Original title: "MT Capital Research Report: A Full Scan of the Inscription Track"
Original author: Xinwei
TL;DR
With the launch of ORDI on Binance, the inscription track of the Bitcoin ecosystem is developing rapidly, with a variety of innovative technologies and concepts emerging. SegWit and Taproot upgrades provide strong support for Bitcoin's programmability and scalability, driving the rise of projects such as Ordinals, BRC-20, and Atomicals. These technological advances not only increase the transaction capacity and flexibility of the Bitcoin network, but also create more sources of income for miners.
introduction
With ORDI listed on Binance, we have witnessed the beginning of a new era: a technological innovation and market prosperity led by the Bitcoin ecosystem. From the inscription craze at the beginning of the year to the current craze, the rapid development of the Bitcoin ecosystem and the huge growth of its value have attracted widespread attention. But behind all this, what is driving the popularity of the BTC ecosystem and the rapid expansion of its value?
technology
Before exploring this issue, we first need to understand several key technological advances in the Bitcoin ecosystem.
Segregated Witness (SegWit) is a key upgrade to the Bitcoin Core protocol launched in 2017 to address Bitcoin scaling challenges and specific vulnerabilities. It primarily facilitates the inclusion of more transactions by correcting transaction malleability issues and expanding Bitcoin block size limits. SegWit introduces the concept of block weight, replacing the traditional block size limit, so that a fully loaded block can accommodate approximately 2,700 transactions, a significant increase compared to the previous 1,650 transactions.
In addition, SegWit also brings a new encoding method Bech32 and two innovative script types.
With the Taproot upgrade at the end of 2021, the Bitcoin ecosystem began to support more complex scripts and data types, bringing great progress to the programmability and scalability of BTC. This provides a key opportunity for the explosion of the Bitcoin ecosystem in 2023.
The Taproot upgrade mainly includes changing the transaction confirmation method and introducing the Schnorr signature algorithm. The introduction of Schnorr signature provides many benefits, including better privacy protection, especially in multi-signature wallets. It allows all private keys to be compiled together, making multi-signature transactions look the same as other transactions, thereby improving privacy. In addition, Schnorr signature supports batch confirmation, making transactions cheaper and faster across the entire network.
Taproot also brings the potential for creating smart contracts to the Bitcoin network. While it may be more expensive and limited in functionality compared to platforms like Ethereum, the ability to enable smart contract interactions on Bitcoin, which is worth as much as $700 billion, is huge and could push smart contract technology into the mainstream.
Miner Benefits
In terms of miner interests, recent data shows that the Bitcoin inscription market is experiencing an unprecedented boom with the rise of projects like Ordinals and Atomics. According to data from oklink chain master, the income of Bitcoin miners has increased significantly in the past three months, especially in November. The proportion of on-chain fee contribution increased from 2.4% on August 19 to 11 23.46% on March 16th. This growth was mainly driven by the introduction of Ordinals trading pairs. This shows that the development of the Bitcoin inscription market has significantly increased the proportion of miners’ fee income. It is expected that this ratio may reach 50% by the time of the Bitcoin production cut in April 2024.
Currently, the competition for mining machine computing power has eased as US Bitcoin mines are mostly in a loss-making state and the semiconductor industry faces process bottlenecks. Therefore, miners may turn to Bitcoin inscriptions as a new source of income. For example, less than a year after the launch of Ordinals, more than 50,000 tokens have been issued in the market, and the number of mints and transactions has grown rapidly, which has greatly promoted the increase in miners' fee income.
The expansion of the inscription track not only drives the growth of miners’ revenue, but may also become the main driving force of the Bitcoin inscription track. However, miners are more concerned about the increase in the number of transactions rather than the fluctuation of the inscription price.
The above factors work together to promote the rapid development of the Bitcoin inscription track. But we must also realize that this development is not just a simple market boom, it represents the deep-seated changes and technological progress of the Bitcoin ecosystem. As Bitcoin continues to show its strong potential in all aspects, we have reason to believe that the Bitcoin inscription track will become a key factor in promoting the development of the entire cryptocurrency industry.
