Dialogue UniSat: Valuation Rumors of 1 Billion USD, the Growth Path of the New Leader in the Bitcoin Sector

Author: Jack, BlockBeats

Ordinals was launched after a two-month dormancy period. Aside from the Twelvefold event promoted by Yuga Labs, there wasn't much discussion. At that time, no one was optimistic about the concept of "Bitcoin inscriptions," and the general view was that Bitcoin should focus on payments and not develop an ecosystem. After the launch of BRC-20, many "mainstream players" scoffed at this "poor imitation of ERC-20," arguing that there is a fundamental difference between a simple JSON code and a smart contract.

However, BlockBeats found that there was still a small group of people trying various ways to create transactions and build a market for Bitcoin NFTs when they were largely ignored. In March, we contacted some participants in the Bitcoin NFT ecosystem, including BRC-20 OTC trading guarantor Bzz, Bitcoin NFT project PixelBirds Sparrow, and the plugin wallet UniSat that was integrating BRC-20. In March, image NFTs were clearly more popular than BRC, dominating the Bitcoin inscription minting. Ethereum blue-chip NFTs like BAYC and Punk were being moved to the Bitcoin network, especially after Magic Eden entered the scene.

In early April, BlockBeats attended an offline Meet Up of the Ordinals community in Hong Kong. At the event, developers from Magic Eden and OrdSwap discussed the unlimited potential of the Bitcoin NFT market. Although the venue was not crowded, the atmosphere was lively. However, UniSat was notably absent; while everyone was excited about Bitcoin image NFTs, UniSat was busy integrating BRC-20.

As a wallet software, UniSat seemed to have become an "outlier" in the new ecosystem by shifting its focus to BRC-20. After all, there could be a back-and-forth debate on whether to put small images on the Bitcoin network, but when it came to BRC-20, everyone seemed to unanimously regard it as a joke, let alone discuss integration or development for it. This "everyone" included many early participants of BRC-20. For instance, the wallet address of the deployer of the "hundredfold coin" $nals had not a single $nals. Due to the lack of players, many participants were giving away their $ordi as gifts to attract others to join. In hindsight, there were actually very few players who were truly committed to BRC early on, and UniSat was among the earliest.

The Labor Day in May completely changed the landscape of the Bitcoin NFT ecosystem. Starting from April 28, news of "$ordi per capita thousandfold" spread across various WeChat groups, followed by the emergence of tenfold and hundredfold opportunities like $nals, $UTXO, and $elon in the following days. A large number of users FOMOed into the BRC market, and the WeChat groups related to BRC-20 grew from one to eight, all filled within an afternoon. As the only on-chain entry and exit for buying and selling BRC tokens, UniSat became a hot topic in the entire crypto circle. Perhaps even the team did not expect that the Bitcoin network would become so congested because of their product.

The success of BRC-20 owes part of its credit to UniSat. As the first to take the plunge, UniSat is one of the few projects that truly seized this rare opportunity. You could say that BRC's breakout was due to good luck coinciding with the "meme season," or that the hype around BRC could not last long, but the returns UniSat received were real and substantial. In the increasingly competitive crypto industry, entrepreneurs and developers are trapped in the "tracks" and "ecosystems" defined by institutions, hoping to create the next miracle through repetitive innovation. However, the reality is that the primary and secondary markets are becoming irreparably divided, and no one is willing to pay for institutions anymore. In such an environment, should the team continue to cling to institutional support or turn to listen to market voices? Perhaps we can hear the thoughts of UniSat founder Lorenzo.

Why choose the Bitcoin Ordinals ecosystem?

BlockBeats: Thank you for accepting the interview. Please introduce yourself briefly, Lorenzo, and explain why you chose to develop a wallet product on Ordinals?

