The Prosperity of the Bitcoin Ecosystem and the Inscription Boom Leading New Trends in the Crypto Assets Market

This year's major trends in the Crypto Assets field are dominated by the rise of Bitcoin and the thriving development of the inscription ecosystem. The increase in Bitcoin's price is attributed to multiple factors, including the prosperity of the on-chain ecosystem, expectations for spot ETF approvals, the approaching halving cycle, and the possibility of interest rate cuts by the Federal Reserve. At the same time, the large-scale entry of institutional investors has also provided strong upward momentum for Bitcoin.

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

Bounce: Bitcoin Ecological 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 auction activities, including tokens, NFTs, physical collectibles, and advertising spaces.

Recently, Bounce has launched auctions for multiple Bitcoin ecosystem projects. These projects had a low initial valuation, but as the auctions progressed, the tokens from earlier projects could be used as "shovels" for subsequent auctions, leading to good project performance. Bounce's native token AUCTION has also seen a price increase due to its important role in the auctions.

Taking the recent GoDID project auction as an example, GoDID serves as a market aggregator for decentralized identity (DID), providing services for ENS, Space ID, and Bitcoin Ordinals DID. The token allocation plan for its token BDID includes 20% for users purchasing lottery tickets for AUCTION, 40% for AUCTION stakers, 20% for stakers of the stablecoin DAII issued by the early project BitStable, and 5% for users participating in airdrop mining using MUBI, BSSB, AUCTION, and WBTC.

In addition, Bounce announced the BounceBit project, a blockchain solution designed specifically for the Bitcoin ecosystem, built on Binance Bitcoin BTCB and AUCTION, which is planned to be launched in 2024.

Uniswap Expands to Rootstock

Uniswap, as a leading decentralized exchange (DEX), has been continuously launching new versions and expanding to multiple blockchain networks. 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 has received funding from the Uniswap Foundation to develop 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 sidechain that is compatible with the Ethereum Virtual Machine (EVM), securing its safety through merged mining with Bitcoin and providing SBTC, which is 1:1 anchored to Bitcoin. RSK uses a joint guarantor model, where trusted entities in 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 has reached $535,000.

Magic Eden enters the Bitcoin NFT market

Magic Eden was originally an NFT marketplace primarily targeting the Solana blockchain, with significant influence in the Solana ecosystem. It offers a user-friendly interface, making it easy for artists, collectors, and NFT enthusiasts to trade and explore NFTs. Its features include low transaction fees, fast transactions, and a wide variety of NFT collections.

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

Currently, the trading volume of Bitcoin ecosystem NFTs such as bitmap and Bitcoin Frogs on the Magic Eden platform is among the top.

Nostr: The Fusion of Decentralized Social Networking and Micro Payments

Nostr is a decentralized social protocol supported by Twitter co-founder Jack Dorsey. The protocol aims to establish a global, decentralized, censorship-resistant communication network.

In September of this year, Nostr underwent the NIP-57 upgrade, adding a small payment feature called "Zaps." This allows users to make small tips or payments through the Nostr client, enabling fast and low-cost transactions within the Nostr ecosystem. Zaps are mainly implemented through the Lightning Network, characterized by efficiency and low costs.

The payment process of Zaps includes steps such as the user initiating a request, the LNURL server confirming the recipient's public key, creating a Zap request, generating an invoice, and completing the payment. Currently, the number of payments made with Zap has exceeded 50,000.

ALEX: B20 Exchange and Bitcoin Oracle

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

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

In addition, ALEX plans to launch the first Bitcoin oracle for BRC20 tokens. This work is being done in collaboration with BRC20 creator @domodata and major off-chain indexers including BestinSlot, OKX, Hiro, and Unisat. The oracle aims to leverage the programmability of Stacks and the ability to read Bitcoin state to lead the decentralized consensus of BRC20 indexing. Its goal is to verify each BRC20 event and update the global balance in a decentralized on-chain contract.

Competition of Inscriptions among Various Public Chains

The successful application of inscription technology on Bitcoin, represented by Ordinals, has already sparked imitation by multiple public chains. The market capitalizations of ORDI and SATS have both exceeded $1 billion. Ordinals allow users to attach data to specific parts of transactions, associating this data with specific "satoshis", thus creating unique digital assets.

Currently, more than 30 public chains have released or are preparing to release inscriptions, such as Ethereum's ETHS, Solana's SOLS, Avalanche's AVAV, etc. Some networks like Arbitrum, TON, and IOST even experienced brief outages during the inscription minting process.

However, inscriptions on the smart contract chain differ from traditional smart contract transfers in some aspects. 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 method may also introduce new security risks, especially when dealing with complex data structures or logic. Furthermore, relying solely on calldata may limit the practicality of Ethscriptions in certain applications.

Conclusion

The development of the Bitcoin ecosystem has driven innovation in multiple projects: Bounce has created a unique auction model and plans to develop Bitcoin Layer 2; Nostr combines decentralized social networking with micropayments; ALEX has developed the BRC20 trading market and plans to launch a decentralized Bitcoin oracle; Uniswap and Magic Eden have expanded their businesses into the Bitcoin ecosystem.

The inscription technology has expanded to numerous public chains, and its significance is particularly important for non-smart contract chains like Bitcoin. For smart contract platforms such as Ethereum, while inscriptions may reduce certain costs, they can also introduce new security risks, and their functionality is not as flexible as traditional smart contracts. With the continuous development of technology, the application prospects of inscriptions on various public chains are worth ongoing attention.