Ordinals & BRC20
The Ordinals project was initiated by developer Casey Rodarmor in December 2022. Thanks to Bitcoin's SegWit and Taproot upgrades, the flexibility and functionality of Bitcoin scripts have been improved. Ordinals gives each Satoshi a unique serial number and tracks them in transactions, allowing additional data to be attached. Ordinals allows users to inscribe data such as images, text, audio, etc. on specific unspent transaction outputs (UTXO), realizing the concept of asset transfer. At the beginning of this year, Ordinals was officially launched, quickly igniting the BTC ecosystem.
The emergence of the Ordinals protocol complements the adoption of Taproot, which promotes the encoding and writing of NFT data into Bitcoin blocks. NFT images are permanently engraved into BTC blocks, which is more decentralized than ETH NFTs and does not rely on third parties to view and transfer NFTs.
Ordinal theory focuses on the traceability of Bitcoin's smallest unit, sat, and designs rules to give each sat a unique number. Based on ordinal theory, on-chain data can be associated with sats to form inscriptions. Inscriptions are stored in taproot scripts and are recognized and displayed by off-chain index nodes. Since they cannot be operated on-chain due to index restrictions, the expansion of inscription functions depends on the development of ord, such as parent-child inscriptions and curse inscription indexes. Inscriptions are similar to Colored Coins in that they store data in transactions for off-chain program indexing, but inscriptions are stored in the input Taproot script, while Colored Coins are stored in outputs.
The implementation of Ordinals is completely dependent on the basic functions of BTC, and the transfer of NFTs is also completely handled by the BTC network. Due to its art attributes, the development potential of Ordinals is limited, but its emergence was still quickly adopted by the BTC fundamentalist community.
Initially, Ordinals was mainly used to create NFTs, but on March 8, 2023, anonymous developer Domo launched BRC-20 based on the Ordinals protocol, a Bitcoin altcoin issuance protocol similar to ERC-20, which defines a json data packet in a specific format and is inscribed on the BTC chain through Ordinals. BRC20 deployers can decide the total amount and name of the token on a first-come, first-served basis. $ORDI is the first BRC20 token deployed by Domo.
BRC-20 further develops on the basis of inscriptions, realizes homogeneous tokens, and writes the token casting and transfer process into the BRC-20 indexer. However, BRC20 needs to use a third-party sorter to record the ledger off the BTC chain, which adds additional complexity and becomes a weak point of the system.
BRC20 transfers are not executed on the BTC main chain and need to be divided into two steps of BTC transactions (collection first and then transfer), which generates a large number of junk transactions. Therefore, although BRC20 is sought after for its wide applicability and liquidity, it is controversial due to the lack of support from the BTC core community. Recently, some developers have begun to develop decentralized sequencers such as #Trac, but this is still limited by the overall framework and it is difficult to make a breakthrough. The concepts of Inscription-Based Virtual Machines and Rollup proposed by domo, the founder of BRC-20, at the Ordinals Summit indicate that BRC-20 may develop into a second-layer network.
With the launch of BRC-20, the scope of use of the Ordinals protocol has expanded, but it has also caused Casey's dissatisfaction. The Casey team even asked Binance to remove the association with Ordinals from the introduction of the ORDI token to draw a clear line. This shows that although both Ordinals and BRC-20 are promoting the development of the BTC ecosystem, there are obvious differences in community acceptance and development direction.
Atomicals & ARC20
Atomicals is an optimization project for Ordinals and BRC20, focusing on homogeneous tokens, solving the problem of BRC20's over-reliance on centralized off-chain indexes. It utilizes and expands Bitcoin's UTXO model, treating each Satoshi (the smallest unit of Bitcoin) UTXO as a specific Atomical token or digital object, thereby creating and managing complex digital objects and token systems (ARC20) on Bitcoin.
