What’s next for the Bitcoin ecosystem? Explore potential opportunities

Source: 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’s response to Through the consensus process of fair distribution, brc20 has created 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, and probably 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 complete maturity of the final "BTC-based" expansion solution, which includes complete smart contract capabilities, better performance, and sharing with BTC strong security. 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 the experience, performance and smart contract functions that are almost completely the same as ETH and its L2, but backed by the huge community and funds of BTC, At the same time, a new ecology takes "fair distribution" as the core culture and "inscription" as the original asset.

Next stop L2< /p>

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.

Relying solely on fair distribution or meme narratives, a total market value of 200 million seems to be a hurdle. If we do not continue to build in a down-to-earth manner, it will be difficult to break through the ceiling (fairness The end of 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 for ETH, Inscription L2 can effectively reduce the user's difficulty in entering Inscription. Threshold and compromise with BTC conservatives. The most important thing is that the complete smart contract capabilities will also introduce more gameplay to Inscription, defi, socialfi, gamefi...

Brc20 and its derivatives For the inscription, choose to write the token information in human-readable Json. The advantage of this is extremely high flexibility. The inscription can be split into any number under the "amt" field.

This kind of 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 will be Very easy to carry out.

Inscription is a new type of asset that is different from NFT and FT. Inscription L2's business can also be developed around Inscription itself. Even the native assets themselves are best to use Inscription. . If the inscription L2 is just to split the inscription into FT after cross-chain, then copy EthereumDeFi gameplay, then 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

Is BRC20 and its json Will Inscription's side chain definitely continue the ETH model? Actually, EVM sounds very boring, we don't need to reinvent a series of L2s. 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 records and processes on the chain and uses BTC as storage. Therefore, this type of expansion may be achieved by adding more business logic to the off-chain index server.

For example, directly introduce new primitives in addition to "mint", "deploy", and "transfer" under the "op" field of Json to place orders. , mortgage, destruction, authorization and other operations. The combination of these "ops" can further evolve Inscription-Fi (inscription finance) such as swap and lending, and even more complex socialfi and gamefi.

This is essentially indexer-oriented programming. It is more like programming the server interface in web2. It is less difficult to implement and can even be directly programmed from a server. Indexing the server started, but the gains were dramatic. 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 always an issue that needs to be considered. Programming for indexers will inevitably lead to server pressure. As the community grows larger, it becomes more difficult for the community to operate; complex businesses must also require consensus, which will eventually lead to the development of smart contract platforms.

Or... a more original idea

BTC layer The issuance methods are actually divided into two major genres. In addition to the Json genre introduced above, it is Atomics' only UTXO genre (the definition of Rune is still vague, so we will not discuss it yet).

atomicals' arc20 token is directly represented by BTC's UXTO itself, without Json updates. Therefore, operations directly based on UXTO can enable arc20 tokens. Many interesting capabilities, such as realizing swap exchange between Arc20 tokens and BTC, consuming Arc20 tokens to produce another Arc20 token...

Enter transaction Output control can also implement 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 L2 that submits proof at the first layer of the BTC network and is verified by the BTC script 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 final 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 Atomics’ development service provider @wizzwallet seems to have given some AVM information in the latest update , maybe progress is faster than I thought.