Ultimately, I will get an experience, performance and smart contract functionality that is almost completely indistinguishable from ETH and its L2.
Written by: blockpunk
This article will introduce the future challenges and potential opportunities of BTC Inscription, and how BTC’s L2 will inject new vitality into the ecosystem.
Four Impacts
The first wave is the community consensus process on fair distribution. brc20 creates a new type of asset that is completely different from FT and NFT. This is the first innovation on the blockchain and represents the rise of civilian culture.
We are experiencing the second wave, which is the renaissance of BTC culture. Big funds and exchanges are also participating in the consensus. At the same time, more developers have joined the Inscription World and launched many excellent protocols, which have spilled over to more chains. The culture of BTC is overwhelming, which of course raises some other questions.
The third wave may be the outbreak of “inscription-based” expansion plans. The second wave of great development promoted the prosperity of the BTC ecosystem, but competition for BTC network resources eventually led to conflicts with BTC conservatives. At the same time, poor user experience prevents more users from entering the market. Therefore, the expansion of Inscription itself (rather than the expansion of BTC) is urgent and necessary, but directly developing a second-layer expansion solution based on BTC (such as Bitvm) is difficult and time-consuming. Therefore, the compromise solution will be adopted first. Perhaps in the next six months, we will see a large number of new side chains of BTC that use inscriptions as their native assets (different from stx) and introduce main chain inscriptions through cross-chain and other methods.
The fourth wave represents the full maturity of the final “BTC-based” expansion solution, which includes complete smart contract capabilities, better performance, and strong security shared with BTC. High-value inscribed assets will put forward more requirements for security, and a more native, more orthodox, and safer second-layer expansion solution will become important. This requires the second layer to use the BTC chain as the DA layer, upload proof, and even allow the BTC network to verify, such as BitVM and AVM of the Atomics protocol. Under the strong guarantee of legitimacy, BTC will be more drawn into the inscription ecology.
In the end, I will get almost the same experience, performance and smart contract functions as ETH and its L2, but backed by the huge community and funds of BTC, with “fair distribution” as the core culture and “inscription” as the native asset a new ecology.
Next stop L2
After experiencing a magnificent wave of new asset distribution, the main narrative of “Inscription” has been established, and we are about to face new opportunities and challenges.
Simply relying on fair distribution or meme narratives, the total market value of 200 million seems to be a hurdle. If we do not continue to build steadily, it will be difficult to break through the ceiling (the end of fair distribution is PUA). In the process of returning to rationality, utility becomes more important, either providing more capabilities or being treated as an underlying asset.
“Inscription-based” side chains may become an important next step. The reason why they are called sidechains instead of L2 is because these “L2” do not use the security of BTC.
But just like Polygon to ETH, Inscription L2 can effectively lower the threshold for users to enter Inscription and compromise with BTC conservatives. The most important thing is that the complete smart contract capabilities will also introduce more gameplay to Inscription, such as defi, socialfi, gamefi…
Brc20 and its derivative inscriptions choose to write the token information in human-readable Json. The advantage of this is extremely high flexibility, and the inscription can be split into any number under the “amt” field.
This flexibility is very suitable for interacting with the second layer of inscription, because as long as the second layer reads json and restores the Brc20 state, subsequent defi and other services are very easy to carry out.
Inscription is a new type of asset that is different from NFT and FT. The business of Inscription L2 can also be developed around the inscription itself. Even the native assets themselves are best to use inscription. If Inscription L2 just splits Inscription into FT after cross-chain, and then replicates the Ethereum DeFi gameplay, it will be unattractive, because for current traders, the cost-effectiveness of trading FT is already very low.
The index book of Brc20 is the ledger. After reading the index, an EVM chain is created to continue the attributes of the inscription. And continue to launch a large number of innovative paradigm applications that are different from FT defi.
Programming for indexers
Will BRC20 and its json inscription side chain definitely continue the ETH model? In fact, EVM sounds very boring, we don’t need to reinvent a series of L2. But perhaps, it would be more interesting to think about the expansion of functions and business based on the native attributes of inscriptions.
Brc20 is a token system that is recorded and processed on the chain, using BTC as storage. Therefore, this type of expansion may be achieved by adding more business logic to the off-chain index server.
For example, new primitives besides “mint”, “deploy”, and “transfer” are directly introduced under the “op” field of Json to perform operations such as pending orders, mortgages, destruction, and authorization. The combination of these “op” can further Inion-Fi (Inscription Finance) such as swap and lending has evolved, and even more complex socialfi and gamefi have evolved.
This is essentially indexer-oriented programming, which is more like programming the server interface in web2. It is less difficult to implement and you can even start directly from an index server, but the effect is very significant. At present, unisat’s swap and other functions, including brc100, orc20, and Tap protocols, are the forerunners of this type of Json expansion genre, and have the opportunity to bring about changes quickly.
The attempt to add encryption primitives is exciting. Of course, decentralization is an issue that always needs to be considered. Indexer-oriented programming will inevitably lead to increasing pressure on the server and make it more difficult for the community to run; complex businesses must also require The consensus will eventually lead to the development of smart contract platforms.
Or… a more original idea
The issuance method of the first layer of BTC is actually divided into two major genres. In addition to the Json genre introduced above, it is the only UTXO genre of Atomics (the definition of Rune is still vague and will not be discussed for the time being).
atomicals’ arc20 token is directly represented by BTC’s UXTO itself, without Json updates. Therefore, operations directly based on UXTO can enable arc20 tokens to achieve many interesting capabilities, such as realizing swap exchange and consumption of Arc20 tokens and BTC. Arc20 tokens yield another Arc20 token…
The control of transaction input and output can also achieve simple defi functions, but this places higher requirements on developers and is more difficult. The benefits are also very obvious. All logic is processed directly by the BTC network, sharing maximum security and consensus. At the same time, BTC assets can be seamlessly absorbed, and you need to rely on a third-party BTC bridge like a side chain. After all, “not your keys not your coins”.
Obviously, Arc20 itself is not Turing complete. Therefore, after absorbing the design ideas of Bitvm, the Atomics protocol also proposed Avm’s Bitcoin second-layer solution, which is a proof that is submitted at the first layer of the BTC network and is verified by the BTC script. L2 as verified by circuit logic. As an asset represented by UTXO, Arc20 is naturally suitable to be used as collateral for AVM second-layer fraud proof.
This will be the ultimate narrative of BTC expansion, that is, the ability to realize smart contracts while using BTC DA to share security.
This may be the fourth wave of L2 that will actually be implemented, but @wizzwallet, the development service provider of Atomics, seems to have given some information about AVM in the latest update, and maybe the progress is faster than I thought.
