Atomics proposed a new split plan for ARC-20 tokens in official documents, aiming to solve the "dust limit" problem existing in the Bitcoin network. In the Bitcoin network, the smallest unit of a single UTXO transmission is 546 satoshis, which limits the application of ARC-20 tokens in small transactions.
The solution proposed by Atomicals overcomes this limitation by introducing a “Substantiation Factor” (SF), which redefines the number of satoshis required to support a single ARC-20 token.
The scheme creates a new operation that allows token holders to convert their token units from 1:1 to smaller ratios such as 1:10, 1:100, etc. It’s worth noting that doing this requires posting regular satoshis as collateral for token units (proportional to their desired materialization factor).