MT Capital Research A Comprehensive Scanning of the Bitcoin Inscription Track

Uncovering the Hidden Potential of Bitcoin A Comprehensive Analysis by MT Capital Research

Author | MT Capital

This article is for information sharing only and does not promote or endorse any business or investment activities. Readers are strictly advised to comply with local laws and regulations and not engage in any illegal financial activities. The article does not represent the views of Wu Shuo.

Original article link:

https://medium.com/@MTCapital_US/mt-capital-research-full-scan-of-the-inscription-sector-a40bddae565f

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Summary

With ORDI’s launch on Binance, the inscription track of the Bitcoin ecosystem is rapidly developing, bringing forth various innovative technologies and concepts. The SegWit and Taproot upgrades provide powerful support for the programmability and scalability of Bitcoin, driving the rise of projects like Ordinals, BRC-20, and Atomicals. These technological advancements not only enhance the transaction capacity and flexibility of the Bitcoin network but also create additional sources of income for miners.

Introduction

With ORDI’s launch on Binance, we are witnessing the beginning of a new era: a technological revolution and market prosperity dominated by the Bitcoin ecosystem. From the inscription craze earlier this year to today’s renewed frenzy, the rapid development of the Bitcoin ecosystem and the significant growth of its value have attracted widespread attention. But what drives the hotness 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.

Segregated Witness (SegWit) is a crucial upgrade to the Bitcoin core protocol introduced in 2017. It aims to address Bitcoin’s scaling challenges and specific vulnerabilities. It mainly promotes the inclusion of more transactions by correcting transaction scalability issues and enlarging the Bitcoin block size limit. SegWit introduces the concept of block weight, replacing the traditional block size limit, enabling a fully loaded block to accommodate approximately 2700 transactions, a significant improvement compared to the previous 1650 transactions.

In addition, SegWit also brings new encoding methods Bech32 and two innovative script types.

By the end of 2021, with the Taproot upgrade, the Bitcoin ecosystem began supporting more complex scripts and data types, bringing significant progress to the programmability and scalability of BTC. This provides a pivotal opportunity for the Bitcoin ecosystem’s big explosion in 2023.

Taproot upgrade mainly includes changing transaction confirmation methods and introducing the Schnorr signature algorithm. The introduction of Schnorr signatures provides many benefits, including improved privacy protection, especially in multi-signature wallets. It allows all private keys to be combined, making multi-signature transactions indistinguishable from other transactions, thus enhancing privacy. In addition, Schnorr signatures support batch verification, making transactions across the network cheaper and faster.

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

Miner Benefits

In terms of miner benefits, recent data suggests that the Bitcoin mempool market is experiencing an unprecedented boom with projects like Ordinals and Atomicals gaining popularity. According to data from oklink’s on-chain master, Bitcoin miner revenue has significantly increased in the past three months, especially in November, with the proportion of on-chain transaction fees contributing rising from 2.4% on August 19 to 23.46% on November 16. This growth is primarily due to the introduction of the Ordinals transaction pair. This indicates that the development of the Bitcoin mempool market has significantly increased the proportion of revenue from miner fees. It is expected that by the Bitcoin halving in April 2024, this proportion could reach 50%.

Currently, due to most US Bitcoin mining farms being in a state of loss for the majority of the time and the semiconductor industry facing process bottlenecks, the race for mining machine computing power is slowing down. Therefore, miners may turn to the Bitcoin mempool as a new source of income. For example, Ordinals has been launched for less than a year, and there have been over 50,000 token issuances in the market, with the number of mints and transactions increasing rapidly, which greatly promotes the increase in miner fee revenue.

The expansion of the mempool track not only promotes the growth of miner income but may also become a major driving force for the Bitcoin mempool track. However, miners are more concerned about an increase in the number of transactions rather than fluctuations in the mempool price.

All these factors together have driven the rapid development of the Bitcoin mempool track. However, we must also recognize that this development is not just a simple market trend, but represents a deep transformation and technological progress of the Bitcoin ecosystem. With Bitcoin continuing to demonstrate its strong potential in various aspects, we have reason to believe that the Bitcoin mempool track will become a key factor driving the development of the entire cryptocurrency industry.

