Rethinking Bitcoin’s Lightning Network Design through Thunderbolt’s Perspective

Author: YBB Capital Researcher Ac-Core

1. Why can’t you buy coffee with Bitcoin?

When most people think of Bitcoin, the first thing they think of is its “decentralized” and “immutable” characteristics.But if you really want to use it to buy a cup of coffee, you will soon encounter an awkward problem: the waiting time for a transaction confirmation is even longer than waiting for a coffee, and sometimes the transaction fee is even higher than the coffee itself.Assets on Bitcoin are still largely “unmovable” – most users just hold them; you can’t lend, combine assets, and can’t interoperate.

Bitcoin’s script structure is extremely conservative, limiting most off-chain interaction scenarios.Its original design goal was not to process tens of thousands of transactions per second.However, the actual demand is right in front of you – people want to use Bitcoin, even if they just buy game skins or give video creators a reward, they are unwilling to wait for it for ten minutes.

2. Lightning Network: A Double-edged Sword

The main Bitcoin network is like a highway, while the Lightning Network is a paid fast channel built next to it.Its core concept is a pragmatic compromise on the main network throughput limit: Since on-chain transactions face speed bottlenecks, the system no longer insists on recording every transaction on the chain, but allows users to open a dedicated “payment channel” for high-frequency transactions, and only settle the final state on the blockchain when the channel is closed.This is similar to friends taking turns to pay for the bill and checking out after a few trips, rather than transferring the bill after each meal.The Lightning Network is essentially a network woven from thousands of such payment channels.

However, this seemingly elegant system faces many realistic challenges.First of all, the threshold for channel setting is very high – users must lock funds in advance to establish a channel, which means you need to establish a dedicated connection in advance to trade with anyone.The second is complex routing problem: if there is a lack of direct channel between user A and user B, even if there is an indirect route like A-C-B, if the intermediate channel is insufficient funds or the node is unavailable, the transaction may still fail.More serious is that there is a security risk: users must stay online to prevent counterparties from submitting expired transactions to cheat when closing the channel, which puts unrealistic operational requirements for ordinary users.

Although Lightning Network has been online for many years, these structural problems limit their use in the real world.Public data shows that the total value of the Lightning Network locked is still only about $100 million – a trivial number compared to the trillion-dollar market capitalization of Bitcoin.This has sparked an industry-wide thinking: Is it possible to build a better off-chain payment protocol to break through these bottlenecks?

According to ChainCatcher on April 15, HSBC revealed in an official press release that Bitcoin Thunderbolt represents the most significant technological upgrade for Bitcoin in the past decade.Thunderbolt can be regarded as “Lightning Network 2.0”, but it is not only an upgrade, but also a fundamental redesign of the Bitcoin off-chain interaction paradigm.

3. What is the Thunderbolt protocol?

Bitcoin Thunderbolt is a soft fork upgrade built directly at the bottom of Bitcoin.Unlike layer two networks or cross-chain bridge compromises, Thunderbolt introduced protocol-level changes on the Bitcoin mainnet, fundamentally enhancing scalability, transaction performance and programmability.

Performance layer: Nubit uses UTXO bundling technology to significantly optimize Bitcoin’s traditional transaction model.Bitcoin’s current design is to process each UTXO separately, which limits throughput, while UTXO bundling technology can aggregate multiple UTXOs for simultaneous processing.This transaction data compression technology can increase processing speed by nearly 10 times without affecting on-chain security.

Programmability: Thunderbolt reintroduces and extends the OP_CAT opcode – originally existed in earlier Bitcoin versions, but was later removed.OP_CAT allows data connections, enabling developers to build more advanced scripting logic and deploy decentralized applications (dApps) directly on the base layer of Bitcoin without relying on sidechains, Rollup, or cross-chain bridges.

Asset Protocol Layer: Nubit also introduced a unified token standard called Goldinals, which is based on zero-knowledge proof and state commitment.This framework supports the issuance and verification of native Bitcoin tokens without relying on external trust or complex bridging.It integrates fragmented protocols such as BRC-20, Runes and Ordinals through on-chain automatic market makers (BitMM), thus fully supporting trust-destructive transactions and verification within the Bitcoin ecosystem.

Unlike traditional expansion methods such as side chains, Plasma, Rollups, or asset packaging through bridges, Nubit follows the “native mainnet expansion” path.It integrates solutions such as BitVisa for decentralized identities and credentials.Whether it is transaction compression, smart contract activation or on-chain transactions, all features run directly on the Bitcoin main network using native BTC.

3.1 Core mechanism analysis

Based on the paper “The Stateless Verified Execution Layer of the Yuan Protocol on Bitcoin” (Reference 1), Bitcoin Thunderbolt is similar to the Lightning Network, aiming to solve the problem of the long confirmation time of the Bitcoin main network.While both are committed to speeding up and reducing costs, there are significant differences in their design philosophy:

• Lightning Network is centered on payment channels and is optimized for peer-to-peer transactions only.It lacks programmability, involves complex channel setup and maintenance, and has limited scalability.

• Developed by Nubit, Thunderbolt provides programmable off-chain protocols that enable Turing-complete operations, enabling the creation of complex stateful assets, liquidity protocols and financial applications.

Key innovations:

Adjustable multi-party signature
Imagine a bitcoin signature being split into two parts: Alice holds half and the committee holds the other half.Each time the funds are transferred, both parties add a “key adjustment” – only the new recipients know – so that they can rebuild the full signature offline without direct communication.

