Bull market phase review: New asset issuance model will give rise to new infrastructure and applications

Original author: jolestar (X:@jolestar）

Washing ones face at the waterfall, the crowd was wailing, and the market was no longer excited. It calmed down and reviewed this bull market in stages.

This bull market has not yet seen the emergence of replicable application models. There is no such grand event as ICO in 2017 and DeFi in 2020, so I always believe that the real bull market has not yet arrived. However, there have been many attempts at new types of asset issuance models, such as new asset protocols on Bitcoin (Inscription, Atomics, RGB/RGB++), inscription protocols on various chains, Meme Coin, Tokens, SFT, etc.

As a Builder, I look at the problem from the perspective of whether there are opportunities to build applications. What are the implications of these attempts? I summarized two points.

Assets in CSV schema get initial validation

First of all, Bitcoin’s Inscription has verified that the model in which asset data is defined on the chain and legality verification is performed off-chain is feasible, and it heralds aNew asset issuance and expansion methods. All protocols derived from Bitcoin, including RGB/RGB++ and Atomics, belong to this paradigm, which can be called a broad client-side validation asset. This asset is an asset between L1 and Offchain (L2). It can define a bridge within the protocol to realize the migration of assets from L1 to Offchain. This has been initially verified by the RGB++ protocol. Its its transition mechanism. And what this capability foreshadows is a way for blockchain expansion to overflow assets from Bitcoin to the infrastructure of Offchain (including other public chains), thus bringing about the prosperity of the entire blockchain ecosystem.

Attached is a picture I shared at the Bitcoin Layer 2 Conference organized by @BTCSCYLab in Hong Kong:

This model is different from the ecological paradigm of Ethereum. The application scenarios of assets are no longer limited to the smart contract environment provided by L1, but are provided through the smart contract environment of Offchain, so that there are no technical bottlenecks in application construction.

Asset-first application startup model is being verified

If the technical bottleneck of building an application is broken, another problem is how to start the application. The traditional approach is to build an application, attract users, and then issue assets. The way to verify this wave of new asset issuance models is to put assets first, build a community, and then build applications based on the community to provide usage scenarios for the assets. This model has been initially verified to attract users and build a community, but the application startup still needs to be explored, and there are several problems that need to be solved:

1. Fair distribution can easily attract users and reduce fraud, but how to solve the initialization cost of building applications.

2. Building applications takes time, and assets with too high liquidity may not wait until the application is born. Therefore, it is more appropriate to initially issue low-liquidity assets and turn them into high-liquidity assets after growth. However, how to switch seamlessly is a direction to explore (ERC 404, Movescriptions).

Although there are many difficulties, the advantages of this model are also obvious:

1. Assets come first, and applications are derivatives of assets, not the other way around, so that the life cycle of assets can exceed the life cycle of applications.

2. Only in this model can there be combinable scenarios in which the same asset is used in multiple applications, and this combination ability is the most critical point that distinguishes blockchain applications from Web2 applications.

3. In this model, the application team does not need to issue assets and directly benefits from providing scenarios for the assets, thus solving the compliance issues faced by the Web2 application development team.

The combination of the above two exploration directions will promote the emergence of a large number of assets and applications. At that time, a hundred flowers will bloom, and it will be a real bull market.