Ordinals & BRC20

Ordinals was launched by developer Casey Rodarmor in December 2022, benefiting from the upgrades of Bitcoin’s SegWit and Taproot, which enhance the flexibility and functionality of Bitcoin scripting. Ordinals assigns a unique serial number to each satoshi and tracks them in transactions, allowing additional data to be attached. Ordinals enables users to inscribe data, such as images, text, audio, etc., on specific Unspent Transaction Outputs (UTXOs), realizing the concept of asset transfer. Earlier this year, Ordinals was officially launched and quickly ignited the BTC ecosystem.

The emergence of the Ordinals protocol complements the adoption of Taproot, driving the encoding and writing of NFT data into the Bitcoin blockchain. NFT images are permanently inscribed in BTC blocks, making it more decentralized compared to ETH NFTs as they can be viewed and transferred without relying on third parties.

The Ordinals theory mainly focuses on tracing the minimum unit of Bitcoin, sat, by assigning a unique number to each satoshi. Based on the Ordinals theory, on-chain data can be associated with sats to create inscriptions. Inscriptions reside in Taproot scripts and are identified and displayed by off-chain indexing nodes. Due to the limitations of on-chain operations, the expansion of inscription functionalities depends on the development of “ords,” such as parent-child inscriptions and curse inscriptions. Inscriptions are similar to Colored Coins, both storing data in transactions for off-chain program indexing. However, inscriptions are stored in the input Taproot scripts, while Colored Coins are stored in outputs.

Ordinals’ implementation relies entirely on the basic functionalities of BTC, and the transfer of NFTs is also handled by the BTC network. Due to its art-like properties, Ordinals has limited development potential, but it was quickly embraced by the BTC community.

Initially, Ordinals was mainly used for creating NFTs. However, on March 8, 2023, an anonymous developer named Domo introduced BRC-20 based on the Ordinals protocol. BRC-20 is a Bitcoin-issued protocol similar to ERC-20, which defines a specific format of json data and inscribes it on the BTC blockchain using Ordinals. Deployers of BRC-20 can independently decide the total supply and name of tokens, following the first-come, first-served principle. $ORDI is the first BRC-20 token deployed by Domo.

BRC-20 further develops on the basis of inscriptions, enabling fungible tokens and writing the minting and transfer processes of tokens into the BRC-20 indexer. However, BRC-20 requires the assistance of a third-party sorter to record the ledger off-chain, which adds additional complexity and becomes a weak point in the system.

Transfers of BRC-20 are not executed on the BTC main chain but require a two-step BTC transaction (consolidation 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, such as #Trac, but they are still limited by the overall framework and difficult to make breakthroughs. 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 move towards the development of layer-two networks.

With the launch of BRC-20, the use of the Ordinals protocol has expanded, but it has also caused dissatisfaction among the Casey team. Casey even requested that Binance remove any association with Ordinals from the ORDI token introduction to create clear boundaries. 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 targeting Ordinals and BRC20, focusing on homogeneous tokens and addressing the issue of BRC20’s excessive reliance on centralized off-chain indexing. It utilizes and extends Bitcoin’s UTXO model, treating each satoshi (the smallest unit of Bitcoin) UTXO as a specific Atomical token or digital object, thus creating and managing complex digital objects and token systems (ARC20) on top of Bitcoin.

The main features of Atomicals include:

1. Using satoshis as the basic unit to represent tokens.
2. Allowing for the creation, transfer, and updating of digital objects on Bitcoin.
3. Providing a decentralized and Bitcoin culture-compliant tokenization method.
4. Utilizing Proof of Work (PoW) to increase fairness and decentralization in the minting process.
5. Designed to expand the functionality of Bitcoin and support broader applications.

Atomicals fundamentally rethinks how tokens can be issued in a centralized, immutable, and fair manner on Bitcoin. It treats satoshis as the basic “atoms,” with each satoshi’s UTXO representing a Token. When verifying Atomicals transactions, one only needs to query the corresponding UTXOs on the Bitcoin chain. The atomical nature of ARC20 tokens aligns with the atomicity of Bitcoin itself, with the transfer calculations entirely handled by the Bitcoin network.

