Ligo: What Is It and How Does It Work?

What Is Ligo?

Ligo is a Layer 2 scaling solution for the Bitcoin ecosystem. It stands out in the blockchain space for its compatibility with the Ethereum Virtual Machine (EVM), making it a bridge between Ethereum's smart contract capabilities and Bitcoin's robust Proof of Work (PoW) blockchain. This unique feature allows developers to seamlessly migrate Ethereum smart contracts to Bitcoin, thereby enriching the Bitcoin ecosystem with functionalities previously limited to Ethereum.

The Ligo project is deeply rooted in the Web3 paradigm, with operational bases in both the Bay Area, United States, and Singapore. It focuses on enhancing the Bitcoin ecosystem through various services, including incubation, investment, Initial Bitcoin Offering (IBO), listing, and liquidation. The project's commitment to the Bitcoin ecosystem is further emphasized by its substantial initial R&D investment of US$13 million, which has led to the development of cross-chain infrastructure, swap applications, and wallet applications.

Resources

Whitepaper: https://drive.google.com/file/d/1tlP37IKE8vXwqC_Ej8zhxmZTVsPU_ySG/view

Official Website: https://ligo.network/

How Does Ligo Work?

Ligo operates as an EVM-compatible Bitcoin Layer 2 network, aiming to integrate contracts into the Bitcoin main network through inscriptions, with Ligo serving as the contract execution and verification layer. This integration allows for the optimization of Bitcoin investments, offering users faster transactions with higher throughput (TPS), lower transaction costs (e.g., reduced gas fees for minting BRC-20 tokens), and enhanced security leveraging Bitcoin's security mechanisms.

The network's economic model is experimental, focusing on building community enthusiasm, launching BTC Layer 2, and enhancing the liquidity of Bitcoin ecosystem assets. It employs a dual-token model centered around BRC-20 assets, with LIGO for governance and SATS for utility. This model aims to leverage the advantages of the BRC-20 token standard, which was created for the Bitcoin blockchain and supports the creation and transfer of fungible tokens via ordinal inscriptions.

To learn more about Bitcoin Ordinals, check out our article: What Are Bitcoin Ordinals? Everything You Need to Know About Bitcoin NFT.

What Is the Tokenomics of LIGO Token?

The LIGO token (LIGO) is a crucial component of the Ligo network, serving as a governance token. It grants holders voting rights, incentives, and staking rewards. The token was initially issued as 1 trillion tokens on the BRC-20 standard, distributed for free minting to gain community operational resources and enthusiasm. LIGO is designed to be deflationary, creating scarcity and value growth over time.

In contrast, SATS, the utility token of the Ligo network, is used for paying gas fees and enabling fast and cost-effective transactions on the Layer 2 network. It is designed to be abundant, inexpensive, and widely circulated, with its value backed by Bitcoin as an asset. The LIGO network's approach to tokenomics is innovative, setting LIGO as fixed and deflationary while SATS is dynamic and inflationary, adapting to the network's needs and usage. This dual-token model is integral to the network's strategy to enhance the liquidity and functionality of the Bitcoin ecosystem.