BRC20 Ecological Recovery? Is it a new prologue or an illusion

By ChandlerZ, Foresight News

On February 24, Bitcoin's on-chain gas fees rose significantly after a long period of low operation, climbing from the previous average of 1-2 satoshis/byte to more than 12 satoshis/byte on high priority. A few weeks ago, the Bitcoin mempool was completely emptied for the first time in nearly two years, but the number of unconfirmed transactions has now climbed back to more than 100,000.

According to Geniidata data monitoring, on-chain minting activity has been highly concentrated in the last 24 hours, with a primary focus on the MASK project.

The total amount minted by MASK is 2.1 million, each containing 10 tokens, and the current market price remains around $0.18, with a total market cap of about $3.06 million. As of the latest data, the project's minting progress has reached 82.69%, and this increase in activity has sparked widespread discussion in the market about the possibility of a new round of recovery for the BRC-20 ecosystem.

From the perspective of the market's deep logic, the current cryptocurrency market is at a special point in time. At a time when the conspiracy theories of the Solana ecosystem and the BSC ecosystem are widely questioned, the BRC20, symbolizing 'fairness' to some extent, seems to have reignited market attention. However, the market's memory has not faded over time, and the intense fluctuations in the Bitcoin ecosystem in the past still cast a shadow over the market.

I saw him rise up a tall building, and I saw his building collapse

According to The Block's data, since April 20, 2023, driven by the BRC-20 ecosystem, the number of transactions on the BTC network has begun to rise sharply, and the transaction volume has increased by nearly 1 times in less than a month. The rise in transaction fees has been even steeper, rising nearly 10 times in less than half a month. During the most active phase of the BRC-20 ecosystem, more than 70% of the transactions on the Bitcoin chain were related to the BRC-20 project.

Behind this façade of prosperity lies a fragile ecological foundation. After entering 2024, the Bitcoin ecosystem will gradually fall into a downturn, and this shift actually reflects the deep dilemma of the market for the Bitcoin application layer. Although the market once had high hopes for the Bitcoin ecosystem, believing that innovation based on the inscription protocol could inject new vitality into the Bitcoin network, the actual development trajectory has deviated greatly from expectations.

Looking back at the development of the BRC20 ecosystem, we have to face a harsh reality. Most early popular projects have experienced significant price pullbacks. ORDIs dropped from a high of $87 to $11, while Sats dropped from 0.00000086 to 0.00000012. Other projects, even NFTs in the Bitcoin ecosystem, can be said to have experienced a decline of up to 90%. They have long been "reset", with only a few projects with a strong community culture, such as 𝛑, remaining.

This phenomenon is not accidental, but an outward manifestation of deep-seated market structural problems. The BRC20 protocol is designed with "authenticity and fairness" as its core concept, and attempts to provide all market participants with truly equal opportunities to participate through a fully transparent on-chain mechanism, eliminating the reservation and scientist mechanism. This design does achieve maximum decentralization in theory, but in practice it exposes significant limitations.

The Paradox of Fairness and Control

From the perspective of market structure, the scientist mechanism and the initial chip distribution system in traditional crypto projects are essentially a market adjustment tool. These mechanisms, while often criticized as centricity, play an indispensable role in maintaining market stability. Through these mechanisms, the project team can regulate market fluctuations to a certain extent and provide necessary price support for the long-term development of the project.

However, the BRC20 ecosystem's completely open minting mechanism, while maximizing the fairness of participation, also leads to a high degree of fragmentation of the chip structure. In the absence of an effective price support mechanism, market volatility tends to be more dramatic. In this case, when there is a shift in market sentiment, it is easy to have a chain reaction that leads to a rapid decline in prices.

The deeper problem lies in the motivation of big money to participate. In traditional crypto projects, large funds can influence market trends through various mechanisms to obtain benefits. However, under the inscription mechanism of the BRC20, this operating space is greatly compressed. When these so-called "bookmakers" or "institutions" find it difficult to establish effective chip control, they naturally choose to turn to other markets where money management is easier. This creates a paradox: the pursuit of absolute fairness can lead to market instability, which in turn harms the interests of all participants. In this case, the market needs to find a balance between complete fairness and the necessary market stability.

The resurgence of the MASK project shows to some extent that the market's yearning for a fair mechanism has not completely faded, regardless of whether the project is still a "shooting star". However, how to establish an effective market stability mechanism while maintaining basic fairness is still the core challenge facing the entire crypto ecosystem. This requires innovation at the protocol design level, which may require the introduction of new mechanisms to balance the seemingly contradictory goals of decentralization and market stability.