Introduction

On January 11, the BTC ETF was finally approved by the SEC, and currently, 11 BTC ETFs are officially trading on the US stock market, marking a milestone moment in the history of cryptocurrency. With the arrival of the Bitcoin halving cycle, the Bitcoin ecosystem is expected to rejuvenate with greater vitality.

In 2023, a new concept emerged in the digital asset space—Inscriptions. The rise of Inscriptions is primarily attributed to a series of protocols within the Bitcoin ecosystem, with the Ordinal protocol represented by ORDI, which once became a leader in the field of Inscriptions.

However, the prominence of Inscriptions is more due to the concept of Fair Launch. Taking ORDI as an example, its issuance model discarded pre-mining and private placements, distributing tokens equally to community members, thus stimulating widespread community participation. This fair distribution model has significantly promoted the popularity of Inscriptions.

Market Background

Market Background

Since January 2023, the Bitcoin Ordinals protocol has sparked a frenzy on the Bitcoin chain, with far-reaching effects. Numerous BRC20 and Ordinals assets have emerged, leading to a "retail" celebration. The inscription projects under the BRC20 protocol adopted a Fair Launch model, allowing all chips to be minted by retail investors, eliminating institutions and project parties, thus bringing true fairness. For instance, the minting cost of Ordi was about $1 each, and after being listed on the Gate exchange, it surged to $30,000 each. As the value of ORDI continued to be discovered by the end of 2023, its price rose to nearly $90,000 each, allowing some early inscribers to achieve financial freedom.

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

Data Overview

However, this also led to a continuous rise in Gas fees on the Bitcoin chain. According to Mempool.space's 3-year block fee rate data, in May 2023 and November 2023, the block fee rate skyrocketed, with the lowest confirmation Gas peaking at 600 s/vb, setting a record high over the past three years.

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

According to Mempool.space's 3-year total block fee data, both in May 2023 and November 2023, the daily total block fees approached 3.5 BTC, marking the highest record in three years.

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

From the minting data of Inscriptions, the minting quantity has stabilized, maintaining 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 their market performance.

Bitcoin Chain

Ordinals

In January 2023, Bitcoin developer Casey Rodarmor released the Ordinals protocol, which is an asset issuance protocol based on Bitcoin, primarily composed of two core components: the Ordinals ordinal theory and Inscription.

Specifically, the Ordinals protocol utilizes the unique characteristics of satoshis, extending a single ordinal number to include text, images, videos, and contracts. This makes each satoshi a carrier of unique information, storing data on the Bitcoin blockchain to ensure its immutability.

BRC20 Protocol

On March 8, 2023, an anonymous developer named Domo launched BRC-20 based on the Ordinals protocol, which is a Bitcoin ecosystem token issuance protocol similar to ERC-20. The uniqueness of BRC20 lies in its being a set of JSON text inscriptions with fixed rules and formats. $ORDI is the first BRC-20 token deployed by Domo, which specifies the protocol rules, name, quantity per piece, and maximum quantity. However, BRC-20 relies on third-party indexing to record the ledger on the BTC chain, adding extra workload to the system and becoming a weak point.

https://ordinalscan.net/inscription

Atomical

Atomicals is a protocol built on the Bitcoin network aimed at creating, transferring, and upgrading various digital items on the Bitcoin network, including native digital NFTs, game NFTs, digital identities, domain names, and social networks. Additionally, the protocol supports the creation of exchangeable tokens, enabling token issuance and trading on the Bitcoin network.

The protocol uses the smallest unit of Bitcoin, satoshi, as the basic unit of the token, where each satoshi's UTXO represents an independent token, meaning 1 token equals 1 satoshi. By binding UTXOs with tokens, the Atomicals protocol successfully avoids the complexity of off-chain indexing in Ordinals and enhances the overall decentralization of the system.

However, Atomicals still faces some issues, one significant problem being the introduction of proof of work (POW) in the minting process of ARC20 tokens, requiring minters to run a full Bitcoin network node to participate in minting. While this ensures fairness and decentralization in minting, the high technical barrier limits participation from most people. Additionally, the underlying technology's imperfections lead to users easily losing ARC20 tokens during Bitcoin transfers.

