BTC and Projects in The BRC-20 Ecosystem
1. Map Protocol
Introduction
On December 7, 2023, the Bitcoin Layer2 MAP protocol announced that it had received strategic investment from Waterdrip Capital.
Founded in 2019, MAP Protocol began as a full-chain network focused on cross-chain interoperability.
There are three main current cross-chain communication solutions:
- Secure Multi-Party Computation (MPC) is a privacy-preserving distributed computing technology in the field of cryptography. Representative projects using this cross-chain verification method include Axelar, Celer (cBridge), Multichain, Wormhole, and Thorchain. In the MPC cross-chain solution, a designated set of roles, composed of witnesses who rotate periodically, serves as the final confirmation of cross-chain validity. However, due to the presence of privileged roles, the entire validation process cannot completely eliminate the risk of malicious behavior.
- In the centralized-liked solution, oracles are off-chain infrastructures that link off-chain data to the blockchain. LayerZero is a well-known example of this type of cross-chain solution. LayerZero uses Relayers and Oracle oracles for cross-chain transmission and validity confirmation. However, this solution also carries the risk of collusion between relayers and oracles.
- Light clients, also known as SPV (Simplified Payment Verification) in the Bitcoin whitepaper, are lightweight methods that allow for fast verification of the validity of a transaction throughout the entire ledger. They have the characteristic of being able to independently verify the validity of a transaction without relying on any privileged third party or authorized third party for validation. Projects that currently use light clients for cross-chain purposes include MAP Protocol, Cosmos, Polkadot, and Aurora (Rainbow Bridge).
MAP Protocol adopts the light client solution, but unlike Cosmos, Polkadot, and Aurora (Rainbow Bridge), it can cover all L1 chains, not just ecologically homogeneous chains.
MAP Protocol aims to enable developers to easily build full-chain Dapps through the Map Protocol, thereby truly solving the liquidity and ecological fragmentation issues in the era of multi-chains. The official documentation lists some possible full-chain Dapps, such as full-chain swap, full-chain lending, and full-chain DID.
Relationship with the Bitcoin Ecosystem
Recently, Map Protocol announced an upgrade to become a Bitcoin Layer 2 solution. The main purpose is to leverage the Bitcoin network to enhance the network security of the Map Protocol.
PoS chains can enhance their security and address long-range attacks by utilizing the Bitcoin timestamp service. The MAPO platform submits the hash value and signature of the last block of each epoch as a checkpoint on the Bitcoin network at regular intervals (every epoch). Therefore, MAPO clients can determine the final canonical chain of the MAPO platform’s PoS chain by retrieving checkpoints from the Bitcoin network, thereby preventing long-range attacks by malicious validators on the MAPO network.
Image source: https://mapo.gitbook.io/docs-en/base/index_en-2
This solution is likely inspired by the architecture of Babylon. Furthermore, the recent strategic alliance between Map Protocol and Babylon indicates their collaboration in unlocking the potential of the Bitcoin ecosystem in the future.
BRC-201
Another innovation of the Map Protocol is the introduction of the BRC-201 standard. This standard is backward compatible with the BRC-20 standard and allows for easy bridging of BRC-20 tokens to smart contract-enabled chains such as Ethereum, thereby expanding the application scenarios of BRC-20 tokens.
Below is an example of a BRC-201 token standard. Compared to the BRC-20 protocol, it adds three fields: “chain” (target chain), “ext” (extended operation type), and “ref” (reference content such as target address).
