Thread by Jameson Mah 🧙🏻♂️
- Tweet
- May 4, 2023
- #Bitcoin #Cryptocurrency
Thread
BRC-20: start of a new era, or flash in the pan?
Let's talk about shitcoins on Bitcoin.
The BRC-20 megathread 🧵
1/43
Let's talk about shitcoins on Bitcoin.
The BRC-20 megathread 🧵
1/43
This thread will cover:
1. What the hell is a BRC-20?
2. State of the market
3. How do I get my hands on some?
4. What could drive the next leg of BRC-20 adoption?
5. Why are Bitcoin maxis shivering with rage?
6. Some BRC-20 shitcoins to watch
Salut, let's jump in!
2/43
1. What the hell is a BRC-20?
2. State of the market
3. How do I get my hands on some?
4. What could drive the next leg of BRC-20 adoption?
5. Why are Bitcoin maxis shivering with rage?
6. Some BRC-20 shitcoins to watch
Salut, let's jump in!
2/43
Firstly, if you haven't read my Ordinals megathread, stop what you're doing and go read that immediately.
It's essential to understanding BRC-20 because they are, at their very core, Ordinals.
Read the thread? Let's continue.
3/43
It's essential to understanding BRC-20 because they are, at their very core, Ordinals.
Read the thread? Let's continue.
3/43
Your first thought is probably that this makes zero sense.
The purpose of Ordinals was to introduce NON-fungibility to Bitcoin, aka Layer 1 native Bitcoin NFTs.
Digital artifacts, right?
But shitcoins are fungible. And yet BRC-20 is built on Ordinals?
Let me explain.
4/43
The purpose of Ordinals was to introduce NON-fungibility to Bitcoin, aka Layer 1 native Bitcoin NFTs.
Digital artifacts, right?
But shitcoins are fungible. And yet BRC-20 is built on Ordinals?
Let me explain.
4/43
BRC-20 has ZERO resemblance to the ERC-20 token standard so throw that comparison out the window.
It's a word play and nothing more.
BRC-20 is more akin to an NFT collection with 10M supply. Yeah, they're "NFTs", but when supply is that large, non-fungibility is dubious.
5/43
It's a word play and nothing more.
BRC-20 is more akin to an NFT collection with 10M supply. Yeah, they're "NFTs", but when supply is that large, non-fungibility is dubious.
5/43
The analogy for the ETH NFT crowd is ERC-1155s – semi-fungibles, where NFTs and fungibles are manageable within the same smart contract.
BRC-20 is creating fungibility from a protocol (Ordinal Theory) designed for non-fungibility.
6/43
BRC-20 is creating fungibility from a protocol (Ordinal Theory) designed for non-fungibility.
6/43
The architecture itself is relatively simple.
BRC-20 is JSON text inscribed into an Ordinal. The text has a few simple variables and functions, such as:
1. The ticker (must be 4 chars)
2. Max supply
3. Token limit per mint
4. Deploying, minting, and transferring functions
7/43
BRC-20 is JSON text inscribed into an Ordinal. The text has a few simple variables and functions, such as:
1. The ticker (must be 4 chars)
2. Max supply
3. Token limit per mint
4. Deploying, minting, and transferring functions
7/43
Here's an example from @domodata, the creator of BRC-20.
"p" = protocol (BRC-20)
"op" = operation (we are deploying)
"tick" = 4 char ticker
"max" = max supply
"lim" = mint limit for buyers
This is a BRC-20 called $ORDI, with 21M supply, and you can buy in 1K increments.
8/43
"p" = protocol (BRC-20)
"op" = operation (we are deploying)
"tick" = 4 char ticker
"max" = max supply
"lim" = mint limit for buyers
This is a BRC-20 called $ORDI, with 21M supply, and you can buy in 1K increments.
8/43
This JSON text is inscribed using Ordinals and lives on the Bitcoin L1.
The first to deploy a ticker has claimed it. Ordinals sequencing provides a universal record of who deployed first.
Once deployed, anyone can mint "tokens" (Ordinals) by inscribing the mint function.
9/43
The first to deploy a ticker has claimed it. Ordinals sequencing provides a universal record of who deployed first.
Once deployed, anyone can mint "tokens" (Ordinals) by inscribing the mint function.
9/43
Here is an example of a "mint" of 1K $ORDI tokens.
This depicted Ordinal would then live in the Taproot address of the inscriber.
To transfer/sell, additional Ordinals are created that act like a "credit/debit" system contained in your wallet.
10/43
This depicted Ordinal would then live in the Taproot address of the inscriber.
To transfer/sell, additional Ordinals are created that act like a "credit/debit" system contained in your wallet.
