What kind of Bitcoin ecosystem do we need in the post-Inscription era?

Author: NP Hard, Source: Author Twitter @xingpt

In the cryptocurrency industry, for technology-type projects, we often need to distinguish between short-term narrative and long-term value to identify what type of project They are bubble assets that belong to the hype category. What kind of projects have long-term technical value? Of course, good projects can also have both popular narratives and long-term value. However, the bubble assets that belong to the hype category are not worthless.

This article mainly discusses the hype logic of the future Bitcoin ecosystem, but before that, let us first learn from how Ethereum, the most successful on the road to hype, developed its narrative.

1.ICO - Creating fair but useless assets

When Ethereum was in its infancy, it needed to find an independent positioning independent of Bitcoin and derivative currencies, that is, it could support smart Contracts are used to run various applications. The first type of application is ICO, which emphasizes fair token launch, that is, raising ETH and giving users Ethereum format erc20 tokens for the project. Due to the low market value of the new currency, the price skyrocketed in the early stage. , and thus broke out Ethereum’s first asset speculation frenzy-the ICO boom.

Although looking back today, 99% of ICO projects have no value, the hype of ICO assets allowed Ethereum to solidify its product positioning as an application launch platform, and was later packaged to sound more flashy. Cool "world computer".

2. DeFi and NFT

After Ethereum experienced a decline in 18 and 19, the last bull market in 20-22 mainly experienced two rounds of mainstream hype: First, The underlying product logic of DeFi assets is to use Ethereum's native currency ETH as a "shovel" to provide ETH liquidity in various lending, DEX, derivatives and other protocols in exchange for project tokens. Different from ICO, ETH is no longer used as investment principal, but as collateral. The user experience is: I can obtain new tokens for free, and use the user's "free prostitution" mentality to quickly seize users.

However, the model of selling useless assets similar to ICO is still continued through the hype of NFT. NFT meets several major characteristics: "useless" - there is more room for speculation, "low circulation and low market value" - Early participants can gain huge benefits, and it is "fair" - except whitelist users, everyone has the opportunity to participate. (Note: We will not discuss the differences in cultural communication attributes between NFT and ICO here, but only discuss the similarities in asset speculation.)

3.Meme

Although Shib and Zoo The market has opened up the meme gameplay, but it was not until the emergence of the Pepe series that meme became a separate track. However, the current problem with meme is that it is difficult to accommodate multiple large-market value projects. Only 1-2 leading players can achieve a market value of more than 1B. Therefore, it is not enough to drive the increase in the market value of Ethereum itself.

From the same perspective, we can also observe the reasons why this round of ETH performance is not as good as expected. It lacks low-liquidity assets similar to NFTs that can be sold, and it does not have the function of being a "shovel" , **Arb/OP/Stark, etc. will not give you the opportunity to deposit ETH to mine Layer 2 local currency. There are only exceptions such as Manta and Blast. The upper limit of coins mined by restaking does not reach the market value of the public chain Layer 2. , so ETH is weakening this round. For ETH, Celestia, which has performed well, has taken the "shovel" attribute to the extreme through modular narrative. In terms of "junk" assets, Solana has also promoted Memes with huge growth such as Bonk and Wif. At the same time, many airdrops in the Sol ecosystem such as Pyth, Jupiter, and Jito have also given SOL some "shovel" attributes.

For the Bitcoin ecosystem, The biggest change in this market cycle is that it is also the first time that "junk" assets are directly issued on Bitcoin, and it has the attributes of low circulation, fair distribution, and low market value. The question is, how can Bitcoin play in the post-Inscription era?

Following the above logic of using Bitcoin as a "shovel", here are a few conjectures.