{
“p”: “brc-20”,
“on”: “transfer”,
“tick”: “ordi”,
“amt”: “100”,
“chain”: “eth”,
“ext”: “bridge-out/in”,
“ref”: “address/txhash”
}
An example of bridging:
{
"p": "brc-20",
"on": "transfer",
"tick": "ordi",
"amt": "100",
"ext": "bridge-in",
"chain": "eth",
"ref": "0x857ab26790d5926de3aa3972230dd8b926b1e6d57c6b7a077d649ae3bea393bc"
}
Token
Data Sources:https://www.coingecko.com/en/digital currency/map-protocol
Evaluation
The Map Protocol utilizes the Bitcoin network to enhance its network security and presents the BRC-201 standard for expanding BRC-20 tokens to smart contract-enabled chains. However, it is not a true Bitcoin Layer 2 network in the strictest sense; it is more of a behavior that follows trends. (From this perspective, after the Babylon mainnet launch, all Cosmos chains that obtain Bitcoin security through the Babylon chain can be considered Bitcoin Layer 2 networks.) The BRC-201 standard also introduces risks associated with cross-chain bridges, which require support from relevant indexers and project teams to be realized.
2. Roup
Roup is a protocol that uses the BRC-201 standard to cross BRC-20 assets to Bitcoin Layer 2. The implementation process is as follows:
source:https://docs.rolluper.xyz/how-does-roup-work/tech-workflow
From Bitcoin to Mapo L2:
- Users initiate a new BRC201 inscription, which requires inputting BRC201 token parameters, including target chain, target address, token code, token amount, and fee.
- After the new BRC201 is engraved, it needs to be transferred to the official ROUP Vault address.
- After the transfer is confirmed, the token asset contract will mint the corresponding number of tokens on MAPO L2 to the user’s designated address.
From Mapo L2 to Bitcoin:
- Users initiate cross-chain transactions by specifying the target chain, target address, token code, and token amount.
- The token asset contract will destroy user tokens at MAPO L2.
- Cross-chain transactions are verified.
- New BRC201 will be credited and transferred to the user-specified Bitcoin address.
Currently, only one-way transfer from BTC to MAPO is supported, and only whitelisted token operations are supported.
Features: The project token ROUP is distributed using BRC-20 fair casting. The handling fees generated by ROUP will be returned to the community through destruction, repurchase, etc. The specific proportion will be determined by user voting.
30% of the revenue will be distributed to developers, etc., and part of it will be used to repurchase Roup and Mapo.
Recently, the token has shown significant growth, with a circulating market cap close to 40 million USD.
source:https://www.coincarp.com/zh/currencies/roup/
Evaluation
The cross-chain solution developed based on the Map Protocol and BRC201 protocol is innovative to some extent. However, it relies on the ecological support of BRC201 tokens on the Map chain, which limits its standard applicability. The project empowers BRC-20 tokens, allowing them to move away from being mere meme coins. Additionally, a fixed percentage of the revenue is allocated to developers, addressing the issue of project teams not being adequately incentivized during the fair launch of BRC-20 tokens.
3. MultiBit
MultiBit is the first two-way cross-chain bridge between BRC-20 and ERC-20 tokens.
source:https://docs.multibit.exchange/multibit
The following is the cross-chain process:
BTC network to ETH/BNB network:
- Once the wallet is connected, the Multibit platform will assign each user a dedicated BRC-20 address.
- Users need to transfer BRC20 tokens to their dedicated BRC-20 address for cross-chain transfers.
- After a block is confirmed, users can see the tokens available for minting in the order book. The user has minting permissions and needs to manually mint the transferred tokens.
- When minted, the transaction requests the signer’s signature from the backend and provides it to the contract. Once the contract verifies the signature, users can mint tokens on the ETH/BNB chain.
The project hopes to realize AMM, Farm, mortgage stablecoins, etc. of BRC-20 tokens by cross-chaining BRC-20 to the ETH/BNB network.
