MT Capital Research Report New Narrative of Asset Issuance, A Comprehensive Scan of the Inscription Track

Exploring the Latest Trends in Asset Issuance MT Capital's Comprehensive Research Report on Inscription Track

Author: Xinwei

TL;DR

With ORDI launching on Binance, the script race in the Bitcoin ecosystem is rapidly developing, bringing forth various innovative technologies and concepts. The SegWit and Taproot upgrades provide strong support for the programmability and scalability of Bitcoin, driving the rise of projects such as Ordinals, BRC-20, and Atomicals. These technological advancements not only enhance the transaction capacity and flexibility of the Bitcoin network but also create more income sources for miners.

Introduction

With the launch of ORDI on Binance, we are witnessing the beginning of a new era: a technological revolution and market prosperity dominated by the Bitcoin ecosystem. From the script frenzy at the beginning of the year to the current frenzy once again, the rapid development of the Bitcoin ecosystem and its significant value growth have attracted widespread attention. But behind all this, what is driving the heat of the BTC ecosystem and the rapid expansion of its value?

Technology

Before exploring this question, we first need to understand several key technological advancements in the Bitcoin ecosystem.

• Ronin million-character research report Before Axie Infinity, after Pixels, why does this game sidechain always produce popular works?
• Standard Crypto Why are we investing in interest-bearing L2 Blast?
• Is the SEC Fighting Crypto with Tax Dollars Worthwhile?

Segregated Witness (SegWit) is a crucial upgrade to the Bitcoin Core protocol launched in 2017, aimed at addressing Bitcoin’s scalability challenges and specific vulnerabilities. It mainly promotes the inclusion of more transactions by correcting transaction malleability issues and expanding the Bitcoin block size limit. SegWit introduces the concept of block weight, replacing the traditional block size limit, enabling fully loaded blocks to accommodate approximately 2700 transactions, a significant improvement compared to the previous 1650.

In addition, SegWit also introduces a new encoding method called Bech32 and two innovative script types.

By the end of 2021, with the Taproot upgrade, the Bitcoin ecosystem started supporting more complex scripts and data types, bringing significant progress in the programmability and scalability of BTC. This provides a crucial opportunity for the explosive growth of the Bitcoin ecosystem in 2023.

The Taproot upgrade includes changing the transaction confirmation method and introducing the Schnorr signature algorithm. The introduction of Schnorr signatures offers many benefits, including improved privacy protection, especially in multi-signature wallets. It allows all private keys to be aggregated, making multi-signature transactions indistinguishable from other transactions, thereby enhancing privacy. Additionally, Schnorr signatures support batch verification, making transactions across the entire network cheaper and faster.

Taproot also brings the potential for creating smart contracts on the Bitcoin network. Although it may be more expensive and limited in functionality compared to platforms like Ethereum, the ability to achieve smart contract interactions on a value of $700 billion Bitcoin is immense and may drive smart contract technology into the mainstream.

Miner Rewards

As for miner rewards, recent data suggests that the Bitcoin inscription market is experiencing an unprecedented boom with the rise of projects like Ordinals and Atomicals. According to data from oklink Chain Master, Bitcoin miners’ income has significantly increased in the past three months, especially in November, when the share of on-chain transaction fees rose from 2.4% on August 19th to 23.46% on November 16th. This growth is mainly attributed to the introduction of Ordinals transaction pairs. It indicates a significant improvement in the proportion of miner transaction fee income in the Bitcoin inscription market. It is expected that this proportion may reach 50% by the Bitcoin halving in April 2024.

Currently, due to the majority of the U.S. Bitcoin mining farms being in a state of loss most of the time and the semiconductor industry facing process bottlenecks, the competition for mining machine computing power has eased. Therefore, miners may turn to Bitcoin inscription as a new source of income. For example, Ordinals has launched less than a year ago, and the market has already seen over 50,000 token issuances, with an increase in minting and trading volume, greatly boosting miner transaction fee income.

The expansion of the inscription track not only drives the growth of miner revenue but also has the potential to become a major driving force behind the Bitcoin inscription track. However, miners are more concerned about the increase in transaction volume rather than the fluctuation of inscription prices.

