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Saturday, April 13, 2024

Surge in Inscriptions on EVM Chains: Etherscan Reports

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A recent development has seen a substantial increase in transaction activities on major Ethereum Virtual Machine (EVM) chains.

According to Etherscan, a widely used blockchain analytics platform, 95% of these transactions can be attributed to inscriptions.

The Ordinals Inscriptions Wave

Ordinals inscriptions, which involve embedding unique data in transaction call data to create non-fungible tokens (NFTs) directly on the blockchain, have increased in popularity.

This new approach allows users to inscribe virtually any digital artifact directly onto a blockchain, including images and texts. Unlike traditional NFTs, which are typically stored off-chain and linked via metadata, these inscriptions are wholly contained within the blockchain.

This trend was initially noted on the Bitcoin network, but Etherscan’s insights reveal a significant migration of this activity to EVM-compatible chains.

Unlike Bitcoin, where inscriptions are made on satoshis (the smallest BTC unit), Ethereum and other EVM chains perform this function within transaction input data, bypassing the need for the blockchain’s native token unit.

Inscriptions on Ethereum rely on third-party services to index these transactions and apply token rules. Typically, these functions are natively handled by smart contracts within the Ethereum network.

Etherscan notes that this method, while counter-intuitive due to its reliance on third parties for indexing and applying token rules, has not deterred its growing popularity.

Inscription Craze Drives Record $8.3M Gas Fees

Despite feeling counterintuitive, the phenomenon of Inscriptions has been on the rise across EVM chains since mid-November. This surge in activity has led to notable consequences, including a significant increase in daily transactions, skyrocketing gas fees, and longer transaction processing times.

On December 16 alone, the total gas fees spent on inscriptions reached approximately $8.3 million.

This demand has affected Ethereum and other chains like Avalanche, Arbitrum One, and the BNB Chain while also causing operational challenges on the Bitcoin network.

Furthermore, the market implications of this trend are profound. For instance, the Bitcoin Frogs Ordinals collection rapidly emerged as a market leader with a capitalization of $182 million. It saw secondary sales surge to $4.8 million on December 17, indicating a significant market interest.

Despite the challenges, Etherscan’s post suggests that the Inscriptions phenomenon is an effective stress test for blockchains and infrastructure providers, offering a unique opportunity to assess their limits and adaptability in the face of evolving demands.

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