Derivation paths for generating bitcoin tx outputs containing RGB state

[dr-orlovsky]

Outputs containing RGB state assignments must be created by a wallet software by using a distinct derivation paths than used for keeping bitcoins. This is required in order to prevent accidental fund/state loss if the output is being spent by a non-RGB-enabled wallet.

After multiple rounds of considerations I tend to simplify the proposal for RGB-related derivation path and introduce one simple way of doing it, interoperable with all existing wallet types.

Instead of using custom BIP43 purpose field or abusing other hardened segments of derivation path (coin etc) I propose to leverage the "change" segment (next to last), which is unhardened segment. This will enable to use RGB assets with any existing bitcoin descriptor and account-level extended public keys without their re-generation.

The proposal:

1. I propose to reserve values of the change index in range of 10-999 for RGB purposes.
2. There will be three categories of indexes used in RGB:

• Index N mod 10 are equivalent of "normal" or "external" change index 0; it will contain RGB state sent to the wallet by the external parties via invoices (and to generate new invoices)
• Index N mod 10 + 1 is a "change" index, which will be used by a RGB wallet when the change output contains RGB asset by is not tweaked with Tapret (since Opret is used or a different output is tweaked)
• Index N mod 10 + 2 is a "tweaked change" index, which will be used to contain a tweak.

3. A concept of "state velocity class" is introduced. It defines how frequently some asset or RGB state is "moved". State with the same velocity class is assigned to the same N index range (N, N+1, N+2).

Initially I propose the following velocity classes:

• index 10, 11, 12: fast-moving assets like stablecoins
• index 20, 21, 22: slow-moving assets like other tokens
• index 30, 31, 33: slow-moving assets like securities (corp shares), NFTs etc
• index 100, 101, 102, 103...: other non-fungible state used only by asset issuers (secondary issue, burn and replacement). Each index is reserved for a selected state type under certain RGB contract; the output must be used by just a single contract only.

CC @fedsten @zoedberg @cryptoquick @crisdut