Author | defioasis
(1) Ordinals Opens the Pandora’s Box of Bitcoin Ecosystem
(Data source: https://dune.com/dgtl_assets/bitcoin-ordinals-analysis)
In December 2022, Casey launched the Ordinals protocol, opening the Pandora's box of the Bitcoin ecosystem. The Ordinals protocol assigns a unique serial number to each satoshi, and any user can engrave additional information on the satoshi, including text, pictures, videos, and 3D models. These inscriptions can be saved in Bitcoin wallets and tracked in Bitcoin transactions, and have the same characteristics as Bitcoin, such as immutability and decentralization. Casey positioned it as saving something eternal and unchanging on Bitcoin, and it was originally used to create and store NFT collections. Currently, the number of Bitcoin inscriptions has exceeded 57 million, contributing more than $230 million in cumulative fees.
(2) Bitcoin Punks lead Ordinals to debut
(Data source: https://geniidata.com/user/orddata/bitcoin-punks)
On February 9, 2023, Bitcoin Punks, the first NFT that uploaded Ethereum CryptoPunks bytes to the Bitcoin chain using the Ordinals protocol, sparked heated discussions on social media. At 15:24 on February 9, all 10,000 Bitcoin Punks were minted in less than two days. At first, most people didn't notice Ordinals, which was just another copy of Punks on a different blockchain, until the inscription revolution brought by Ordinals became relevant to everyone.
(3) BRC-20 Ignites Bitcoin Ordinals
(Data source: https://dune.com/dgtl_assets/bitcoin-ordinals-analysis)
In March 2023, anonymous developer domo launched BRC-20 based on the Ordinals protocol. BRC-20 is essentially a specific JSON text file used for transactions. The JSON file is an Ordinal inscription with a unique number. Each JSON file corresponds to a specific BRC-20. BRC-20 can be seen as a Bitcoin altcoin issuance standard with the characteristics of fair launch. After its launch, BRC-20 quickly ignited Bitcoin Ordinals in a short period of time, and tens of thousands of inscription tokens were born. Currently, about 95% of the inscriptions on Bitcoin Ordinals are text types represented by BRC-20 as the main representative.
(4) OKX shines in inscription layout
(Data source: https://dune.com/domo/ordinals-marketplaces)
As the first mainstream centralized exchange to enter the inscription sector, in addition to the analysis and strategy of the research team behind it, the technical reserves of OKLink built by OKX over the years have also played an absolute advantage. The experience of the built-in wallet of OKX Web3 Wallet, which can be called the best product innovation of Crypto in 2023, is highly dependent on the service data behind OKLink. The continuous improvement of the stability of the back-end service allows the front-end product to be highly in line with user needs. At present, OKX Web3 Wallet has basically become the first choice for inscription users to enter the market. Its market share in inscription transaction volume and users has stabilized at more than 60%, and its market share has been maintained at 80%-90% in November-December 2023. On December 16, when the on-chain market transaction volume of Bitcoin Ordinals hit a historic high of more than 80 million US dollars, OKX Web3 Wallet contributed nearly 74 million US dollars in transaction volume.
(5) Sophon sniper robots sweep BRC-20
(Data source: https://dune.com/queries/3381233)
From late September to mid-October 2023, BRC-20 faced one of the biggest crises since its birth, with the number of on-chain castings almost dropping to 0. This was caused by a BRC-20 sniper robot named "Sophon" invented by anonymous developer Rijndael. The Sophon robot takes advantage of the "first come, first served" deployment mechanism of BRC-20 and the publicity of most Bitcoin transactions to monitor BRC-20 deployments in Bitcoin transactions, and then broadcasts similar inscriptions for the same token code at a higher rate, so that other BRC-20 deployment transactions can be replaced, making the copied BRC-20 "official". In addition, Sophon also sets each deployed token to 1, so that each deployed token has only one holder, and on-chain casting activities stagnate. Fortunately, Rijndael is not a hacker, and Sophon costs a lot of money to run. After running for a while, it was finally shut down and donated to the open source software opensats.
(6) ORDI was listed on leading exchanges OKX and Binance
(Data source: https://coinmarketcap.com/currencies/ordi/)
As the first inscription token of BRC-20, ORDI has increased tens of thousands of times in less than a year, from the initial fair launch that only required Gas to be minted to more than $90. In this process, BRC-20, led by ORDI, and the Ordinals protocol behind it have gradually been recognized by more users. In May and November 2023, ORDI was listed on the two major exchanges, OKX and Binance, respectively, and completed a tenfold increase in one month after listing on Binance. Subsequently, SATS also landed on Binance and OKX. The listing of ORDI and SATS on the head exchanges has allowed users to see the exchanges' positive attitude towards inscription assets, and look forward to more inscription tokens being listed.