Key features of Atomicals include:
1. Use Satoshi as the basic unit to represent tokens.
2. Allows the creation, transfer, and update of digital objects on Bitcoin.
3. Provide a decentralized tokenization method that is consistent with Bitcoin culture.
4. Use Proof of Work (POW) to increase fairness and decentralization of the minting process.
5. Aims to expand the functionality of Bitcoin and support a wider range of applications.
Atomicals fundamentally rethinks how to issue tokens on Bitcoin in a centralized, immutable, and fair manner. It uses Satoshi as the basic "atom", and each Satoshi UTXO represents a token. When verifying Atomicals transactions, you only need to query the corresponding UTXO on the Bitcoin chain. The atomicity of ARC20 tokens is consistent with the atomicity of Bitcoin itself, and its transfer calculations are completely handled by the Bitcoin network.
Compared with BRC20, ARC20 transactions have a much lower demand for third-party sorters, which improves the decentralization of the system. The composability of UTXO makes ARC20 tokens more programmable. For example, in theory, the exchange of BTC and ARC20 only requires swapping the input and output of UTXO.
After the Atomicals protocol was launched in September, the first token ATOM was quickly mined. Compared with BRC-20, the mining process of ATOM is more technically demanding and fair.
Atomicals is minted and propagated based on Bitcoin's UTXO, with 1 token equal to 1 sat, which is technically more in line with Bitcoin fundamentalism. The Atomicals protocol has defined the ARC-20 token standard and other use cases.
The Atomicals protocol is highly respected by the community and is considered a complete set of protocols. The ARC-20 token standard is based on Bitcoin's UTXO for minting and transmission. Each unit of ARC-20 token is always backed by 1 sat, that is, 1 Token = 1 sat. All operations of ARC-20 tokens can be completed by relying on the Bitcoin network without additional steps.
Atomicals introduced POW in the ARC20 minting process. The minter must calculate the hash value of a specific prefix character to mint, which is a more decentralized fair distribution method. The Atomicals protocol provides Bitwork Mining prefix parameter settings for ARC-20, allowing participants to directly mine inscriptions/NFTs. The ARC-20 token standard is faithful to the fundamentalist principles of Bitcoin, and the emergence of related tools in the future will enhance its liquidity.
In summary, Atomicals, as a competitor of Ordinals, focuses on the decentralized creation and management of homogeneous tokens and digital objects. By expanding Bitcoin's UTXO model, it realizes a more decentralized token system that is more in line with Bitcoin culture. With its technical advantages and design that conforms to Bitcoin fundamentalism, the ARC-20 token standard is expected to gain support from the Bitcoin core community and bring wider application possibilities to the Bitcoin ecosystem.
Rune & PIPE
The RUNE protocol stems from Ordinals founder Casey Rodarmor’s recognition of the shortcomings of existing fungible token schemes on the Bitcoin network, such as BRC20 and Taproot Assets. Casey proposed the idea of a UTXO-based fungible token protocol that aims to address the limitations of these schemes.
The main features and design concepts of the RUNE protocol include:
1. UTXO-based: Runes balance is stored in UTXO, and each UTXO can contain any number of Runes.
2. Transaction and protocol information: The output of a specific script is considered part of the protocol information, which defines how Runes are transferred and distributed.
3. Flexibility: The transfer of Runes is achieved by interpreting the data push in the transaction, providing a flexible distribution method.
4. Issuance Mechanism: The second data push is considered an issuance transaction, allowing the creation of new Runes.
5. Simplicity and decentralization: The Runes protocol is as simple as possible, does not rely on off-chain data or native tokens, and adapts to Bitcoin's UTXO model.
6. Symbol Assignment: Runes can be associated with symbols, but the protocol does not address symbol squatting to maintain simplicity.