Because it involves the BRC-20 cross-chain concept, the project tokens have grown significantly recently:
source:https://www.coingecko.com/zh/%E6%95%B0%E5%AD%97%E8%B4%A7%E5%B8%81/multibit
source:https://www.coingecko.com/zh/%E6%95%B0%E5%AD%97%E8%B4%A7%E5%B8%81/multibit
Evaluation
It can be seen that the project still adopts a traditional cross-chain bridge solution, with some improvements made specifically for BRC-20 tokens. However, there is still a centralized risk. At the same time, the solution of cross-chaining BRC-20 to the existing smart contract chain to implement BRCFi is exactly the same as the implementation of AMM, Farm, and mortgage stablecoins in the ERC-20 ecosystem, without much innovation.
4. Stacks
Introduction
Stacks is a Bitcoin smart contract layer, but it has a different relationship with the Ethereum mainnet and Layer 2. Stacks has its own chain, compiler, and programming language called Clarity. It runs in sync with Bitcoin. Essentially, a new chain is built outside the Bitcoin chain, with an independent governance structure and transaction model.
The first characteristic of Stacks is its adoption of the PoX consensus mechanism.
The Stacks layer relies on STX and BTC for its novel consensus mechanism called Proof of Transfer (PoX), which utilizes both Stacks and Bitcoin layers. PoX is similar to Bitcoin’s Proof of Work (PoW) consensus: just like Bitcoin PoW miners spend electricity and are rewarded with BTC, Stacks PoX miners spend (mined) BTC and are rewarded with STX. Like PoW, PoX uses a Nakamoto-style single leader election: PoX miners bid by simply spending BTC, and they have a leader with a random probability weighted by the bidding amount. The leader election takes place on the Bitcoin chain, and new blocks are written on the Stacks layer. In this way, PoX reuses work already done by Bitcoin miners and does not consume any significant additional electricity: only a regular laptop/computer is required to run a Stacks node and bid BTC.
Another part of PoX is “Stacking,” which allows holders of Stacks tokens to participate in the network’s security. If holders choose to “Stack” their tokens, they are periodically rewarded with Bitcoin. This is a unique mechanism that allows participants in the Stacks chain to directly receive Bitcoin as a reward, further enhancing the connection between the Stacks network and Bitcoin.
Stacks’ Satoshi upgrade is expected to be implemented before halving this year.
For Stacks, the main implications of the Nakamoto upgrade are as follows:
(1) Sharing network security with BTC: transactions are settled on the Bitcoin network. This feature makes Stacks transactions more secure and reliable, and becomes a true Layer2 rather than a sidechain with its own independent state.
(2) Launch of sBTC: The introduction of Bitcoin-linked asset sBTC enables smart contracts to run faster and cheaper, and can easily transfer BTC into or out of Stacks L2. Conducive to the development of the Bitcoin DeFi market.
When converting BTC to sBTC: Send BTC to a multi-signature address and initiate a transaction on the Stacks network, triggering a smart contract that will send BTC to the multi-signature address and create a corresponding number of sBTC assets on the Stacks network .
Convert sBTC back to BTC: Send a message to the smart contract and initiate another transaction on the Stacks network, triggering another smart contract that destroys the corresponding amount of sBTC assets and sends the corresponding amount of BTC to the user.
(3) Support for BTC atomic swaps, allowing Bitcoin addresses to own and move assets defined on the Stacks layer, such as STX, stablecoins, and NFTs, and transfer them through Bitcoin L1 transactions.
(4) Clarity language: The security of smart contracts on the chain can be greatly improved.
(5) Bitcoin status reading: It is possible to fully read the data of the Bitcoin chain, supporting the reading of Bitcoin transactions and state changes, and executing smart contracts triggered by Bitcoin transactions. The ability to read Bitcoin enables the synchronization of Bitcoin L1 network data and L2 network data.
(6) Fast block generation: The current block generation time is 10 minutes. After the upgrade, it can reach a block generation speed of 4–5 seconds, breaking the 10-minute block generation limit of BTC. The transaction hash will be written into the Bitcoin security network with each Bitcoin block.
