Tide Capital: Bitcoin Renaissance: What opportunities in the BTC ecosystem are worth paying attention to?

Author: Tide Capital

Abstract

Expectations for spot ETFs have once again driven BTC up from the bottom range of $25,000, reaching a new high for the year. At the same time, the BTC ecosystem has made significant progress this year, with the emergence of several native protocols such as Ordinals, Atomicals, and PIPE. The innovations in the BTC ecosystem not only bring more possibilities for Bitcoin but also harbor unique investment opportunities. We are optimistic about the long-term growth potential of BTC native protocol tokens like $ATOM and $PIPE, as well as established Layer 2 protocols like $RIF and $STX capturing BTC's beta.

Spot ETFs reignite market sentiment, BTC ecosystem deserves attention

Expectations for spot ETFs have once again driven BTC up from the bottom range of $25,000, reaching a new high for the year. On October 16, Cointelegraph reported false news about the SEC approving spot ETFs, causing BTC to spike to around $30,000, but the market did not fully retract; instead, it consolidated near MA120 before continuing to rise. Clearly, we are in a phase of "bullish sentiment," and the market's long positions have been ignited.

It is noteworthy that the BTC ecosystem has made significant progress this year, with the emergence of several native protocols such as Ordinals, Atomicals, and PIPE. The innovations in the BTC ecosystem not only bring more possibilities for Bitcoin but also harbor unique investment opportunities, with related tokens even outperforming BTC. The following will introduce some BTC ecosystem investment opportunities we are focusing on.

Ordinals Protocol

Ordinals Protocol major update, leading $ORDI surges

On January 21, 2023, Bitcoin developer Casey Rodarmor launched the Ordinals protocol, opening up new gameplay in the Bitcoin ecosystem. On October 24, the Ordinals protocol underwent a major update, releasing version v0.10.0, which added features such as batch inscription, metadata addition, and inscription numbering endpoints. With BTC rising and the community becoming active again, the leading $ORDI rebounded from the bottom. On November 7, Binance listed $ORDI, driving its price up significantly, with a daily increase of nearly 100%.

Since its launch at the beginning of the year, the Ordinals protocol has seen over 38 million inscriptions, with the community continuously growing. As the leading token in the Bitcoin ecosystem, $ORDI currently has a market cap of around $400 million and has not yet been listed on major exchanges like Coinbase and Upbit, still holding certain upside expectations. Recently, community members proposed using $ORDI as the governance token for BRC-20, with uses including community proposal voting and Indexer staking, which is expected to bring practical use to $ORDI and further boost demand.

Total inscriptions of the Ordinals protocol exceed 38 million

$SATS listed on multiple exchanges, market cap close to $300 million

$SATS was deployed on March 9, 2023, with a total supply of 21 trillion, corresponding to the number of satoshis in Bitcoin. Due to a single minting cap of only 100 million, all $SATS were not minted until September 24, six months later. Among all BRC-20 tokens, $SATS has the most on-chain holding addresses, close to 40,000. Therefore, $SATS has the most supporters and the widest impact.

Basic information of $SATS

In the past month, $SATS has risen nearly tenfold, successively listing on exchanges like Bitget, Kucoin, and Gate, with a market cap close to $300 million. Various exchanges are fully embracing the Bitcoin ecosystem, bringing in more funds and attention.

$SATS has risen nearly tenfold in the past month

BRC-100 launched, expected to open up native applications like DeFi and GameFi

On October 25, the Layer 1 Foundation, established by BRC-20 developer @domodata, released an introduction to BRC-100. BRC-100 is a scalable decentralized computing protocol based on ordinal theory, designed for decentralized applications directly on the Bitcoin first layer, such as DeFi, SocialFi, and GameFi. BRC-100 expands from BRC-20 and can be enhanced and improved, creating possibilities for applications based on the Bitcoin first layer.

Although the Ordinals protocol has only been online for nine months, it has attracted developers from various fields and communities, leading to many applications and gameplay, such as BRC-20, rare satoshis, recursive inscriptions, etc. Protocols and applications that improve and expand upon Ordinals continue to emerge, and we should keep a close eye on future developments.

Atomicals Protocol

The Atomicals protocol is a simple and flexible protocol launched on September 17, designed for minting, transferring, and updating digital objects (traditionally known as NFTs) on the Bitcoin UTXO blockchain. Atomicals is a way to organize the creation, transfer, and updating of digital objects, essentially defining a chain of digital ownership based on some simple rules.