Although RUNE only exists in the conceptual design stage, BennyTheDev implemented PIPE Protocol based on the technical architecture proposed by Casey. PIPE is an important part of the TRAC ecosystem, which also includes BRC20 tokens $TRAC, Bitmap, and BennyTheDev's OrdFi ecosystem protocol TAP Protocol developed for BRC20, which allows BRC20 to implement DeFi functions such as token swaps.
BennyTheDev is an active Bitcoin community developer who launched the BRC-20 auxiliary tool LooksOrdinal in March, deployed the TRAC token in May, released the OrdFi-targeted Tap Protocol in August, and launched the Pipe protocol based on the Runes idea in October.
The Pipe protocol follows Casey's RUNE protocol idea and uses UTXO-based technology to achieve homogeneous tokens. The release of the Pipe protocol attracted hype from BRC20 and quickly completed the first round of hype. Although RUNE's acceptance in the Bitcoin community may face challenges, its legitimacy is still stronger than BRC20.
In general, the emergence of RUNE and PIPE protocols reflects the Bitcoin community's continuous exploration and innovation of the implementation of homogeneous tokens. Although these protocols are still in their early stages, they have shown potential and may bring more transaction fee income, developers and users to the Bitcoin ecosystem.
Bitmap & BRC420
Bitmap.land is the first metaverse project in the Bitcoin ecosystem, which is based on Ordinals theory and Bitmap theory.
Ordinals theory numbers the smallest unit of Bitcoin, Satoshi, and defines the scarcity of Satoshi. This can be figuratively understood as each Satoshi is a numbered box, whose scarcity is determined by the time of production and can be used to load data.
·Bitmap theory was proposed by Twitter user @blockamoto on June 13, 2023. This theory maps each transaction input in a Bitcoin block into a parcel, forming a block or district. The size of different transaction inputs results in different sizes of mapped parcels.
Influenced by Decentraland and The Sandbox, Bitmap.land buyers adopted a method of dividing land and drawing patterns on the map, similar to the logic of buying land on these two platforms. Users write data to Satoshi through inscriptions to obtain ownership of specific Bitcoin blocks, similar to free coin minting.
On the Bitcoin blockchain, each block is divided into four parts to represent different halving cycles. Users can view the number and color of each block on the Bitmap.land website, and different colors represent different sales status.
The Bitmap.land offering is closely tied to the ordinal theory, similar to how Decentraland and The Sandbox’s virtual land offerings rely on the ERC-721 standard. Ordinal theory is similar to the earlier principles of colored coins, but the two are different in the context of Bitcoin’s current narrative, consensus, ecology, and infrastructure. While ordinal theory is not as innovative as ERC-721, BRC-20’s approach is more original.
The bitmap theory adds a new interpretation to the Bitcoin blockchain, providing a topical element, albeit one lacking in practicality. It changes the relationship between Bitcoin and the metaverse, providing a new dimension to each block of the Bitcoin blockchain and making it part of the metaverse by allowing users to own and record individual blocks.
The Bitmap theory has attracted the attention of the Ordinals community and inspired the inscription craze. Any block on the Bitcoin blockchain can become part of the metaverse through Bitmap, bringing new creation and ownership opportunities to the community.
Bitmap.land blurs the line between Bitcoin and the Metaverse through Bitmap Theory, paving the way for ownership, creativity, and community development. As the inscription craze continues, this means huge potential for those seeking to carve out a niche in the digital realm.
The BRC-420 protocol, with the total number of Ordinals inscriptions exceeding 40 million since November 13, 2023, has become one of the active token protocols in the Bitcoin ecosystem. Unlike traditional token protocols, BRC-420 focuses on on-chain inscription modularity, creating a new asset type on Bitcoin. Its first token, commonly known as “Blue Box,” has achieved significant market growth, growing from an initial $0.15 to $1,000, with developers earning significant on-chain royalty income in a short period of time.
