Author: Howe
Editor: Faust, geek web3
From a technical perspective, the current asset issuance schemes in the BTC ecosystem can be divided into two factions: UTXO-bound and non-UTXO-bound. The main difference lies in whether the data of the inscription assets is directly related to the UTXO on the Bitcoin chain. Union. According to this distinction, BRC-20 is a non-UTXO-bound asset, while ARC-20 under the Atomics protocol is the first UTXO-bound asset.
This article will objectively analyze the history, current situation and future development of the Atomics protocol, mainly from the emerging concepts and technologies brought by the Atomics protocol, and the development direction of the entire Atomics ecosystem. Through this article, readers will more easily understand why we call the Atomics protocol a âself-contained BTC ecological revolution.â
Image source: https://twitter.com/okxweb3/status/1765967704282816873
Text: The birth of the Atomicals protocol was quite dramatic. When the Ordinals protocol was first released, founder Arthur wanted to develop a DID project on top of it. However, during the development process, he found that the Ordinals protocol had many limitations and was not conducive to supporting some of the features he wanted to achieve.
So, on May 29, 2023, Arthur posted the first tweet about the idea of ââthe Atomics protocol on Twitter. After several months of development, the Atomics protocol was launched on September 17, 2023.
Later, the Atomics protocol derived four major concepts such as Dmint, Bitwork, ARC-20, and RNS, and AVM and split solutions will be launched in the future. In the following, we will explain the principles of these typical product innovations to help everyone understand the innovation of Atomics more quickly.
Image source: https://twitter.com/atomicalsxyz/status/1761738325176553535
Bitwork: Non-exclusive PoW
The Atomics protocol adds PoW to the token minting process. This link is called Bitwork. The principle is similar to Bitcoin mining and is set up to limit current flow and anti-witches.
Let's first look at the principle of Bitcoin mining: miners continuously provide different input values ââto a given algorithm locally, trying to make the output value meet the requirements of the Bitcoin protocol. Miners may get lucky and get a result that meets the conditions. At this time, the corresponding output value and input value are written into the block as a "letter of commitment" and used as a chip to obtain mining rewards. Next, as long as this new block is recognized by the vast majority of nodes in the network, the miner can get BTC rewards.
In the Atomics protocol solution, you need to perform a similar process and obtain input and output parameters that meet the restrictions before you are eligible to mint tokens. Similar to Bitcoin, Atomics can also dynamically adjust the mining difficulty. For example, the protocol can stipulate in advance:
Miners who want to get rewards need to find a set of parameters that, after being input into a given algorithm, satisfy the following conditions for the output value: the first four digits are all 6, and the fifth digit is greater than 10 (hexadecimal). At this time, the restrictions are relatively loose. However, the Atomicals protocol can periodically change the restrictions, such as requiring the first five digits of the output value to be 6, which tightens the restrictions and increases the difficulty of mining for miners.
There is a fundamental difference between Bitwork and Bitcoin mining: Bitcoin mining is exclusive, Bitwork mining is non-exclusive. For example, suppose that after blocks No. 99 and No. 100 appear in the Bitcoin network, different mining pools compete for the accounting rights of the 101st block. In the end, only block No. 101 given by one mining pool will be used. The Bitcoin network recognizes that blocks submitted by other mining pools will be "invalidated". This is the exclusivity of Bitcoin mining.
Obviously, cruel and exclusive competition is not conducive to the survival of individual miners. Many small miners will eventually contribute their mining machines to large mining pools, which will act as a "whole" that gathers a large amount of computing power and compete with other mining pools. There is no doubt that this will make the computing power within the Bitcoin network tend to be highly centralized, which is even clearly mentioned in the Ethereum white paper.
Completely different from Bitcoin mining, ARC-20 mining under the Bitwork protocol is non-exclusive, that is to say, there is no strict competitive relationship between different miners, as long as the current amount of Atomics assets minted does not exceed the specified total amount , the mining results (token minting statements) given by miners through the Bitwork mechanism will eventually be included in the history of the protocol.
Let's imagine the following scenario: suppose an ARC-20 asset that follows the Bitwork protocol begins to be issued, allowing users to mint it in the form of mining. Someone gives a relatively low gas, but there are many people participating in the asset minting, and the gas fee immediately soars. The minting request that gave a low gas will be stuck and cannot be uploaded to the chain. However, as long as the ARC-20 asset has not been minted, then after the gas fee drops, the mint request will still be recognized and trigger the minting behavior.
