The BRC20 token standard, an experimental protocol on the Bitcoin Blockchain, is gaining traction in the cryptocurrency world. These tokens use ordinals to encode and decode data such as texts and images within Bitcoin transactions. While BRC20 presents exciting possibilities, it currently faces limitations, especially when compared to the more established ERC20 token standard.
BRC20 tokens currently do not support the creation of a decentralized finance (DeFi) ecosystem due to their limited functionality, which is restricted to minting and transferring. This lack of complexity has made it challenging to drive adoption for BRC20 tokens. To increase adoption, there is a need to integrate BRC20 tokens with existing DeFi ecosystems on popular chains such as Ethereum, Avalanche, and Solana. The introduction of inscriptions on these chains has lent credence to the potential of BRC20 tokens.
One notable solution to this challenge is the development of cross-chain bridges. These bridges are designed to connect BRC20 assets to other blockchain networks, making them accessible on decentralized exchanges (DEXs) like Uniswap. This connectivity enables users to trade and invest in BRC20 assets, potentially creating a positive feedback loop for adoption.
The first project to embark on building a cross-chain bridge between BRC20 and ERC20 tokens was OrdBridge, followed by Multibit_Bridge. Multibit launched the first-ever cross-chain bridge in this domain and quickly gained prominence, achieving over $450 million in volume. Despite its success, Multibit's bridge, which follows a typical burn and mint model, has been subject to security concerns, including vulnerabilities that could potentially lead to the draining of user funds.
OrdBridge has placed a greater emphasis on security. For example, they have implemented measures to prevent the infinite minting of ERC20 wrapped tokens and maintain a unique on-chain entry for every transaction to avoid network failures. In terms of product development, OrdBridge has successfully launched a BRC20 bridge for Ethereum and Avalanche, achieving over $25 million in volume since its launch.
OrdBridge's smart contract operations, including ERC-20 token minting and burning, have undergone an audit by bytes032, with identified vulnerabilities being addressed. On the token side, they offer a native token $BRGE on the BTC chain and $wBRGE on the Ethereum chain, allowing holders to earn a share in protocol revenue.
Looking forward, both Multibit and Ordbridge have ambitious plans to expand BRC20 bridges to other chain ecosystems, with Multibit planning a BRC20 to Solana bridge and Ordbridge launching a BRC20 to Avalanche bridge. As an incentive for early adopters, OrdBridge is offering a fee waiver until January 16, after which standard fees will apply!