Ethereum Inscriptions

Ethscriptions

Ethscriptions is a protocol that serves as an alternative to smart contracts and L2, allowing users to share information and execute computations at low costs on Ethereum L1. It bypasses smart contract storage and execution by applying rules to Ethereum call data, achieving decentralized computation. In August 2023, Ethscriptions introduced a virtual machine (ESC VM) to enhance its capabilities, making 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, the number of Ethscriptions inscriptions exceeded 3.593 million, with over 165,000 total users and more than 320,000 transactions. From the perspective of daily active users and daily increase in inscriptions, Ethscriptions has been growing at a relatively stable pace since October 2023.

iERC20

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.

The uniqueness of the iERC20 protocol lies in its development of a Swap function and integration of EVM cross-chain capabilities, building a bridge between Ethereum inscriptions and traditional Layer 2. This feature allows 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. Furthermore, the iERC20 protocol introduces PoW and DPOS mining, making IERC20 more decentralized and democratized. This strategy is expected to bring new momentum to the development of the Ethereum ecosystem.

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

Solana Chain

The first inscription-based token on the Solana chain, SOLS, is created based on the SPL-20 protocol, similar to the BRC20 protocol, with a total of 21,000 pieces. SPL20 is also a set of JSON text inscriptions with fixed rules and formats. Its difference from BRC20 lies in the change of the "P" field's protocol name to "P":"spl-20".

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

Although the minting process of Sols is relatively complex, it remains very popular. In addition to adopting the innovative form of inscribing on NFTs, it has also increased the validity of inscriptions through multiple steps of minting, double-locking, and migration to verification. Data from the NFT platform Magic Eden shows that as of January 14, 2024, Sols ranked third in trading volume, 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, receiving attention and support from Ava Labs CEO Emin Gun Sirer. ASC20 is also a set of JSON text inscriptions with fixed rules and formats. Its difference from BRC20 lies in the change of the "P" field's protocol name to "P":"asc-20".

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

According to DeFiLlama data, on December 20 alone, the Avalanche network generated $9.72 million in revenue, mostly from gas fees consumed by the community during 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 inscription Launchpad, Marketplace, and Swap. Leveraging the unique advantages of Sui Network's inscription system object model, it has initially launched the Sui-20 standard protocol inscriptions on the Sui Network and improved infrastructure to allow more developers and communities to participate in the construction of the Sui Network inscription ecosystem, jointly promoting the development of the Sui Network ecosystem. ISSP uses the indexer that comes with Sui chain nodes to index inscription data, achieving the highest performance and most stable inscription usage experience. At the same time, ISSP supports seamless integration of inscriptions with CEX, eliminating the need for additional development to connect the inscription protocol with CEX.

Source: https://issp.io/

Polygon

The first Polygon inscription, pols, is minted based on PRC-20, which is a token protocol based on the Ordinals protocol, with a total of 2,100 pieces. It is also the first inscription on an EVM chain. The off-market price of pols once skyrocketed, even being sold on second-hand trading platforms like Xianyu.

According to DUNE platform data, the popularity of PRC-20 once caused the Polygon network's GAS to soar, reaching a daily consumption of GAS of 88,000 on November 16, 2023.

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

Other POW Chains

Dogechain

The DRC-20 protocol is based on the Ordinals protocol on the Dogecoin chain, functioning similarly to the Bitcoin chain. However, due to its low transfer fees and strong meme attributes, it has gained popularity.

$UNIX is the first UTXO-based Dogecoin exchange that supports transactions between inscriptions. Currently, there are 36,200 holders, with a total trading volume of 109,576.

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

Conclusion

In summary, during this wave of Inscriptions, although the data touted by major public chains appears very impressive, under the impact of Inscriptions, those chains that have always claimed high speed, low cost, and high performance have encountered setbacks, performing unsatisfactorily and revealing their true levels under extreme stress testing.

It is noteworthy that Bitcoin and Ethereum have shown very robust performance. Although their main networks face congestion and transaction fees soar, they have consistently maintained good operational conditions during the execution of transactions.

Summary

Despite investors flocking to the inscription ecosystem driven by the wealth effect, the characteristics of fair distribution and first-come-first-served inherent in inscriptions also pose a series of challenges, including high network fees and script issues. Moreover, most inscriptions currently on the market still rely on institutional support, community participation, and meme culture to stimulate market sentiment, while also facing long-term dilemmas such as weak application narratives, insufficient infrastructure, and lack of liquidity. Although the controversy over the value of inscriptions has not yet subsided, innovators continue to move forward, and the field of inscriptions will welcome broader possibilities.

Author: Snow

Translator: Sonia

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

Copyright: Gate.io