Asynchronous Committee Ledger:
A set of nodes (for example, 4n+1) maintains ownership consensus.Even if some nodes fail, the system will still operate normally as long as most nodes are online.These nodes cannot transfer funds themselves – they simply sign and record ownership, thus maintaining decentralization and security.

Final determination based on atomic exchange
On-chain redemption involves three atomic steps:

1. Alice and the Commission spend the original UTXO to transfer funds to the Commission;

2. The Commission locks the same amount of funds in a joint vault that only Zenni and the Commission can access;

3. Zenni uses the new two-part signature to complete the redemption.
This process ensures that neither party can cheat or give up the process.

3.2 Thunderbolt’s protocol design and technical highlights

• Non-interactive recursive signature delegate:
  Thunderbolt uses adjustable Schnorr threshold signatures, eliminating multiple rounds of messaging.Each transmission requires only a key-adjusted signature, which greatly reduces communication and uptime requirements.

• Use a new lock for each hop

• Each transmission introduces a new key-based signature.The old key will fail, preventing signature reuse and enhancing security.

• Single chain tracking
  The only on-chain operation is initial locking.All subsequent transfers are conducted off-chain, and the final on-chain redemption is only conducted at the end of the transaction.Compared with the frequent channel operation of Lightning Network, Thunderbolt not only improves efficiency but also improves privacy.

• Offline elasticity
  Even if Alice or Zenni is offline, the committee can continue to process redemption or transfers – without time locking or forced closure.

• Formal verification of security through machine verification
  Each critical protocol step is formally validated using Tamarin Prover, ensuring safe guarantees of mathematical verification—not just theoretical commitments.

Thunderbolt represents a fundamental rethinking of how Bitcoin supports off-chain interactions with high throughput, programmable and trust-minimized while maintaining the core principles of decentralization.

4. How is Thunderbolt different from existing Lightning Network solutions?

Now let’s compare Thunderbolt with existing solutions like the BOLT protocol, Breez SDK, and Phoenix to see the specific improvements it introduces.

Key differences:

Thunderbolt stands out primarily in terms of security and theoretical soundness.It is one of the few solutions that can claim the following advantages:

• Its protocol design has proven security.

• No malicious user can unilaterally gain advantages or value.

But it also has obvious disadvantages:

• Deployment Complexity: Running Thunderbolt requires a complete protocol stack, which is difficult for ordinary wallet users to adopt.

• Mainchain compatibility limitations: Bitcoin’s scripting language is extremely limited.Thunderbolt has to break through these limitations, which adds to the complexity of the implementation.

• Lack of ecosystem support: Unlike BOLTs with numerous wallets and node support, Thunderbolt is still in its early stages of R&D.

5. The potential impact of Thunderbolt: a catalyst for BTCFi?

So is Thunderbolt the best solution for BTCFi?A bold but wise view might be:

Thunderbolt is theoretically the best solution for BTCFi, but in practice it is still in the alpha stage—like Ethereum’s original 2.0 white paper: visionary, but not ready for mass production deployment.Based on current observations, Thunderbolt development may follow three potential paths:

1. Rollup layer integration: Bitcoin Layer2’s DeFi engine

Given the limited scalability of the Bitcoin base layer, Thunderbolt can evolve into a modular off-chain execution layer in Bitcoin Layer 2 solutions such as BitVM, Nomic, or BOB.Think of it as a programmable contract engine embedded in Bitcoin Rollup.

example:

• BOB may integrate Thunderbolt’s payment channels for native BTC transactions.

• The RGB ecosystem can adopt Thunderbolt’s state management logic.

• BitVM supports advanced logic and can use Thunderbolt as the smart contract standard.

• Babylon, Bitlayer, and similar systems can embed Thunderbolt as off-chain contract execution modules.

2. Build an independent parallel ecosystem

Thunderbolt may follow in the footsteps of Lightning Network and develop its own infrastructure: nodes, operators, aggregators, and maybe even Thunderbolt-LSP (liquidity service provider).Supported by Nubit and early Bitcoin miners, its soft fork schemes—UTXO bundling and OP_CAT—allows Thunderbolt to natively support protocol assets such as BRC-20, Runes, and Ordinals.

In this case, Thunderbolt can develop into a mature ecosystem with the following characteristics:

• Thunderbolt wallet (similar to Phoenix)

• Thunderbolt node (light node for channel operation)

• Thunderbolt DEX (chain order matching)

• Thunderbolt AMM (off-chain liquidity pool)

3. Replaced by simpler solutions

Thunderbolt’s future is uncertain.It may eventually be replaced by simpler or more efficient alternatives:

• BitVM can provide a more scalable contract execution model.

• Cross-chain ZK technology may enable fully trusted BTC deployment on other chains.

• The new native Bitcoin protocol can unify payments, lending and contracts into a seamless system.

Real impact: off-chain composability

Thunderbolt’s biggest breakthrough is not only payment, but also the introduction of off-chain composability of Bitcoin assets – a concept that is crucial to the DeFi boom of Ethereum.Ethereum’s success is due to its integrated development stack: Solidity, Hardhat, Ethers.js and Metamask.Thunderbolt can also provide a similar basis for Bitcoin.

Its core innovations—OP_CAT and UTXO Bundling—are particularly exciting:

• OP_CAT realizes the native programmability of Bitcoin for the first time.

• UTXO bundles compress transaction data to enhance on-chain throughput—similar to Ethereum summary.

Together, these advances drive our vision of unifying the Bitcoin ecosystem protocol and implementing trustless asset exchanges through BitMM—all without bridging or packaging tokens.Still, Thunderbolt is closer to a “powerful math paper” than a ready-to-use developer stack.