Compared to BRC20, ARC20 significantly reduces the need for third-party sorters in transactions, increasing the decentralization of the system. The composability of UTXOs allows for greater programmability of ARC20 tokens, for example, theoretically allowing for the exchange between BTC and ARC20 by simply swapping the inputs and outputs of UTXOs.

After its launch in September, the first token, ATOM, of the Atomicals protocol was quickly mined out. Compared to BRC-20, ATOM’s mining process has higher technical barriers and fairness.

Atomicals is based on Bitcoin’s UTXO for minting and propagation, with 1 token equal to 1 sat, adhering more closely to Bitcoin’s original principles. 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 protocol. The ARC-20 token standard is forged and transferred based on Bitcoin’s UTXO, with each unit of ARC-20 token permanently backed by 1 sat, i.e., 1 Token = 1 sat. All operations of ARC-20 tokens can be completed using the Bitcoin network without any additional steps.

Atomicals introduces PoW in the minting process of ARC20, where minters must calculate the hash value of a specific prefix character to mint, ensuring a more decentralized and fair distribution. The Atomicals protocol provides the prefix parameter settings for Bitwork Mining, allowing participants to directly mine inscriptions/NFTs. The ARC-20 token standard remains true to the principles of Bitcoin’s original ideals, and the emergence of related tools in the future will enhance its liquidity.

In summary, Atomicals, as a competitor to Ordinals, focuses on decentralized creation and management of homogeneous tokens and digital objects. By extending the UTXO model of Bitcoin, it has achieved a more decentralized and Bitcoin-culture-friendly token system. With its technical advantages and adherence to Bitcoin’s ideological design, the ARC-20 token standard is expected to gain support from the Bitcoin core community and bring wider possibilities for applications in the Bitcoin ecosystem.

Rune & PIPE

The RUNE protocol is derived from Casey Rodarmor, the founder of Ordinals, recognizing the shortcomings of existing homogeneous token solutions on the Bitcoin network, such as BRC20 and Taproot Assets. Casey proposed an idea for a UTXO-based homogeneous token protocol to address these limitations.

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

1. Based on UTXO: Runes balances are stored in UTXOs, with each UTXO able to contain any amount of Runes.

2. Transactions and Protocol Information: Outputs of specific scripts are considered part of the protocol information, defining the transfer and allocation of Runes.

3. Flexibility: Transfer of Runes is achieved by 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 Runes protocol aims to be as simple as possible, without relying on off-chain data or native tokens, and is compatible with Bitcoin’s UTXO model.

6. Symbol Allocation: Runes can be associated with symbols, but the protocol does not address the issue of symbol squatting to maintain simplicity.

Although RUNE is currently only in the conceptual design stage, BennyTheDev has implemented the PIPE Protocol based on Casey’s proposed technical architecture. PIPE is an important part of the TRAC ecosystem, which also includes the BRC20 token $TRAC, Bitmap, and BennyTheDev’s OrdFi ecosystem protocol TAP Protocol, which allows for token exchange (Swap) and other DeFi functions for BRC20 tokens.

BennyTheDev is an active developer in the Bitcoin community. He released the BRC-20 auxiliary 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 the ideology of Runes improvement in October.

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

In conclusion, the emergence of the RUNE and PIPE protocols reflects the Bitcoin community’s continuous exploration and innovation in terms of homogeneous token implementation methods. Although these protocols are still in the early stages, they have shown 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.

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

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

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

On the Bitcoin blockchain, each block is divided into four parts representing different halving cycles. Users can check 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 Ordinals theory, similar to how the virtual land sales in Decentraland and The Sandbox depend on the ERC-721 standard. While Ordinals theory shares similarities with early colored coin principles, there are differences given the current narrative, consensus, ecosystem, and infrastructure of Bitcoin. Though not as innovative as ERC-721, the BRC-20 method is more primitive.

Bitmap theory adds a new explanation to Bitcoin blocks, providing a topic of interest despite its lack of practicality. It changes the connection between Bitcoin and the metaverse by allowing users to own and record individual blocks, providing a new dimension to each Bitcoin block and making it a part of the metaverse.

