1. Review of the dispute
1.1 Technical Background
What is BRC-20
BRC-20 is a fungible token (Fungible Token, compared to NFT, Non-Fungible Token) protocol on the Bitcoin chain. Developers can issue coins, keep accounts, and perform other operations based on this protocol.
The relationship between Bitcoin Chain, Ordinals and BRC-20
BRC-20 is a meta-protocol, built on top of Ordinals; using the Ordinals protocol as a complete data availability layer, with off-chain indexers to determine the meta-protocol state;
Ordinals is also a meta-protocol, built on top of Bitchain; it uses the Bitchain protocol as a complete data availability layer, with an off-chain indexer to determine the meta-protocol state;
Therefore, BRC-20 is actually a meta-protocol, which implements the financial behaviors mentioned in 1.1.1 through a mechanism called "Index" (see 1.1.3 for details).
Index
Indexing is a mechanism based on the bit chain mechanism.
Because the tokens on the Bitchain are different from the Ethereum chain, they are not "real" tokens distinguished by contract addresses, but transaction information recorded in the "ledger" in the "Notes" field in each block in text form. Due to the decentralized nature of the Bitchain, anyone can package and upload block content, and the "Notes" field information does not affect the validity of the block, so there are valid/normally functioning ledgers and invalid/malicious ledgers. In order to maintain the order of information, certain rules must be followed to collect and verify these ledger information. The verification process is indexing. The program that executes the verification process (called a smart contract on the Ethereum chain) is the indexer.
The Indexer is a database that reads and registers all BRC-20 transaction data, such as checking which inscription is the first to deploy a new token, tracking changes in wallet balances of minted tokens, and related transaction address data. The rules applied by the Indexer are the consensus reached by all parties involved.
Jubilee Upgrade
The name of an Ordinals protocol upgrade that occurred on block #824,544 on January 5, 2024. The specific content is to update the Ordinals protocol to version 0.13. Version 0.13 is a routine but non-regular update of Ordinals, and its main content is to further enrich the protocol functions.
Figure 1-1 Ordinals 0.13 update content (1) (Source: Ordinals Github page)
Figure 1-2 Ordinals 0.13 update content (2) (Source: Ordinals Github page)
It should be noted that the content of this Ordinals update is not directly related to the indexing issue. The source of this dispute is [BRC-20 generates different indexing standards based on Ordinals 0.8 and 0.9, resulting in inconsistent indexing results, which may lead to greater differences in future versions] and [BRC-20 protocol standards have been frozen at 0.9] (see 1.2.1 for details).
1.2 Issues and Disputes
technical problem
As mentioned above, although the technology of Bitchain itself is no longer developing, Ordinals, as a meta-protocol, has its own technology iteration and update. This iteration will naturally affect the protocols and ecological development on it, including BRC-20.
In November, a proposal put forward by Domo, the founder of the BRC-20 protocol, has come into effect on the chain. The content of the proposal is to [standardize and freeze the BRC-20 index based on Ordinals 0.9] (paraphrased), aiming to maintain the stable operation of the protocol and avoid blind iterations that may cause unexpected impacts on technical standards and protocol operations.
In October, it was discovered that inscriptions#35321413and#35329860could be indexed by the 0.9 version of the Ordinals protocol, but not by the 0.7 and 0.8 versions. Because different markets use different versions of the Ordinals protocol, some inscriptions cannot be correctly indexed in some markets, and this has caused a de facto inscription number shift.
For the BRC-20 protocol as a whole, this problem is even bigger. The bug in the 0.8 version of the Ordinals protocol may lead to: 1) minting exceeding the maximum supply; 2) double spending between different versions of the Ordinals protocol in different markets. This type of risk cannot be ignored.
Ecological issues
BRC-20 is a protocol that "parasitizes" on the Ordinals protocol. Whether its index should be upgraded along with the Ordinals protocol is a dilemma at this stage. On the one hand, the Ordinals protocol is still being updated and iterated rapidly, and more and more new features are being added to the protocol, especially the "Jubilee" upgrade will be activated at block height 824544. The original way of generating curse inscriptions will be fixed, which means that curse inscriptions that will be assigned negative numbers in the 0.9 version of the Ordinals protocol will be assigned positive numbers in the 0.13 version. The difference in the versions of the Ordinals protocol will cause a great difference in the numbering of subsequent new inscriptions.
In addition, the modified BRC-20 protocol, such as CBRC-20, which uses the new features of the new version of the Ordinals protocol to bring performance optimization, also poses certain challenges to the development of BRC-20.
On the other hand, as a protocol that has already produced a large number of assets with huge market capitalization, BRC-20 naturally has to maintain stability during its development. If the optimization and expansion of BRC-20 brought by the pursuit of new features causes the loss of users' assets, it will undoubtedly cause great harm to the BRC-20 ecosystem.