All these factors together have contributed to the rapid development of the Bitcoin inscription track. But we must also recognize that this development is not just a simple market frenzy. It represents a profound transformation and technological progress of the Bitcoin ecosystem. With Bitcoin continuing to demonstrate its powerful potential in various aspects, we have reason to believe that the Bitcoin inscription track will become a key factor in driving the development of the entire cryptocurrency industry.

Ordinals & BRC20

The Ordinals project was launched by developer Casey Rodarmor in December 2022. It benefits from the upgrades of Bitcoin’s SegWit and Taproot, which improve the flexibility and functionality of Bitcoin scripts. Ordinals assigns a unique sequence number to each satoshi and tracks them in transactions, allowing additional data to be attached. Ordinals enables users to inscribe data on specific unspent transaction outputs (UTXOs), such as images, texts, audios, etc., 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 is complementary to the adoption of Taproot, driving the encoding and writing of NFT data into the Bitcoin blockchain. NFT images are permanently inscribed in the BTC blocks, which is more decentralized than ETH NFT and can be viewed and transferred without relying on third parties.

The ordinal theory primarily focuses on the traceability of the smallest unit of Bitcoin, sat, by designing rules that give each sat a unique identifier. Based on ordinal theory, on-chain data can be associated with sats to form inscriptions. Inscriptions are stored in taproot scripts and identified and displayed by off-chain index nodes. Due to the limitations of indexing, inscription functionality depends on the development of ord, such as parent-child inscriptions and curse inscription indexes. Inscriptions are similar to Colored Coins, both storing data in transactions for off-chain program indexing, but inscriptions are stored in the input’s taproot script, while Colored Coins are stored in the output.

The implementation of Ordinals completely relies on the basic functionality of BTC, and the transfer of NFTs is also completely handled by the BTC network. Due to its artistic attributes, the development potential of Ordinals is limited, but it was quickly adopted by the BTC purist community when it appeared.

Initially, Ordinals were mainly used to create NFTs, but on March 8, 2023, anonymous developer Domo introduced BRC-20 based on the Ordinals protocol. BRC-20 is a Bitcoin altcoin issuance protocol similar to ERC-20. It defines a specific format of JSON data package and engraves it on the BTC chain through Ordinals. Deployers of BRC-20 can decide the total supply and name of the token themselves, following a first-come-first-served principle. $ORDI is the first BRC-20 token deployed by Domo.

BRC-20 further develops on the foundation of inscriptions, realizing fungible tokens and writing the minting and transfer process of tokens into the BRC-20 indexer. However, BRC-20 requires the use of third-party sorters to record the ledger off-chain, which adds additional complexity and becomes a weak point of the system.

BRC-20 transfers are not executed on the BTC main chain and require two steps of BTC transactions (aggregation and then transfer), resulting in a large number of garbage transactions. Therefore, despite the widespread applicability and liquidity of BRC-20, it has been controversial due to the lack of support from the BTC core community. Recently, some developers have started developing decentralized sorters like #Trac, but they are still limited by the overall framework and difficult to make breakthroughs. The Inscription-Based Virtual Machines and Rollup concepts proposed by Domo, the founder of BRC-20, at the Ordinals Summit indicate that BRC-20 may move towards the development of Layer 2 networks.

With the launch of BRC-20, the scope of the Ordinals protocol has expanded, but it has also caused dissatisfaction among Casey. The Casey team even requested Binance to remove the association with Ordinals from the ORDI token introduction to make a clear distinction. This indicates that although Ordinals and BRC-20 are both driving the development of the BTC ecosystem, they have significant differences in community acceptance and development direction.

Atomicals & ARC20

Atomicals is an optimization project for Ordinals and BRC-20, focusing on fungible tokens and solving the issue of BRC-20 relying too much on centralized off-chain indexes. It utilizes and extends Bitcoin’s UTXO model, making each sat a specific Atomical token or digital object, thus creating and managing complex digital objects and token systems (ARC20) on the Bitcoin network.

The main features of Atomicals include:

1. Using satoshis as the basic unit to represent tokens.

2. Allowing the creation, transfer, and update of digital objects on the Bitcoin network.

3. Providing a decentralized tokenization method that aligns with Bitcoin culture.

4. Utilizing proof-of-work (POW) to increase fairness and decentralization in the minting process.

5. Aiming to expand the functionality of Bitcoin to support broader applications.

Atomicals fundamentally rethinks how tokens can be issued on Bitcoin in a centralized, tamper-proof, and fair manner. It uses satoshis as the basic “atom,” with each satoshi UTXO representing a token. When validating Atomicals transactions, one only needs to query the corresponding UTXOs on the Bitcoin chain. The atomicity of ARC20 tokens aligns with the atomicity of Bitcoin itself, with the transfer calculation fully handled by the Bitcoin network.

