It’s inscription mania…

By EdgyDecember 21, 2023


Merry early Christmas to everyone!

As an early gift from Santa, Frame is doing an airdrop for their chain. Anyone who has traded NFTs on Ethereum since 2022 is eligible for the airdrop.

Claim your airdrop here (by the way, always double-check links – even from me)

Here’s what we got today:

  • The Inscription mania. The transaction type that took down chains.
  • Coin already 3xd. What do? My solutions for this dilemma.
  • Chart of the week. Avalanche C-Chain Performance Review.
  • Around the web. Redacted released DINERO, Immutable launched it’s “passport”, Move VM is on Ethereum as an L2, and more.

Here’s your Edge 🗡️!


📰 News

The Inscription Mania

Visualization of viruses infecting blockchains.

Blockchains are under an inscription attack.

The operations of Arbitrum and zkSync have been affected. The Avalanche C-chain had sky-high fees. More than $5.5M was paid in gas fees on the C-Chain. Binance Smart Chain, Polygon PoS, Fantom, Gnosis, Celo, etc. also all experienced significant inscription activity.

What’s happening?

Degens spammed EVM chains with inscriptions, a parasitical (kinda, it’s debatable) form of transaction. This overwhelmed the Arbitrum sequencer, so transactions could no longer be executed. Arbitrum was down for ~48 minutes. And zkSync needed a live upgrade, affecting users’ ability to submit transactions for ~15 mins.

This dashboard is great for data on inscription activity across different chains. Here’s a chart from that dashboard:

A bar graph of inscription % of txns in different blockchains.
Source: @hildobby


This chart shows the percentage of total transactions that were inscriptions. Around 91.01% of transactions were inscriptions on Avalanche, 66.5% on Gnosis, 62.32% on Arbitrum, and so forth.

What are inscriptions?

Bitcoin can’t create tokens or NFTs. Inscriptions are a transaction on the Bitcoin blockchain that creates data to mimic tokens and NFTs. This is done by “inscribing” data onchain with BTC transactions and then using offchain systems to interpret this as tokens and NFTs.

Ordinals are a form of inscription on Bitcoin that has become a huge success. Degens realized that they could do similar inscriptions on EVMs and wanted to bring the success of ordinals to EVMs.

The many drawbacks to inscriptions

#1 No composability. The ability of different protocols to interoperate and build upon one another is one of the key benefits of DeFi. But inscriptions aren’t interoperable.

For example, you can get stETH by staking ETH using Lido, use that stETH to borrow DAI, and then do something else with that DAI. You can’t perform a similar activity with inscription tokens.

#2 Dependence on offchain systems. Tokens have logic to them. For example, there’s a logic to determining who owns which tokens and how many they own. In smart contracts, this logic is fully enforced onchain. But in the case of inscriptions, these logics aren’t fully enforced onchain. Rather offchain systems are used to enforce these logics.

#3 Smart contracts have better functionality. Compared with inscriptions, smart contracts can do everything and more. It is possible to have a large variety of token standards, from the vault token standard to the RWA token standard. So, in a way, inscriptions are a step backwards.

But if inscriptions are so bad –

Then why do people use them?

#1 Memes and speculation. The success of ordinals on Bitcoin has created a certain narrative around inscriptions. So, many degens are speculating that inscriptions on EVM chains will pump similarly.

#2 Inscriptions are cheaper. While smart contracts might have better functionality, they are costlier than inscriptions. Therefore, people are able to make many more inscriptions than smart contract transactions.

Final Thoughts

I view inscriptions as being similar to memecoins. They don’t win based on utility but their capacity to capture people’s attention.

And just like memecoins, most inscriptions are going to fail. There could be a few exceptions, such as DOGE, SHIB, PEPE, and BONK. But I won’t be spending my time trying to find those needles in the inscriptions haystack.

Some people view inscriptions as a spam attack against blockchains. And there’s some truth to that.

But, as of now, there are no signs of them slowing down.


Ask Edgy

“Coin already 3xd. What do?”

An investor analysing chart.


“I’ve recently found a good project worth investing in. But by the time I finished my research, it had already pumped 2x. What do you do in this case? Wait for a pullback?

This is a dilemma that most of us have grappled with. And if you’re a newbie, this is a situation you will face at some point.

