The recent craze for “Inscriptions,” a new hype product encompassing everything from NFT collections to memecoin projects, has caused partial or full outages in several blockchain networks last week. According to industry researchers, networks such as Arbitrum, Avalanche, Cronos, zkSync, Celestia, and The Open Network experienced disruptions on December 18th due to the overwhelming demand generated by Inscriptions.
During a 78-minute outage on December 16th, the popular Layer-2 network Arbitrum confirmed that its sequencer stopped processing transactions properly due to a continuous increase in Inscriptions. This incident highlighted the network’s vulnerability to sudden surges in activity. In response, Cronos developer Ken Timsit announced a network update to implement dynamic transaction fees based on transaction volume, enhancing the network’s resilience to high traffic caused by spikes in demand.
People have realized that they can now write data such as text, images, and videos directly onto ecosystems like Bitcoin Ordinals, sparking significant interest in doing the same on Ethereum and other Ethereum Virtual Machine (EVM)-based chains. Crypto developer Shardul Mahadik compared Bitcoin Inscriptions to writing on the smallest denomination of a banknote (UTXO model), while EVM Inscriptions are likened to writing in the memo field of a payment app (acc model).
According to Ordi.io, the recent surge in activity has been driven by various collections like Bitcoin Frogs and new token projects such as BMBI, BEEG, and GROK, which are themed BRC-20 type token projects. Crypto researcher cygaar suggested that users are taking advantage of low transaction costs to send token mint and transfer operations directly from their wallets.
Developers are actively utilizing ERC-20 successes in other ecosystems, but the lower transaction fees compared to smart contract interactions are causing users to perform repetitive transactions, leading to incredible congestion in the networks. Bitcoin developer Eric Wall suggested earlier this month that EVM Inscriptions projects could be seen as a way for users to access low-budget crypto assets, with regulated and restricted token supplies drawing user interest. These projects can be described as derivatives of BRC-20.