The BRC-420 protocol is a Bitmap-based asset protocol that combines multiple inscriptions into a complex asset to create a variety of assets from small characters and pets to complete game scripts and virtual machines. These assets are open source on the chain and can be run or verified by any client, fully embodying the "Client Agnostic" spirit of the full-chain game. Although RCSV's Bitmap browser dominates the market, other teams also have the opportunity to develop clients to run BRC-420 assets.
From a market perspective, Bitmap has more than 25,000 Holder addresses, surpassing Sandbox to become the Metaverse asset with the most Holders on the entire chain. This achievement is due to its fair launch mechanism and the collective efforts of more than 200 development teams around Bitmap. The market value of BRC-420 has grown with the launch of the Bitmap browser and the protocol itself, and currently stands at approximately $30 million.
RCSV, the project owner of BRC-420, is actively promoting the full-chain game plan for the Bitcoin ecosystem. The plan emphasizes the assets, gameplay, logic, and data on the entire chain, aiming to create a truly decentralized Bitcoin chain game ecosystem. For example, developers can use the "fighting module" on BRC-420 to quickly develop and release new games, while only paying royalties through the agreement.
RCSV also proposed a solution to expand the Bitcoin network to address the capacity limitations of the Bitcoin network when processing a large number of transactions. The solution aims to migrate assets from the first layer to the second layer and implement a complete virtual machine environment on the next layer of the Module. This arrangement aims to provide a low-fee, high-efficiency interactive environment for Bitcoin's first-layer assets while ensuring security to the greatest extent possible.
In general, the BRC-420 protocol and the related Bitmap project are stimulating innovation and vitality in the Bitcoin ecosystem. By creating complex, modular digital assets, BRC-420 is providing new economic opportunities and interactive experiences for creators, developers, and users. With the continuous efforts of the RCSV team, the full-chain game and metaverse concepts of the Bitcoin ecosystem are gradually becoming a reality, showing the broad prospects of Bitcoin technology and applications.
BRC100
BRC-100 is an extension protocol based on the Ordinals theory, designed for implementing various decentralized applications on Bitcoin Layer 1. This protocol not only inherits the basic functions of BRC-20 on Bitcoin, such as creation, minting and trading, but also introduces the concept of decentralized computing. This means that based on the BRC-100 protocol stack, various decentralized applications such as DeFi, SocialFi and GameFi can be developed, bringing truly decentralized, trustless, censorship-resistant and permissionless application scenarios to the first layer of Bitcoin.
A major feature of the BRC-100 protocol is its interoperability, which not only allows all protocols and applications within its protocol stack to be compatible with each other, but also supports interaction with BTC, brc-20 or other layer 1 chains such as Ethereum and Stacks. In addition, the protocol also introduces the UTXO model and state machine model, which enhances its security and computing power.
The protocol also includes a series of innovative features, such as inheritance concept, application nesting, address and application status, permission settings, and decentralized governance. For example, the inheritance concept introduced by BRC-100 allows the protocol to directly or indirectly inherit the characteristics of BRC-100. At the application level, applications deployed based on BRC-100 and its extended protocols can be nested to form sub-applications. At the same time, the protocol also introduces two roles: owner and administrator, which provides a basis for decentralized governance of applications.
The practicality of BRC-100 is reflected in its diverse application cases, from the governance protocol BRC-101 to the automated liquidity protocol BRC-102, as well as functions such as staking, airdrops, lending, and stablecoin pools. These extended protocols make BRC-100 not only limited to token transactions, but also support more complex financial operations and calculations.
In general, the BRC-100 protocol has opened up a new field of decentralized applications on the Bitcoin chain through its innovative features and powerful computing power. It not only inherits the advantages of BRC-20, but also provides an open protocol framework, providing new possibilities for the future development of the Bitcoin ecosystem.
