The ongoing inscription hype has fueled growth for EVM networks, with nine chains reaching new transaction pinnacles.
Inscription refers to a process that transforms individual satoshis, the smallest units of Bitcoin, into unique digital artifacts. The goal of inscriptions is to add utility to the Bitcoin blockchain. By embedding images or data directly into the calldata of Bitcoin transactions, inscriptions create a new dimension of NFTs that reside directly on the blockchain itself.
There are loads of ways to use this tech to record content on blockchains. However, it can lead to higher prices in some cases.
Keypoints
- Inscription frenzy fueling new transaction records on 9 chains like Arbitrum and BNB Chain. 83-97% of transactions now involve inscriptions.
- Alongside soaring volumes, fees spiking substantially. Avalanche inscription fees hit $14M in 5 days, 70% of total.
- Causing gas price hikes and frequent network outages. Underscores need to advance scalability.
- Addresses engaged in inscriptions exponentially grew from 50K to 180K.
- Trend started on Bitcoin and Polygon. Now adopted by other major chains like Dogecoin, Solana, Avalanche.
Transaction Volumes Hit Year-end Record
The ongoing inscription frenzy has led to an unprecedented explosion of activity on platforms like Arbitrum and BNB Chain. It’s particularly positive after the market suffered an extended setback with decreased network activities.
Data researcher “hildobby” from crypto-focused investment firm Dragonfly reports that Goerli, zkSync, Arbitrum, Gnosis and the BNB Chain are not only experiencing surging transaction volumes but also setting new benchmarks.
Daily peaks reveal a staggering statistic: 83-97% of all transactions on these platforms involve inscriptions. In November, the surge happened on other chains, including Fantom, Celo, Avalanche, and Polygon; all reaching new transaction peaks.
Data from Dune Analytics shows that in December, Optimism and Avalanche broke new ground by setting hourly transaction records. Optimism soared to a remarkable 87,960 transactions per second (TPS) on December 19, while Avalanche achieved a 289,285 TPS on December 18.
In comparison to historical data, the inscription hype also drove prominent networks to transaction highs in the last two years.
Transaction Fees and Gas Fees Soar
Not only do transaction volumes see peaks, transaction fees also soar. On December 6, Ordinals inscriptions reportedly led to fee hikes and network congestion.
The concept of inscriptions takes NFTs to a new level by permanently tying them to specific units of a cryptocurrency, instead of existing as standalone digital assets. This inscription craze is proving a boon for miners and validators, driving significant financial benefits through increased network activity.
But the inscription boom’s bright promise comes with a dark cloud. The pressure it exerts on existing blockchains is starkly evident in the frequent and disruptive outages plaguing networks like Arbitrum, zkSync, Cronos, and Celestia.
Ava Labs co-founder Kevin Sekniqi noted a high transaction volume for Avalanche’s C chain. He additionally emphasized the technical challenges posed by the inscription craze and the need for continued development in blockchain technology to handle increased demand.
The Avalanche network has witnessed a surge in inscription-related transaction fees, reaching a record high of $5.6 million on December 16. Between December 12 and 17, the collective fees for inscriptions soared to nearly $13.8 million, accounting for a staggering 70% of total blockchain transaction fees.
This influx has also caused a sharp increase in gas fees, with averages surpassing 500 gwei and even reaching as high as 5,000 gwei for transaction validation on Avalanche. Arbitrum, another network experiencing inscription activity, has also observed a rise in fees, with $3 million spent in just three days.
As the number of addresses engaging in inscriptions has expanded exponentially from 50,000 to 180,000, networks such as BNB Chain, Avalanche, and zkSync Era are solidifying their positions as primary venues for this burgeoning phenomenon.
The inscription boom kicked off in early November on the Polygon network, with a surge in users minting PRC-20 tokens with custom text “POLS.” This initial spark on Bitcoin, where inscriptions first rose to prominence, ignited a wider trend.
The unique fusion of NFT-like properties with individual cryptocurrency units captivated other chains, such as the adoption of DRC-20 for inscription functionalities within the Dogecoin ecosystem, or SPL-20 on Solana, ASC-20 on Avalanche, FRC-20 on Fantom, or STX-20 on Stacks.
