BRC20-Swap Launch: Development History, Product Model, and Future Outlook

The liquidity of Ordinals ecological assets has always been a focus of the industry. In July 2023, a platform integrating engraving, trading market, and wallet functions announced the upcoming launch of brc20-swap, aimed at improving the liquidity of ecological assets. This product officially entered the testing phase on October 30.

This article will detail the development history, product model, and future prospects of brc20-swap.

The Development History of brc20-swap

On September 20, 2023, the platform issued brc20-swap Early Access invitation inscriptions to 620 addresses. The selection criteria include:

1. Active users who trade at least 1 BTC on the platform market between July 16 and September 20.
2. Active users who accumulate at least 500 points through the platform's inscription during the same period.
3. Platform OG PASS holders (snapshot taken at block height 808559).

On October 10, 2023, the official announcement was made regarding the launch schedule and related details of the brc20-swap mainnet. The platform is gradually distributing a commemorative inscription called brc20-swap Prime Access for free to community users, allowing holders to participate in early testing of the product. These inscriptions are distributed through lottery via official social media channels, with a total of 654 available, and the current lowest price in the secondary market is 0.0067 BTC.

The settlement and synchronization of transactions are completed by the sorter. brc20-swap refers to the fee standards of a well-known DEX, charging all trading users a service fee of 0.3%. Of this, approximately 1/6 (0.05%) is collected by the platform, and the remaining 5/6 (0.25%) is distributed to liquidity providers of each trading pair. It is worth noting that brc20-swap uses the brc20 asset "sats" as the transaction fee.

On October 30, 2023, the official announcement revealed the 14 assets initially supported by brc20-swap. The screening criteria were that the assets had to have at least 15 days of trading activity on the platform market in the past 30 days, and the median trading volume in the past 30 days had to be non-zero. Following the announcement, these assets experienced significant increases due to positive expectations.

Product Model

The product is divided into three parts: trading, liquidity pool, and data overview, which is similar to the decentralized exchange format of the Ethereum ecosystem. Users need to recharge their assets into the brc20-swap module by "inscribe TRANSFER" before trading, and the recharge confirmation takes 3 block times.

The brc20-swap adopts a modular expansion implementation, with each module existing independently. The advantages of this model include:

1. Permissionless Development: Developing new modules for brc-20 does not require permission.
2. Isolated Execution: A problem in a single module will not affect the operation of the core protocol and other modules.
3. Consensus Upgrade: When the majority of indexers recognize and implement the indexing of a specific module, that module can be upgraded from a black module to a white module, becoming part of the brc-20 protocol.

However, one disadvantage of the black module expansion mode is that users cannot freely withdraw assets. The platform improves this issue by designing a dynamic adjustment mechanism, allowing withdrawals when the assets deposited by other users exceed the amount of assets withdrawn. This design avoids arbitrary issuance, but also somewhat restricts the liquidity and convenience of the assets.

With the understanding and recognition of the black module by users, as well as the acceptance by more indexers, the product will transition from the black module to the white module, achieving a consensus upgrade. At that time, users will be able to freely deposit and withdraw assets.

In addition, since the BRC20 protocol and the entire Ordinals ecosystem are still in their early stages, the current platform has a significant influence and reputation within the ecosystem, providing complete indexing services such as transaction and balance inquiry for the protocol. This relatively centralized situation carries certain risks. However, the modular operating architecture creates conditions for more service providers to participate, which helps to achieve the decentralization of indexing.

Future Outlook

Users in the Ordinals ecosystem often report insufficient liquidity, with limited capital capacity for entry, leading some large capital users to adopt a wait-and-see attitude. Brc20-swap, as the first native trading platform of the Ordinals ecosystem, utilizes the brc20 protocol as the underlying asset foundation, aiming to continuously optimize liquidity and expand the capacity for incoming capital. This is undoubtedly an important advancement for the development of the entire ecosystem.

The platform officially announced that 2% of the brc20-swap transaction fees will be donated to the foundation involved in the development of the brc20 protocol to promote the development and standard optimization of brc20. Meanwhile, the platform will also open source the complete explanation and verification source code of brc20-swap to facilitate early support from indexers.

These measures reflect the platform's desire to cooperate with all parties in the ecosystem for mutual development, rather than monopolizing ecosystem benefits. Given that the Ordinals ecosystem has developed relatively quickly, it requires all parties within the ecosystem to work together to expand the market and achieve a win-win situation for all.