Bitmap theory has caught the attention of the Ordinals community and spurred an inscription trend. Any block on the Bitcoin blockchain can become a part of the metaverse through Bitmap, bringing new opportunities for creativity 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 continued inscription trend, it represents significant potential for those seeking to establish 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 as the total number of inscriptions in Ordinals exceeds 40 million. Unlike traditional token protocols, BRC-420 focuses on on-chain inscription modularization, creating new asset types on Bitcoin. Its initial token, commonly known as the “blue box,” has experienced significant market growth, increasing from an initial $0.15 to $1000. Developers have achieved significant on-chain royalty income within a short period of time.

The BRC-420 protocol is an asset protocol based on Bitmap, which combines multiple inscriptions into complex assets, creating a variety of assets ranging from small characters, pets to complete game scripts and virtual machines. These assets, due to their on-chain open source nature, can be run or verified by any client, fully embodying the “Client Agnostic” spirit of the blockchain 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, the number of Bitmap holder addresses has exceeded 25,000, surpassing Sandbox to become the most widely-held metaverse asset on the blockchain. 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 alongside the release of the Bitmap browser and the protocol itself, reaching approximately $30 million.

RCSV, the team behind BRC-420, is actively promoting the full-chain game plan of the Bitcoin ecosystem. This plan emphasizes assets, gameplay, logic, and data on the blockchain, aiming to create a truly decentralized Bitcoin-based game ecosystem. For example, developers can use the “Combat Module” on BRC-420 to quickly develop and release new games, while only needing to pay royalties through the protocol.

RCSV has also proposed a scaling solution for the Bitcoin network to address its capacity limitations when processing a large number of transactions. This solution aims to migrate assets from Layer 1 to Layer 2 and implement a complete virtual machine environment in the next layer of the module. This arrangement aims to ensure security to the greatest extent while providing a low fee, high-efficiency interaction environment for Layer 1 Bitcoin assets.

In summary, the BRC-420 protocol and the related Bitmap project are sparking 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 ongoing efforts of the RCSV team, the full-chain game and metaverse concept in the Bitcoin ecosystem are gradually becoming a reality, demonstrating the broad prospects of Bitcoin technology and applications.

BRC100

BRC-100 is an extended protocol based on Ordinals theory designed specifically to achieve 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 true decentralized, trustless, censorship-resistant, and permissionless application scenarios to Bitcoin Layer 1.

One major feature of the BRC-100 protocol is its interoperability, allowing compatibility among all protocols and applications within its protocol stack, as well as interaction with BTC, brc-20, or other Layer 1 chains like Ethereum and Stacks. Additionally, the protocol introduces the UTXO model and state machine model, enhancing its security and computational capabilities.

This agreement also includes a series of innovative features, such as inheritance concepts, application nesting, address and application status, permission settings, and decentralized governance, etc. 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 extension protocols can be nested to form sub-applications. At the same time, the protocol also introduces two roles: owner and administrator, providing a foundation for decentralized governance of applications.

The practicality of BRC-100 is demonstrated in its diverse range of applications, from governance protocol BRC-101 to automated liquidity protocol BRC-102, as well as functions such as staking, airdrops, borrowing, and stablecoin pools. These extension protocols allow BRC-100 to support not only token trading but also more complex financial operations and computations.

All in all, the BRC-100 protocol opens up a new decentralized application field on the Bitcoin chain through its innovative features and powerful computational capabilities. It not only inherits the advantages of BRC-20 but also 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 from the Bitcoin community as a mature Bitcoin derivative protocol. The update of Taproot Assets expands the functionality of the Lightning Network from simple peer-to-peer payment channels to point-to-multi modes that can achieve asset distribution and circulation. The unique feature of Taproot Assets is that Token information is recorded as registration in the UTXO output script of the Bitcoin mainnet, while transaction transfers and other functionalities are implemented in the Lightning channel. The biggest difference between Taproot Assets and BRC20 and ARC20 is that the issuance of Taproot Assets is pre-minted by an owner and then distributed, rather than freely minted.

Taproot Assets has received support from Lightning Labs, which has a large financing background, and Jack Dorsey, the founder of Twitter, making it superior to other grassroots projects in terms of legitimacy and community support.