Therefore, under the dual blessing of technical and ecological issues, differences have arisen among the parties with a say in the BRC-20 protocol. The core of the dispute can be summarized as [whether to upgrade the 0.9 version running on the BRC-20 index and keep it synchronized with the iteration of Ordinals].
1.3 Voices from all sides
UniSat Wallet: Strictly follow the upgrade
UniSat decided to follow Ordinals for the Jubilee upgrade, which may result in two different indexing standards for BRC-20 on the Bitcoin chain and different accounting rules. Differences in accounting rules mean that users may have different balances in different places, or their account balances may not match, which will fragment the BRC-20 market due to the different indexing standards of the Ordinals version.
In addition, UniSat has also launched a black and white module system. Developers can introduce new features in the black module, and tokens can be placed in the black module, but they can't be taken out until they are approved ("whitened"). UniSat also hopes to use this module to provide convenience for users and further regulate the market.
For other protocols that have not been upgraded, UniSat's attitude is "Split". Although it is "separation", it is not the same as the "Fork" of BTC and BCH. According to UniSat's official explanation, this Split allows two different sets of standards to run simultaneously in two different ecosystems, but token/ledger information and other contents can still interact freely. However, compared with the repeated mention of technology iteration, UniSat did not explain too much about how to deal with risks such as market chaos and double-spending attacks.
BRC-20 founder Domo: Temporarily freeze and focus on testing
Although Domo previously proposed freezing BRC-20 at Ordinals 0.9 and the proposal has officially come into effect, he also recognizes the technical problems and risks and is open to upgrades. However, for the sake of stability and risk prevention, Domo opposes directly following Ordinals for Jubilee upgrades, but instead hopes that current indexers will continue to freeze at 0.9 and fully test future versions of Ordinals (not limited to 0.13) in the background. When the test receives satisfactory results, it will be decided which future version of Orindals to use for the BRC-20 upgrade and whether to continue freezing.
A minority of radicals: direct fork
In addition to the two parties, UniSat and Domo, there are a few radicals in the market who propose a direct fork, that is, just like BTC and BCH, they simply implement different standards, token information is not interoperable, and "each plays its own game". However, on the one hand, this plan will have an impact on the newly started BRC-20 and further create chaos. On the other hand, the number of holders of this voice is very small and they will not have important and direct ideas about the ecosystem like Domo or UniSat. This view has not received much attention.
1.4 Trend Forecast
Note: At the time of writing this article, all parties have reached a consensus to jointly upgrade to 0.14. To ensure the integrity of the article, this part of the analysis is retained.
On January 3, the Twitter user @lilyanna_btc published a long tweet analyzing several potential possibilities. In his opinion, there are probably the following possibilities:
Coexistence of freeze faction and upgrade faction
The upgrade faction compromised and stayed at 0.9 with the freeze faction
Freeze faction compromises and follows Ordinals to upgrade
For original text, please see:
https://twitter.com/lilyanna_btc/status/1742395707624132825
In addition, the author has another point of view: each side should take a step back and discuss the future affairs.
Domo once said in the L1F forum that he was considering using maintenance mode to slowly accept the upgrade of Ordinals. That is to say, freeze first and then upgrade later. This plan is actually not feasible. Freezing first and then upgrading will lead to another debate on whether to change the inscription number. If the inscriptions before the upgrade are backtracked, the inscription numbers will be rearranged, and the inscriptions and transactions in the middle will be more chaotic than the direct upgrade of BRC-20. If there is no backtracking, the numbers of BRC-20 and Ordinals will never be consistent.
1.5 Final Result
After 5 days of discussion and coordination, all parties finally reached the following consensus and implemented the promotion:
Figure 1-3 The final solution agreed by all parties (Source: Twitter)
BRC-20 was upgraded to version 0.14 with Orindals, which is a step further than Jubilee. This version solves the bugs in the indexing process, but it is not significantly different from 0.9.
In the short term, there is no discussion on whether BRC-20 will be frozen at Ordinals 0.14. Currently, the focus is on security, stability, and related testing, and further decisions will be made based on the results.
Regarding the issue mentioned in 1.2.2 that may cause duplicate inscription numbers, Casey, the author of Ordinals, has proposed the following: Add a mark to the specific part of the inscription where the number may be repeated to indicate that the inscription will be correctly indexed in the future with the help of minor changes in Ordinals. Before updating to the then-current version of Ordinals, indexers can temporarily skip it and merge the inscriptions after the update. In the current agreement reached by all parties, this proposal called "Vindication" has been shelved, but it may be enabled in the future;
The extreme situations mentioned in “Vindication” are being tried together by all parties to resolve;
Ignore the delegation and encoding issues. However, the consensus does not specify what delegation and encoding refer to.
