Bitcoin Ecosystem and Inscription Boom: The Innovative Path of Established Projects

The upward momentum of Bitcoin and the vigorous development of the inscription ecosystem have become the main focus in the cryptocurrency sector this year. The rise in Bitcoin's price is attributed to multiple factors, including the prosperity of the on-chain ecosystem, expectations for a spot ETF, the approach of the halving cycle, and the anticipation of potential interest rate cuts by the Federal Reserve. At the same time, the massive entrance of institutional investors has also provided strong impetus, and these factors have collectively contributed to Bitcoin's significant growth this year.

The inscription ecosystem, especially represented by Ordinals, has not only injected new vitality and attention into the Bitcoin ecosystem but has also spread its influence to other public chains. Almost all mainstream public chains have developed their own inscription gameplay, and many established projects have taken this opportunity to rejuvenate.

Bounce: Bitcoin Ecosystem Project Auction and Layer 2 Development

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 has launched multiple auctions for Bitcoin ecosystem projects. These projects have a relatively low initial valuation, and in subsequent auctions, early project tokens can be used as participation tools, resulting in good project performance. Bounce's native token AUCTION plays an important role in the auctions, which has led to an increase in its price.

Taking the recent GoDID project auction as an example, GoDID is a decentralized identity (DID) market aggregator that provides services for ENS, Space ID, and Bitcoin Ordinals DID. The allocation plan for its token BDID includes: 20% to users who purchase lottery tickets for AUCTION, 40% to AUCTION stakers, 20% to stakers of the early project BitStable stablecoin DAII, and 5% to users who participate in airdrop mining using MUBI, BSSB, AUCTION, WBTC.

In December, Bounce also announced the BounceBit program, a blockchain solution designed specifically for the Bitcoin ecosystem, built on Binance Bitcoin BTCB and AUCTION, with a Bitcoin Layer 2 expected to launch in 2024.

Uniswap Expands to Rootstock

Uniswap, as a leading decentralized exchange (DEX), has been continuously evolving and expanding. Recently, GFX Labs deployed Uniswap V3 onto the Bitcoin sidechain Rootstock through Oku, marking Uniswap's expansion into the Bitcoin ecosystem. GFX Labs received funding from the Uniswap Foundation to build the trading front-end Oku based on Uniswap V3, which features an order book, price charts, trading records, and limit orders.

Rootstock (RSK) is a sidechain compatible with the Bitcoin network, supporting the Ethereum Virtual Machine (EVM), securing itself through merged mining with Bitcoin, and has SBTC anchored 1:1 with Bitcoin. RSK adopts a joint collateral model, where trusted entities from the community are responsible for managing the asset transfers between Bitcoin and RSK, providing additional security guarantees.

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

Magic Eden Enters the Bitcoin NFT Market

Magic Eden was originally the main NFT marketplace in the Solana ecosystem, known for its user-friendly interface, low transaction fees, and fast transactions. In March of this year, with the rise of Ordinals NFTs, Magic Eden announced its expansion to the Bitcoin ecosystem, marking an important step in its multi-chain strategy.

Currently, Bitcoin ecosystem NFT projects such as bitmap and Bitcoin Frogs have ranked among the top in trading volume on the Magic Eden platform, indicating that their influence in the Bitcoin NFT market is growing.

Nostr: The Combination of Decentralized Social Networking and Micropayments

Nostr is a decentralized social protocol that has received support from Twitter co-founder Jack Dorsey. The project started in November 2020, aiming to create a global, decentralized, censorship-resistant communication network.

In September this year, Nostr introduced a small payment feature called "Zaps" through the NIP-57 upgrade, allowing users to make small tips or payments on the Nostr client. Zaps are mainly implemented through the Lightning Network, providing an efficient and low-cost payment method.

The operation process of Zaps includes steps such as users initiating requests, LNURL servers confirming, creating payment requests, generating invoices, and completing payments. Currently, the number of payments made via Zap has exceeded 50,000, demonstrating users' active adoption of this feature.

ALEX: B20 Exchange and Bitcoin Oracle

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

With the rise of the inscription craze, ALEX has developed a decentralized exchange called B20, specifically for trading BRC20 tokens. B20 supports the use of sUSDT (USDT cross-chain from the BNB chain to Stacks) as the base currency for BRC20 token trading.

In addition, ALEX plans to launch the first Bitcoin oracle for BRC20 tokens. This work is being carried out in collaboration with BRC20 founder @domodata and major off-chain indexers such as BestinSlot, OKX, Hiro, and Unisat. ALEX aims to leverage the programmability of Stacks and the ability to read Bitcoin states to lead the decentralized consensus of BRC20 indexing, known as the "indexer of indexers". This oracle is designed to verify each BRC20 event and update global balances in decentralized on-chain contracts.

Competition of Inscriptions among Public Chains

The successful application of inscription technology on Bitcoin has inspired other public chains to follow suit. Currently, more than 30 public chains have released or are preparing to launch inscription projects, such as Ethereum's ETHS, Solana's SOLS, and Avalanche's AVAV. Some networks like Arbitrum, TON, and IOST even experienced brief outages during the minting process of inscriptions.

Recently, the minting of the first inscription INJS on Injective has sparked controversy. As each minting requires a fee to be paid to the contract deployer, the project has faced opposition from users. This reflects users' expectations for the free launch of inscription projects.

On smart contract chains, inscriptions may have lower fees compared to traditional smart contract transfers. Taking Ethscriptions on Ethereum as an example, it reduces transaction costs by using calldata and avoiding traditional smart contract storage and execution. However, this method may introduce new security risks, especially when dealing with complex data structures or logic. Additionally, relying solely on calldata may limit the practicality of inscriptions in certain applications.

Summary

In the development of the Bitcoin ecosystem, various projects have demonstrated innovative spirit: Bounce has launched a unique auction model and plans to develop Bitcoin Layer 2; Nostr combines decentralized social networking with micro-payments; ALEX is developing a BRC20 trading market and plans to launch a decentralized Bitcoin oracle; Uniswap and Magic Eden are expanding 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 can reduce on-chain storage and execution costs, they may bring new security risks and are not as flexible in functionality as traditional smart contracts.