Taproot Assets & Nostr Assets
Taproot Assets is a protocol launched by the famous Lightning Labs, which aims to create and trade various digital assets on the Bitcoin network and integrate with the Lightning Network. The Lightning Network has been widely recognized by the Bitcoin community as a mature Bitcoin derivative protocol. The update of Taproot Assets expands the function of the Lightning Network from a simple point-to-point transaction payment channel to a point-to-multipoint mode that can realize asset distribution and circulation. The feature of Taproot Assets is that the token information is recorded in the UTXO output script of the Bitcoin main network as a registration, while functions such as transfer transactions are implemented in the Lightning channel. The biggest difference from BRC20 and ARC20 is that Taproot Assets is issued by one owner in advance and then distributed, rather than freely minted.
Taproot Assets is backed by Lightning Labs and Twitter founder Jack Dorsey, who have a large financing background, giving it an edge over other grassroots projects in terms of legitimacy and community support.
NostrAssets is an open source protocol that introduces Taproot assets and Satoshis (bitcoin units) to the Nostr ecosystem. Users can send and receive assets at the Nostr protocol layer using Nostr's public and private keys. The settlement and security of assets rely on the Lightning Network, and the Nostr Asset Protocol itself does not issue assets, but only introduces assets to Nostr through the protocol.
NostrAssets features include seamless integration of Taproot assets and Bitcoin into the Nostr ecosystem, providing developers with tools to create innovative products, enriching the value of the Bitcoin and Lightning Network ecosystems, and enabling a seamless experience from chat to transaction. In the future, NostrAssets plans to import Taproot assets from other Daemon Universes, allowing the receipt and sending of Taproot assets in and out of Nostr.
NostrAssets' vision is to drive user participation in the Bitcoin ecosystem and deliver Taproot assets to users around the world. By providing modular development tools, NostrAssets aims to facilitate the construction of decentralized applications that provide user-friendliness and commercial practicality.
On October 30, Nostr Assets airdropped the first token on its platform, TRICK&TREAT, to users who participated in its early missions to celebrate Halloween. The value of these tokens has now risen to about $2,000.
The total supply of these tokens is 210 million each, for a total of 420 million. The total airdrop is approximately 80 million, which is approximately 20% of the total supply.
Nostr Assets also announced the upcoming launch of the Fair Mint feature and is looking for projects interested in issuing assets on Twitter for collaboration. This means that once the feature is launched, a large number of new assets are expected to appear on the protocol, which may attract widespread attention and participation from the community. This series of activities shows that Nostr Assets is actively expanding its ecosystem and preparing for future development.
Ethereum Inscription
Ethscriptions is a protocol that replaces smart contracts and L2, allowing users to share information and perform computations at low cost on Ethereum L1. It enables decentralized computing by bypassing smart contract storage and execution by applying rules to Ethereum call data. In August 2023, Ethscriptions introduced a virtual machine (ESC VM) to enhance its capabilities and make it a general-purpose computing engine.
The founders of Ethscriptions are Middlemarch (a domo similar to BRC20) and Michael Hirsch. Its first protocol token is $eths. As the current leading token, the early minting price was only about $0.5, and subsequently rose to about $3,000 in the market, bringing significant returns to investors. Although this result is not as good as the $ORDI and $SATS of the BRC20 track, it has shown significant growth compared to other inscription tracks, establishing its position among the thousand-fold tracks.
In addition to $eths, there are other projects worth paying attention to in the Ethscriptions track, such as Facetswap. Facet is a decentralized trading platform developed by Middlemarch and Michael Hirsch, originally named dumbswap, and later renamed Facetswap. Although the price and market value of $Facet are temporarily lagging behind $eths, its potential value may become more obvious after the mainnet is launched.
iERC20 is a new Ethereum-based token protocol that provides a low-cost token ecosystem that allows anyone to deploy, mint, and trade tokens. $Ethi, as the first token in the iERC20 ecosystem, has received official support. This protocol not only provides more choices for Ethereum users, but also promotes the development of the inscription ecosystem on the Ethereum chain.
