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News/EVM Inscriptions: Crypto's New Frontier or Network Nightmares?

EVM Inscriptions: Crypto's New Frontier or Network Nightmares?

Van Thanh Le

Dec 18 2023

6 months ago4 minutes read
Cute chibi cubic-styled humanoid robot with green and red design, animatedly interacting with blockchain inscriptions

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Inscription Boom: Crypto Mania or Fee Frenzy?

Forget tulips – EVM inscriptions impact crypto market significantly, marking inscriptions as the new crypto craze etching a digital footprint across EVM chains. On December 16, inscriptions' gas fee spending hit a record $8.3 million, as reported by Dune Analytics.   

Remember Avalanche? In a mere five days, its users willingly forked over a mind-boggling $13.8 million in Avalanche inscription fees to permanently inscribe data and images onto the blockchain. This isn't a whimsical fever dream; it's a crypto revolution disguised as digital graffiti, and EVM chains like Avalanche and Polygon are ground zero.
Source: @hildobby/ Dune

So, what exactly are these "inscriptions," often misunderstood? Here’s an inscriptions definition: Picture Bitcoin Ordinals, those controversial NFT-like creations etched directly onto the Bitcoin blockchain, but imagine them sprinkled with the smart contract magic of Ethereum Virtual Machine (EVM) chains. 

On EVM chains, BRC-20-type tokens and similar data are stored in “calldata” during transactions. This method, being read-only and cheaper than storing data in smart contract states, ensures that all transaction details and NFT metadata are kept on-chain. This approach not only enhances accessibility but also remains cost-efficient due to the on-chain transmission of “calldata.”

But how does it work? Imagine a blockchain transaction as a letter, and the information you're sending as the message. Inscriptions are like hidden notes tucked discreetly within the call data, the envelope of that letter. These notes, containing small amounts of metadata like images or text, essentially form smart contract-based non-fungible tokens (NFTs). 

Hand holding a transparent, glowing tablet displaying a rotating 3D model of an inscription-based token.webp

So, why the sudden frenzy? Is it pure crypto mania, the thrill of pushing boundaries, or is there something more brewing beneath the surface? The answer, like most things in crypto, is a complex cocktail. 

Novelty plays a part – the sheer audacity of permanently etching your cat picture onto the blockchain is undeniably cool. Speculation also adds spice to the mix – could these inscriptions, like digital Mona Lisas, become valuable collectors' items in the future? Don’t forget that OKX's NFT marketplace has outperformed Blur and OpenSea with a $50.33 million 24-hour trading volume today, driven by the trading of Bitcoin Ordinals NFTs.

But more importantly, a glimmer of potential utility peeks through the hype. Imagine embedding legal documents, medical records, or even fractional ownership deeds directly onto the blockchain, all secured by the immutable magic of cryptography. This opens doors to groundbreaking possibilities like decentralized identity systems and tamper-proof record keeping.

This inscription boom begs the question: are we witnessing the birth of a revolutionary new way to interact with the blockchain, or a fleeting fad fueled by gas-guzzling FOMO? Concerns about scalability, similar to those surrounding Bitcoin Ordinals, linger. Only time will tell, but one thing's for sure – the crypto landscape is shifting underfoot, and inscriptions are the seismic tremors we're feeling now.

The Avalanche of Fees: Network Overload or New Revenue Stream? 

The inscription boom on Avalanche has unleashed a torrent of activity, but with it comes a tidal wave of gas fees. As Kevin Sekniqi aptly reported, Avalanche's C-Chain is currently burning a staggering $12.65 worth of AVAX every second, primarily fueled by inscription transactions. 

This translates to a 4x increase in on-chain activity, with daily transactions soaring past 2.3 million compared to the pre-inscription average of 450,000. Inscriptions have consumed a whopping 75.12% of Avalanche C-Chain's gas over the past week, while accounting for 87.49% of transactions with 1084 actively inscripted collections, highlighting their undeniable impact on the network.