10/43
If you wanted to sell 300 of your 1K $ORDI tokens, you would inscribe the "transfer" function that acts as a credit on your balance.
If you owned the below Ordinal + the one in the previous tweet, any blockchain indexer could net the two to see you own 700 tokens.
Voila.
11/43
If you owned the below Ordinal + the one in the previous tweet, any blockchain indexer could net the two to see you own 700 tokens.
Voila.
11/43
Pausing here for a sec.
This probably all sounds like a jerry-rigged experiment right?
That's because it is.
BRC-20 creator @domodata clearly states "these will be worthless" and "this is just a fun experiment."
Yet, the market cap of BRC-20 is already above $100M+.
12/43
This probably all sounds like a jerry-rigged experiment right?
That's because it is.
BRC-20 creator @domodata clearly states "these will be worthless" and "this is just a fun experiment."
Yet, the market cap of BRC-20 is already above $100M+.
12/43
There is something to be said about BRC-20's simplicity.
Occam's Razor.
Similar to Ordinals, my view is that the rudimentary nature of BRC-20 actually makes them more appealing, especially for memeability.
Best of all, every BRC-20 will live forever on BTC's L1.
13/43
Occam's Razor.
Similar to Ordinals, my view is that the rudimentary nature of BRC-20 actually makes them more appealing, especially for memeability.
Best of all, every BRC-20 will live forever on BTC's L1.
13/43
If you've paid your dues shitcoining in the ETH or smart-contract world, you have probably been rugged by devs altering contracts, pulling liquidity, raising buy/sell taxes, etc.
The beauty of BRC-20? That can never happen.
Its ossification is a feature, not a bug.
14/43
The beauty of BRC-20? That can never happen.
Its ossification is a feature, not a bug.
14/43
Critics of BRC-20 have cited the fact that supply and max per mint is immutable after deployment.
But in the same vein as JPEG Ordinals, this is actually its distinguishing quality.
As I said before with Ordinals: what you buy will ALWAYS be precisely what you own.
15/43
But in the same vein as JPEG Ordinals, this is actually its distinguishing quality.
As I said before with Ordinals: what you buy will ALWAYS be precisely what you own.
15/43
Moving on to the market – what has been the activity level so far?
BRC-20 was published by @domodata almost 2 months ago on March 8th.
Not much happened...
...until shitcoin season took everyone by storm.
ERC-20 $PEPE quite literally marks the rise of BRC-20.
16/43
BRC-20 was published by @domodata almost 2 months ago on March 8th.
Not much happened...
...until shitcoin season took everyone by storm.
ERC-20 $PEPE quite literally marks the rise of BRC-20.
16/43
Since then, we have seen:
- Over a whopping $10M secondary volume on BRC-20 tokens with the majority in the last week
- 2.5M BRC-20 transactions
- 120 BTC ($3.5M) in fees paid to inscribe
- BRC-20 transactions taking up to 50% of all network activity on Bitcoin (!!!)
17/43
- Over a whopping $10M secondary volume on BRC-20 tokens with the majority in the last week
- 2.5M BRC-20 transactions
- 120 BTC ($3.5M) in fees paid to inscribe
- BRC-20 transactions taking up to 50% of all network activity on Bitcoin (!!!)
17/43
The current market cap of all BRC-20s is ~$106M per brc-20.io/.
While liquidity is relatively thin ($10M volume per $106M market value), the price action is quite impressive in its short time span and indicative that market participants see room to run.
18/43
While liquidity is relatively thin ($10M volume per $106M market value), the price action is quite impressive in its short time span and indicative that market participants see room to run.
18/43
The supply/demand imbalance in the market thus far is also fascinating.
Because BRC-20 is low cost (just gas) to mint, every mint is by default in excess demand as long as there is speculative interest in shitcoins on Bitcoin.
Its (almost) like a free option for minters.
19/43
Because BRC-20 is low cost (just gas) to mint, every mint is by default in excess demand as long as there is speculative interest in shitcoins on Bitcoin.
Its (almost) like a free option for minters.
19/43
The underbelly of this is that demand for new tokens is merely expressed in the form of gas fees. There is no primary issuance price discrete to a BRC-20.
Aptly put by @ercwl: "you get a shitcoin if you waste blockchain capacity/burn fees."
More on this later.
20/43
Aptly put by @ercwl: "you get a shitcoin if you waste blockchain capacity/burn fees."
20/43
Let's turn to brass tacks.
How do you buy and sell BRC-20s?
Thankfully, we are out of the stone age with Ordinals and there is a myriad of impressive builders paving the way for easy-to-use UI/UX around deploying, minting, buying/selling, and custody of BRC-20.
21/43
How do you buy and sell BRC-20s?
