introduction

On January 11, BTC ETF finally passed the approval of the SEC. Currently, 11 BTC ETFs are officially listed and traded in the US stock market, which is a milestone in the history of cryptocurrencies. With the arrival of the Bitcoin halving cycle, the Bitcoin ecosystem is expected to be more vibrant.

In 2023, a new concept emerged in the field of digital assets - inscriptions. The rise of inscriptions mainly benefited from a series of protocols in the Bitcoin ecosystem. Among them, ORDI, represented by the Ordinal protocol, once became a leader in the inscription field.

However, the reason why Inscription has emerged is more due to the concept of Fair Launch. Taking ORDI as an example, its issuance model abandons pre-mining and private placement, distributes tokens equally to community members, and stimulates extensive community participation. This fair issuance model has greatly promoted the popularity of Inscription.

Inscription market background

Market Background

Since January 2023, Bitcoin's Ordinals protocol has spawned a frenzy on the Bitcoin chain with far-reaching impact. Many BRC20 and Ordinals assets have emerged, bringing a carnival of "retail investors". The inscription project of the BRC20 protocol adopts the Fair Launch model, so that all chips are minted by retail investors themselves, eliminating institutions and project parties, and bringing real fairness. Among them, the casting cost of Ordi is about $1 per piece. After listing on the Gate exchange, it rose to $30,000 per piece. As the value of ORDI continues to be discovered at the end of 2023, its price has also risen to nearly $90,000 per piece. Some early engraved users also took this opportunity to achieve wealth freedom.

This exaggerated increase not only boosted the popularity of the BRC20 protocol, but also attracted many Ordinals players to join the BRC20 camp.

Data Overview

However, this has also led to a continuous increase in Gas on the Bitcoin chain. According to the 3-year block fee rate data from Mempool.space, in May 2023 and November 2023, the block fee rate soared, and the minimum confirmed Gas even soared to 600 s/vb at its peak, setting a record high in the past three years.

Source: https://mempool.space/graphs/mining 2024.1.14

According to Mempool.space's 3-year total block fee data, in May 2023 and November 2023, the total daily block fee was close to 3.5BTC, the highest record in 3 years.

Source: https://mempool.space/graphs/mining 2024.1.14

Judging from the casting data of Inscriptions, the casting quantity tends to be stable and remains at a high level.

Source: https://dune.com/cryptokoryo/brc20 2024.1.14

Track Analysis

This article will review the popular public chain leading inscriptions and take a look at the market performance of these inscriptions.

Bitcoin Chain

Ordinals

In January 2023, Bitcoin developer Casey Rodarmor released the Ordinals protocol, a Bitcoin-based asset issuance protocol consisting of two core components: Ordinals ordinal theory and Inscription.

Specifically, the Ordinals protocol takes advantage of the unique characteristics of Satoshi, expands the single serial number, and adds data such as text, images, videos, and contracts. This makes each Satoshi a carrier of unique information, and stores the data on the Bitcoin chain to ensure its immutability.

BRC20 Protocol

On March 8, 2023, anonymous developer Domo launched BRC-20 based on the Ordinals protocol, which is a Bitcoin ecosystem token issuance protocol similar to ERC-20. The special feature of Brc20 is that it is a set of JSON text-like inscriptions with fixed rules and formats. $ORDI is the first BRC-20 token deployed by Domo. Taking $ORDI as an example, it stipulates the protocol rules, name, quantity per piece, and maximum quantity. However, BRC-20 needs to rely on third-party indexes to record the ledger off the BTC chain, which adds additional workload to the system and becomes a weak point of the system.

https://ordinalscan.net/inscription

Atomical

Atomicals is a protocol built on the Bitcoin network, which aims to enable the creation, transfer and upgrade of various digital items on the Bitcoin network, including native digital NFTs, game NFTs, digital identities, domain names and social networks. At the same time, the protocol also supports the creation of exchangeable tokens, allowing the issuance and trading of tokens on the Bitcoin network.

The protocol uses the smallest unit of Bitcoin, Satoshi, as the basic unit of Token. Each Satoshi UTXO represents an independent Token, that is, 1 Token equals 1 Satoshi. By binding UTXO to Token, the Atomicals protocol successfully avoids the complexity of Ordinals off-chain indexing and improves the decentralization of the entire system.

However, Atomicals still faces some problems. One of the most notable problems is the introduction of Proof of Work (POW) in the casting process of ARC20 Token. The minter needs to run a full node of the Bitcoin network to participate in the casting. Although this ensures the fairness and decentralization of the casting, it also limits the participation of most people due to the high technical threshold. In addition, the imperfection of the underlying technology makes it easy for users to lose ARC20 Token when transferring Bitcoin.

Ethereum Inscription

Ethscriptions

Ethscriptions is a protocol that replaces smart contracts and L2, allowing users to share information and perform computations at low cost on Ethereum L1. It enables decentralized computing by bypassing smart contract storage and execution by applying rules to Ethereum call data. In August 2023, Ethscriptions introduced a virtual machine (ESC VM) to enhance its capabilities and make it a general-purpose computing engine.