1. Staking Bitcoin to earn interest

Babylon, one of the leading projects in the Bitcoin ecosystem, provides BTC Staking and wants to ensure the issuance of Bitcoin permissionless staking by implementing Slashing on the Bitcoin network. Cosmos public chain security. The two narratives of using Bitcoin as the underlying interest-earning asset and using the Bitcoin network to ensure the security of the public chain are attractive enough. Therefore, Babylon is killing all the parties in the primary market and is sought after by major VCs, but in fact, Bitcoin must play a shovel role. To work, two conditions are needed: first, the value of the PoS coins mined using the Babylon protocol is high enough and the quantity is large enough; second, the Bitcoin pledged through the Babylon protocol also meets a certain volume. If the TVL is too low, the Bitcoin network The security narrative doesn’t work. Both conditions require top-notch BD resources to promote, and it requires efforts in both the Bitcoin ecosystem and the Cosmos ecosystem at the same time, which is not easy. Projects that want to imitate Babylon need to carefully consider whether they have the ability to raise more than 100 million US dollars.

2. Staking Bitcoin mining

Staking Bitcoin mining is a cold start method adopted by many emerging Bitcoin Layer 2, such as BSquare, MerlinChain, etc.; but for Bitcoin holders Generally speaking, there are two significant problems. One is security. Bitcoin is stored in the second-layer network through a cross-chain bridge. It is necessary to trust the security of the second-layer network contracts and nodes. Compared with the security of the Bitcoin network, it is significantly degraded; The second is the inconvenience of operation. Unlike Celestia, which is a Cosmos-based chain, users can pledge TIA once to get airdrops from multiple projects. However, the second-layer mining of Bitcoin requires users to move between different protocols. For users, The experience is not user-friendly and there are a lot of operational risks.

Another challenge is also the issue of income. The value of the chain dug out by the shovel is also worthy of consideration. If there is no annual income of 10% or even 20% or more, it will be difficult to attract large Bitcoin investors to take risks. Take the risk to mine the tokens of the new chain.

Therefore, the project side of this model needs to pre-emptively seize the limited number of high-risk Bitcoin users (which is not a high percentage) as early as possible, and also needs to seize the high-risk users as early as possible. Improving the value of the local currency, including listing on exchanges, launching ecological projects, etc., is more beneficial to projects with experience in entrepreneurship or asset operation in the currency circle.

3. Use Bitcoin for financing to issue “junk” assets

The reason why “junk” assets seem “useless” but people pay for them is because of its very innovative narrative method. The narrative of Inscription is about the revival of Bitcoin, and NFT is about cultural out-of-circle. At present, Runes has the most complete foundation. The founder is Casey from Ordinals, and various community gameplays similar to RSIC are constantly emerging. The BRC420 blue box once issued by Merlin's project partner RCSV can be said to be a typical example of a story that starts from the issuance of new assets, focuses on hype assets, and finally returns to larger infrastructure.

Other new Bitcoin second-layer public chains and cross-ecological public chains like Babylon may not only think about how to make a more decentralized and secure second-layer public chain (as an orthodox The narrative basis of the project), before launching the chain, we should also plan how to create new asset classes and how to distribute assets more innovatively and fairly, rather than just absorbing the Bitcoins in the hands of users to airdrop.

So how to “package” a perfect Bitcoin ecological infrastructure project?

First of all, we hope to allow Bitcoin users to stake in our protocol without trust, without using cold wallet fund transfers, using underlying verification logic similar to Bitcoin’s native, similar to Bitcoin Convenant, DLC, etc.;< /p>

Secondly, we hope that the interest or new assets obtained from staking can be exchanged for Bitcoin in some way, which will generate a very attractive annualized return from the perspective of Bitcoin standards;

For degens, newly issued assets have a relatively fair way to participate, which can relatively limit the financial advantages of large households and reward early community core users in small groups.

Finally, participate in the construction of open source communities as much as possible, contribute basic development tools and documents of Bitcoin, reward open source communities, etc. Giving back to the community is an important non-technical means to gain legitimacy, even more important than technical means. itself is more important.

In the next article on Bitcoin ecology, I will explain how the Bitcoin ecology develops from the perspective of technical paths, and how to find the ecological positioning of the Bitcoin project.