In the latest cryptocurrency development, the iERC20 protocol and Sparkle, a GameFi project incubated by Binance, announced a partnership to introduce Inscription NFTs and other inscription assets on iERC20, aiming to leverage the advantages of inscriptions to enhance the gameplay of the GameFi ecosystem. This collaboration has attracted widespread attention in the Ethereum community, especially shifting the focus from ETHS to the iERC20 protocol.
The uniqueness of the iERC20 protocol is that it not only develops the Swap function, but also integrates the EVM cross-chain function, building a bridge between Ethereum inscriptions and traditional Layer 2. This feature enables the protocol to introduce more mainstream coins and stablecoins, thereby expanding the TVL of the inscription ecosystem and providing more development possibilities for the entire system.
In addition, the iERC20 protocol also plans to introduce a fair mining model of PoW and cooperate with other projects to launch new inscriptions, similar to the mining method of the Atom protocol. This strategy is expected to bring new impetus to the development of the Ethereum ecosystem.
Although $Ethi was launched almost at the same time as $ETHS, $Ethi did not initially gain fame as quickly as $ETHS due to its relatively low profile in the early stages. However, as the price of $ETHS rose and market attention increased, $Ethi also began to receive more and more attention. $Ethi's splittable technology makes it more attractive to retail investors. Although its current market value is still lower than $ETHS, its development potential cannot be ignored.
In the iERC20 ecosystem, $Ethi is seen as an important tool, similar to a shovel, that provides special empowerment to holders. For example, users holding $Ethi may receive inscription airdrops from cooperative projects, such as the recent cooperation with Sparkle. In addition, the FOMO sentiment in the community is spreading, and many investors are optimistic about the future development potential of $Ethi, believing that it is an official iERC20 recognized leading token, and will increase in value with the launch of the PoW mechanism and the continued development of the inscription ecosystem.
Overall, the ERC20 track is showing its great potential and may create more miracles after BRC20. With the addition of more high-quality projects and the development of the ecosystem, this field is expected to attract more users and innovations.
Other public chain inscriptions
As the wealth effect generated by Bitcoin inscriptions spread to other public chains, various "RC 20" tokens began to arouse heated discussions in the community, forming a FOMO phenomenon, including DOGE inscriptions, BSC inscriptions, Litecoin inscriptions, BASE inscriptions, Polygon inscriptions, Solana inscriptions, etc.
In particular, on November 16, the gas fee of the Polygon network rose sharply, reaching 1,800 gwei, because the community discovered the PRC-20 standard token POLS deployed in May this year. According to evm.link data, the total issuance of POLS is 21 million.
Inspired by the missed Bitcoin inscription token SATS, community members have begun to "play a few self-defense cards". Compared with the high costs of BRC and ERC, the simple and low-cost POLS has quickly gained attention in the community. Users can mint POLS by visiting evm.link and paying a fee of less than 0.05 Matic.
The community also shared methods to mint POLS in batches through the batch collection function (which requires importing the wallet private key) or scripts. Polygon’s low gas fee is considered one of POLS’s advantages as an inscription token. If 21 million POLS are fully minted, Polygon could become the chain with the largest number of inscriptions of any EVM chain, including Ethereum. This is naturally reminiscent of the BRC inscription token SATS, which has attracted a lot of attention from the community due to its significant gains.
Future Opportunities
In March 2023, Galaxy Research and Mining predicted that by 2025, the market value of the Ordinals market will reach 5 billion US dollars. At that time, the number of inscriptions was only 260,000, and now the number of inscriptions has reached 33 million, an increase of 126 times in just half a year. The market value of Dragon One ORDI has reached 400 million US dollars, and the market value of Dragon Two SATS has reached 300 million US dollars. It can be seen that the forecast for the entire inscription market is still greatly underestimated.
