Technology-Driven Finance: The Underlying Logic Behind the Hype of Inscriptions
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Technology-Driven Finance: The Underlying Logic Behind the Hype of Inscriptions
The development of inscriptions has certain progressive significance for Bitcoin, but for other public chains or Layer2 solutions, it is more like an application performance test.
Navigating Web3 tides with focused insightsBy Asher Zhang, TechFlow
Currently, inscription tokens lack practical utility and are similar to memes. So what is driving the surge in these inscription tokens? What's the underlying logic behind this phenomenon? How do Bitcoin-based inscription tokens differ from those on public blockchains? And how might inscription tokens evolve differently in the future?
The Underlying Drivers Behind the Inscription Token Frenzy
How can one identify valuable or potentially hyped-up tokens? The author adheres to a core belief—technology drives finance. Many tokens that experience sustained price surges are often linked to technological advancements. Alongside wealth-effect-driven FOMO, early interesting tokens often emerge during such periods. However, when technology stagnates or hits bottlenecks—and speculation becomes excessive—corrections inevitably follow. From the brief history of inscriptions, representative inscription tokens include Ordi, sats, rats, Atom, and Pipe, each reflecting different stages in the evolution of inscription protocols.
At the end of 2022, Bitcoin core contributor Casey Rodarmor launched the Ordinals protocol. On March 8, 2023, an anonymous developer known as @domodata introduced BRC-20 based on Ordinals, with Ordi becoming the first BRC-20 token. After Ordinals' release, another anonymous developer launched the Atomicals Protocol in September. On September 26, Casey announced Runes, a fungible token protocol built on Bitcoin. These two protocols represent significant improvements over BRC-20 by leveraging UTXO technology, making Atom more favorably viewed by the market. Additionally, a community developer named Beny successively released LooksOrdinal (a non-tokenized BRC-20 minting tool), Tap Protocol—an improved version of BRC-20 focused on OrdFi—and Pipe, an enhanced version of Runes.
Beyond these tokens tied to inscription protocol development, sats shares its name with the smallest unit of BTC (a strong naming advantage) and also serves as gas for Unisat’s L2 BRC20-swap. Rats is a leading meme token under the "zoo" theme, enjoying strong community consensus—likely appealing to enthusiasts who previously favored zoo-themed tokens.
From the above analysis, it's clear that truly valuable—or hype-worthy—tokens still have some connection to technological progress. Approaching inscription tokens from this angle may offer greater potential for substantial gains. Simply copying existing inscription tokens is unlikely to attract broad attention. In addition, tokens with solid community support and real use cases deserve attention—rats and sats being prime examples.
Impact of the Inscription Boom on Mainstream Public Blockchains
From a practical standpoint, inscriptions represent a progressive step for Bitcoin. After modest network scaling, they demonstrate a novel use case. Previously, Bitcoin core developer Luke opposed inscriptions—not because he rejects innovation per se, but because he objects to their implementation directly on Bitcoin’s base layer. He does not oppose Layer2 solutions like the Lightning Network or sidechains. However, for other public blockchains, inscriptions are essentially technologically meaningless; the hype surrounding them is largely financial bandwagoning. Ultimately, inscription tokens on public blockchains are highly likely to go to zero.
Currently, although inscription tokens on public chains lack utility, they serve as stress tests for various blockchain networks. In fact, the blockchain industry has yet to produce any true breakout applications. Without such applications, most public blockchains’ performance remains untested. Without proven high performance, they remain conceptual and speculative for developers and users alike. The inscription craze, however, provides a valuable real-world test, offering reference data for future killer apps. Let’s examine how different chains have performed:
Modular blockchain Celestia launched its first inscription project, CIAS. Within one hour of opening the mint, it received over 1 million visits from more than 120,000 users. Over 50% of transactions on Celestia were related to CIAS. Subsequently, the team announced RPC failures and temporarily suspended the mint.
On December 8, Tonado introduced an inscription protocol, causing a sharp spike in on-chain activity. TON network transaction processing suffered prolonged delays. According to blockchain monitoring bot dTON, starting December 5, TON-20 inscriptions generated over 2 million transactions within just half an hour, increasing network utilization by 61x. This sudden traffic surge severely congested the TON network, with verification significantly delayed despite ongoing block production by validators.
Public chain Conflux underwent a similar stress test. Data from ConfluxScan shows that due to inscription activity, Conflux recorded 1.788 million transactions on December 15, with 17,700 active accounts that day.
On December 18, Trader Joe, the largest DEX on Avalanche, co-founder @cryptofishx announced the launch of asc-20 standard inscription (Avascription) BEEG, indirectly turning Avalanche’s inscription projects into performance testers.
On December 16, Arbitrum officials reported that the Arbitrum One sequencer stopped operating at 10:29 AM Eastern Time due to a surge in user traffic caused by inscription protocols, resulting in network downtime. According to Arbiscan data, Arbitrum’s daily transaction count spiked to 4.39 million on December 15, setting a new record. Similarly, zkSync, another major Layer2, experienced a brief “outage” on December 17 during SYNC inscription minting.
Inscription minting is technically simple—essentially a zero-value transfer transaction. Yet, data shows that nearly all chains experienced congestion or outages amid sudden user influxes. During the early stages of a bull market—when participation is still limited to crypto-native users—mainstream public blockchains clearly have much room for improvement. Only then can they seize opportunities when Web2 users begin to join en masse.
Future Development of Inscription Tokens
The rise of inscriptions holds certain progressive significance for Bitcoin, but for other public blockchains or Layer2s, it resembles little more than an infrastructure stress test. From a value perspective, the current mania around inscriptions is merely an appetizer signaling Bitcoin’s tentative move toward application expansion. Ultimately, on-chain inscriptions will likely disappear—Bitcoin core developer Luke has already made this stance clear. In the long run, Bitcoin’s truly valuable application space will reside in Layer2 and sidechain innovations. For other public blockchains, we are currently in a critical phase of application development. Creating decentralized apps capable of challenging traditional Web2 applications is no easy task. During this “gap period,” the hype around inscription tokens on mainstream blockchains should be seen primarily as performance testing for infrastructure—with a very high probability of eventual collapse. As for Bitcoin-based inscription tokens, they may eventually compete with meme tokens like Doge.
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