Architecture

System Overview

In the Utexo model, ownership proofs are validated locally by users’ wallets (client-side validation), while actual payments occur through bidirectional Lightning channels. This means there is no global state to synchronize; each transaction is a direct peer-to-peer exchange verified by cryptographic commitments.

At the protocol level, Utexo combines:

• Bitcoin for double-spending prevention and settlement guarantees

• Lightning Network for instant, low-cost transaction execution

• RGB for privacy-preserving asset issuance

• Off-chain execution for transaction validation

Transactions in Utexo are executed within a coordinated execution environment: this execution layer validates transactions, enforces balance and authorization rules, providing near-instant finality and predictable costs.

Lightning handles the payment path and instant transfer, while RGB ensures that the underlying asset (e.g., USDT) remains valid, non-duplicable, confidential, and Bitcoin-secured.

Utexo sits on top as the execution and coordination layer, abstracting these components into a payment rail optimized for payment service providers, exchanges, and other financial operators. Through our REST API and SDK, users can offer private USDT payments on Bitcoin without facing technical complexity directly.

Because execution does not require global consensus across a public blockchain, throughput and latency are predictable and suitable for payment flows. More importantly, Utexo enables pre-defined fixed fees that can be set by the protocol in conjunction with the client’s needs.

This architecture allows USDT to operate natively on Bitcoin without wrapped assets, account-based smart contracts, or external Layer-1 dependencies, while keeping transaction data off public ledgers and preserving Bitcoin’s security model.

Bitcoin

Bitcoin serves as the settlement and finality anchor for the entire Utexo system.

It handles correctness, finality, and dispute resolution, acting as the foundational layer that grants irreversible settlement and strong security, allowing Utexo to decouple settlement guarantees from execution cost volatility.

Individual payments, asset transfers, and balances are not recorded on-chain: only compact cryptographic commitments derived from Utexo activity are ultimately anchored to Bitcoin in the form of UTXOs, indistinguishable from other ordinary metadata.

By anchoring state commitments to Bitcoin via RGB, Utexo ensures that execution taking place off-chain cannot be arbitrarily rewritten or manipulated without detection.

This model minimizes on-chain footprint while preserving the ability to prove that off-chain execution followed the agreed rules, remaining accountable to a globally verifiable settlement layer.

If off-chain execution were to fail, stall, or behave maliciously, participants retain the ability to fall back to Bitcoin-backed guarantees. This approach allows Utexo to scale payment activity without compromising on the long-term trust model that Bitcoin provides.

Lightning Network

The Lightning Network provides off-chain execution and value transfer for the Utexo system, enabling high-throughput payments and near-instant finality, allowing execution costs to remain stable regardless of base-layer congestion.

It serves as the execution path through which BTC and RGB-based assets are exchanged between participants while remaining enforceable by Bitcoin.

Lightning allows value transfer to occur as direct peer-to-peer state updates: execution is finalized off-chain and only falls back to Bitcoin in dispute scenarios. Transactions remain fast and deterministic, while settlement security ultimately derives from the base layer.

Within Utexo, Lightning is abstracted through a state-channel layer that manages liquidity management, routing, and failure recovery automatically. Utexo provides pooled liquidity and routing access through APIs, transforming Lightning into a scalable backend execution engine without requiring users to open, balance, and maintain individual channels.

By removing transaction execution from Bitcoin’s fee auction and abstracting Lightning’s channel management away from users, Utexo can offer stablecoin execution that behaves like traditional payment rails: fixed latency, predictable fees, and continuous availability.

RGB

RGB is a smart contract protocol on Bitcoin designed for privacy-preserving asset issuance and cost optimization.

It enables stablecoins to operate natively on Bitcoin without introducing global state or on-chain execution. It defines how assets such as USDT are created, transferred, and validated while remaining anchored to Bitcoin’s security model.

Within Utexo, RGB ensures that stablecoin assets remain valid, transferable, and privately verifiable as they move through off-chain execution and Lightning-based settlement.

RGB uses a client-side validation architecture, where ownership proofs and state transitions are verified locally by participants rather than recorded on a shared public ledger.

Privacy is inherent: only sender and receiver hold the transaction proofs, and no public ledger of individual transfers exists, eliminating data traceability.

For operators, this means stablecoin balances, transfer amounts and counterparties are not exposed on public ledgers, reducing competitive intelligence leakage while maintaining cryptographic auditability.

As RGB doesn’t require blockspace for asset execution or state updates, stablecoin transfers do not compete for on-chain throughput.

This removes fee volatility tied to block congestion and allows Utexo to offer predictable and stable execution costs, independent of Bitcoin mempool conditions.

For a more detailed overview of RGB’s architecture, consult the RGB official documentation: https://docs.rgb.info/

Utexo

Utexo provides a payment execution environment for USDT on Bitcoin, exposing stablecoin transfers and settlement as predictable, production-ready primitives.

Utexo handles execution routing, liquidity access, retries, and failure recovery on behalf of users, allowing PSPs and financial platforms to support Bitcoin-native stablecoin payments without embedding protocol-specific logic into their systems.

By combining RGB’s client-side validation architecture with Lightning’s routing network, Utexo achieves transaction times of around 200 ms latency, comparable to Visa speeds.

Utexo makes Bitcoin usable as a stablecoin settlement network for high-throughput, private-by-default payments that behave predictably regardless of network conditions.