(7) Customized subnets support multiple development languages: Scalability layers such as subnets can make different tradeoffs in performance and decentralization than the Stacks mainnet. The subnet can support other programming languages and execution environments (such as Ethereum’s Solidity and EVM), which allows all Ethereum smart contracts to use Bitcoin-anchored assets and be settled on the Bitcoin chain.
Ecosystem
The total TVL of the ecosystem has reached 670M, but most of it is contributed by Liquid Staking. There is only one protocol left, ALEX, which is the Dex platform on Stacks.
source:https://defillama.com/chain/Stacks
The current circulating market value is about US$2 billion. Due to the popularity of the Bitcoin ecosystem this year, the price of STX has also increased significantly.
source:https://www.coingecko.com/en/digital currency/stacks
source:https://www.coingecko.com/en/digital currency/stacks
Evaluation
Currently, the on-chain TVL of Stacks is low, and the trading activity is inactive. Additionally, the unique development language, Clarity, increases the barrier for developers, resulting in an inactive development ecosystem. However, after the upgrade in the middle of next year, Stacks will have a closer integration with the security and ecosystem of Bitcoin. Furthermore, supporting customizable subnets will make it easier to connect with the EVM (Ethereum Virtual Machine) ecosystem. Currently, the focus is more on the expectations for future development.
5. SATS
Major timeline (https://www.binance.com/zh-CN/feed/post/1275458907377）：
March 9, 2023: $SATS was deployed, with a total amount of 2100 trillion, with a maximum of 100 million per ticket, for a total of 21 million. At that time, I not only lamented who had such a big idea, but also 1:1 sats deployed such a behemoth. At that time, no one thought it would be fully minted.
May 11: The number of currency holding addresses exceeded Ordi, boosting the development of SATS.
May 15th: SATS inscription progress reached 1%, and the number of currency holding addresses was 7,309, a milestone.
May 16: Due to the success of the Unisat market, everyone is keen to buy Unisat points, and Mint SATS has become the first choice.
June 29: SATS inscription progress is 13.69%, the number of currency holding addresses is 19,831, Mint cost is 1.35U, and the market is 0.8U. A large investor purchased SATS for $25,000 at one time. In June, more and more SATS communities began to be established, and famous influencers gradually began to build positions.
July 30: SATS inscription progress is 36.87%, the number of currency holding addresses is 26,905, Mint cost is 0.65U, and the market is 0.43U. In July, due to the decline of BTC, the entire brc20 ecosystem was in a state of malaise, and gas was as low as single digits. This is The best time to open a position in SATS. At the same time, because OKX makes markets in the Ordinals market, many users also make some profits by minting inscriptions.
September 24: The progress of SATS inscription is 100%. It took more than 6 months and cost tens of millions of dollars to complete this impossible task.
September 27: Unisat launches brc20-swap testnet and puts SATS on the top of the list.
In September, SATS was completely under FOMO sentiment and was quickly completed. At the same time, more KOLs began to promote SATS, and more and more communities were established to promote SATS spontaneously. The community atmosphere was very strong.
October 10: Unisat announces use of SATS for service charges.
December 12: Binance announced the launch of SATS, and the price soared from 25U to 54U before the launch.
Evaluation
SATS took more than 6 months and spent tens of millions of dollars to complete the entire Mint. This also makes it the BRC20 token with the highest number of currency holding addresses and the highest total cost of Mint. In addition, after Unisat launches UniSat Indexer, it will mine through sats and use sats as service fees, further empowering SATS and breaking away from the traditional meme currency attributes. Indexer, as the most important infrastructure project of BRC20 tokens, will most likely be implemented using a separate chain, with SATS as its base currency, which has a lot of room for imagination.
source:https://www.coincarp.com/zh/currencies/sats/
The current market value of SATS is close to US$1.5 billion, surpassing ORDI to become the BRC20 token with the largest market value.
source:https://www.coincarp.com/zh/category/brc20/
Reference article:
The Development History of Inscription SATS in the Currency Circle
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