Thankfully, we are out of the stone age with Ordinals and there is a myriad of impressive builders paving the way for easy-to-use UI/UX around deploying, minting, buying/selling, and custody of BRC-20.
21/43
There is one builder in particularly primarily responsible for the massive influx of capital into BRC-20.
@unisat_wallet.
I'm posting the same chart again because it's absolutely ludicrous.
22/43
@unisat_wallet.
I'm posting the same chart again because it's absolutely ludicrous.
22/43
Unisat has two main products: the @unisat_wallet plug-in wallet + their website.
Both interfaces will feel very natural for Web3 users.
The innovation of Unisat is that they have indexed all BRC-20 data to provide a seamless and traditional experience for users.
23/43
Both interfaces will feel very natural for Web3 users.
The innovation of Unisat is that they have indexed all BRC-20 data to provide a seamless and traditional experience for users.
23/43
For first-timers, I highly recommend setting up a @unisat_wallet and checking their {} brc-20 page (unisat.io/brc20).
It allows you to filter by % mint progress, holder distribution, and more.
Minting is as simple as using their UX to inscribe the mint function.
24/43
It allows you to filter by % mint progress, holder distribution, and more.
Minting is as simple as using their UX to inscribe the mint function.
24/43
For trading, Unisat has a BRC-20 marketplace.
It will look and feel like a NFT marketplace as opposed to a DEX (again, going back to how BRC-20 is stretching NFTs to a logical extreme).
You buy/sell by listed tick sizes, i.e. purchase 200 tokens as a single Ordinal.
25/43
It will look and feel like a NFT marketplace as opposed to a DEX (again, going back to how BRC-20 is stretching NFTs to a logical extreme).
You buy/sell by listed tick sizes, i.e. purchase 200 tokens as a single Ordinal.
25/43
There are other builders working to index BRC-20s and provide clean trading experiences, for example @ordinalswallet recently launched their marketplace similar to @unisat_wallet's design.
But what about a DEX for BRC-20?
Soon 👀
26/43
But what about a DEX for BRC-20?
Soon 👀
26/43
Seamless trading primitives (DEX) is a core pillar for the next leg of BRC-20 adoption and growth.
@Uniswap catalyzed velocity and thus capital growth for ERC-20s in a way that centralized orderbooks could not.
Such a development for BRC-20s would be a game-changer.
27/43
@Uniswap catalyzed velocity and thus capital growth for ERC-20s in a way that centralized orderbooks could not.
Such a development for BRC-20s would be a game-changer.
27/43
The other core unlock for BRC-20 growth is scalability.
Earlier I mentioned how, since every mint costs only gas, the overall Bitcoin network sets the market price for primary.
Unfortunately, this means that the cost for non-BRC-20 transactions has gone through the roof.
28/43
Earlier I mentioned how, since every mint costs only gas, the overall Bitcoin network sets the market price for primary.
Unfortunately, this means that the cost for non-BRC-20 transactions has gone through the roof.
28/43
The pic below basically sums it up. Pending mempool tx fees have gone exponential due to BRC-20s.
This sucks for all the other users of the network who aren't speculating on shitcoins.
How will this play out?
29/43
This sucks for all the other users of the network who aren't speculating on shitcoins.
How will this play out?
29/43
Currently, there has been ~$3.5M in fees paid to inscribe BRC-20 tokens.
The est. market value of all BRC-20s is ~$106M.
So, demand for shitcoins far outpaces supply and marginal cost to get in on the action.
30/43
The est. market value of all BRC-20s is ~$106M.
So, demand for shitcoins far outpaces supply and marginal cost to get in on the action.
30/43
Realistically, I think this continues as long as the shitcoin meta is intact.
Fees to inscribe BRC-20 will continue to grind higher, but as long as it is +EV to mint, people will mint.
Eventually, supply will saturate, new coins will go nowhere, and the meta will shift.
31/43
Fees to inscribe BRC-20 will continue to grind higher, but as long as it is +EV to mint, people will mint.
Eventually, supply will saturate, new coins will go nowhere, and the meta will shift.
31/43
Nonetheless, for the time being...if you thought JPEG Ordinals were a nightmare for Bitcoin Maxis...
BRC-20 is like Dante's Fourth Circle of Hell.
The longer this continues, the stronger a reaction I expect from the purist side of Bitcoin's community.
32/43
BRC-20 is like Dante's Fourth Circle of Hell.
The longer this continues, the stronger a reaction I expect from the purist side of Bitcoin's community.
32/43
The potential solution isn't novel.
The panacea to network bloat has been discovered on other chains already:
Layer 2s.
BRC-20s are a great fit for L2s where the bloat does not constrict important L1 activity...and several Bitcoin L2s already exist.
33/43
The panacea to network bloat has been discovered on other chains already:
Layer 2s.