NostrAssets is an open-source protocol that introduces Taproot assets and Satoshis (Bitcoin units) into the Nostr ecosystem. Users can send and receive assets in 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 Assets protocol itself does not issue assets but introduces them into Nostr through the protocol.

The features of NostrAssets include seamlessly integrating 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 achieving a seamless experience from chatting to transactions. In the future, NostrAssets plans to import Taproot assets from other Daemon Universes, allowing the inflow and outflow of Taproot assets into Nostr.

The vision of NostrAssets is to drive users to join the Bitcoin ecosystem and deliver Taproot assets to global users. By providing modular development tools, NostrAssets aims to facilitate the construction of decentralized applications, thus providing user-friendly and practical business solutions.

Nostr Assets has announced the upcoming launch of the Fair Mint feature and is seeking project partners interested in issuing assets on Twitter to collaborate. This means that once the feature is live, it is expected that there will be a large number of new assets appearing on the protocol, which could garner widespread attention and participation from the community. These series of activities indicate that Nostr Assets is actively expanding its ecosystem and preparing for future development.

Ethscriptions

Ethscriptions is an alternative protocol to smart contracts and L2, allowing users to share information and execute computations on Ethereum L1 at a low cost. It achieves decentralized computing 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 and make it a general-purpose computing engine.

Middlemarch (similar to BRC20’s domo) and Michael Hirsch are the founders of Ethscriptions. Its initial protocol token is $eths, which as the current leading token has brought significant returns for investors. Although not as impressive as $ORDI and $SATS on the BRC20 track, it has shown significant growth compared to other inscription tracks.

In addition to $eths, there are other notable projects in the Ethscriptions track, such as Facetswap. Facet is a decentralized exchange platform developed by Middlemarch and Michael Hirsch, originally named dumbswap before rebranding as Facetswap. Although the price and market value of $Facet temporarily 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 provides more choices for Ethereum users but also promotes the development of inscription ecosystems on the Ethereum chain.

In the latest developments in the cryptocurrency world, the iERC20 protocol has partnered with the GameFi project SLianGuairkle incubated by Binance, planning to introduce Inscription NFTs and other inscription assets on iERC20 to enhance the gamification of the GameFi ecosystem utilizing the advantages of inscriptions. This collaboration has garnered wide attention in the Ethereum community, particularly shifting the focus from ETHS to the iERC20 protocol.

What sets the iERC20 protocol apart is that it has developed not only a Swap feature but also integrated EVM cross-chain functionality, building a bridge between Ethereum inscriptions and traditional Layer2. This feature allows the protocol to introduce more mainstream coins and stablecoins, expanding the TVL (total value locked) of the inscription ecosystem and providing more possibilities for the entire system’s development.

In addition, the iERC20 protocol plans to introduce a PoW (Proof of Work) fair mining model and collaborate with other projects to launch new inscriptions, similar to the mining approach of the Atom protocol. This strategy is expected to bring new momentum to the development of the Ethereum ecosystem.

Although $Ethi and $ETHS were launched almost simultaneously, $Ethi initially did not gain as much recognition as $ETHS due to its low profile in the early stages. However, as the price of $ETHS rises and market attention increases, $Ethi has also started to receive more and more attention. $Ethi’s divisibility technology makes it more attractive to retail investors, and although its market value is currently lower than $ETHS, its development potential should not be overlooked.

In the iERC20 ecosystem, $Ethi is seen as an important tool, similar to a shovel, providing holders with special empowerment. For example, users holding $Ethi may receive inscription airdrops from collaborative projects, such as the recent collaboration with SLianGuairkle. In addition, FOMO sentiment in the community is spreading, with many investors optimistic about $Ethi’s future development potential, believing it to be the leading token officially recognized by iERC20, with value appreciation as the PoW mechanism goes live and the inscription ecosystem continues to develop.

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

Other public chain inscriptions

As the wealth effect generated by Bitcoin inscriptions spreads to other public chains, various “RC20” tokens have begun to attract attention in the community, creating a FOMO phenomenon, including DOGE inscriptions, BSC inscriptions, Litecoin inscriptions, BASE inscriptions, Polygon inscriptions, Solana inscriptions, and others.

