Bitcoin Ecosystem and Inscription: How Old Projects Revitalize

The strong rise of Bitcoin and the booming development of the inscription ecosystem constitute the main narrative in the cryptocurrency space this year. The increase in Bitcoin's price is attributed to multiple factors, including the prosperity of the on-chain ecosystem, the potential approval of spot ETFs, the upcoming halving event, and the possible interest rate cuts by the Federal Reserve. At the same time, the massive entry of institutional investors has also provided significant momentum for Bitcoin, and these factors together have contributed to Bitcoin's remarkable growth this year.

The inscription ecosystem, especially represented by Ordinals, non-fungible tokens (NFTs) and fungible tokens (FTs), not only injects new vitality and focus into the Bitcoin ecosystem but also influences and spreads to other public chains. Almost all mainstream public chains have developed corresponding inscription applications, and many existing projects have also taken this opportunity to rejuvenate.

Bounce: Auction-as-a-Service and Layer 2 Plans

Bounce Finance, as an Auction-as-a-Service (AaaS) protocol, provides comprehensive token issuance services for projects. The platform supports multiple blockchain networks, allowing users to create and participate in various types of auctions, including tokens, NFTs, physical collectibles, and advertising spaces.

Recently, Bounce launched several auction events for Bitcoin ecosystem projects. These projects had a low initial valuation, and subsequent auctions can utilize the tokens from previous projects as participation tools, resulting in generally good performance. As Bounce's native token AUCTION is also an important participation tool in the auctions, its price has also increased.

Taking the recent GoDID project auction as an example, GoDID is a decentralized identity (DID) market aggregation platform that provides services for ENS, Space ID, and Bitcoin Ordinals DID. The allocation plan for GoDID's token BDID includes: 20% given to users who purchase lottery tickets using AUCTION, 40% allocated to AUCTION stakers, 20% given to stakers of the US dollar stablecoin DAII issued by the previous Launch project BitStable, and 5% distributed to users participating in airdrop mining using MUBI, BSSB, AUCTION, and WBTC.

In addition, Bounce announced the BounceBit program in December, which is a blockchain solution specifically designed for the Bitcoin ecosystem. BounceBit is based on Binance Bitcoin BTCB and AUCTION's Bitcoin Layer 2, and is expected to launch in 2024.

Uniswap: Expanding to Rootstock

As a leader in decentralized exchanges (DEX), Uniswap has been continuously evolving, launching multiple versions and expanding to multiple blockchains.

Recently, GFX Labs deployed Uniswap V3 to the Bitcoin sidechain Rootstock through Oku, which is seen as an important expansion of Uniswap into the Bitcoin ecosystem. GFX Labs received funding from a certain foundation to build the trading front end Oku based on Uniswap V3. Oku features an order book, price charts, trading records, limit orders, and more.

Rootstock (RSK) is a Bitcoin-compatible sidechain that also supports the Ethereum Virtual Machine (EVM). It secures its safety through merged mining with Bitcoin and has SBTC, which is 1:1 anchored to Bitcoin. RSK employs a federated guarantor model, where trusted entities from the community are responsible for managing the asset transfers between Bitcoin and RSK, providing additional security.

As of December 19, the liquidity on the Oku platform reached $535,000.

The Bitcoin Ecosystem Layout of the NFT Market Magic Eden

Magic Eden, as the leading NFT marketplace on the Solana blockchain, has a significant influence within this ecosystem. It provides a user-friendly platform for artists, collectors, and NFT enthusiasts to easily buy, sell, and explore NFTs. Featuring low transaction fees, high-speed transactions, and a diverse range of NFT collections, Magic Eden has become one of the most popular NFT marketplaces in the Solana ecosystem.

In March of this year, with the rise of Ordinals NFTs, Magic Eden announced its expansion into the Bitcoin ecosystem, marking an important step in its multi-chain strategy and further consolidating its position in the multi-chain NFT market.

Currently, NFT projects in the Bitcoin ecosystem, such as bitmap and Bitcoin Frogs, also rank among the top in terms of trading volume on the Magic Eden platform.