Source: Snowtrace

But is this fee frenzy a network nightmare or a potential goldmine? On the one hand, it undeniably strains the network, raising concerns about congestion and potentially deterring casual users. Avalanche currently dominates the inscription scene, capturing 99.85% ($1.228 million) of the gas spent across all tracked blockchains at midnight on December 18, 2023. This concentration raises anxieties about scalability and future fee spikes. (2).png
Source: @hildobby/ Dune

However, the fee surge paints a different picture from a revenue perspective. Inscription fees serve as a direct burn mechanism, steadily removing AVAX from circulation. This, in theory, can contribute to long-term price appreciation and network security. 

Additionally, Avalanche remains a top contender in the inscription arena, ranking #3 by number of inscriptions (62 million) and #4 by number of inscriptors. This popularity suggests potential traction and future adoption, which could translate into a new and sustainable revenue stream for the network. (1).png
Source: @hildobby/ Dune

Ultimately, the Avalanche of inscription fees presents a double-edged sword: a potential network strain on one hand and a new revenue channel on the other. Whether it's a fee frenzy or a network fuel cell, only time will tell how this inscription tidal wave shapes the future of Avalanche and the broader EVM Inscriptions Impact Crypto Market.

Beyond the Hype: Unpacking the Potential of Inscription-Based Tokens

Innovation or Gimmick? Beyond the meme-fueled frenzy, inscriptions offer intriguing possibilities that go far beyond novelty. Imagine enhanced asset uniqueness and traceability with data like provenance, ownership history, or unique identifiers embedded directly on-chain. This is particularly relevant for NFTs, where verifying authenticity is crucial. Inscriptions can act as digital certificates, forever tied to the asset and easily accessible on the blockchain.

But the real game-changer lies in efficiency and cost-effectiveness. By storing data in transaction calldata instead of executing complex smart contracts, inscriptions offer a cheaper, faster alternative. This opens doors to multi-chain functionality and trading, as platforms like Allins create inscription AMMs across various EVM chains. Imagine seamless swaps and transactions of inscription-based assets, potentially boosting activity across the entire blockchain ecosystem.

Abstract representation of the Avalanche blockchain as an icy landscape with crystal-like peaks and valleys.webp

However, challenges remain. The reliance on off-chain indexers and potential for spamming raise concerns about long-term viability. The blockchain community needs to address these issues to ensure inscriptions evolve sustainably and integrate seamlessly with decentralized applications and token ecosystems.

A look at the numbers paints a compelling picture. Polygon has emerged as the undisputed leader, with over 76% of all inscriptions happening there and a staggering 133,000 users contributing to 109 million inscriptions. Gas costs spent on inscriptions reached a peak of over $800,000 before leveling off. This surge has even pushed inscriptions to account for 69% of all Polygon transactions in the past week. 

Fantom, the second-ranking entity in the EVM chain, has a far smaller number of inscriptions—26 million—than its competitors. Interestingly, the OKT altcoin experienced an 80% surge on December 10 coinciding with an inaugural inscription-minting event, highlighting the potential market interest in these novel assets.

okt txs.webp
OKT Chain transactions soared to 7.2M on December 8. Source: OKLink

While the inscription boom might leave some scratching their heads, the underlying technology holds immense promise. From enhancing asset security to facilitating efficient cross-chain transactions, inscriptions have the potential to reshape the way we interact with digital assets and redefine the future of blockchain technology.

Here's a quick table summarizing the key potential and challenges of inscription-based tokens:

Enhanced asset uniqueness & traceabilityReliance on off-chain indexers
Cost-effective data storage & transactionsPotential for spamming & network congestion
Multi-chain functionality & tradingLack of composability with existing DeFi protocols

These are just the initial steps on an exciting journey. As inscriptions evolve and the community addresses the challenges, their impact on the Future of Inscription-Based Tokens and the broader Bitcoin Ordinals Analysis landscape will be fascinating to watch.

Is the Ink Dry on EVM Inscriptions? Predictions for the Future

Futuristic digital cityscape representing EVM blockchain.webp

Sustainable Mania or Passing Fad?

