Introduction

On January 11th, BTC ETF finally received approval from the SEC, and currently, 11 BTC ETFs are officially available for trading on the US stock market, marking a milestone moment in the history of cryptocurrencies. With the arrival of the Bitcoin halving cycle, the Bitcoin ecosystem is expected to gain greater vitality.

In 2023, a new concept emerged in the field of digital assets - Inscriptions. The rise of Inscriptions is mainly due to a series of protocols in the Bitcoin ecosystem, with ORDI, represented by the Ordinal protocol, becoming a leader in the Inscriptions field.

However, the reason why Inscriptions have been able to make a name for themselves is largely due to the concept of Fair Launch. Taking ORDI as an example, its issuance model has abandoned pre-mining and private placement, instead distributing tokens equally to community members, sparking widespread community participation. This fair distribution model has greatly promoted the popularity of Inscriptions.

Inscription Market Overview

Market Background

Since January 2023, the Ordinals protocol of Bitcoin has created a frenzy on the Bitcoin chain, with far-reaching implications. Numerous BRC20 and Ordinals assets have emerged, bringing about a “frenzy for retail traders.” The Inscription project of the BRC20 protocol adopts the Fair Launch model, allowing all chips to be minted by retail investors themselves, eliminating institutions and project parties, and bringing true fairness. The cost of minting Ordi is about 1 dollar per card, which has risen to 30,000 dollars per card after being listed on the Gate exchange. As the value of ORDI continues to be discovered by the end of 2023, its price has risen to nearly 90,000 dollars per card, allowing some early inscription users to achieve financial freedom.

This exaggerated surge has not only driven 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 fees on the Bitcoin chain. According to the Mempool.space 3-year block fee rate data, in May 2023 and November 2023, the block fee rate skyrocketed, with the lowest confirmed Gas even reaching 600 s/vb at its peak, setting a new high in the past three years.

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

According to the data from Mempool.space on the total block fees for a 3-year period, it shows that in May 2023 and November 2023, there were single-day total block fees close to 3.5 BTC, which is the highest record in the past 3 years.

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

From the data on the minting of inscriptions in the blockchain, the minting quantity tends to be stable, maintaining a high quantity.

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

Inscription Sector Analysis

This article will take stock of the leading inscriptions on various public chains and examine the market performance of these inscriptions.

Bitcoin Chain

Ordinals

In January 2023, Bitcoin developer Casey Rodarmor released the Ordinals protocol. This is an asset issuance protocol based on Bitcoin, consisting of two core components: Ordinal theory and Inscriptions.

Specifically, the Ordinals protocol utilizes the unique features of satoshis to extend a single sequence number and incorporate data such as text, images, videos, and contracts. This makes each satoshi a carrier of unique information and stores the data on the Bitcoin blockchain, ensuring its immutability.

BRC20 Protocol

On March 8, 2023, an anonymous developer named Domo introduced the BRC-20 protocol based on the Ordinals protocol. It is a Bitcoin ecosystem token issuance protocol similar to ERC-20. BRC20 has the unique feature of being a set of JSON text inscriptions with fixed rules and formats. The first BRC-20 token deployed by Domo is $ORDI. Taking $ORDI as an example, it specifies the protocol rules, name, quantity per token, and maximum quantity. However, BRC-20 relies on third-party indexing to record the ledger on 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 that aims to enable the creation, transfer, and upgrade of various digital assets on the Bitcoin network, including native digital NFTs, game NFTs, digital identities, domain names, and social networks, among others. Additionally, the protocol supports the creation of fungible tokens, allowing for token issuance and trading on the Bitcoin network.

The protocol uses the smallest unit of Bitcoin, called satoshi, as the basic unit for tokens. Each satoshi UTXO represents an independent token, meaning that 1 token is equal to 1 satoshi. By binding UTXOs with tokens, the Atomicals protocol successfully avoids the complexity of off-chain indexes and increases the decentralization of the entire system.

However, Atomicals currently faces some challenges. One significant issue is the introduction of proof-of-work (POW) in the minting process of ARC20 tokens, requiring minters to run full Bitcoin network nodes to participate in minting. While this ensures fairness and decentralization in minting, it also limits the participation of the majority due to the high technical barrier. Additionally, the imperfect underlying technology makes it easy for users to lose ARC20 tokens when conducting Bitcoin transfers.