Nostr: The Fusion of Decentralized Social Networking and Micropayments

Nostr is a decentralized social protocol supported by a well-known tech entrepreneur. The protocol was first proposed in November 2020 with the aim of building a global, decentralized, censorship-resistant communication network.

In September of this year, Nostr underwent the NIP-57 upgrade, introducing a small payment feature called "Zaps." This enables users to make small tips or payments through the Nostr client, facilitating fast and low-cost transactions within the Nostr ecosystem. Zaps are primarily realized through the Lightning Network, ensuring the efficiency and low cost of transactions.

The payment process for Zaps is as follows: After the user initiates a Zap request in the Nostr client, if the recipient's Lightning wallet supports Zaps, the LNURL server will confirm the recipient's public key. Subsequently, the client creates a Zap request containing the key payment data, and the LNURL server responds by providing the required invoice. After the user completes the payment, the amount is directly transferred to the recipient's Lightning wallet.

As of now, the number of payments made with Zap has exceeded 50,000.

ALEX: B20 Exchange and Oracle Plan

ALEX was originally a DeFi platform on Stacks, offering various functions such as DEX, Launchpad, cross-chain bridges, staking, mining, and lotteries. According to data, ALEX's total value locked (TVL) is $38.8 million, accounting for approximately 82.3% of Stacks' TVL.

With the popularity of inscriptions, ALEX has developed a decentralized exchange called B20, specifically for trading BRC20 tokens. ALEX also provides new users with STX tokens to pay for the ecosystem's gas fees. In B20, these BRC20 tokens can be traded using sUSDT (the USDT that crosses from the BNB chain to Stacks) as the base currency.

In addition, ALEX plans to launch the first Bitcoin oracle for BRC20 tokens. This work is being done in collaboration with the founder of BRC20 and several key off-chain indexers. ALEX aims to leverage the programmability of Stacks and the ability to read Bitcoin state to lead the decentralized consensus of BRC20 indexing, referred to as the "Indexer of Indexers." This oracle is designed to verify each BRC20 event and update the global balance in a decentralized on-chain contract.

The Rise of Inscriptions on Various Public Chains

The popularity of inscriptions represented by Ordinals on Bitcoin has driven the development of inscriptions on other public chains. Currently, more than 30 public chains have released or are preparing to release inscriptions, such as Ethereum's ETHS, Solana's SOLS, and Avalanche's AVAV. The minting of inscriptions has even caused several networks, including Arbitrum, TON, and IOST, to experience temporary outages.

On December 19, the minting of the first inscription INJS on a certain public chain sparked controversy. Because each minting requires a fee to be paid to the contract deployer, the project faced skepticism from the community. The official of the public chain advised users not to participate, deeming the charging method inappropriate. Subsequently, INJS announced the suspension of minting, planning to allow free participation in the future. This reflects users' expectations for a free launch of inscriptions.

What are the differences between inscriptions on the smart contract chain and traditional smart contract transfers? Taking Ethscriptions on Ethereum as an example, it may reduce transaction costs by using calldata and avoiding traditional smart contract storage and execution. However, this approach may introduce new security risks, especially when dealing with complex data structures or logic. Additionally, relying solely on calldata may limit the practicality of Ethscriptions in certain applications.

Summary

In the development of the Bitcoin ecosystem, various projects have demonstrated different innovations: Bounce has launched a unique auction model and plans to develop Layer 2; Nostr combines decentralized social networking with micropayments; ALEX has developed a BRC20 trading market and plans to launch a decentralized Bitcoin oracle; Uniswap and Magic Eden have expanded their businesses into the Bitcoin ecosystem.

Inscription technology has been successfully applied to multiple mainstream public chains. For non-smart contract chains like Bitcoin, the significance of inscriptions is particularly substantial. On smart contract platforms like Ethereum, while inscriptions may reduce certain transaction costs, they can also pose new security challenges, and their functionality is not as flexible as traditional smart contracts.