New Narrative of the Bull Market - Bitcoin Ecosystem Development Landscape

[TL；DR]:

The Ordinals protocol was proposed by Casey Rodarmor and was launched on the Bitcoin mainnet on January 30 of this year. It supports users to bind multiple forms of data to specific sats (satoshis) and “engrave” them on the Bitcoin blockchain, making it easy to transfer transactions.

Presently, various eco projects on the Stacks platform cover fields such as wallet, DeFi, NFT, pledge, DAO, data analysis, etc., and are also of high level in narrative marketing.

Of course, the current battle for asset issuance rights and product expansion rights around the Bitcoin eco is not yet over, and various project parties are still competing vigorously. This can actually be seen as a prosperous manifestation of the Bitcoin New Culture Movement.

Introduction

After years of silent cultivation, the BTC eco has finally made a huge breakthrough, with a large number of native protocols/products such as Ordinals, Atomicals, and Taprot Assets emerging first, bringing more possibilities to the new narrative of Bitcoin.

The article will share with you many eco protocols/products based on Bitcoin, and look forward to the future development path.

The Trending Bitcoin Derivative Protocol: Ordinals

The Ordinals protocol may be the most popular new protocol this year.

The Ordinals protocol was proposed by Casey Rodarmor and was launched on the Bitcoin mainnet on January 30 of this year. It supports users to bind multiple forms of data to specific sats (satoshis) and “engrave” them on the Bitcoin blockchain, making it easy to transfer transactions.

Popularize background information here. Ordinal number is a numbering scheme for Bitcoin that allows for tracking and transferring individual Sats, which we refer to as serial numbers. Bitcoins are numbered in the order in which they are mined, minted and transferred in UTXO manner.

Under the Ordinals protocol, the supported asset or token categories include inion, BRC20, rare satoshis, and recursion.

As the first Bitcoin native inion, $ORDI sparked a wave of ORDI Summers this summer, but soon fell into silence. Until late October of this year, the Ordinals protocol underwent a major version update, adding multiple functions such as batch engraving, inion numbering, and adding metadata. Coupled with a significant increase in BTC, the community was once again active.

With the launch of leading inions such as $ORDI and $SATS on well-known exchanges such as Gate, as well as community members proposing to use them as governance tokens for staking, voting, and other scenarios, it helps to transform many inions from purely short-term speculative MEME attributes to practical functions, and helps Bitcoin inions further go rival.

Source: Gate.io

In general, Ordinals has brought BRC20 standard, upgraded protocols such as RUNE and PIPE, and new asset agreements such as Atomicals and Taproot Assets to the industry, bringing more diversified assets to the market. Although there is a lot of speculation about foam in the short term, it is still a very valuable innovation experiment in the long term.

New Bitcoin Derivative Protocol for Use Cases: Atomicals

The Atomicals atomic protocol was proposed by an anonymous team to address some of the limitations of the Ordinal protocol and thus redesign and develop new areas of assets such as ARC20, Realms, and Digital Objects.

Compared to Ordinals, Atomicals has improved existing theoretical solutions such as colorcoin and namecoin, allowing its applications to utilize the UTXO model of Bitcoin to a greater extent and be compatible with various existing Bitcoin innovation protocols such as BitVM and PSBT SWAP.

Source: Atomicals

ARC20: All casting and trading operations of ARC20 tokens can be completed through the Bitcoin mainnet, supporting token splitting. In addition, the caster can also choose the Bitwork Mining prefix themselves, and only after calculating the matching prefix through CPU/GPU mining can they obtain the qualification to mint the corresponding ARC20 token. Overall, this concept is very ‘halal’ and more closely aligned with the demands of Bitcoin fundamentalism among OGs. The current flagship token is $ATOM.

Realm: We translate it as “domain” and position it in the Web3 version of the Internet Name and Digital Address Allocation Authority (ICANN), which allows users to operate their own domain to establish communities, tokens, and more.

NFT: Atomicals also allows users to generate NFTs using images, and $Atommap is the first NFT produced by this protocol.

The Earliest Developed Bitcoin L2: Lightning Network

As the Layer 2 solution most widely accepted by the Bitcoin community, the Lighting Network has been a gathering place for Bitcoin eco developers since 2016.

It achieves efficient and low-cost micro transactions by building an additional payment channel network without touching the core code of Bitcoin, and currently has a processing speed of millions of coins per second.