Compared to BRC20, ARC20 significantly reduces the need for third-party orderers, increasing the decentralization of the system. The composability of UTXOs makes ARC20 tokens more programmable. For example, theoretically swapping BTC for ARC20 only requires exchanging the inputs and outputs of the UTXOs.

After the launch of the Atomicals protocol in September, the first token, ATOM, was quickly mined. Compared to BRC20, ATOM’s mining process has higher technical barriers and fairness.

Atomicals forges and propagates based on Bitcoin’s UTXO model, with 1 token equaling 1 sat. It is technically more aligned with Bitcoin’s original ideology. 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 comprehensive set of protocols. The ARC-20 token standard is forged and transferred based on Bitcoin’s UTXO model, with each unit of ARC-20 token permanently supported by 1 sat, i.e., 1 Token = 1 sat. All operations related to ARC-20 tokens can be completed relying on the Bitcoin network without additional steps.

In the ARC20 minting process, Atomicals introduces POW, requiring the forger to calculate a hash value with specific prefix characters for minting. This is a more decentralized and fair distribution method. The Atomicals protocol provides ARC-20 with prefix parameters for Bitwork Mining, enabling participants to directly mine inscriptions/NFTs. The ARC-20 token standard remains faithful to the principles of Bitcoin’s original ideology, and the emergence of related tools in the future will enhance its liquidity.

In summary, as a competitor to Ordinals, Atomicals focuses on the decentralized creation and management of homogeneous tokens and digital objects. By extending Bitcoin’s UTXO model, it achieves a more decentralized and Bitcoin-aligned token system. With its technical superiority and adherence to Bitcoin’s original ideology, the ARC-20 token standard is expected to gain support from the Bitcoin core community and bring broader possibilities for Bitcoin’s ecosystem.

Rune & PIPE

The RUNE protocol originated from Casey Rodarmor, the founder of Ordinals, recognizing the shortcomings of existing homogeneous token schemes (such as BRC20 and Taproot Assets) on the Bitcoin network. Casey proposed a concept for a UTXO-based homogeneous token protocol to address the limitations of these schemes.

The main features and design principles of the RUNE protocol include:

1. UTXO-based: Rune balances are stored in UTXOs, and each UTXO can contain any amount of Runes.

2. Transaction and protocol information: The output of a specific script is considered part of the protocol information, defining the transfer and distribution of Runes.

3. Flexibility: The transfer of Runes is achieved through interpreting data pushes in transactions, providing flexible allocation methods.

4. Issuance mechanism: The second data push is considered an issuance transaction, allowing the creation of new Runes.

5. Simplicity and decentralization: The Rune protocol strives to be simple, not relying on off-chain data or native tokens, and adapts to Bitcoin’s UTXO model.

6. Symbol allocation: Runes can be associated with symbols, but the protocol does not involve symbol squatters to maintain simplicity.

Although RUNE only exists at the conceptual design stage, BennyTheDev has implemented the PIPE Protocol based on the technical architecture proposed by Casey. PIPE is an important component of the TRAC ecosystem, which also includes the BRC20 token $TRAC, Bitmap, and the OrdFi ecosystem protocol TAP Protocol developed by BennyTheDev for BRC20, allowing BRC20 to achieve DeFi functionalities such as token swapping.

BennyTheDev is an active Bitcoin community developer who launched the BRC-20 utility tool LooksOrdinal in March, deployed the TRAC token in May, released the Tap Protocol targeting OrdFi in August, and launched the Pipe protocol based on Rune’s improved ideation in October.

The Pipe protocol closely follows Casey’s RUNE protocol ideas and implements homogeneous tokens using UTXO-based technology. The release of the Pipe protocol attracted speculation from the BRC20 community and quickly completed the first round of speculation. Although RUNE may face challenges in acceptance within the Bitcoin community, its orthodoxy is stronger than BRC20.

In summary, the emergence of the RUNE and PIPE protocols reflects the Bitcoin community’s continuous exploration and innovation of homogeneous token implementation methods. Although these protocols are still in the early stages, they have already demonstrated potential and may bring more transaction fee revenue, developers, and users to the Bitcoin ecosystem.

