Launch of BRC20-Swap: An In-Depth Look at Its Development, Business Model, and Future Expectations

Development History of BRC20-Swap

Due to the transaction mechanism of Ordinals ecosystem assets largely being in a listing-for-sale mode, their liquidity has always been a focal point of attention in the ecosystem. In July 2023, Unisat, integrating inscription services, a trading marketplace, and a wallet, announced the upcoming launch of brc20-swap to improve the liquidity of ecosystem assets. This product was launched for testing on October 30, 2023. PANews presents a detailed breakdown of the development history, product model, and future expectations of brc20-swap.

On September 20, 2023, Unisat distributed BRC20-Swap Early Access inscriptions to 620 addresses. The selection criteria were:

1. Active community members who traded at least 1 BTC on the UniSat Marketplace between July 16 and September 20.

2. Active community members who accumulated at least 500 UniSat points through UniSat inscriptions during the same period.

3. Holders of Unisat OG PASS (snapshot block height 808559).

On October 10, 2023, UniSat officially announced the mainnet launch schedule and other details for brc20-swap. They gradually distributed commemorative inscriptions named BRC20-Swap Prime Access for free to community users, allowing them to participate in the early testing of the brc20-swap product. These were distributed through official Discord channels and Twitter user raffles. A total of 654 inscriptions were distributed, with the current floor price on the secondary market being 0.0067 BTC.

The settlement and synchronization of transactions to the Bitcoin mainnet are handled by sorters. In terms of transaction fees, brc20-swap refers to the current fee standard used by UniSwap, charging a 0.3% service fee from all participating users. Approximately 1/6 of this fee (0.05%) is collected by UniSat, and the remaining 5/6 (0.25%) is distributed to liquidity providers of each trading pair. However, unlike others, brc20-swap charges fees in brc20 asset “sats.”

On October 30, 2023, UniSat officially announced the initial support for 14 types of assets on brc20-swap. The selection criteria included assets that had at least 15 days of trading activity in the past 30 days on the UniSat market, and whose median trading volume in the last 30 days was not zero. Following this announcement, the involved assets experienced significant price increases due to positive expectations.

Product Model

The product is divided into three segments: trading, liquidity pools, and data overview, which closely resembles the DEX format on EVM chains. Before trading, users must first deposit assets into the brc20-swap module through “inscribe TRANSFER”. The confirmation process for this deposit takes three blocks.

RANSFER”. The confirmation process for this deposit takes three blocks.

The brc20-swap is implemented through modular extensions, with each module existing independently of brc20-swap. The advantages of this model are:

1) Permissionless development, enabling the creation of new modules for brc-20 without needing permission;

2) Isolated execution, ensuring that if any single module encounters a problem, it does not affect the core protocol or other modules;

3) Consensus upgrade, where a module can transition from being a ‘black’ module to a ‘white’ module and become part of the brc-20 protocol once most indexers recognize and implement indexing for that specific module.

However, the expansion model of the ‘black’ modules has a downside: users cannot freely withdraw assets. Unisat addresses this by designing a dynamic adjustment mechanism, allowing withdrawals when the asset amount recharged by others exceeds the amount to be withdrawn. This approach avoids arbitrary issuance like on EVM chains but compromises asset liquidity and convenience for users.

As the behavior of the ‘black’ modules is understood and executed by users, gradually becoming more reliable, and accepted by more indexers, the product transitions from ‘black’ modules to ‘white’ modules, achieving a consensus upgrade. This allows users to freely deposit and withdraw assets.

Moreover, as the brc20 protocol and the entire Ordinals ecosystem are still in their early stages, and Unisat holds significant influence and reputation, it provides comprehensive trading and balance inquiry indexing services for the protocol, posing a risk of centralization. Its modular operational architecture enables more service providers to participate, thus achieving more decentralized indexing.

Future Expectations

Users in the Ordinals ecosystem often complain about low liquidity and limited capital entry, leading to hesitation among major players on EVM chains. The brc20-swap, utilizing the brc20 protocol as its underlying asset foundation, facilitates the first native transaction within the Ordinals ecosystem. By continuously optimizing liquidity, it expands the capacity for capital entry. Thus, the launch of brc20-swap marks a progressive step for the entire ecosystem.

Additionally, Unisat officially announced that 2% of the transaction fees from brc20-swap will be donated to the L1F Foundation, which brc20 protocol developer domo is involved with, to promote further optimization of brc20 development and standards. Moreover, UniSat will open-source the complete interpretation and verification source code of brc20-swap to foster early support from indexers.

These indications reflect a cooperative attitude, rather than a monopolistic dominance over the ecosystem’s benefits. With the Ordinals ecosystem still in its early stages of development, it requires collaborative efforts from all parties to enlarge the pie and achieve mutual success.

Disclaimer：

1. This article is reprinted from [Panewslab]. All copyrights belong to the original author [雾海、PANews]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.