Figure 1-4 Casey’s Vidication proposal (Source: Casey’s Github page)
2. Analysis by all parties
2.1 UniSat: “Radical”
The solutions and opinions proposed by UniSat throughout the incident have always been very "radical". This radicalism has both advantages and disadvantages. On the one hand, this radicalism can always maintain synchronization with the Ordinals protocol, and actively or passively promote the update and development of the BRC-20 ecosystem. On the other hand, the overly radical solution and the lack of communication and coordination with peers do ignore possible bugs, which may further lead to market chaos or even technical faults.
Domo once commented that this kind of radicalism is pure speculation, but this criticism is mainly based on the perspectives of "too short time" and "lack of communication", rather than recklessness in terms of technology, ecology and development route. Considering that UnSat is also a startup team, it is understandable that they want to "do more" in the early stage of the ecology to enrich the team's experience. Therefore, the author is reluctant to evaluate UniSat's motivation and role as "good" or "bad", but highly recognizes its enthusiasm in this dispute.
2.2 Domo and the Creation Team: “Stable”
Unlike the team and UniSat, Domo always emphasizes the word "stable". Even before the dispute, the proposal to freeze the BRC-20 version at 0.9 was mainly to ensure the stability of the entire protocol. Throughout the dispute, whether it is the views held or the voices on social media, they mainly focus on the technology and the protocol itself, and rarely consider the future route.
This way of thinking is actually very common in all walks of life. The main manifestation is that people with a technical background pay great attention to the stability and quality of the technical level, and believe that quality is above all else. They do not pay enough attention to future development, especially development from the perspective of market and capital. This way of thinking cannot be simply evaluated as good or bad. It can only be said that, like UniSat's perspective, it has advantages and limitations.
2.3 Market and Users Neutral: Focus on customer relationships
Those who hold a neutral view are mainly service providers, such as exchanges like OKX. For OKX, BRC-20 or Ordinals protocol is just one of its many main businesses. It is not important to adopt 0.8, 0.9, or 0.13 or even 0.14 after Jubilee upgrade. What is important is to reach a consensus on which set of standards to adopt as soon as possible, which can avoid the extra costs brought by the coexistence of multiple systems and help maintain market order.
2.4 Conspiracy Theory
From the inscription users to the Bitcoin chain, all participants have more or less the idea of pursuing profit, whether it is money, technology, or other things. Naturally, there are also conspiracy theories that the dispute between Domo and UniSat is mainly about grabbing the right to speak in the future ecology in order to maximize their own interests.
The author believes that although this logic makes sense, whether it is UniSat and Domo's early thinking logic, voice wording, or the later negotiation process and the final result of each taking a step back, it is indeed somewhat unfounded to directly label both parties as "grabbing the right to speak". In addition, considering that BRC-20 has just started and has attracted a lot of funds, the mechanisms and gameplay in the ecosystem are still in the early stages of exploration and development. It is short-sighted to rush to grab the right to speak and achieve a one-man show at this time, and to "cut leeks" by doing so. In particular, the vision for future development shown by all parties in the dispute also indirectly confirms that the conspiracy theory is indeed untenable.
2.5 Event Evaluation
There is a very classic impossible triangle in blockchain: security, decentralization, and scalability. For any product or ecosystem, in addition to the product itself, how to balance technical quality and follow the market is also a very important issue, and this dispute is mainly focused on this.
After half a year of development, the BRC-20 ecosystem is no longer just an entertainment product or a speculative direction. Its $3 billion volume is enough to attract everyone's attention. So how the BRC-20 ecosystem will develop in the future should not be determined by users, nor should it be driven unilaterally by UniSat or Domo, or exchanges. I am glad to see that in the later statements of all parties and Domo's own interviews, all parties generally do not care about the terms "win" or "lose", but repeatedly mention words such as "communication", "cooperation", and "coordination". At the same time, they do not blindly insist on their own views, but gather the strengths of all parties.
Recently, the United States has also approved the application for a Bitcoin spot ETF. Digital currencies and blockchains themselves are gradually evolving from "speculative products" to "investment products". The $3 billion capital volume of the BRC-20 ecosystem is both large and small. The large part is that there are many participants and the market has strong funds, which will wisely support every healthy development project and community. The small part is that there are still larger amounts of funds waiting to be launched outside of BRC-20 and even the blockchain industry. After the end of this dispute, although the parties only reached a temporary consensus, the good attitude shown has sent a very positive signal to users, developers, operation teams, and even traditional investors outside the market. Perhaps looking back on this incident after a period of time, we will find that the ecosystem and industry just happened to concentrate the right time, right place, and anything, and have since embarked on a path of rapid and healthy development.