Bitmap & BRC420

Bitmap.land is the first metaverse project in the Bitcoin ecosystem, based on Ordinals theory and Bitmap theory.

• The Ordinals theory assigns numbers to the smallest unit of Bitcoin, called a “satoshi,” and defines the scarcity of satoshis. This can be understood as each satoshi being a numbered box, with its scarcity determined by production time, and can be used to store data.

• The Bitmap theory, proposed by Twitter user @blockamoto on June 13, 2023, maps each transaction input in a Bitcoin block to a land plot called a “LianGuaircel,” forming a neighborhood or district. The size differences of different transaction inputs result in different sizes of mapped land plots.

Buyers on Bitmap.land are influenced by Decentraland and The Sandbox, adopting a similar logic of dividing and drawing patterns on the map, similar to land buying on these two platforms. Users write data into satoshis through engravings, gaining ownership of specific Bitcoin blocks, similar to free minting.

In the Bitcoin blockchain, each block is divided into four sections to represent different halving periods. Users can view the number and color of each block on the Bitmap.land website, where different colors represent different selling statuses.

The release of Bitmap.land is closely related to the Ordinals theory, similar to how the virtual land release on Decentraland and The Sandbox depends on the ERC-721 standard. The Ordinals theory is similar to the earlier concept of colored coins, but it differs in the current narrative, consensus, ecosystem, and infrastructure of Bitcoin. While the Ordinals theory is not as innovative as ERC-721, the BRC-20 method is more primitive.

The Bitmap theory provides a new interpretation for Bitcoin blocks, offering a topicality despite lacking practicality. It changes the connection between Bitcoin and the metaverse by allowing users to own and record individual blocks, providing a new dimension for each block of the Bitcoin blockchain and making it part of the metaverse.

The Bitmap theory has attracted attention from the Ordinals community and sparked the engraving craze. Any block on the Bitcoin blockchain can become part of the metaverse through Bitmap, bringing new opportunities for creation and ownership to the community.

Bitmap.land blurs the boundaries between Bitcoin and the metaverse, paving the way for ownership, creativity, and community development. With the continuation of the engraving craze, there is immense potential for those seeking a presence in the digital realm.

The BRC-420 protocol, since November 13, 2023, has become one of the active token protocols in the Bitcoin ecosystem, with the total number of engravings surpassing 40 million. Unlike traditional token protocols, BRC-420 focuses on on-chain engraving modularity, creating new asset types on Bitcoin. Its first token, commonly known as the “blue box,” has experienced significant market growth, from an initial price of $0.15 to $1000, providing developers with significant on-chain royalty income in a short period of time.

The BRC-420 protocol is an asset protocol based on Bitmap, which creates various assets ranging from small characters, pets, to complete game scripts and virtual machines by combining multiple glyphs into a complex asset. These assets can be run or verified by any client due to their on-chain open-source nature, fully embodying the “Client Agnostic” spirit of the whole-chain game. Although the RCSV Bitmap browser dominates the market, other teams also have the opportunity to develop clients to run BRC-420 assets.

From a market perspective, the number of holder addresses for Bitmap has exceeded 25,000, surpassing Sandbox and becoming the metaverse asset with the highest number of holders on the whole chain. This achievement is due to its fair launch mechanism and the collective efforts of over 200 development teams around Bitmap. The market value of BRC-420 has grown with the launch of the Bitmap browser and the protocol itself, reaching approximately $30 million.

RCSV, the project behind BRC-420, is actively promoting the whole-chain game plan for the Bitcoin ecosystem. This plan emphasizes assets, gameplay, logic, and data on the whole chain, aiming to create a truly decentralized on-chain game ecosystem for Bitcoin. For example, developers can use the “combat module” on BRC-420 to quickly develop and release new games while only paying royalties through the protocol.

RCSV also proposes a scaling solution for the Bitcoin network to address capacity limitations when processing a large number of transactions. This solution aims to migrate assets from layer one to layer two and achieve a complete virtual machine environment in the next layer of the module. This arrangement aims to provide a low fee, high-efficiency interaction environment for layer one Bitcoin assets while ensuring security to the maximum extent.