Lorenzo: I am Lorenzo, an early Bitcoin ecosystem developer. We have always been very focused on the Bitcoin ecosystem. When the Ordinals protocol emerged, we conducted in-depth research and strongly recognized the concept of digital artifacts, so we decided to invest in development. In a relatively short time, we created a Bitcoin-native lightweight wallet, UniSat Wallet, and a fast querying tool, UniSat Search, gradually gaining recognition from early participants in the Ordinals community.

BlockBeats: UniSat initially focused on "small image代打," why did you later shift your development focus to the BRC-20 market? Why did you not choose to create a trading market for Bitcoin NFTs?

Lorenzo: Inscription is a fundamental service. When there weren't so many users flooding in and the overall fee rates were low, the experience of UniSat Inscribe was quite ideal. After the inscription service was established, we noticed the definition specification document for BRC-20 and began preliminary parsing and implementation under this original definition. At that time, the original definition was still quite vague, and we implemented it while discussing and adjusting with the protocol creator, domo, refining and confirming most details.

We were not uninterested in general NFT trading. The first trustless wallet interaction based on PSBT was jointly completed by UniSat Wallet and OpenOrdex (BlockBeats note: For more about PSBT, please read “What is a Partially Signed Bitcoin Transaction (PSBT)?”). At that time, we focused on ensuring smooth interaction between the wallet and the website, which laid the groundwork for our later market efforts. Later, the choice to enter the BRC-20 market with UniSat Marketplace proved to be a reasonable decision.

BlockBeats: For a long time, both Ordinals and BRC-20 did not receive much attention. During this period, why did the team continue to insist on developing the BTC ecosystem?

Lorenzo: It hasn't actually been a long time; Ordinals has only been online for three months. Those who have been with us know that we have been working hard, continuously delivering a series of products, and we didn't feel this "low tide." On the contrary, while external attention was limited, many new ideas continued to emerge within the community, and BRC-20 was just one of them. Some innovations did not come to fruition, which is quite reasonable for a rapidly developing community.

BlockBeats: In the development of the BRC-20 trading process, what was the most challenging part? What is the key to making transactions "smoother"?

Lorenzo: The most challenging part was the design trade-offs. We ultimately chose to use a listing format for transactions. Many people do not understand why we did not abandon the inscription presentation on the interface and instead chose a DEX-like presentation. This is because we want new users to be intuitively guided into and understand the thinking behind Ordinals through their interaction with UniSat's products, rather than "playing the same mature gameplay from other chains in a different place." Doing so would not necessarily achieve a native experience, nor would it necessarily align with the characteristics of Ordinals. Therefore, we took the risk of choosing a native inscription presentation. From this, you can see that UniSat cares deeply about the native aspects of Ordinals.

As for "smoother," I apologize, but our market has indeed not yet achieved that. Before BRC-20 transactions, all features provided by UniSat, from UniSat Inscribe to UniSat Search to UniSat Wallet, did not require block confirmations, which could indeed be described as "smooth." Therefore, naturally, we hoped that BRC-20 transactions would also be a seamless experience without confirmations, and we did a lot of validation work for this. Unfortunately, after launch, we still encountered significant issues in this area, as attackers achieved forgery through a special construction (BlockBeats note: On April 24, UniSat Wallet suffered a large number of double-spending attacks, and the team later compensated users). Thus, in subsequent updates, we chose to sacrifice some experience to ensure adequate security, and similar issues have not occurred since.

BlockBeats: Many people believe that BRC-20 transactions heavily rely on centralized project parties to maintain them. What is your view on this? How does UniSat plan to address the decentralization challenge?

Lorenzo: It is well known that Bitcoin currently lacks comprehensive smart contract support, and BRC-20 transactions are indeed decentralized. In UniSat Marketplace, we use the relatively mature PSBT technology to implement trustless transactions (BlockBeats note: For more about PSBT transactions, please read “Ordinals founder angrily refutes Yuga Labs auction, why PSBT is the correct answer for Bitcoin NFT transactions?”). The assets of both parties in a transaction are exchanged in a single tx without the need for platform involvement, which is essentially peer-to-peer, similar to existing Ordinals market transactions.