In a nutshell, Bitwork only looks at the remaining mintable amount of the asset, not the order of minting requests. Under the Bitcoin mining protocol, miners who submit blocks late will most likely be eliminated by other miners.
There is no doubt that Atomics has lowered the participation threshold for miners/asset miners. The traditional PoW public chain is subject to huge mining difficulty. The right to produce blocks is basically monopolized by several major mining pools. Individual miners have only a very low probability of success. Mining, and Bitwork's improvement measures have greatly weakened the status of centralized mining pools, making it more conducive to the participation of individual miners and making asset distribution more fair.
Considering that PoW itself is a fairer asset distribution scheme than PoS and ID0, the Atomicals protocol further increases the fairness of asset distribution, with both the value injection of physical resources and the existence of random luck (mining is a process of hitting the jackpot). This further promotes the development of the "Fair Launch" concept.
ARC-20: More like dyed coins than inscriptions
In fact, many people have misunderstandings about the ARC-20 concept included in the Atomicals protocol, thinking that it is also an inscription protocol. But in fact, ARC-20 is closer to colored coins. It uses the smallest unit of Bitcoin, sat, as the basic "atom". The number of Sats corresponding to each Bitcoin UTXO represents the amount of ARC-20 assets bound to it, 1 sat = 1 Token.
Here we take an ARC-20 called "TEST" as an example to explain its operating principle.
First, the token issuer of TEST must determine which Bitcoin block to use as the "Genesis Block" of TEST, and record the initialization information in a Bitcoin UTXO transaction script in the Genesis Block. These initialization information include token symbols, total supply, etc. This process is actually equivalent to coloring, coloring the Sats in the existing Bitcoin UTXO into a form bound to ARC-20. The sats balance of this Bitcoin UTXO is equivalent to the amount of ARC-20 assets.
The above-mentioned TEST token issuer can use the function of the Taproot locking script to set some restrictions. Only those who meet the restrictions can transfer some Sats from the Bitcoin Sats controlled by the above-mentioned locking script. As we mentioned earlier, these Sats are dyed. If you take part of the Sats locked by the issuer, it is equivalent to acquiring the same amount of TEST tokens.
After the above-mentioned asset minters successfully obtain TEST tokens, they can directly transfer these ARC-20 tokens to others. This process is almost the same as the normal transfer on the Bitcoin chain, which is to split the Bitcoin UTXO on the handle. If one or more copies are transferred to others, these divided Bitcoin UTXOs will correspond to as many ARC-20 tokens as there are Sats balances.
Based on this feature, the transfer of ARC-20 tokens does not require the inscription information related to the Transfer instruction to be engraved first like BRC-20, which saves transfer costs and reduces the additional data size generated on the BTC network.
To sum up, ARC-20 assets mainly have three operations: deployment, casting, and transfer:
When deploying ARC-20, the asset issuer needs to set the token name, total amount, difficulty setting, genesis block and other information, and configure the corresponding Taproot lock script.
When users mint ARC-20, they write the Claim information (data that needs to be submitted for minting tokens) into the aforementioned UTXO locking script, and then take out the corresponding ARC-20 assets (dyed sats).
When transferring ARC-20 later, users do not need to deposit any data to BTC. They only need to transfer the aforementioned UXTO to others. The recipient can confirm that it is associated with the ARC-20 asset by tracing the source of the Bitcoin UTXO.
Similar to the "one-time seal" featured by the RGB protocol, the security of ARC-20 transactions is completely guaranteed by the BTC main network. No one needs to follow the chain when tracking historical transaction records and calculating the current ARC-20 asset balance. To read data from the off-chain storage module, you only need to check those Bitcoin UTXOs related to ARC-20 dyeing. This is the biggest difference between it and the BRC-20 protocol. The latter often has a negative impact on the off-chain indexer and off-chain storage layer. There is a strong dependence.
Source: https://twitter.com/blockpunk2077/status/1725513817982136617
For ARC-20, we only need a lightweight indexer (or wallet client) to help us identify which ARC-20 asset minting and transfers are triggered on the Bitcoin chain.
Of course, the design of one coin per satoshi has some flaws that cannot be ignored, because the Bitcoin mainnet has a restriction to prevent "dust attacks", and a single transfer must transfer at least 546 Sats to the recipient at one time, that is, every time you transfer the dyed Bitcoin Sats, you must transfer at least 546 Sats, which may be unacceptable to most people. In addition, since each ARC-20 token must be bound to one Sats, the minimum split precision of the ARC-20 asset balance is 1, and it cannot be subdivided to a smaller level.
