GM, this is your Daily Bolt briefing.
Are you curious about all the activity suddenly taking place on top of Bitcoin? Many DeFi natives long saw BTC’s main use case as being ‘digital gold‘. While BTC traditionally has not been a place for innovation or developer activity, this has trend has begun to buck, with new BTC primitives being built on top of the Bitcoin Network.
From Bitcoin L2s to BRC-20 memecoins, to DeFi dApps and NFTs built on Ordinals, the Bitcoin ecosystem is more exciting than ever. Read our briefing below to learn all about the main narratives around Bitcoin scaling, concerns and criticisms, and more.
We’ve also included notes from Polygon Co-Founder Mihailo Bjelic on the Polygon zkEVM’s progress so far, what the team is working on, and why private blockchains are important.
Stay Vigilant⬇️
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1/ Unchained Podcast Ep. 493 - Bitcoin’s BRC-20 Mania
Preview: In this episode of the Unchained podcast, Host Laura Shin is joined by Dan Held and Trevor Owens to discuss the breakneck rise of BRC-20s, and why they’re both bullish on what meme coins mean for the original blockchain and more! Click here to listen to the full episode (106 mins).
Read our Note (14 mins) and save 94 mins.
Here are some key takeaways:
Dan provides an overview of Bitcoin Ordinal theory. He explains that Ordinals refer to the ordering of Satoshis, a process that attributes an order value to them. This represents a shared social consensus on the sequence of Satoshis. He also introduced the concept of inscriptions, which involve embedding data onto specific Satoshis, such as videos, audio, JPEGs, or code. He clarifies that Ordinals have broadened in usage to encompass Bitcoin NFTs and DeFi-like components, with BRC-20 representing meme coins.
Dan extends the discussion by acknowledging Bitcoin's trade-offs for preserving decentralization at the cost of higher throughput. He commends Ordinals for elegantly handling these trade-offs, particularly in NFTs, which he argued made Bitcoin potentially a superior platform for artistic and community-focused NFTs. He highlights the immutability of Bitcoin NFTs and their value as original assets on-chain.
Trevor went on to describe a unique aspect of BRC-20s, which is the addition of smart contracts to Bitcoin through node software. This doesn't involve on-chain logic like with Ethereum. Instead, the Ordinals node facilitates the reading of the inscription space for BRC-20s.
Dan offers a non-technical perspective, noting that BRC-20s hit a market cap of a billion dollars in a short time. He attributes this rapid growth to speculative interest that users of other chains wanted to bring back to Bitcoin.
Dan explains the minting process of BRC-20s, noting that the person who comes up with the four-character BRC-20 first gets to set the parameters for the total supply. This minting process is considered fair because it is open and requires on-chain transaction fees.
Dan further suggests that transaction fees on the Bitcoin network are expected to rise over time, and higher transaction fees on L1 would signify a healthy fee market. This could eventually replace the block reward for Bitcoin miners.
Dan is critical of some members of the Bitcoin community who he believes have misled users in developing countries by presenting Bitcoin as a cheap way to send payments. He insists that rising transaction fees on L1 were always expected and that Bitcoin can still be useful for people in these regions if they transact on L2 instead.
Laura states that the trading of BRC 20 tokens is leading to a significant rise in transaction fees, even pushing up the number of unconfirmed transactions to unprecedented levels. She mentions that Binance even had to pause Bitcoin withdrawals. Some in the Bitcoin community are referring to this as a DDoS attack on Bitcoin.
Dan explains the opposing viewpoint, characterizing it as suggesting these transactions are "spam" because they're not typical transactions. He criticizes this view as trying to subjectively determine what transaction types are valid. Despite being entirely legitimate according to the protocol and the code, the opposition claims these transactions are non-valid and are spamming the network.
Trevor disagrees, asserting that the original intention is hard to know and any disruptive product evolves over time. He believes that critics fail to understand that the use case is not just payments, but store value. Trevor argued that until people hold the majority of their wealth in Bitcoin, it won't be used daily for payments. He used the example of Twitter's evolution from a blogging tool to a real-time information exchange platform to illustrate his point.
