Bitcoin Ecosystem and Inscription Boom: How Old Projects Revitalize

The rise of Bitcoin and the prosperity 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 activity in the on-chain ecosystem, expectations for a spot ETF, the approaching halving cycle, and potential interest rate cuts from the Federal Reserve. At the same time, the large-scale entry of institutional investors has also provided significant momentum for Bitcoin.

The inscription ecosystem, especially represented by Ordinals, has injected new vitality into the Bitcoin ecosystem with non-fungible tokens (NFTs) and fungible tokens (FTs), and it has also influenced other public chains. Almost all mainstream public chains have developed their own inscription gameplay, and many mature projects have taken this opportunity to rejuvenate.

Bounce: Bitcoin Ecosystem Project Auction and Layer 2 Plan

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 auctions for Bitcoin ecosystem projects. These projects had a low initial valuation, and tokens from previous projects could be used as participation tools in subsequent auctions, resulting in good performance. Bounce's native token AUCTION plays an important role in the auctions, which has also led to a price increase.

Taking the latest GoDID project auction as an example, GoDID is a decentralized identity (DID) market aggregator that provides services for multiple DID projects. Its token BDID distribution plan includes: 20% to users who purchase lottery tickets using AUCTION, 40% to AUCTION stakers, 20% to stakers of the stablecoin DAII issued by the early project BitStable, and 5% to users participating in airdrop mining using MUBI, BSSB, AUCTION, and WBTC.

In addition, Bounce has also announced the BounceBit project, which is a blockchain solution designed specifically for the Bitcoin ecosystem, built on Binance Bitcoin BTCB and AUCTION, and is scheduled for launch in 2024.

Uniswap Expands to Rootstock

As a leading decentralized exchange (DEX), Uniswap continuously releases new versions and expands to multiple blockchains.

Recently, GFX Labs deployed Uniswap V3 to the Bitcoin sidechain Rootstock via Oku, which is seen as an important expansion of Uniswap into the Bitcoin ecosystem. GFX Labs received funding from the Uniswap Foundation to develop the trading frontend Oku based on Uniswap V3. Oku features an order book, price charts, trading records, limit orders, and more.

Rootstock (RSK) is a Bitcoin sidechain compatible with the Ethereum Virtual Machine (EVM), secured through merge mining with Bitcoin, and features SBTC, which is 1:1 pegged to Bitcoin. RSK adopts a joint 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.

NFT Market Magic Eden Enters Bitcoin Ecosystem

Magic Eden was initially an NFT marketplace primarily targeting the Solana blockchain, occupying an important position in the Solana ecosystem. It offers a user-friendly interface that facilitates NFT trading and exploration for artists, collectors, and NFT enthusiasts. Features of Magic Eden include low transaction fees, fast transactions, and a diverse range of NFT collections.

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 solidifying its position in the multi-chain NFT market.

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

Nostr: The Combination of Decentralized Social Networking and Micro-Payments

Nostr is a decentralized social protocol supported by one of the co-founders of Twitter. The protocol started in November 2020 and aims to create a global, decentralized, and censorship-resistant communication network.

In September 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, facilitating fast and low-cost transactions within the Nostr ecosystem. Zaps are primarily implemented through the Lightning Network, featuring efficiency and low costs.

The payment process of Zaps involves multiple steps, including the user initiating a request, the LNURL server responding, creating a payment request, generating an invoice, and so on. Currently, the number of Zap payments 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 bridge, staking, mining, and lottery. According to DefiLlama data, ALEX's 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 BRC20 token trading. B20 allows trading using sUSDT (USDT cross-chain from the BNB chain to Stacks) as the base currency and provides new users with STX tokens to pay for ecosystem fees.

In addition, ALEX plans to launch the first Bitcoin oracle for BRC20 tokens. This work is being carried out in collaboration with the creators of BRC20 and several key off-chain indexers, aiming to leverage the programmability of Stacks and the ability to read Bitcoin state to lead the decentralized consensus of BRC20 indexing. The goal of this oracle is to verify each BRC20 event and update the global balance in the on-chain contract.

Development of Inscriptions on Various Public Chains

The successful application of inscription technology on Bitcoin, such as the Ordinals project, allows users to attach data to specific "satoshis," creating unique digital assets. The market capitalizations of ORDI and SATS have both exceeded $1 billion.

The inscription technology has also rapidly expanded to other public chains, with more than 30 public chains having released or preparing to release inscription projects. For example, Ethereum's ETHS, Solana's SOLS, Avalanche's AVAV, etc. Some networks like Arbitrum, TON, and IOST even experienced brief outages during the minting process.

However, inscriptions on the smart contract chain differ from traditional smart contract transfers. Taking Ethscriptions on Ethereum as an example, it may reduce transaction costs by using calldata and avoiding the storage and execution of traditional smart contracts. However, this approach may also introduce new security risks and limit the implementation of certain complex features.

Summary

The development of the Bitcoin ecosystem is showing a trend of diversification. Bounce has created significant economic effects through its unique auction model and plans to develop Bitcoin Layer 2. Nostr has successfully combined 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 respective businesses into the Bitcoin ecosystem.

Inscription technology has been applied on numerous public chains. For non-smart contract chains like Bitcoin, the importance of inscriptions is particularly prominent. On smart contract platforms like Ethereum, while inscriptions may reduce certain costs, they may also introduce new security challenges, and their functional flexibility is not as good as that of traditional smart contracts.