Source: https://dune.com/tyler3/ethscription-indexer 2024.1.14

Dune data shows that as of January 14, 2024, Ethscriptions has more than 3.593 million inscription numbers, more than 165,000 users, and more than 320,000 transactions. Judging from the number of daily active users and inscriptions, Ethscriptions has been growing at a relatively stable rate since October 2023.

iERC20

iERC20 is a new Ethereum-based token protocol that provides a low-cost token ecosystem that allows anyone to deploy, mint, and trade tokens on it.

The uniqueness of the iERC20 protocol is that it not only develops the Swap function, but also integrates the EVM cross-chain function, building a bridge between Ethereum inscriptions and traditional Layer2. This feature enables the protocol to introduce more mainstream coins and stablecoins, thereby expanding the TVL of the inscription ecosystem and providing more development possibilities for the entire system. In addition, the iERC20 protocol also introduces PoW and DPOS mining to make IERC20 more decentralized and democratic. This strategy is expected to bring new impetus to the development of the Ethereum ecosystem.

Source: https://x.com/EthinscXYZ/status/1745254515169997173?s=20

Solana Chain

The first inscription token of the Solana chain, SOLS, is created based on SPL-20, which is similar to the Ordinals protocol BRC20, with a total of 21,000. SPL20 is also a set of JSON text-like inscriptions with fixed rules and formats. It differs from BRC20 in that it changes the protocol name "P" of the "P" field: "spl-20".

Source: https://www.libreplex.io/fairlaunch/deployments

Although the Sols casting process is relatively complicated, it is still very popular. In addition to the innovative form of engraving inscriptions on NFTs, the validity of inscriptions is increased through multiple screening steps such as casting, double locking, and migration to verification. According to the data from the NFT platform Magic Eden, as of January 14, 2024, Sols ranked third in the trading list, with a floor price of 42.43 SOL (cost 0.1 SOL) and a total trading volume of 590,800 SOL.

Source: https://magiceden.io/marketplace/sols_spl20?activeTab=items

AVAX Chain

AVAL is an inscription based on ASC20, with a total of 21 million pieces, and has received the attention and support of Ava Labs CEO Emin Gun Sirer. ASC20 is also a set of JSON text-based inscriptions with fixed rules and formats. It differs from BRC20 in that it changes the protocol name "P" of the "P" field: "asc-20".

Source: https://docs.avaxmarket.xyz/

According to DeFiLlama data, the Avalanche network generated $9.72 million in revenue on December 20 alone, mostly from gas fees consumed by the community in inscription minting.

Source: https://defillama.com/chain/Avalanche 2024.1.14

SUI Chain

ISSP is the first infrastructure project on the SUI Network that integrates the inscription Launchpad, Marketplace and Swap. Relying on the natural advantages of the Sui Network's unique inscription system object model, it has initially launched the Sui-20 standard protocol inscription on the Sui Network, and through the improvement of infrastructure, it allows more developers and communities to participate in the construction of the Sui Network inscription ecosystem and jointly promote the development of the Sui Network ecosystem. ISSP uses the indexer that comes with the Sui chain node to index the inscription data to obtain the highest performance and most stable inscription experience. At the same time, ISSP supports seamless docking of inscriptions with CEX, without the need for CEX to develop additional docking inscription protocols.

Source: https://issp.io/

Polygon

The first Polygon inscription pols was minted based on PRC-20. The token protocol is based on the Ordinals protocol, with a total of 2,100 pieces. It is also the first inscription on the EVM chain. The over-the-counter price of pols once soared, and it was even sold on the second-hand trading platform Xianyu.

According to the DUNE platform, the popularity of PRC-20 once caused the Polygon network GAS to soar. On November 16, 2023, the daily GAS consumption reached a peak of 88,000.

Source: https://dune.com/satsx/pols-exclude-internal-tx

Other POW chains

Dogechain

The Drc-20 protocol is an Ordinals-based protocol on the Dogecoin chain. Its functions are similar to those of the Bitcoin chain, but it is popular due to its low transfer fees and strong meme properties.

$UNIX is the first UTXO-based Dogecoin exchange that supports transactions between inscriptions. There are currently 36,200 holders and a total transaction volume of 109,576.

Source: https://unielon.com/drc20/UNIX

summary

In summary, during this inscription craze, although the data usually publicized by major public chains look very impressive, under the impact of inscriptions, those public chains that have always boasted of high speed, low cost, and high performance have encountered setbacks one after another, and their performance has been unsatisfactory, showing their true level under extreme stress tests.

Notably, Bitcoin and Ethereum have been remarkably robust, and despite the congestion their mainnet have faced and the spike in transaction fees, they have continued to perform well in terms of executing transactions.

Summarize

Although investors have flocked to the inscription ecosystem driven by the wealth effect, the fair distribution and first-come-first-served characteristics of inscriptions also make them face a series of challenges, including high network fees and script issues. In addition, most inscriptions on the current market still rely on factors such as institutional support, community participation, and Meme culture to stimulate market sentiment, while also facing long-term difficulties such as weak application narratives, insufficient infrastructure, and lack of liquidity. Although the controversy over the value of inscriptions has not subsided, innovators are always moving forward, and the field of inscriptions will usher in broader possibilities.

Author: Snow

Translated by Sonia

Article review: Piccolo, Wayne, Elisa, Ashley, Joyce

Copyright: Gate.io