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Tuesday, February 27, 2024

Bitcoin BRC-20 token standard becomes new destination for meme tokens

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Bitcoin’s BRC-20 token standard has become the latest trend in the crypto ecosystem, especially after the Pepe (PEPE) memecoin rise in recent months. A total of 8,500 different tokens have been minted using the BRC-20 standard, with the majority of these BRC-20 tokens being memecoins, such as PEPE and Memetic (MEME).

BRC-20 is an experimental token standard on the Bitcoin (BTC) blockchain modeled on Ethereum’s ERC-20. It allows programmers to create and send fungible tokens via the Ordinals protocol.

Although modeled after ERC-20, the BRC-20 token standard fundamentally differs from its Ethereum-based counterpart. BRC-20 tokens don’t make use of smart contracts. The token standard also requires a Bitcoin wallet to mint and trade these tokens.

The BRC-20 token standard was created early in March by an anonymous on-chain analyst called Domo. The objective was to make it possible for fungible tokens to be issued and transferred on the Bitcoin blockchain. The market cap of BRC-20 tokens has exploded over the past month and currently sits at $120 million, a 600% rise in the past week.

BRC-20 tokens marketcap. Source: Ordinals

The BRC-20 token frenzy has also dwarfed the blockchain’s original number of Bitcoin transactions. The number of BRC-20 transactions on the Bitcoin blockchain between April 29 and May 2 reached over 50%, outperforming regular BTC transactions.

Related: Bitcoin metrics to the moon: ATH for hash rate, daily transactions and Ordinals

The BRC-20 token volume peaked on May 1 at 366,000 transactions, with the total number of transactions on the network being 2.36 million.

BRC-20 tokens transaction volume. Source: Dune

Along with the rise in BRC-20 transactions, transaction fees have surged due to the new token activity. Since its inception in late April, the network has generated an additional 109.7 BTC in transaction fees for miners.

BRC-20 tokens total fees. Source: Dune

The memecoin frenzy has been a notable topic on the Ethereum blockchain, but with the rise of the BRC-20 standard, a similar trend is also observed on the Bitcoin blockchain. The memecoin craze has also led to a significant rise in Ethereum network gas fees, contributing to network congestion.

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