Compared to the Ordinals protocol, the Atomicals protocol is more detailed in design, incorporating modules for tokens, NFTs, realms, containers, and more, providing developers and users with various commonly used functions. Since its launch on September 17, the protocol has welcomed many developers and users, with tools such as wallets, browsers, minting platforms, and domain services already online, achieving tens of thousands of mints and still growing rapidly.

Daily minting volume of Atomicals

ARC-20 Token

The ARC-20 token standard of the Atomicals protocol addresses the issue of representing arbitrary fungible tokens on the Bitcoin network, using one satoshi to represent the deployed token. Anyone can use a UTXO-supporting wallet to deploy and transfer ARC-20 tokens, with both direct deployment and decentralized deployment options available. Additionally, ARC-20 is equipped with a built-in unique name system, where the first registered token name is permanent.

Some ARC-20 tokens

As the simplest gameplay of the Atomicals protocol, multiple ARC-20 tokens have already been minted by community members. Among them, $ATOM is the first ARC-20 token to be born, becoming the representative token of the Atomicals protocol. Its total supply is 21 million, and the current price of $ATOM has reached $1.55, with a total market cap of about $30 million. Compared to $ORDI's market cap of over $400 million, $ATOM has significant room for imagination.

Basic information of $ATOM token

NFT

"Atomical Digital Object" is a new type of NFT that can be minted and transferred on the Bitcoin network. Unlike traditional NFTs, it does not require centralized services or trusted indexers, but is permanently stored on the Bitcoin blockchain. In addition to immutable content and files, it also supports continuous updates, making it suitable for social media, games, and other applications.

AtomPunks

Realm Name

Realm Name is a domain name identifier that can be used to associate network addresses and resource information, starting with a "+" and containing at least one letter. Realms do not require any intermediaries or centralized registrars; once a user claims a domain name, they will permanently own it until it is transferred to someone else.

Interestingly, realms support the construction of subdomains through suffixes, opening up more applications and gameplay, such as allowing users to register multiple DAOs for management under one realm. Recently, the minting of realms has peaked, with shorter 1, 2, and 3-digit realms being snatched up, and the total number of realms minted has exceeded 30,000.

Total number of realms minted

With careful preparation by developers, the Atomicals protocol has relatively complete modules and functions, achieving tens of thousands of mints in just over a month since its launch, showing remarkable growth speed. As a competitor to the Ordinals protocol, the Atomicals protocol is expected to emerge with more gameplay and applications in the future, warranting continued attention.

PIPE Protocol

PIPE is a native Bitcoin token protocol inspired by Casey Rodarmor's RUNES and the BRC-20 protocol, primarily developed by the creator of the BRC-20 indexer TRAC. Like BRC-20, PIPE includes three functions: deployment, minting, and transfer, but differs in that the PIPE protocol is based on Bitcoin's UTXO, allowing for the creation of fungible tokens and NFTs with greater flexibility.

Deployment page of the PIPE protocol launched by Inscribe3

The RUNES protocol proposed by the founder of Ordinals has not yet been launched and has faced controversy due to its inability to facilitate decentralized minting. The PIPE protocol adds the feature of fair minting on top of the RUNES protocol and has gained a lot of community support by launching ahead of it.

$PIPE is the first token to be deployed and minted, with a total supply of 21 million. Its current market price is $1.2, with a market cap of about $25 million.

Some tokens of the PIPE protocol

The PIPE protocol is still in its early stages, with various infrastructure still under development. SatsX recently launched minting and transfer functions for the PIPE protocol, as well as a trading market. Biston Labs has begun testing the Swap feature of the PIPE protocol, and the related ecosystem is continuously improving.

SatsX recently launched minting and transfer functions for the PIPE protocol

Sidechains & Layer 2 Protocols

RIF (Rootstock Infrastructure Framework)

RSK (Rootstock) is a Bitcoin sidechain developed and launched by IOV Labs in January 2018, which shares the security and decentralization features of the Bitcoin network through merged mining technology and is compatible with EVM smart contracts, expanding the functionality of the Bitcoin system without sacrificing security. RBTC is the native token of RSK, pegged 1:1 to BTC, and is converted to BTC through a special bridging mechanism for paying RSK network transaction fees, with a current issuance of 3,334.

Based on RSK, IOV Labs further developed RIF (Rootstock Infrastructure Framework), which includes operating systems, domain services, relays, and wallets, aimed at helping developers build DApps faster and better through APIs and language libraries. $RIF is its native token, which has doubled in this round of price increase, and Binance has also launched perpetual contracts for RIF. Despite experiencing a significant rise, RIF's market cap is only $110 million, leaving considerable upward potential.