At the same time, we have noticed that many people are still confused about the difference between the ARC-20 indexer and the BRC-20 indexer. Here is a brief explanation:
The ARC-20 indexer is simpler and lighter than the BRC-20 indexer. We can think of BRC-20 as a paper check and ARC-20 as a hard coin. The BRC-20 standard allows users to fill in any number of BRC-20 assets on this check, which is why the BRC-20 protocol uses 3 different index transactions to ensure the accuracy and security of BRC-20 assets; and no matter how ARC-20 is traded, it is like directly transferring ready-made coins. When we calculate the balance of ARC-20 assets, it will be much easier than calculating the balance of BRC-20 assets, and the workload of the ARC-20 indexer will be much less than that of the BRC-20 indexer.
ARC-20 transaction index is more convenient than BRC-20 transaction index in asset merging. We can simply understand that BRC-20 asset merging is to replace three checks worth $1,000 with a new check worth $3,000. In theory, the original three checks should be destroyed, but because they have been recorded on the chain, they cannot be directly erased, causing data pollution; many times when withdrawing coins from exchanges, you will always encounter some inexplicable inscriptions.
The asset merger of ARC-20 is to package 3 coins and send them out in one transaction. Many times when withdrawing coins from the exchange, you will encounter some inexplicable inscriptions, but the ARC-20 transaction index will not pollute the sats data. , because his work process is different.
Dmint: A new way to issue NFTs
In the Atomics protocol, NFT collections are called "Containers" and are issued using a decentralized method called "Dmint". The specific process of NFT issuance following the Dmint protocol is divided into four steps: NFT data preparation, container configuration, NFT project verification, and NFT casting.
For NFT project parties, the focus can be on preparations before NFT issuance, which requires collecting all NFT data, configuring Dmint data, etc. At the same time, NFT issuers who follow the Dmint protocol will summarize all NFT data and build a Merkle Tree. The Merkle root of this tree will be published on the chain, and the complete NFT metadata will be stored off-chain.
When the NFT minter selects the NFT to be minted, he will obtain its off-chain metadata. The minter then presents the Merkle Proof to the outside world to prove that the NFT data he has obtained is indeed associated with the Merkle Tree originally constructed by the issuer, that is, it exists in the NFT data set declared by the NFT issuer to the outside world.
In the process of minting NFT, the Atomics protocol provides the projectâs founding team with advanced options, such as setting mint payment rules and allowing NFT minters to mint some limited edition NFTs. This not only requires minting through the aforementioned Bitwork method, but also requires Pay some tokens to the specified address to take effect.
SourceïŒhttps://docs.atomicals.xyz/collection-containers/dmint-guide
It can be said that after combining with Bitwork, Dmint introduced a decentralized minting mechanism for NFTs on the Bitcoin chain. At this time, all minters need to participate in the NFT minting process through "mining" in the form of lottery draws. The method used by script scientists to initiate flood transactions through automated codes is difficult to implement.
With the combination of Bitwork and Dmint protocols, both fungible tokens and non-fungible tokens in the Bitcoin ecosystem have the soil for Fair Launch.
Through Dmint, the Atomicals protocol strengthens the security and uniqueness of NFTs, provides flexible management options, and enables project owners to freely control their NFT collections on the Bitcoin blockchain. This not only opens up customized options for creators to meet diverse creative needs, but also provides a convenient on-chain operation solution for the casting, transfer and update of digital assets, greatly enhancing the flexibility of static and dynamic digital assets.
In addition, the Bitwork mining mechanism introduced by Dmint provides everyone with an equal one-time minting opportunity, fundamentally eliminating the possibility of script-automated minting and market competition related to gas fees.
RNS: unlimited expansion of domain names
As mentioned earlier in this article, Arthur originally wanted to do a DID project on the Ordinals ecosystem. This project is RNS â Realm Name System, also known as Realm.
Realm names start with a plus sign + and have at least one alphabetic character, such as +alice and +agent007, which are both valid DID identifiers. Compared to traditional domain names and ENS, Realm has higher scalability and flexibility while retaining decentralization.
Today's domain name services or DID projects have great limitations. Most of the domain names provided are used to refer to a single object (i.e. website/wallet address, etc.), and users cannot expand them more deeply. For example, Alice has the Alice.com domain name, which is limited to representing links to different websites or personal information by adding different prefixes such as blog.Alice.com. The domain name cannot be continuously expanded downward, such as Alice.com.blog.text, a domain name with more scenarios.