Ethereum Inscriptions

Ethscriptions

Ethscriptions is a protocol that serves as an alternative to smart contracts and L2. It allows users to share information and execute computations on Ethereum L1 at a low cost. By applying rules to Ethereum call data, it bypasses smart contract storage and execution, enabling decentralized computations. In August 2023, Ethscriptions introduced a virtual machine (ESC VM) to enhance its capabilities and become a general-purpose computing engine.

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

According to data from Dune, as of January 14, 2024, the Ethscriptions script number has exceeded 3.593 million, with a total of over 165,000 users and over 320,000 transactions. From the daily active users and the daily increase in script numbers, it can be observed that since October 2023, Ethscriptions has been growing steadily at a relatively stable pace.

iERC20

iERC20 is a new token protocol based on Ethereum 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 the Swap function and integration of EVM cross-chain functionality, creating a bridge between Ethereum’s scripting and traditional Layer2. This feature enables the protocol to introduce more mainstream coins and stablecoins, 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 momentum to the development of the Ethereum ecosystem.

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

Solana Chain

Solana’s first token with inscription series, SOLS, is created based on the SPL-20 protocol, similar to the Ordinals protocol for BRC20. The total supply of SOLS is 21,000 tokens. SPL-20 is also a set of JSON text inscriptions with fixed rules and formats. The difference between SPL-20 and BRC20 is that it changes the protocol name in the “P” field to “spl-20”.

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

Although the minting process of Sols is relatively complex, it is still very popular. In addition to using the innovative form of inscriptions inscribed on NFTs, it also increases the effectiveness of inscriptions through multiple stages such as minting, double locking, and migration to verification. According to data from the NFT platform Magic Eden, as of January 14, 2024, Sols ranked third on the trading list, with a floor price of 42.43 SOL (cost 0.1 SOL) and a total transaction 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 supply of 21 million tokens, gaining support from Ava Labs CEO Emin Gun Sirer. ASC20 is also a set of JSON text-based scripts with fixed rules and formats. The difference between ASC20 and BRC20 is that ASC20 changes the protocol name in the “P” field to “asc-20”.

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

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

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

SUI Blockchain

ISSP is the first infrastructure project on the SUI Network that combines the inscription Launchpad, Marketplace, and Swap. Leveraging the natural advantages of Sui Network’s unique inscription system object model, ISSP has initially launched the Sui-20 standard protocol inscription on the Sui Network. By improving the infrastructure, more developers and communities can participate in the inscription ecosystem construction of the Sui Network, jointly promoting the ecological development of the Sui Network. ISSP uses the indexer of the Sui chain node to index inscription data, providing the highest performance and most stable inscription usage experience. At the same time, ISSP supports the seamless integration of inscriptions with CEX, eliminating the need for additional development to integrate the inscription protocol with CEX.

Source: https://issp.io/

Polygon Chain

The first Polygon NFT, called pols, is minted on the PRC-20 protocol. This token protocol is based on the Ordinals protocol and has a total supply of 2100 tokens. It is also the first inscription on the EVM chain. The off-chain price of pols has soared at times and has even been listed for sale on the Chinese second-hand trading platform, Xianyu.

According to data from DUNE, the popularity of PRC-20 has caused a surge in GAS fees on the Polygon network. On November 16, 2023, the daily GAS consumption reached its highest point, reaching 88,000.

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

Other POW Blockchain

Dogechain

Drc-20 Protocol is an on-chain protocol for Dogecoin based on Ordinals. Its functionality is similar to the Bitcoin chain, but it is popular due to its low transaction fees and strong meme attributes.

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

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

Summary

Overall, in this wave of inscription frenzy, although the data promoted by major public chains usually looks very impressive, they have encountered setbacks one after another under the impact of inscription, and their performance has been unsatisfactory, showing their true level under extreme stress tests.

It is worth noting that Bitcoin and Ethereum have performed very robustly. Although their mainnets may face congestion and transaction fees may soar, they have maintained good operational conditions throughout the transaction execution process.

Conclusion

Although investors have flocked to the blockchain ecosystems driven by the wealth effect, the fairness distribution and first-come, first-served characteristics embodied by inscription also pose a series of challenges, including high network costs and scripting issues. In addition, most of the inscription projects in the current market still rely on 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 yet subsided, innovators are always moving forward and the field of inscriptions is poised for broader possibilities.