Transaction advantages of high privacy and instant confirmation.

Operation Guide

NervDAO website Two staking methods are provided: one is the "traditional" staking method, which is operated on the Deposit page of the NervDAO website; the other is staking through iCKB, which is operated on the iCKB page of the website. These two staking methods are independent of each other.

As mentioned above, to deposit CKB into Nervos DAO through the iCKB protocol, users only need one simple step: exchange CKB for iCKB. To withdraw the corresponding CKB, simply exchange iCKB for CKB. The specific steps are as follows:

Deposit

1. Open the NervDAO website (https:/ /www.nervdao.com/) and connect to the wallet (currently supporting JoyID, MetaMask, OKX Wallet, UniSat, UTXO Global Wallet).

2. Click iCKB on the left navigation bar, select "Deposit", enter the amount of CKB you want to deposit, then click the "Swap" button and save it in the wallet Signature confirmation.

3. Wait about 90 seconds for confirmation. When the order in “Active Orders” is displayed as “Completed”, it means that the on-chain operation has been completed.

4. At this time, your iCKB will be in the on-chain contract custody state. If you need to withdraw, click "Extract" and sign in the wallet for confirmation; if you do not withdraw, the next time you deposit CKB in exchange for iCKB or use iCKB to exchange CKB, this part of iCKB will also be automatically released from custody and returned to your wallet. middle. Whether the "Extract" operation is performed or not will not affect the interest rate of Nervos DAO. The only difference is that these iCKB in escrow cannot be directly redeemed back to CKB, nor can they be directly transferred to other wallets or participate in BTCFi.

Remove

1. Open the NervDAO website and connect the wallet.

2. On the iCKB page, select "Withdraw", enter the amount of iCKB you want to redeem, then click the "Withdraw" button and sign in the wallet to confirm ( If you want to redeem all iCKB, and there are iCKB managed by on-chain contracts in "Active Orders", you must first retrieve all iCKB through the "Extract" operation).

3. Wait for the transaction confirmation on the chain. When the order in "Active Orders" Displayed as "Completed", indicating that the on-chain operation has been completed. Same as above, these CKB are also in the on-chain contract custody state. They can be returned to the wallet immediately through the "Extract" operation, or they can be automatically released from custody and returned to the wallet during the next exchange.

Conclusion

The launch of the iCKB protocol marks a major advancement in the Nervos DAO staking tool, which not only solves liquidity problems for users, but also provides them with more flexible investment options and income methods. Through iCKB, users can fully enjoy Nervos The opportunities and value brought by DAO and the entire BTCFi ecosystem