Stacks

Stacks is a blockchain network for Dapps and smart contracts based on Bitcoin, similar to a sidechain or Layer 2 on Bitcoin, with a relatively complete ecosystem of applications including DeFi, NFTs, and DAOs. STX is its native token used for paying transaction fees and smart contract fees.

Some applications in the Stacks ecosystem

On October 20, Stacks released the developer version of sBTC, allowing developers to start building applications using sBTC and testing basic functions such as deposits and withdrawals. sBTC is an asset that corresponds 1:1 to BTC on the Stacks layer, accessible for smart contracts and used in applications like DeFi and NFTs. Stacks plans to release the Nakamoto upgrade in the first quarter of 2024, significantly enhancing the network's security and operating speed.

Recently, both the price and TVL of STX have rebounded, with TVL exceeding $20 million and market cap reaching $1 billion. Currently, STX is the largest Layer 2 protocol in the Bitcoin ecosystem by market cap, with the most Dapps, capturing the premium brought by Bitcoin's rise and outperforming the market. After completing the Nakamoto upgrade, the STX ecosystem is expected to experience further explosive growth.

Taproot Assets

Lightning Labs released the Alpha version of the Taproot Assets mainnet on October 18, allowing developers to issue and manage stablecoins and other assets on the Bitcoin blockchain network, opening up new possibilities for the Bitcoin ecosystem.

Founded in 2016, Lightning Labs has been dedicated to developing the Lightning Network to solve the slow throughput issue of Bitcoin. The Lightning Network is a Layer 2 solution that provides a way for small payments, allowing users to conduct off-chain transactions through payment channels of the Lightning Network. When the transaction is completed, the payment channel is closed, and the transactions are aggregated and settled to the Bitcoin network, thereby reducing transaction fees and increasing the throughput of the Bitcoin network.

Illustration of the Lightning Network

In 2022, Lightning Labs raised $70 million in Series B funding, with investors including early backers of Tesla and SpaceX, as well as the CEO of Robinhood. The funds are primarily used to build a multi-asset layer Taro on top of the Bitcoin network. Lightning Labs has strong financial and technical capabilities, and is expected to achieve the construction of a settlement layer for global currency on the Bitcoin network, further promoting Bitcoin's adoption in the mainstream.

The total BTC held by all nodes in the Lightning Network is steadily increasing

The Nostr Assets Protocol launched the Taproot Assets mainnet on October 30, simultaneously releasing Halloween airdrop tokens $TREAT and $TRICK. Both have a total supply of 210 million, totaling 420 million, with whitelisted users able to choose to receive 10,000 of one of the tokens, with about 8,000 addresses claiming 80 million tokens. The current market price is approximately $0.09, with a total circulating market cap of $7 million and a total FDV of $38 million. The project team holds the remaining tokens, which may be used to launch more gameplay and uses in the future.

Conclusion

Since the beginning of this year, the BTC ecosystem has seen astonishing development, with various native protocols emerging one after another, not only bringing more gameplay and applications to BTC but also attracting new members to the BTC community, making it more diverse. At this point, it is difficult to accurately predict which protocol will ultimately succeed, but it is undeniable that we are at the starting point of a major explosion in the BTC ecosystem, with the future full of infinite possibilities.

Just like the public chain competition in 2021, each project has its unique technical characteristics and community culture, and the "hundred schools of thought contend" and competitive situation will only make the track larger. Looking at the leading tokens in the BTC ecosystem, $ORDI currently has a market cap of $400 million, while $ATOM and $PIPE have market caps of only around $30 million. When an ecosystem is in its early stages, we can enter at a very low price, and once the ecosystem experiences further development, even a broadly diversified investment can yield significant returns.

More importantly, the emergence of BTC ecosystem protocol tokens provides BTC investors with more choices. In previous bull markets, BTC usually rises first, followed by funds flowing into ETH and other altcoins. In this round of increase, BTC and its market share also set new highs first. BTC is the preferred target for institutional allocation of crypto assets, while BTC ecosystem projects complement institutional investment choices. If the BTC spot ETF is successfully approved, BTC ecosystem projects are likely to be favored by smart money due to their higher elasticity, thus significantly outperforming other altcoins.

We are optimistic about the explosive growth of BTC native protocols like Ordinals, Atomicals, and PIPE, as well as the long-term development of established Layer 2 protocols like Stacks and RIF, and we are closely monitoring investment opportunities related to these tokens.