BRC-20s are a great fit for L2s where the bloat does not constrict important L1 activity...and several Bitcoin L2s already exist.
33/43
Could another token standard outpace BRC-20?
It's possible, but the window is shrinking.
BRC-20 is nearing escape velocity.
34/43
It's possible, but the window is shrinking.
BRC-20 is nearing escape velocity.
34/43
Remember Stamps, the Ordinals Theory competitor that stores inscription data in the essential part of the node as opposed to the Witness section?
Stamps are at 18,600 inscriptions.
Ordinals are at 3.4 MILLION.
Escape velocity.
35/43
Stamps are at 18,600 inscriptions.
Ordinals are at 3.4 MILLION.
Escape velocity.
35/43
BRC-20's traction hasn't stopped competitors from trying, including on Stamps itself with SRC-20.
ORC-20 is another protocol that attempts to migrate BRC-20s onto a more mutable version.
Lastly you have trustless.computer who implemented BRC-20 into smart contracts.
36/43
ORC-20 is another protocol that attempts to migrate BRC-20s onto a more mutable version.
Lastly you have trustless.computer who implemented BRC-20 into smart contracts.
36/43
To round out this thread, what are some BRC-20s to pay attention to?
Liquidity flowing into these coins will be indicative of broader gains across the ecosystem and likely draw in more participants.
(NFA – I own none of these coins at time of writing.)
37/43
Liquidity flowing into these coins will be indicative of broader gains across the ecosystem and likely draw in more participants.
(NFA – I own none of these coins at time of writing.)
37/43
The big three:
1. $PEPE. One of the earliest BRC-20s (4th deployed), even before ERC-20 $PEPE. $12M MC
2. $ORDI. The original BRC-20. $63M MC
3. $MEME (not to be confused with @Memeland). $6M MC
Expect a big splash if (when) the first BRC-20 hits a 9-figure market cap.
38/43
1. $PEPE. One of the earliest BRC-20s (4th deployed), even before ERC-20 $PEPE. $12M MC
2. $ORDI. The original BRC-20. $63M MC
3. $MEME (not to be confused with @Memeland). $6M MC
Expect a big splash if (when) the first BRC-20 hits a 9-figure market cap.
38/43
To recap this fat thread:
1. BRC-20 </> ERC-20
2. BRC-20s are mass-supply text-based Ordinals
3. The market is red hot with $10M+ volume and $106M market cap
4. UI/UX is moving at an incredible pace thanks to @unisat_wallet @ordinalswallet and others
(cont.)
39/43
1. BRC-20 </> ERC-20
2. BRC-20s are mass-supply text-based Ordinals
3. The market is red hot with $10M+ volume and $106M market cap
4. UI/UX is moving at an incredible pace thanks to @unisat_wallet @ordinalswallet and others
(cont.)
39/43
5. DEX capability will exponentially increase BRC-20 velocity and capital expansion
6. Mint pricing is determined by BTC fee rates meaning BRC-20s are the marginal fee setters on the network right now
7. This has caused a fee spike – L2s are a possible solution
(cont.)
40/43
6. Mint pricing is determined by BTC fee rates meaning BRC-20s are the marginal fee setters on the network right now
7. This has caused a fee spike – L2s are a possible solution
(cont.)
40/43
8. There are BRC-20 competitors but the window to scale up is closing
9. Watch the top MC coins for an indication of overall price action in the space
41/43
9. Watch the top MC coins for an indication of overall price action in the space
41/43
Congrats if you made it to the end of my hefty thread!
I invite you to mint my very own custom Metaveralist Badge: a free mint on Polygon.
@HelloMetaversal and myself will be giving out perks in the future for badge holders.
Link: mint.highlight.xyz/63fd0406d21c0bafe66b3f5f
42/43
I invite you to mint my very own custom Metaveralist Badge: a free mint on Polygon.
@HelloMetaversal and myself will be giving out perks in the future for badge holders.
Link: mint.highlight.xyz/63fd0406d21c0bafe66b3f5f
42/43
If you enjoyed this deep dive into BRC-20 shitcoins on Bitcoin, follow me @JamesonMah for more research at the intersection of NFTs, culture, and finance.
Would really appreciate a like/retweet on the first tweet below if you can:
43/43
Would really appreciate a like/retweet on the first tweet below if you can:
43/43
Mentions
See All
₿-Lane 🦢 @brendanlane00
·
May 6, 2023
Great thread on BRC-20s. My view: Ordinals are like 💩coins. You make them and try to get suckers to be exit liquidity. BRC-20s are like denominations of 💩coins. You can now have n "tokens" on a single ordinal, making it possible to sucker in a wider range of ppl Don't scam.