(7) Inscription activities take turns to carry out "stress testing" on major public chains
(Data source: Chain Explorer)
From mid-November to December 2023, the abundance of inscription funds began to overflow from Bitcoin to major EVM public chains, and the FOMO sentiment for the first inscription asset quickly spread to major public chains, and even the test network became the object of pursuit. More than a dozen public chains suddenly burst out millions or even tens of millions of transactions on a certain day, causing some public chains to crash.
(8) Inscription narrative is expected to become a new potential growth point for Bitcoin miners’ income
(Data source: https://studio.glassnode.com/metrics?a=BTC&category=&m=fees.VolumeSum&s=1672531200&u=1706198399&zoom=)
Driven by Inscription activity, Bitcoin’s USD-denominated transaction fees reached an all-time high of $23.69 million on December 16, 2023. Unlike the previous two bull markets, which peaked in four-year cycles, 2023 is not yet considered a bull market, which also allows miners to see the huge potential of Inscription to promote transaction fees on the Bitcoin network. Especially with the halving approaching, the halving of earnings may significantly improve the economic income of miners if the demand for inscriptions is sustainable.
(9) External crisis: Bitcoin Core client developer Luke Dashjr requests to disable inscriptions
(Data source: https://github.com/bitcoin/bitcoin/pull/28408)
Bitcoin Core client developer Luke Dashjr submitted PR#28408to Bitcoin Core Github in September 2023, which updated "datacarriersize" to filter transactions such as "inscriptions" that carry new script data. On December 6, 2023, Luke criticized on social media that "inscriptions" were exploiting Bitcoin Core vulnerabilities to spam the blockchain and hoped that the vulnerability could be finally fixed before the release of v27 in 2024. Luke classified the inscriptions of the fire as a Bitcoin vulnerability and was determined to fix it, which became the biggest external crisis faced by Bitcoin inscription protocols such as Ordinals at the time.
Around the issue of whether to keep or remove the inscription of PR #28408, major Bitcoin developers held a heated discussion on Bitcoin Core Github for a month and published hundreds of posts. At the same time, on social media, various forces representing miners, developers, communities, and users also started a war of words. However, due to the large differences in opinions and the difficulty in reaching a conclusion, Bitcoin Core core maintainer achow101 believed that the PR was obviously controversial and eventually closed the PR on January 5, 2024. At this point, the external crisis of the Bitcoin inscription protocol has come to an end. During this period, although the inscription asset representative ORDI was affected in the short term, it still rose by nearly 35% overall and set a record high.
(10) Internal crisis: consensus disagreement between BRC-20 creator domo and largest indexer UniSat
BRC-20 is based on the Ordinals protocol, but it is not native to the Ordinals protocol. When the Ordinals protocol is facing an upgrade, BRC-20 will face the question of whether the index will follow the Ordinals protocol upgrade. The index is essentially a consensus carrier. In order to maintain the stability of the index, domo froze BRC-20 at ord v 0.9 in November 2023. However, with the development of the Ordinals protocol, earlier problems such as unrecognizable curse inscriptions have been fixed, and many new features have been brought, which makes BRC-20, which is frozen at ord v 0.9, face a big choice.
On January 3, 2024, UniSat, which has the largest index consensus in the market, chose to upgrade BRC-20 to Ordinals Jubilee, which was contrary to the original intention of domo, the creator of BRC-20. Domo criticized UniSat for forking BRC-20. The "stabilization faction" of Layer 1 Foundation led by BestinSlot and domo and the "upgrade faction" of UniSat and Ordinals Wallet formed two forces on the BRC-20 issue. One is the creator and the other is the largest index consensus. BRC-20 is facing an unprecedented huge internal crisis. Although the opinions are inconsistent, the starting point for BRC-20 is good. After friendly communication between the two parties, domo and UniSat finally reached an agreement on January 5, two days later, agreeing that BRC-20 will follow the Ordinals upgrade. OKX and Binance also support BRC-20 to upgrade according to the Ordinals protocol. Although the crisis was resolved in a very short time, it also made people realize that assets derived from the Ordinals protocol are prone to the test of consensus split in the early stages of development.