UniSat Wallet is a non-custodial wallet similar to MetaMask, where your mnemonic phrase is stored independently, and no one else can access it. Later, the Marketplace was launched to interact with the wallet in a standard way, where the seller's wallet signs to provide the sell order, and the buyer signs to complete the purchase. This is a completely decentralized transaction. During the transaction process, the platform cannot intervene, making it a secure trading method based on peer-to-peer interactions.

However, the criticism of BRC-20's centralization is indeed valid. Currently, only UniSat provides a relatively complete commercial index, meaning that whether a transaction is valid heavily relies on the correctness and completeness of that index. Since the birth of the UniSat Indexer (BRC-20), we have eliminated various ambiguities in communication with the initiator, domo, achieving strong completeness.

Of course, in special cases, there may still be some "corner cases" that cannot be accurately covered by the documentation. Currently, all issues that have arisen have been resolved. As of May 10, we even handled a case of an invalid Mint caused by mixed case usage in JSON field names.

For now, UniSat can proudly claim that there are no known issues with the index.

BlockBeats: Most users generally report that the UniSat wallet and website are very laggy. What optimization work is the team currently doing?

Lorenzo: The main reason is that the recent surge in popularity has been too rapid, with fast iterations and exponential user growth, especially with users' strong interaction capabilities, which we did not anticipate. The team has been continuously optimizing, improving the product's ability to handle external requests, and the product experience is gradually improving. Based on the current foundation, UniSat Marketplace will soon be fully open.

About Market Share, Fees, and Open Source Indexing

BlockBeats: It is said that UniSat occupies over 90% of the market share in inscriptions and the BRC-20 market?

Lorenzo: This should not be such a large proportion; perhaps our product iterations are relatively fast, giving us a slight first-mover advantage. Soon, with the open-sourcing of the index, centralized trading platforms will occupy a considerable share. Ordinals has only been around for three months, and everyone is at the same starting line. For Bitcoin, which has been around for over a decade, this is a marathon that has just begun. We have enough patience and solid infrastructure to support our continued efforts.

BlockBeats: Many users have reported that UniSat's fees are not low. The team's revenue must be considerable, right?

Lorenzo: We conducted rigorous market research, and a 1.6% fee is actually quite low. UniSat Marketplace is a level-and-a-half market and cannot be compared to CEX or DEX transactions. A significant shortcoming is the lack of liquidity. Excessively low fees can lead to false wash trading. We are a decentralized market and will not intervene in the market, but user safety and responsibility to users have always been our top priority.

So, considering the collection of a 1.6% fee, it is more based on protecting users. BRC-20 is also an inscription, so you can think of it as we are providing trading for inscription NFTs. We all know that the trading fees in the NFT market are generally around 2.5%, plus an additional 2% to 5% in royalties.

BlockBeats: Many in the community mention that it was UniSat's design of a 0.2% trading royalty for BRC-20 inscription deployers that truly ignited the market. What considerations did the team have during the design phase?

Lorenzo: The starting point for the royalty design for deployers is quite simple; we hope to encourage deployers to participate in the operation and become active and effective network nodes. The income for deployers has indeed stimulated everyone's enthusiasm for participation. However, we have recently heard continuous feedback from users opposing the royalty design, arguing that deployers merely preemptively occupy a good name. This opinion is not without merit.

We are currently considering eliminating the mandatory royalty design on the platform. For users, this would directly lower transaction costs; for deployers, there would be no need for concern because if it is indeed canceled, UniSat would take a proportion (0.2%) from every fee received to create a Deployer Incentive Program, while also setting aside an additional 0.2% of fee income to incentivize deployers who make stable and continuous contributions. Please stay tuned for our subsequent updates.

BlockBeats: Why decide to open-source the UniSat index parsing code? Won't this allow exchanges to integrate BRC-20 tokens faster and impact UniSat's trading volume?

