In the Bitcoin ecosystem, projects typically fall into two categories: ‘Asset Issuance Protocols’ and ‘Scalability Solutions’. Project teams usually focus on developing products and solving issues within one of these domains. ZKBase is introducing a comprehensive scalability solution tailored for asset issuance protocols, aimed at addressing two major challenges currently faced by the Bitcoin ecosystem: poor underlying network performance and the low liquidity of inscribed assets. This solution promises to enhance both the efficiency and fluidity of the ecosystem, tackling these issues head-on.
The team behind ZKBase is highly technical and has focused on delivering concrete ZK solutions and security enhancements rather than over-promising in their roadmap. With ZKBase’s BRC20 AMM DEX gaining a significant user base, the previously popular BRC20 IDO could also be an area where ZKBase excels.
Why does the market need ZKBase?
The market faces a contradiction between the liquidity issues of mid to long-tail BRC20 assets and their inability to be listed on centralized exchanges. ZKBase addresses this gap by providing a solution that enhances liquidity and accessibility for these assets, potentially rivaling protocols that aim to solve similar problems within the cryptocurrency ecosystem.
Liquidity Challenges and Listing Dilemmas for Mid to Long-Tail BRC20 Assets
During the “Summer of Inscriptions,” the market witnessed a significant wealth effect from the emergence of forked inscriptions. However, the peer-to-peer (P2P) listing model that dominates the inscription market has resulted in extremely low liquidity for these assets, making it challenging for them to be listed as tradable assets on centralized exchanges. This lack of liquidity hinders the ability of asset holders to liquidate their holdings promptly and acts as a deterrent for substantial capital investment. ZKBase is on the cusp of introducing AMM ZKSwap, a platform designed to support BRC20 assets and address these issues. By aiming to significantly improve the market’s liquidity and capital efficiency, ZKSwap aspires to become the “Uniswap” of the BRC20 market, facilitating easier access and trading for a broader range of assets.
Currently, after its launch, Unisat brc-20 swap seems to have not attracted a significant user base, indicating that this area remains a vast blue ocean market.
Security Concerns of BRC20 – ERC20 Cross-Chain Bridges
The security of cross-chain bridge technology has been a major concern for investors and users, especially with numerous incidents in recent years leading to significant losses for many users and projects. In the newer niche of BRC20 – ERC20 cross-chain bridges, there are many known and unknown risks.
ZK technology focuses more on privacy and fast transaction processing and is considered a more secure method. ZK Rollups, which submit new states to L1 with accompanying Proofs, can inherit L1’s security guarantees. This is somewhat similar to the security provided by the strong miner community in the BTC network, akin to the Nakamoto upgrade in Stacks. Compared to ZKBase, the most well-known BRC20 – ERC20 cross-chain bridge on the market, MUBI, lacks in terms of security.
Bitcoin’s network is often criticized for its inherent limitations, including slow transaction speeds, high fees, and a lack of support for complex smart contracts and DApps. To address these issues, Layer 2 solutions have emerged, proposing an additional layer that interoperates with the Bitcoin blockchain to enable a broader range of applications while maintaining the network’s high security.
Stacks, a veteran BTC Layer 2 blockchain, boasts regulatory compliance, having become the first project to receive SEC compliance certification for a public offering in the third quarter of 2019. However, in the current market and cryptocurrency development trends, this compliance narrative is not particularly appealing. Additionally, the niche nature of Stacks’ ecosystem language, Clarity, has made it challenging to increase developer engagement. Growth in attracting developers and users for Stacks has been slow, and the ecosystem has yet to produce any well-known projects, indicating a stagnation in its development over the years.
ZKBase, leveraging ZK technology and focusing on the BRC20 hotspot, has the potential to rapidly gain popularity within a short timeframe.
The perennial shortcomings of the Bitcoin network
Bitcoin’s network is often criticized for its inherent limitations, including slow transaction speeds, high fees, and a lack of support for complex smart contracts and DApps. To address these issues, Layer 2 solutions have emerged, proposing an additional layer that interoperates with the Bitcoin blockchain to enable a broader range of applications while maintaining the network’s high security.
Stacks, a veteran BTC Layer 2 blockchain, boasts regulatory compliance, having become the first project to receive SEC compliance certification for a public offering in the third quarter of 2019. However, in the current market and cryptocurrency development trends, this compliance narrative is not particularly appealing. Additionally, the niche nature of Stacks’ ecosystem language, Clarity, has made it challenging to increase developer engagement. Growth in attracting developers and users for Stacks has been slow, and the ecosystem has yet to produce any well-known projects, indicating a stagnation in its development over the years.
ZKBase, leveraging ZK technology and focusing on the BRC20 hotspot, has the potential to rapidly gain popularity within a short timeframe.
Positive Impact on ZK Sector
- Market forecasts suggested zkSync may launch its token in the first half of 2024
In December, zkSync surpassed Ethereum‘s mainnet in the number of transactions processed over the past month. According to L2Beat data on December 28th, zkSync handled 34.7 million transactions in the last 30 days, exceeding Ethereum mainnet’s 34.2 million transactions in the same period. Another highly anticipated, well-funded project, LayerZero, has officially announced its token launch in the first half of 2024.
Consequently, market predictions suggest that the first half of 2024 will present an ideal opportunity for zkSync’s token launch and airdrop. Should the zkSync Token Generation Event (TGE) occur, it is expected to bring a substantial influx of capital and TVL growth to its ecosystem, directly benefiting various projects within the ecosystem.
Drawing parallels to the period before the Arbitrum airdrop, known as the Arbitrum Summer, from January to March 2023: Camelot (GRAIL) rose from $200 to $4000, MAGIC increased from $0.5 to $2, and RDNT went from $0.04 to $0.45.
If zkSync can replicate the wealth effect seen with Arbitrum around the time of its token launch, in the early stages of the current bull market, the overall Layer 2 (L2) sector could experience heightened FOMO, potentially pushing valuations even higher. Overall, the investment prospects appear very promising.
Will the Market Reward Innovative Bitcoin Projects？
With Bitcoin hitting ATH as the time of writing, the question seems rhetorical. Beyond the wealth myths of inscription tracks like BRC20 and ARC20, projects building infrastructure within the Bitcoin ecosystem have also seen substantial returns.
The star BRC20-ERC20 cross-chain bridge project MUBI completed its auction in nearly 30 minutes on Auction, with its highest price increase exceeding 20 times on the day, and a 1455% increase within a month; the token BSSB of Bitstable, a decentralized stablecoin protocol based on the Bitcoin network, surged over 45 times compared to its IDO price; BakerySwap BRC20 IDO project BitcoinCats, was oversubscribed 150 times, with subscription funds exceeding 100 million USD, proving extremely popular and ultimately delivering significant capital returns to investors; FOOX and Zooopia on TurtSat reached nearly 30 and 100 times their launch prices, respectively; even BendDAO, which ventured into the BRC20 NFT lending market mid-way, saw a significant price increase upon announcing its foray into the Bitcoin ecosystem.
After experiencing a downturn, MUBI’s circulating market cap equals a total value of 200 million USD. In comparison, ZKBase, with its more comprehensive future products and stronger technical background, has a promising future.
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