The latest action of Lightning Network is to release the alpha version of Taproot Assets mainnet in mid October

We have previously written an article specifically discussing this protocol on our blog. Simply put, the Taproot Assets protocol is a Taproot native asset layer built on Bitcoin. In the asset issuance scenario of Taprot Assets, the can specify the operation code as the basic rules such as the total issuance amount, issuance time, and issuance object of the token. By accessing a set of multiple signed addresses, the operation code can be jointly triggered. The relay node of the lightning network serves as the accounting management function for asset management distribution, which can achieve low-cost, high-frequency, and efficient point-to-point distribution interaction.

Currently, Taproot Assets is more suitable for high-frequency trading scenarios, such as fungible tokens (stablecoins).

Of course, since Taproot Assets does not use Bitcoin as the complete data availability layer, users need to index out of the chain or configure their own data storage.

BTC Smart Contract Chain Good at Marketing: Stacks

As an old side chain project that was conceptually proposed as early as 2013 and launched in 2018, Stacks adopts the PoX mechanism to integrate Stacks blocks with Bitcoin, allowing users to lock their protocol token $STX to participate in network security and receive Bitcoin rewards.

In fact, Stacks leverages the security of the Bitcoin main network to ute smart contracts written in Clarity (a self-developed smart contract language with a strongly typed and clear ution logic) on their blockchain and ultimately achieve settlement transactions on the Bitcoin network, thus creating the basic environment for the emergence of a simple DeFi product line.

Source: Gate.io

In addition to the above features, Stacks is also compatible with existing web technologies, such as using Java to develop decentralized applications, making it easier for developers to build various types of decentralized applications.

Presently, various eco projects on the Stacks platform cover fields such as wallet, DeFi, NFT, staking, DAO, data analysis, etc., and are also of high level in narrative marketing.

The Stacks team participated in the UDC Conference in South Korea this year and launched the first pilot decentralized funding plan, collaborating with btcstartuplab to promote new application cases such as decentralized finance and gamified finance for Bitcoin.

However, its practice of distributing BTC as a reward to staked STX miners has been criticized, and in the eyes of the legitimate Bitcoin community, it is the least “halal” troublemaker.

Scalability solution for the concept phase: BitVM

BitVM is a new solution launched by ZeroSync that expresses Turing’s complete Bitcoin smart contract. Without changing the Bitcoin network, it runs a VM virtual machine that supports universal computing through optimistic rollouts to achieve Bitcoin-based smart contract operations.

We have previously written an article to share BitVM with everyone. At present, there are two mainstream ideas in the industry for implementing Layer2 with Bitcoin:

1) Expand the OP Rollup model of Lightning Network, which is not limited to payment, and can perform any contract operation. BitVM follows this approach.

2) Centralized distributed threshold signatures like tBTC on the chain. BEVM is this approach.

Compared to BEVM, BitVM is still in the early stage of concept validation, making it relatively difficult to understand and use. A complete solution has not yet been proposed for some details such as side chain trust bridging. In addition, it is slightly insufficient in supporting multi-party cooperation, ease of operation, and universality.

In summary, BitVM is a brainchild concept. Although it cannot yet achieve quite sophisticated smart contract development, it can be used in some scenarios of off-chain computing with the security performance of Bitcoin, including DLC oracle machines, congestion control/coinjoin aggregators, and side chain quorum.

Conclusion

In addition to the above, there is also relatively slow progress in the ultimate scalability solution RGB, EVM structured smart contract chain RSK, Celestia’s Rollup project based on BTC network Rollkit, and so on. Due to limited highlights, the article will not elaborate further.

But the basic idea of these solutions is consistent, that is, relying on the security performance and strong consensus of the Bitcoin network to develop new use cases for specific categories or fields without touching the core code of Bitcoin as much as possible, in order to attempt to obtain development space with larger scale and more recognition than other public chains.

Of course, the current battle for asset issuance rights and product expansion rights around the Bitcoin eco is not yet over, and various project parties are still competing vigorously. This can actually be seen as a prosperous manifestation of the Bitcoin New Culture Movement, which may become a new paradigm progress for Bitcoin miners to receive compensation for losses and even increase income under halving rewards.

Competition squeezes out the foam and consensus condenses value.

Developers of the Bitcoin eco should not only immerse themselves in technological innovation but also pay attention to application landing and community construction, especially in the face of speculative chaos in the early stages of the eco explosion. The ideology of Bitcoin minimalism will be severely tested, and whether the community can accept this innovation will also be a topic that we must follow up on for a long time.

Finally, we would like to add that the various project tokens mentioned in the article, such as $ORDI, $SATS, $STX, etc., are all supported for trading at Gate.io. Gate will continue to support valuable and innovative Bitcoin eco projects, and we welcome many developers to contact and cooperate with us to contribute to the sustainable development of the Bitcoin eco.