Different protocols in the inscription track emerge in an endless stream, and the biggest beneficiaries are of course miners. According to Tokenview on-chain data monitoring, the daily transaction fee of the Bitcoin network reached 11.6 million US dollars, surpassing Ethereum for the first time since 2020. With the upcoming halving of Bitcoin, miners are in urgent need of finding income supplements. The prosperity of the inscription track brings benefits to miners while also maintaining the security of the Bitcoin network in disguise. The reduction of block incentives will also make miners increasingly dependent on transaction fee income to pay for operating costs. In the long run, Bitcoin will definitely compete with multiple expansion plans in the future. The outbreak of this round of inscription track and the resulting high transaction fees are the catalysts for moving towards this future. At present, BRC20's trading activities are mainly concentrated in OKX and Unisat. With the emergence of various other protocols, different trading markets have emerged for different protocols, such as Atomicals Market for ARC20. The emergence of the final leading protocol will inevitably give birth to a unique trading market, and the competition in the trading market is far from over. The wallet market is similar. Currently, the main wallet of BRC20 is Unisat, but there are still different wallets on the market that have launched and connected to different inscription protocols.
As funds continue to pour into the inscription market, users are no longer satisfied with the hype of memes and are beginning to turn their attention to inscription-based applications. BRC420 mentioned in this article is a typical example. Unisat also brings innovation to BRC20. Through BRC20-Swap, users can easily exchange BRC20 tokens like AMM DEX. As the first product to improve the liquidity of the Ordinals ecosystem, it is expected to unleash the potential of the Bitcoin DeFi ecosystem. More functions such as lending and derivatives may appear in the future. Recently, Unisat has also opened an API interface, which is very friendly to small developers. Many functions can be called, such as automatic batch scanning, monitoring inscriptions and automatic mint, which can generate a lot of tool projects.
ORC20 returned on November 20th, releasing the Nirvana upgrade, improving the inscription format to support BTC DeFi integration, introducing stablecoin support, providing services for issuers such as USDT and USDC, etc. Compared with BRC20, ORC20 is obviously more complex, and the initial supply and maximum minting amount can be changed, and the naming is no longer restricted to four-character words. However, it is also considered by the community to be more centralized, and the upgradeability is also considered by the community to violate the immutable spirit of blockchain, and there are concerns about problems such as malicious issuance by the project party and rat trading.
In general, BRC20 is the most original and first protocol to be listed on exchanges, with the strongest community consensus and fair launch, which has left a very good impression on users. With the launch of ORDI on Binance, it also means that all exchanges have begun to recognize and support innovation in the inscription track. Because the technical difficulty of supporting BRC20 deposits and withdrawals and self-built indexes is not small, it is expected that BRC20 tokens will still be listed on exchanges first in the future. And BRC20 tokens cannot always be memes. Project owners can completely choose an existing BRC20 token with community consensus as a utility token, which can avoid regulatory risks and gain a ready-made community.
Summary and Outlook
The development of the Inscription track has shown significant vitality and innovation. The growth of this track is mainly due to the key technological advancements of Bitcoin such as SegWit, Bech32 encoding, Taproot upgrades and Schnorr signatures. These technologies not only improve the Bitcoin network transaction efficiency and scalability, and also increases its programmability. With the application of these technologies, the inscription market has experienced a rapid boom, not only attracting investors and users, but also promoting the development of diverse projects and protocols, such as Ordinals, BRC20, and Atomics.
The growth of this track has also had a positive impact on the interests of miners. With the rise of projects like Ordinals and Atomicals, miners' income sources have been expanded, indicating the importance of the inscription track to the Bitcoin network. In addition, other public chains have also begun to appear in the inscription track, showing its wide potential and influence.
Looking ahead, the inscription track is expected to continue to witness technological innovation and promote the realization of more complex functions. The market growth is expected to continue, bringing more investment and participation opportunities. At the same time, it can be foreseen that more innovative projects and protocols will emerge to further enrich the inscription ecology of Bitcoin and other public chains. Miners' income may also continue to grow as the inscription track provides new income opportunities.
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