In summary, the BRC-420 protocol and the related Bitmap project are igniting 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 whole-chain game and metaverse concepts in the Bitcoin ecosystem are gradually becoming a reality, demonstrating the vast prospects of Bitcoin technology and applications.

BRC100

BRC-100 is an extended protocol based on the Ordinals theory, designed specifically for implementing various decentralized applications on the Bitcoin Layer 1. This protocol not only inherits the basic functionalities of brc-20 on Bitcoin, such as creation, minting, and trading but also introduces the concept of decentralized computation. 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 use cases to the Bitcoin Layer 1.

One major feature of the BRC-100 protocol is its interoperability. It not only allows all protocols and applications within its protocol stack to be mutually compatible but also supports interaction with BTC, brc-20, or other Layer 1 chains such as Ethereum and Stacks. Additionally, the protocol introduces the UTXO model and state machine model, enhancing its security and computational capabilities.

This protocol also includes a series of innovative features, such as inheritance concept, application nesting, address and application state, permission settings, and decentralized governance. For example, the inheritance concept introduced by BRC-100 allows the protocol to directly or indirectly inherit the features 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: owners and administrators, providing a foundation for decentralized governance of applications.

The practicality of BRC-100 is demonstrated in its diverse application scenarios, ranging from governance protocol BRC-101 to 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 trading but also capable of supporting more complex financial operations and computations.

In summary, the BRC-100 protocol has opened up a new decentralized application field on the Bitcoin chain through its innovative features and powerful computing capabilities. It inherits the advantages of BRC-20 and provides a framework for open protocols, offering 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, aiming to create and trade various digital assets on the Bitcoin network and integrate them with the Lightning Network. The Lightning Network has gained wide recognition in the Bitcoin community as a mature Bitcoin derivative protocol. The update of Taproot Assets expands the functionality of the Lightning Network from simple point-to-point transaction payment channels to point-to-many modes that can realize asset distribution and circulation. The distinguishing feature of Taproot Assets is the registration of Token information in the UTXO output script of the Bitcoin mainnet, while functions such as transfer transactions are implemented in Lightning channels. The biggest difference from BRC20 and ARC20 is that Taproot Assets are pre-minted by an owner and then distributed, rather than being freely minted.

Taproot Assets is supported by Lightning Labs, which has a significant financing background, and Jack Dorsey, the founder of Twitter, giving it an advantage in terms of legitimacy and community support compared to other grassroots projects.

Nostr Assets is an open-source protocol that introduces Taproot assets and Satoshis (Bitcoin units) into 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 depend on the Lightning Network, while the Nostr asset protocol itself does not issue assets but introduces them into Nostr through the protocol.

The characteristics of Nostr Assets 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 ecosystem, and realizing a seamless experience from chatting to trading. In the future, Nostr Assets plans to import Taproot assets from other Daemon Universes, allowing Taproot assets to flow in and out of Nostr.

The vision of Nostr Assets is to drive users to join the Bitcoin ecosystem and deliver Taproot assets to global users. By providing modular development tools, Nostr Assets aims to facilitate the construction of decentralized applications, providing user-friendliness and commercial utility.

On October 30th, Nostr Assets airdropped its first token TRICK&TREAT to users who participated in its early missions, to celebrate Halloween. Currently, the value of these tokens has risen to around $2000.

The total supply of these tokens is 210 million each, for a total of 420 million. The airdrop total is approximately 80 million tokens, accounting for about 20% of the total supply.

Nostr Assets also announced the upcoming launch of the Fair Mint feature and is seeking project partners on Twitter who are interested in issuing assets to collaborate. This indicates that once the feature is live, there is expected to be a significant influx of new assets on the protocol, potentially attracting widespread attention and participation from the community. This series of activities demonstrates that Nostr Assets is actively expanding its ecosystem and preparing for future development.

Ethereum Inscriptions

Ethscriptions is an alternative protocol to smart contracts and L2, which allows users to share information and execute computations on Ethereum L1 at a low cost. It achieves decentralized computation by applying rules to Ethereum call data, bypassing smart contract storage and execution. In August 2023, Ethscriptions introduced the Esc VM (virtual machine) to enhance its functionality, making it a universal compute engine.

The founders of Ethscriptions are Middlemarch (similar to BRC20’s domo) and Michael Hirsch. The first protocol token is $eths, serving as the current flagship token, with an initial minting price of around $0.5, subsequently rising to around $3000 in the market, delivering significant returns for investors. Although this achievement is not on par with the $ORDI and $SATS tracks of BRC20, it has demonstrated significant growth compared to other inscription tracks, establishing its position in the thousandfold track.