Lorenzo: The parsing of the index is a crucial part of the entire ecosystem. If we do not open it, others will certainly develop it; it is just a matter of whether it happens sooner or later. However, if we open it up in a timely manner, it allows all developers to have a default reference, giving them confidence to quickly and easily verify "this is how UniSat's code logic is determined," having a piece of homework to refer to, saving everyone's time and minimizing potential disagreements.

We understand and support the exchanges' desire to launch BRC-20 as quickly as possible. This is not just lip service; we are striving to provide substantial technical support to various exchanges in terms of documentation, APIs, and data, even if it means our development time and resources are fully occupied during this period. We hope these CEXs can launch as soon as possible, as this not only affirms UniSat as an infrastructure but also allows more new users to learn about BRC-20, understand Bitcoin Ordinals, and get involved, which is a true win-win situation.

We will further improve the infrastructure and gradually bring more interesting and useful native Ordinals experiences. Just as has happened over the past three months, you will see UniSat moving forward without looking back, always heading towards the next innovation.

About Rumors of Financing and Acquisition

BlockBeats: Recently, there have been rumors in the community that a major exchange wants to acquire UniSat?

Lorenzo: Currently, there are indeed trading platforms contacting us. Acquisition is not on the table; we are still quite small, and it is more about technical communication and collaboration. BRC-20 is a new accounting method, and exchanges need independent technical implementations to support BRC-20. We have already open-sourced the BRC-20 index, and we will soon launch an open-source public parsing index that can cross-verify with the exchange's index. This will consistently provide reliable BRC-20 ledger parsing, which is key to the development of the entire ecosystem. UniSat is very happy to continue contributing to the standardization of the Ordinals ecosystem and BRC-20.

It is particularly worth mentioning that OKX has had in-depth technical discussions with us, indicating that they have been investing in research and development on BRC-20 for quite some time, providing us with many beneficial ideas regarding public indexing and cross-verification.

BlockBeats: Is the team considering financing soon?

Lorenzo: We are indeed in contact, and we will have financial advisors help us with overall planning.

BlockBeats: If the BRC-20 craze subsides, how does UniSat consider its future development direction?

Lorenzo: The BRC-20 craze may indeed fade, but it could also make a comeback unexpectedly; this trend has already formed, and Bitcoin is always ready for the next explosion. UniSat will improve the user experience across the platform, securely store users' inscriptions in the wallet, enhance mobile user access, and optimize the minting process. Additionally, we have new products in testing, which we won't disclose just yet.

BlockBeats: There is still some resistance towards Chinese teams in the Web3 space. What are your thoughts on this?

Lorenzo: From the very beginning, our positioning has been to serve global users. We can particularly understand users' concerns, especially in the recent surge of users and extreme network congestion, where our services faced many issues with timely responses and processing, including many minting transactions that could not enter the memory pool, those that entered the memory pool but could not be packaged in time, and delays in confirming payments after purchasing BRC-20, among other issues. These problems indeed stem from our limited capabilities, as we did not manage to handle things well amid the surge in user numbers, which is unrelated to where the team is based.

Some of these issues can be resolved or alleviated, while others are due to the current limitations of the Bitcoin network. We hope users can understand. On the other hand, this also indicates that our adaptation to the Bitcoin network is still insufficient, and the system cannot effectively handle extreme congestion situations, which are areas we need to improve. We will learn from this lesson, and when the next wave of excitement arrives, you may find that no matter how congested the chain is, UniSat will evolve well, just as it has always done.

BlockBeats: Indeed, the BRC-20 craze has been primarily led by the Chinese market from the start, and users need to reduce their irrational discriminatory attitudes. Finally, I wish Lorenzo and the team success in expanding the Ordinals ecosystem. Thank you for accepting our interview.

Lorenzo: Thank you for your understanding and support; I really appreciate it.