The future of EVM inscriptions hangs in the balance, teetering between a sustained revolution and a fleeting fad. Several key factors will determine their trajectory:

  • Chain Dominance: The current landscape, with Polygon, BNB Smart Chain, zkSync, and Avalanche leading the charge, bodes well for longevity. A strong user base and active inscription activity on these dominant chains provide a stable platform for future growth.
  • EVM Compatibility and InteroperabilityThe ability to seamlessly move inscriptions across EVM chains is crucial. Developers can then easily migrate smart contracts and dApps, boosting inscription usability and lifespan.
  • Technical Challenges and Scalability: Concerns about scalability remain, as storing metadata in call data can strain network resources. Addressing indexing, compatibility, and integration issues will be key to overcoming these hurdles.
  • Market and User Trends: The surging market demand and growing user base on inscription-heavy chains like Polygon indicate a sustainable trend. As long as this momentum continues, inscriptions are here to stay.
  • Gas Fees and Smart Contract Interactions: The recent gas spikes highlight the increased activity level surrounding inscriptions and smart contracts. This dynamic, if maintained within manageable limits, suggests a bright future for both technologies.

The Crystal Ball of Crypto

Looking ahead, EVM inscriptions could significantly impact the crypto landscape in several ways:

  • Tokenization: Inscriptions offer a novel way to tokenize real-world assets and digital goods, potentially revolutionizing the way we own and trade them.
  • Network Fees: While the current gas spike is a concern, future scalability solutions could make inscriptions a cost-effective alternative to traditional smart contracts.
  • Broader Crypto Trends: The adoption of inscriptions could drive further innovation in the blockchain space, leading to the development of new applications and use cases.

Ultimately, the ink on EVM inscriptions is far from dry. While challenges remain, their potential to reshape the crypto landscape is undeniable. As the technology evolves and adapts, their impact will undoubtedly continue to grow, leaving a permanent mark on the digital future.

The Inscription Crossroads: Boon or Bust for the EVM Market?

Imaginative depiction of a blockchain network as a cosmic galaxy.webp

EVM inscriptions are an audacious experiment rewriting the rules of blockchain interaction. They offer a tantalising glimpse into a future where data, identity, and even ownership reside directly on-chain, potentially revolutionizing various industries. 

But this nascent technology faces steep cliffs – scalability concerns loom large, and gas fees threaten to turn this frontier into a toll road for the privileged few. Only time will tell whether EVM inscriptions become a cornerstone of the EVM inscriptions' impact on crypto market or fade into a footnote of blockchain history. 

One thing's certain: the inscription boom has irrevocably cracked open the Pandora's Box of on-chain possibilities, and the echoes will resonate for years to come. Are we ready to embrace the data-etched future, or will it crumble under its own weight? The debate, and the inscriptions, are just beginning.

FAQs About EVM Inscriptions

1. What exactly are EVM inscriptions?

Imagine embedding data (images, text, even legal documents) into the call data of an Ethereum-compatible blockchain transaction. That's essentially what EVM inscriptions do, creating unique, on-chain assets like smart contract-powered NFTs. Think of them as Bitcoin Ordinals' programmable cousins!

2. Why is everyone suddenly talking about them?

EVM inscriptions have exploded in popularity due to their diverse potential. Think fractional ownership of real estate tied to an inscription, or permanent, verifiable records of provenance for artwork. This opens up a galaxy of new use cases beyond simple NFTs.

3. Where can I learn more about EVM inscriptions?

Dive into the rabbit hole! Check out Dune Analytics for inscription activity data, follow projects like Ordinals Protocol and Raretoshi on Twitter, and stay tuned for in-depth analyses from trusted crypto news outlets.

4. Should I jump on the inscription bandwagon?

DYOR (Do Your Own Research)! Explore the potential, understand the risks, and invest responsibly. Remember, crypto is a wild ride, and inscriptions are the latest rollercoaster adding to the thrill. Buckle up and enjoy the journey!

This article has been refined and enhanced by ChatGPT.

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