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

Inspired by the missed opportunity of Bitcoin inscription token SATS, community members are now starting to “mint a few for self-defense”. Compared to the high costs 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 fees.

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

Future opportunities

In March 2023, Galaxy Research and Mining predicts that by 2025, the market value of Ordinals will reach $5 billion, with only 260,000 inscriptions at the time. Now, the number of inscriptions has reached 33 million in just half a year, an increase of 126 times, and the market value of Dragon One ORDI has already reached $400 million, and the market value of Dragon Two SATS has reached $300 million. From this, it can be seen that the prediction for the entire inscription market is significantly underestimated.

The world of Blockchain is filled with various protocols, and the ones benefiting the most are of course the miners. According to Tokenview’s on-chain data monitoring, Bitcoin’s daily transaction fees reached 11.6 million USD, surpassing Ethereum for the first time since 2020. With Bitcoin halving approaching, miners are in urgent need of additional income. The prosperity of the Blockchain is not only beneficial for miners but also indirectly maintains the security of the Bitcoin network. The reduction in block incentives will make miners increasingly reliant on transaction fees to cover operational costs. In the long run, the future of Bitcoin will certainly involve competing scaling solutions. The outbreak of the Blockchain and the resulting high transaction fees are catalysts propelling us towards this future. Currently, BRC20 trading activities are mainly concentrated on OKX and Unisat. As various protocols emerge, different transaction markets are appearing for different protocols, such as Atomicals Market for ARC20. The emergence of leading protocols will inevitably give rise to a unique transaction market, and the competition within this market is far from over. The wallet market is similar; currently, Unisat is the main wallet for BRC20. However, there are still different wallets being launched that support various Blockchain protocols.

As funds continue to flow into the Blockchain market, users are no longer satisfied with meme hype and are beginning to shift their focus to applications based on the Blockchain. The mentioned BRC420 is a typical example. Unisat also brings innovation to BRC20 by introducing BRC20-Swap, allowing users to easily exchange BRC20 tokens like an AMM DEX. As the first product to enhance Ordinals’ ecosystem liquidity, it is expected to unleash the potential of the Bitcoin DeFi ecosystem. In the future, more features such as lending and derivatives may be introduced. Recently, Unisat has also opened its API interface, which is very developer-friendly, allowing for the implementation of various functions such as automatic batch orders, monitoring of the Blockchain, and automatic minting, leading to the creation of numerous tool-based projects.

ORC20 returned on November 20th with the release of the Nirvana upgrade, which improved the Blockchain format to support BTC DeFi integration and introduced stablecoin support, providing services for issuers such as USDT and USDC. Compared to BRC20, ORC20 is clearly more complex, allowing for changes in initial supply and maximum minting capacity. It is no longer limited by four-letter words in naming. However, it is considered more centralized by the community, and the upgradability is seen as violating the immutable spirit of Blockchain. There are concerns about potential issues like malicious inflation and insider trading.

Overall, BRC20 is the most original protocol to be listed on exchanges, and it has the strongest community consensus. The 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 Blockchain. Due to the technical difficulty of supporting BRC20 deposits and withdrawals and building custom indices, it is expected that the priority for listing will still be given to BRC20 tokens. Additionally, BRC20 tokens cannot remain memes forever. Project teams can choose an existing BRC20 token with community consensus as their utility token, thus avoiding regulatory risks and gaining an established community.

Summary and Outlook

The development of the Inscription track has shown remarkable vitality and innovation. The growth of this track is mainly attributed to key technological advancements in Bitcoin like 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 and users, and promoting the development of diverse projects and protocols such as Ordinals, BRC20, and Atomicals.

The growth of this track has also positively impacted miners’ interests. With the emergence 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 embrace the Inscription track, showcasing its extensive potential and influence.

Looking ahead, the Inscription track is expected to continue witnessing technological innovation and driving the implementation of more complex functionalities. The market growth is expected to persist, bringing more investment and participation opportunities. Furthermore, it is foreseeable that more innovative projects and protocols will emerge, further enriching the Inscription ecosystem of Bitcoin and other public chains. Miners’ revenue may also continue to grow as the Inscription track presents new income opportunities.

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