The Inscription Gold Rush: Blockchain Networks Struggle Under Pressure

The Inscription Gold Rush: Blockchain Networks Struggle Under Pressure

Multiple blockchain networks experience outages as the surge in inscriptions overwhelms their capacities

In a frenzy reminiscent of the gold rush era, blockchain networks are grappling with the overwhelming demand for inscriptions. From profile pictures to memecoins, users are eager to inscribe data directly on-chain, leading to a surge in activity that has caused several networks to buckle under the pressure. Arbitrum, Avalanche, Cronos, zkSync, and The Open Network are just a few of the platforms that have experienced partial or full outages in recent days. The latest victim, Celestia, joined the ranks as its block explorer faltered. As the inscriptions gold rush continues, experts are analyzing the driving factors behind this phenomenon and its implications for the crypto space.

The Surge in Inscriptions:

The surge in inscriptions can be attributed to the realization that Ethereum and other Ethereum Virtual Machine (EVM)-based chains can accommodate data inscriptions on transaction call data, similar to Bitcoin Ordinals. This development has opened up new possibilities for users to directly inscribe various types of data on-chain. Shardul Mahadik, a crypto developer, explains that Bitcoin inscriptions are akin to writing on the smallest denomination of a currency bill, while EVM inscriptions are equivalent to the notes or remarks field on a payment app. This newfound capability has sparked a wave of activity, with users minting and transferring tokens to themselves with call data.

The Impact on Blockchain Networks:

The influx of inscriptions has taken a toll on multiple blockchain networks, causing partial or complete outages and leading to significant gas spikes. Arbitrum, for instance, experienced a 78-minute outage due to a sustained surge of inscriptions that overwhelmed its sequencer. Cronos, on the other hand, implemented a network update to activate dynamic transaction fees that can better withstand traffic spikes. Despite these efforts, the strain on the networks remains evident, with users spamming tiny mints repeatedly due to the lower cost of minting compared to smart contract interactions.

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The Driving Factors:

The driving factors behind the inscriptions gold rush are multifaceted. Some experts theorize that it provides retail investors with a way to access low-cap crypto assets, which have become increasingly restricted due to regulations on initial coin offerings. Eric Wall, a Bitcoin developer, suggests that burning gas and wasting blockspace through inscriptions is one of the last distribution mechanisms that allows retail investors to participate from the ground floor. However, others, like Michael Rinko, an analyst at Delphi Digital, fail to see the logic behind the trend and view it as a speculative frenzy devoid of rationality.

Concerns and Warnings:

As the inscriptions gold rush continues, concerns have been raised about the potential for crypto influencers to shill low-quality coins. ZachXBT, a blockchain sleuth, warns investors to be cautious of influencers promoting coins with lower market caps or liquidity than their follower count. He cautions against falling victim to pump-and-dump schemes and advises investors to exercise due diligence.

Conclusion:

The inscriptions gold rush has put significant strain on blockchain networks, causing outages and gas spikes. While some see it as an opportunity for retail investors to access low-cap assets, others view it as a speculative frenzy lacking rationality. As the trend continues to unfold, it remains to be seen how blockchain networks will adapt to accommodate the growing demand for inscriptions and whether regulators will step in to address potential risks. In the meantime, investors are urged to exercise caution and remain vigilant in the face of the inscriptions frenzy.