With the explosion of BRC-20, some other asset standards built around the Bitcoin network have also begun to emerge.

On May 7, Alexei Zamyatin, the founder of the cross-chain interoperability project Interlay, proposed to launch the BRC-21 standard to introduce fully decentralized cross-chain assets on the Bitcoin network and use them in the Lightning Network.

Interlay Labs also released the V0.1 document on the BRC-21 Token Standard. According to the description of the document, BRC-21 assets are still BRC-20 assets in essence, but unlike BRC-20 assets "born out of thin air", BRC-21 needs to be generated by locking assets on the initial chain (such as ETH, DOT , ATOM, DAI, etc.), in other words,The BRC-21 standard provides the possibility to mint BRC-20 versions of ETH, DAI and other on-chain assets on the Bitcoin network.

From a technical point of view, the cross-chain of BRC-21 assets only needs to rely on three components to complete, and the whole process is expected to achieve complete decentralization:

1. StartChain Smart Contract: Responsible for processing coin minting and redemption operations on the StartChain.

2. Custom indexer: Responsible for verifying BRC-21 minting, transfer, redemption and other operations on the Bitcoin network, as well as the smart contract status on the initial chain.

3. Bitcoin relay (BTC-Relay): As a light client on the Bitcoin network to achieve the effect of smart contracts, it is necessary to verify and analyze the transaction inclusions on the Bitcoin network.

Interlay Labs also demonstrated the deployment of BRC-21 assets in the document. How to set up the smart contract on the initial chain is not mentioned for the time being. What is worth noting is how to deploy it on the Bitcoin network.

In general,Deploying BRC-21 tokens is much the same as deploying BRC-20 tokens, but there are some differences in details,for example:

1. The "max" field used to define the maximum supply is no longer mandatory, but optional, because the maximum supply of the original assets behind BRC-21 has generally been defined on the initial chain, and the optional only provides a An extra layer of accident protection.

2. The "lim" field to define the minting limit was removed, as BRC-21 assets are subject to strict minting and redemption rules, so there is no need to limit how many tokens can be minted in a single transaction.

3. Add a new field "src" to specify the starting chain, which can be a string of letters (such as Ethereum) or a number (but an additional list is required).

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BRC-21 Asset Deployment Format

As for use cases, Interlay Labs' view is that while the BRC-21 standard could theoretically introduce ETH, DOT, SOL, and a wide variety of other chain assets into the Bitcoin network,Where the standard really comes in is actually in introducing decentralized stablecoins and deploying them on top of the Lightning Network or other payment protocols.

Interlay Labs further explained that decentralized stablecoins like DAI and RAI often require complex minting, redemption and liquidation mechanisms to maintain their effective anchoring. Due to the natural lack of programmability of the Bitcoin network, protocols such as MakerDAO cannot directly deploy stable coins such as DAI on the Bitcoin network. This situation is still unlikely to change in the future.

Interlay Labs believes that bridging these assets to the Bitcoin network in a fully decentralized form through the BRC-21 standard, and then making full use of the decentralized nature of the Bitcoin network, is better than spending a lot of time on Bitcoin. Building on top of a programming protocol, this method that only requires a few lines of code to take effect may have a better chance of achieving mass adoption.