In addition to $eths, the Ethscriptions track includes other notable projects such as Facetswap. Facet is a decentralized exchange platform developed by Middlemarch and Michael Hirsch, initially named dumbswap before being renamed Facetswap. Although the price and market capitalization of $Facet currently lag behind $eths, its potential value may become more apparent after the mainnet launch.

iERC20 is a new Ethereum-based token protocol that provides a low-cost token ecosystem, allowing anyone to deploy, mint, and trade tokens on it. $Ethi, as the first token in the iERC20 ecosystem, has received official support. This protocol not only offers more choices for Ethereum users but also promotes the development of inscription ecosystems on the Ethereum chain.

In the latest development in the cryptocurrency space, the iERC20 protocol announced a collaboration with GameFi project SLianGuairkle incubated by Binance, planning to introduce Inscription NFTs and other inscription assets on iERC20, aiming to leverage the advantages of inscriptions to enhance gameplay in the GameFi ecosystem. This collaboration has sparked widespread attention in the Ethereum community, particularly shifting the focus from ETHS to the iERC20 protocol.

The uniqueness of the iERC20 protocol lies in its development of the Swap feature and integration of EVM cross-chain functionality, bridging the gap between Ethereum’s On-chain and traditional Layer2. This feature allows the protocol to introduce more mainstream coins and stablecoins, thereby expanding the TVL of the On-chain ecosystem and providing more development possibilities for the entire system.

In addition, the iERC20 protocol also plans to introduce a fair mining mode using PoW and collaborate with other projects to launch new On-chain, similar to Atom protocol’s mining method. This strategy is expected to bring new momentum to the development of the Ethereum ecosystem.

Although $Ethi was launched almost at the same time as $ETHS, it initially didn’t gain as much popularity as $ETHS due to its low-key approach in the early stages. However, with the price rise of $ETHS and increased market attention, $Ethi has also started to receive more and more attention. The divisible nature of $Ethi makes it more appealing to retail investors, and although its market cap is currently lower than $ETHS, its development potential should not be ignored.

In the iERC20 ecosystem, $Ethi is regarded as an important tool, similar to a shovel, providing holders with special empowerment. For example, users holding $Ethi may receive On-chain airdrops from collaborating projects, such as the recent collaboration with SLianGuairkle. Additionally, FOMO sentiment within the community is spreading, with many investors optimistic about the future development potential of $Ethi, considering it as the leading token officially recognized by iERC20, and one that will appreciate with the launch of the PoW mechanism and continuous development of the On-chain ecosystem.

Overall, the ERC20 track is showing tremendous potential and may create more miracles following BRC20. With the addition of more high-quality projects and ecosystem development, this field is expected to attract more users and innovation.

Other On-chain Protocol Tokens

As the wealth effect generated by Bitcoin spills over to other On-chain protocols, various “RC 20” tokens have been causing a stir in the community, creating a FOMO phenomenon, including DOGE On-chain, BSC On-chain, Litecoin On-chain, BASE On-chain, Polygon On-chain, Solana On-chain, etc.

Especially on November 16th, the gas fees of the Polygon network surged to 1800 gwei due to the discovery of the PRC-20 standard token POLS which was deployed in May this year. According to evm.link data, the total supply of POLS is 21 million tokens.

Inspired by missing out on the Bitcoin On-chain token SATS, community members have started to “mint a few for self-defense.” Compared to the high cost of BRC and ERC, the simple and low-cost POLS quickly gained attention in the community. Users can mint POLS by visiting evm.link and paying less than 0.05 Matic.

The community also shared methods for bulk minting of POLS through the batch aggregation function (which requires importing wallet private keys) or scripts. The low gas fees of Polygon are considered one of the advantages of POLS as a token for inscriptions. If 21 million POLS tokens are fully minted, Polygon could become the chain with the highest number of inscriptions on all EVM chains, including Ethereum. This naturally brings to mind the BRC inscription token SATS, which has gained widespread attention in the community due to its significant increase.

