brc20-swap goes live Explaining the development process, product model, and future expectations

BRC20-Swap Launches A Comprehensive Guide to its Development, Product Design, and Future Outlook

Author: Foggy Sea, LianGuaiNews

Due to the trading mechanism of Ordinals’ ecological assets being almost entirely in the mode of order selling, its liquidity has always been a focus of attention in the ecosystem. In July 2023, Unisat, which combines engraving, trading market, and wallet, announced that it will soon launch brc20-swap to improve the liquidity of ecological assets, and the product went online for testing on October 30.

In this article, LianGuaiNews will explain in detail the development process, product model, and future expectations of brc20-swap.

Development Process of brc20-swap

On September 20, 2023, Unisat sent brc20-swap Early Access invitation engravings to 620 addresses. The screening conditions were

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1) Active community members who traded at least 1 BTC on UniSat Marketplace between July 16 and September 20.

2) Active community members who accumulated at least 500 UniSat points through UniSat engravings between July 16 and September 20.

3) Unisat OG LianGuaiSS holders (snapshot block height is 808559).

On October 10, 2023, UniSat officially released the brc20-swap mainnet launch schedule and other details. It gradually distributed commemorative engravings called brc20-swap Prime Access to community users for free, and holding this commemorative engraving allows participation in the early testing of the brc20-swap product. They were distributed through the official Discord channel and Twitter user giveaways. The total distribution was 654, and the current secondary market floor price is 0.0067 BTC.

The work of settlement and synchronization of transactions to the Bitcoin mainnet is completed by the sorter. In terms of transaction fees, brc20-swap refers to the fee standards currently used by UniSwap, charging a 0.3% service fee to all participating users. Approximately 1/6 (0.05%) of this fee is charged by UniSat, and the remaining 5/6 (0.25%) is distributed to all liquidity providers of the various trading pairs. The difference is that brc20-swap uses brc20 asset “sats” as transaction fees.

On October 30, 2023, UniSat officially announced the 14 types of assets initially supported by brc20-swap. The screening criteria were assets that had at least 15 days of trading activity on the UniSat market in the past 30 days and a non-zero median trading volume in the past 30 days. After this announcement was made, the assets involved in it also experienced significant increases due to positive expectations.

Product Model

The product is divided into trading, liquidity pool, and data overview, which is roughly similar to the dex form on the EVM chain. Before conducting transactions, users need to recharge their assets into the brc20-swap module through “inscribe TRANSFER”, and the confirmation process for recharging takes 3 blocks.

brc20-swap is implemented through modular expansion, and each module exists independently of brc20-swap. The advantages of this model are:

1) Unlicensed development allows for the development of new modules for brc-20 without the need for a license;

2) Isolated execution ensures that any issues with the execution of a single module do not affect the core protocol and operation of other modules;

3) Consensus upgrade allows for the transition from the current black module to the white module, becoming a component of the brc-20 protocol, when the majority of indexers approve and implement a specific module.

However, the extension mode of the black module has one drawback: users cannot freely withdraw assets. Unisat improves this by designing dynamic adjustments, allowing for withdrawal when other users have deposited more assets than the amount to be withdrawn. The benefit of this approach is that it avoids the arbitrary issuance pattern seen in EVM chains, but the downside is that users lose some asset liquidity and convenience.

As the behavior of the black module is understood and executed by users, gradually gaining reliability and acceptance by more indexers, the product transitions from the black module to the white module, achieving a consensus upgrade. Users can then freely deposit and withdraw assets.

In addition, as the brc20 protocol and the entire Ordinals ecosystem are still in the early stages, Unisat holds significant influence and reputation and poses a centralized risk. The modular architecture allows for more service providers to participate, achieving a more decentralized indexing service.

Future Expectations

Complaints about low liquidity and limited entry capital in the Ordinals ecosystem are frequently voiced by users, causing larger holders in the EVM chain to hesitate. brc20-swap uses the brc20 protocol as the underlying asset foundation to realize the first native transaction in the Ordinals ecosystem. It constantly optimizes liquidity, meaning the capacity for entry capital is continuously expanding. Therefore, the launch of brc20-swap is also considered progress for the entire ecosystem.

Additionally, Unisat announced that 2% of the transaction fees from brc20-swap will be donated to the L1F Foundation, in which brc20 protocol developer domo participates, to promote further development and optimization of the brc20 standard. UniSat will also open-source the complete explanation and verification source code of brc20-swap to encourage early support from indexers.

All these signs indicate a collaborative attitude rather than monopolizing and enjoying the benefits of the ecosystem alone. The development cycle of the Ordinals ecosystem is relatively short, requiring all parties within the ecosystem to work together to make the cake bigger and achieve mutual success.

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