Dan explains that even Satoshi used the Bitcoin protocol to inscribe messages onto the Bitcoin blockchain. He pointed out that many early Bitcoin pioneers, including Hal Finney, were advocates of digital collectibles, which were precursors to NFTs. Dan believes that Satoshi, being open to all use case types, would likely be excited about the creative uses of Bitcoin today.
When asked by Laura about what needs to be developed for this ecosystem to flourish, Dan mentions integration into different wallets and exchanges, expecting widespread support for Ordinals across all major wallets and exchanges by the winter of this year.
Trevor agrees with Dan and also highlights the impressive pace of adoption and development for Ordinals since its inception in January of the same year. He sees organic growth as a positive sign and believes that the fundamental building blocks are already in place for more development and experimentation in the space.
2/ The Defiant - Polygon Co-Founder Mihailo Bjelic on Polygon zkEVM
Preview: In this episode of The Defiant, Tegan Kline is joined by Mihailo Bjelic to discuss the zkEVM launch, Polygon's brand deals, and Bjelic's outlook for 2023! Click here to listen to the full episode (51 mins).
Read our Note (14 mins) and save 37 mins.
Here are some key takeaways:
Mihailo Bjelic is a Co-founder of Polygon, a scalable and interoperable layer-2 platform, enabling high-performance blockchain networks while maintaining the benefits of Ethereum's robust ecosystem.
Mihailo Bjelic shares his primary focus at Polygon, emphasizing his involvement with protocol design and tech strategy, while also contributing to strategic decisions and special operations.
Mihailo Bjelic explains that Polygon zkEVM, which has been on the mainnet for about a month and a half (Polygon zkEVM launch date is March 27, 2023), is a significant achievement for the team. He describes zkEVM as the "holy grail" of Ethereum scaling or blockchain infrastructure because it offers three critical properties: security, scalability, and EVM compatibility.
Despite the initial predictions of 3-5 years for a production-ready zkEVM, Polygon's team delivered it in about 18 months, thanks to their engineering and cryptographic breakthroughs.
He shares that their team made engineering and cryptographic breakthroughs which improved the cost efficiency and scalability of zkEVM. As a result, they were able to launch it in a practical and efficient manner.
Bjelic mentions that while Polygon zkEVM has been stable on the mainnet so far, they are proceeding cautiously. They aim to be responsible with this complex technology, but overall, they are thrilled with its progress.
Bjelic argues that privacy will become important for both enterprises (for legal and business reasons) and regular users (for personal reasons). He states that the current financial system operates privately and it's not optimal for everyone's transactions to be visible on the blockchain.
He goes on to explain that once they realized privacy would likely become the next big requirement, and that ZK technology could also address this, they decided to go "all in" on ZK. They published the Polygon ZK thesis and committed $1 billion from their treasury to ZK-based technology and efforts.
Mihailo Bjelic acknowledges that the scaling of Polygon zkEVM is not as high as they would like it to be, with only about one order of magnitude improvement in throughput and costs compared to Ethereum at present.
He emphasizes that this is just the first iteration of zkEVM and that both the Polygon and Ethereum roadmaps are heading toward making zkEVM more scalable and affordable.
Bjelic highlights that they're now focusing on cost optimization and throughput, noting that ZK-based solutions have several beneficial properties.
He points out that if anyone is building a ZK rollup, you don't need to submit signatures on-chain because you can prove all transactions were validly signed. This could save a lot of gas, making transactions cheaper.
Bjelic discusses future improvements and how Ethereum is moving forward with EIP-4844, which would make data availability for rollups like zkEVM exponentially cheaper and more scalable.
Bjelic mentions the launch event as emotional and successful, with Vitalik Buterin joining and making the first transaction. Importantly, the network has remained stable without any incidents or downtime since launch.
Despite the successful launch, Bjelic mentions their team is still concentrated on improving and strengthening the network, maturing the code, and resolving bugs. The launch is seen as a significant milestone, but they remain focused on enhancing security.
aiPX is the official sponsor of the Daily Bolt by Revelo Intel
In a post-FTX world, securely trading with leverage and earning real yield in a decentralized manner has never been more important.
aiPX offers cutting-edge risk management for liquidity providers, leverage trading, and a suite of products between perpetuals, binary options, and synthetics.
Earn passive yield and trade with leverage straight from your wallet.
Take the step, join aiPX.