Future Opportunities

In March 2023, Galaxy Research and Mining predicted that by 2025, the market capitalization of the Ordinals market would reach $5 billion, with only 260,000 inscriptions at the time. However, now the number of inscriptions has already reached 33 million in just six months, a growth of 126 times, and the market value of Dragon One ORDI has also reached $400 million, and the market value of Dragon Two SATS has reached $300 million. This shows that the predictions for the entire inscription market have been greatly underestimated.

There are various protocols emerging in the inscription track, and the biggest beneficiaries are of course the miners. According to Tokenview’s on-chain data monitoring, the daily transaction fees of the Bitcoin network have reached 11.6 million US dollars, exceeding Ethereum for the first time since 2020. With Bitcoin’s halving approaching, miners urgently need to find additional income. The prosperity of the inscription track brings benefits to miners and indirectly maintains the security of the Bitcoin network. The reduction of block rewards will also make miners increasingly dependent on transaction fee income to cover operating costs. In the long run, the future of Bitcoin will definitely involve competition among multiple scalability solutions. The outbreak of this round of the inscription track and the resulting high transaction fees are the catalyst for moving towards that future. Currently, most of the BRC20 trading activity is concentrated on OKX and Unisat. With the emergence of various protocols, different trading markets have also emerged for different protocols. For example, Atomicals Market targets ARC20. In the end, the emergence of a leading protocol will definitely give birth to a unique trading market, and the competition in the trading market is far from over. Wallet markets are also similar. Currently, the main wallet for BRC20 is Unisat, but there are still different wallets being introduced and integrated with different inscription protocols on the market.

With funds continuously flowing into the inscription market, users are no longer satisfied with meme hype and are starting to focus on applications based on inscriptions. BRC420 mentioned in this article is a typical example. Unisat has also brought innovation to BRC20. Through BRC20-Swap, users can easily exchange BRC20 tokens like an AMM DEX. As the first product to improve liquidity in the Ordinals ecosystem, it is expected to unleash the potential of the Bitcoin DeFi ecosystem, and more features such as lending and derivatives may appear in the future. Recently, Unisat has also opened its API interface, which is very friendly to small developers and can be used to access many functions, such as automatic batch order scanning, inscription monitoring, and automatic minting, which can generate many utility projects.

ORC20 made a comeback on November 20th, announcing the Nirvana upgrade, improving the inscription format to support BTC DeFi integration, introducing stablecoin support, and providing services for issuers such as USDT and USDC, etc. Compared to BRC20, ORC20 is obviously more complex, as it can change the initial supply and maximum minting amount, and is no longer limited to four-letter words for naming. However, it is also considered more centralized by the community, and its upgradability is seen as contrary to the immutability spirit of blockchain. There are concerns about potential malicious issuance and insider trading.

Overall, BRC20 has the strongest community consensus as it was the first protocol to be listed on exchanges, and its fair launch has left a great impression on users. With the listing of ORDI on Binance, all exchanges are starting to recognize and support the innovation of the inscription track. Due to the technical difficulty of supporting BRC20 deposits/withdrawals and self-built indexes, it is expected that BRC20 tokens will continue to be prioritized for listing. BRC20 tokens are also not limited to being meme tokens forever, as project teams can choose an existing BRC20 token with community consensus as a utility token, thereby avoiding regulatory risks and obtaining an established community.

Summary and Outlook

The development of the inscription track has demonstrated significant vitality and innovation. The growth of this track is primarily due to key technological advancements in Bitcoin, such as SegWit, Bech32 encoding, Taproot upgrade, and Schnorr signatures. These technologies not only enhance the transaction efficiency and scalability of the Bitcoin network but also increase its programmability. With the application of these technologies, the inscription market has experienced rapid prosperity, attracting investors, users, and fostering the development of diverse projects and protocols like Ordinals, BRC20, and Atomicals.

This growth also has a positive impact on miners’ interests. With the rise of projects like Ordinals and Atomicals, miners’ sources of income have expanded, demonstrating the importance of the inscription track to the Bitcoin network. Additionally, other public chains are also starting to adopt the inscription track, showcasing its wide-ranging potential and influence.

Looking ahead, the inscription track is expected to continue witnessing technological innovation, driving the realization of more complex functionalities. The market’s growth is predicted to persist, bringing more investment and participation opportunities. Furthermore, it can be anticipated that more innovative projects and protocols will emerge, further enriching the inscription ecosystem of Bitcoin and other public chains. Miner revenue could also continue to grow as the inscription track provides new income opportunities.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!