Here we will make a more in-depth comparison of two different domain names, Alice.com/blog/text and Alice.com.blog.text. For example, Alice.com/blog/text1 and Alice.com/blog/text2 refer to opening the first/second page of the blog diary in Alice's room;
Alice.com.blog.text1 and Alice.com.blog.text2 can correspond to two understanding methods:
1. Open two different blog notes in two different rooms
2. Open two different pages of the blog diary in Alice's room.
We can find that the traditional "/" mode limits the operating space very narrowly from the beginning, while the sub-domain mode used by Realm domain names does not have such restrictions.
The Realm Domain Name Protocol allows any user to issue a sub-domain (SubRealm) under any Realm domain name, manage the domain name ecosystem in a hierarchical/graded manner, and tokenize it. The specific rules are as follows:
Any Realm or SubRealm can publish SubRealm
All SubRealms can inherit the same characteristics and publish their own SubRealms based on SubRealm
Everyone is the registrant of the Realm they own, and there is no centralized domain name management agency
Theoretically, there is no limit to the number of times a SubRealm can be expanded, which makes the Realm domain name system very imaginative. For example, we can think of the top-level Realm domain name as a forum community, the first-level SubRealm can be various types of posts, and the subsequent second-level SubRealm is the reply to the corresponding post... In this way, the Realm domain name system may bring about a revolution in domain name applications, which will empower domain name applications and bring higher scalability.
SourceïŒhttps://twitter.com/atomicalsxyz/status/1761744365448274371
AVM: a potential dark horse
Since its inception, the Atomics protocol has had ambitions beyond asset issuance. After about half a year of development, more and more assets are compliant with the Atomics protocol, which has led to a new question - how to provide richer usage scenarios for assets to enhance their liquidity and do more in terms of functionality. expand.
As we all know, Bitcoin does not support Turing-complete programming languages, making it difficult to build complex DAPPs on top of it. Inspired by the ideas of BitVM and concerns about the development of the Atomics protocol, Arthur proposed the idea of ââAVM. Although the specific details of AVM have not yet been announced, the market has high expectations for it.
According to Arthur, AVM is mainly used to support the implementation of complex logic in the Bitcoin network, such as solving the problem that ARC-20 "one coin, one satoshi" cannot be split. In addition, the current Bitcoin expansion solutions on the market basically have various problems. We expect the release of AVM to bring more vitality to the BTC ecosystem.
According to Arthur, in an optimistic scenario, the first beta version of AVM can be released before Bitcoin halving, and we will then provide a further detailed interpretation of it.
Atomicals Protocol Ecosystem Summary: Opportunities Are Coming
Whether it is inscription protocols such as BRC-20 or the Atomics ecosystem, they have all fallen into a cooling-off period after experiencing several waves of climax. But we found that the asset issuance on BTC is very different from the previous asset issuance on Ethereum. The two ecosystems are more about the difference between decentralization and centralization.
Existing assets on BTC have made the concept of "Fair Launch" popular. The Atomics protocol increases market users' trust in project assets and reduces project parties' reliance on assets through Bitwork, Dmint, no pre-mining, and no distribution. Direct manipulation. To a certain extent, this is actually the love-hate relationship between centralization and decentralization.
Centralized project parties are more efficient and responsive in the early stage of development, and can easily succeed if manipulated properly; while decentralized projects pursue higher fairness and decentralization, and require more efforts in project promotion, marketing, etc. The spontaneous actions of the community may cause great resistance to early development, but once the difficult period is overcome, centralized projects will soon be left behind.
The same is true for the Atomicals ecosystem. The following figure shows the Atomicals ecosystem projects that are currently online and under development. Even though the entire BTC asset market is relatively quiet now and the development of the Atomicals protocol is still in its early stages, there are still many projects that choose to actively connect to the Atomicals ecosystem, which stems from the strong confidence of community members in the Atomicals ecosystem.
The source of this strong confidence comes, on the one hand, from the "Fair Launch" craze brought about by the Ordinals protocol and the BRC-20 protocol, and on the other hand, from the beautiful vision brought about by this overgrown decentralized experiment.
We believe that with the subsequent release of AVM, the Atomicals protocol will be able to achieve programmability on Bitcoin Layer1, develop more AVM-based applications, and write a new chapter for the entire Bitcoin ecosystem.