(11) Ordinals The diversified ecology of inscription assets cannot be ignored
(Data source: https://dune.com/dgtl_assets/bitcoin-ordinals-analysis)
Although texts, led by BRC-20, dominate the inscription types, other types of inscription assets have never stopped developing, and accurate positioning can still have a niche for development. From Bitcoin Punks to Bitcoin Frogs to NodeMonkes, image-type assets represented by NFTs have maintained a stable development trend, and the completely on-chain and tamper-proof characteristics have returned to the essence of NFT collections; 3D model-type assets represented by BRC-420 blue boxes have demonstrated the imagination of building a metaverse on Bitcoin. On January 23, 2024, the number of model inscription assets minted reached a historical high of 61,000; building applications on Bitcoin has become a reality.
(12) The Runes protocol proposed by the founder of Ordinals is highly anticipated
(Data source: https://geniidata.com/user/jonsnft/degen)
Tired of the adverse consequences of the massive increase in UTXOs brought about by BRC-20, Casey, the founder of the Ordinals protocol, publicly criticized BRC-20 on social media on September 25, 2023, and proposed a new tokenization standard protocol Runes to replace BRC-20. The balance of Runes is recorded and saved by UTXO, and a UTXO can contain any number of runes. Compared with BRC-20, UTXO-based Runes is more in line with the native characteristics of Bitcoin, reducing the harm caused by the expansion of the UTXO set and reducing the risk of consensus differentiation due to reliance on external indexes.
The "official version" of the Runes protocol mainnet launched by Casey is scheduled to be launched at the next Bitcoin halving, but the Runes vision has been realized on some grassroots protocols, such as Rune Alpha, which deploys the COOK rune token; the PIPE Protocol launched by the inscription model worker Benny, which gave birth to rune tokens such as PIPE; RSIC's new mining method, the mining output is a certain rune token after the Runes protocol is launched in the future.
(13) Atomicals protocol based on UTXO model shows potential
(Data source: https://dune.com/0xmatsu0x/atomicals-vs-ordinals)
In September 2023, after months of polishing, Arthur launched Atomicals, an improved protocol of Ordinals based on the Bitcoin UTXO model. It has a GPU Bitwork mining mechanism and natively defines three asset types: NFT, ARC-20, and Realm. ARC-20 is a dyed satoshi token standard, and each ARC-20 token is backed by 1 satoshi. Because it is closer to the original ecology of Bitcoin, Atomicals is also considered by the community to have the potential to take over Ordinals and start a new round of inscription ecological prosperity. Because it has the same name as the basic unit of matter, the atom, the Atomicals protocol has formed a physical MEME culture headed by ATOM, and most of the other ARC-20s are also named after physical terms. On January 1 and January 21, 2024, the casting activities of QUARK and SOPHON both pushed Atomicals to surpass Ordinals in the number of castings/deployments per day.
(14) Airdrops to Bitcoin degen players may become the norm, RSIC’s first high-value airdrop
(Data source: https://dune.com/keyinotc/rsic-airdrop)
On January 22, 2024, RSIC airdropped to 9.27k addresses including Ordinals active addresses and blue-chip BTC NFT holders. The total amount of RSIC is 21,000, and the current floor price is over 0.036 BTC (about $1,500). This is the first time that the Inscription project has been cold-started with a high-value airdrop. In the future, airdrops to active Bitcoin players may become more and more normalized.
(15) Bitcoin expansion path exploration, BTC L2 ushered in a blowout
(Data source: https://bitvm.gitbook.io/cn/btc-layer2/overview/detail)
According to statistics from the BitVM Chinese community, there are more than 30 BTC L2s currently available on the market, which can be divided into side chains, off-chain computing, Rollup, data availability, state channels, client verification, and others according to their characteristics. Side chains include BEVM, MAP Protocol, and Merlin Chain, Rollup includes QED Protocol, BitVM, and Bison, data availability includes Veda and Nubit, state channels include OmniBOLT and Lightning Network, client verification includes RGB, and others include Bool Network, Dovi, and Bitfinity Network. It is ultimately expected that more than 100 BTC L2s may be born in this cycle.
In just one year of Inscription’s development, various protocols and assets have emerged one after another. However, for most of the early protocols, the infrastructure such as indexes and data is not yet sound, and my data mining capabilities for some protocols are insufficient, so I am sorry that I have not been able to mention all of them.
reference:
https://mp.weixin.qq.com/s/vIfc_CUKsQlCXBgkaF2VdA
https://www.theblockbeats.info/news/49464?search=1
https://www.odaily.news/post/5191700