​I faced similar situations during the last bull run. I’d stumble upon a coin priced at $1.00. It would seem promising. But by the time I had finished my research and was ready to invest, the price had already soared 3x.

Naturally, this would feel “expensive” to me. So, I would wait, hoping the coin would return to its original price. But it never did. Instead, I helplessly watched it climb higher and higher and eventually 20x at its ATH.

Here’s where we often go wrong. We see a rising price and think that the asset has become too costly. And then, we wait for it to return to what we consider the “original price.” But in a bull market, this can be a mistake.


Why? Because in bull markets, increasing prices generate momentum. Increasing prices lead to more people discovering the coin and investing in it. Existing holders start chanting ‘HODL’ and ‘WAGMI.’ And the pump will keep on pumping. Token prices rarely return to those lower points during a bull run.

​Of course, not all tokens can continue on this upward trajectory. The key is to reassess the risk and reward at the price point now available to you. If there’s a good chance that the coin will pump further, then enter the position.

​​But what if you’re unsure? Here’s a solid strategy: allocate a small position to the token. This way, even if the position dips, it won’t have devastating consequences. And if the token does pump, you won’t feel left out and still make a profit.

​Remember, the bull market is much crazier than what newbies might imagine. Prices can escalate beyond any traditional sense of a “proper valuation.” So, allocating a small portion as a moon bag is a good strategy.

​You gotta shed the bias of past prices. It’s in the past and you don’t have a time machine (if you do, tell your buddy Edgy to go all in on ETH in 2016 when his buddy told him about it).

Adjust to the new reality. Assess whether the coin still has the potential to rise further from its current price.


Chart of the Week

Avalanche C-Chain Performance Review

Active addresses on Avalanche C-Chain.
Source: Artemis

AVAX price has been on a tear lately. It’s almost doubled in the last 30 days and is the top performer among the major L1s.

We did mention a few emails ago that Solana’s price action might cause similar price rallies to other L1s. And AVAX was a pretty obvious one.

Is this pure speculation or is network activity backing this up? Let’s look at some charts.

The first chart above shows the number of active addresses on the Avalanche C-Chain over the last three months. It was in a similar range until the end of November but has grown fast since then.

Since active addresses are a good proxy for the number of users, we can conclude that the number of Avalanche users is growing.

The annual peak of active addresses on the C-Chain was in June at 117.3k. On December 19th, it only had 74.42k. However, it is in a growth trajectory, and Avalanche has the potential to keep on growing.

​Are these accounts just bots performing cheap transactions on Avalanche? Or are there high-value transactions taking place?

​Let’s look at the fee chart of Avalanche.

Avalanche Fee Chart from DefiLlama
Source: DefiLlama

In the context of L1s, users pay fees to the network for their transactions to be included on the blockchain. Willingness to pay for inclusion indicates the value of those transactions. Spammy bots aren’t willing to pay much in transaction fees.

​The above chart tracks the transaction fees paid to Avalanche for 2023. For most of the year, it was insignificant. Then there are two transaction fee spikes: a small spike at the November end and a gigantic spike in December.

​What caused these spikes? Inscriptions are a big part of the answer.

% of gas spent on inscriptions.
Source: @hildobby



This chart shows the percentage of the gas fee that was spent on inscriptions across different chains. Around 77.43% of the gas fee on the Avalanche C-Chain was spent on inscriptions.

​Also, around 91.01% of Avalanche C-Chain transactions from the last week are related to inscriptions.

​In the first article of this week’s newsletter, we explained that inscriptions on EVMs are like memecoins. They aren’t providing “real” value to the ecosystem. In fact, they’re parasitical to the chain and driving up transaction fees for other activities on the C-Chain.

​If that’s the case, then is the Avalanche C-Chain becoming an inscription chain? Is it just a chain for degens to experiment with inscriptions?

A good way to test this is by looking at the DEX volume.

DEX volume on Avalanche
Source: DefiLlama

Inscriptions aren’t traded on traditional DEXes. So, DEX volume can be a great indicator for non-inscription-related activity on Avalanche.

And in the DEX volume, we can see growth from November onwards. This growth isn’t as significant as the growth of inscriptions, but it is still substantial.

In conclusion, Avalanche has been experiencing massive growth over the last few weeks. However, a significant portion of this is driven by inscription activity. While this doesn’t mean that DeFi isn’t growing, it is simply growing at a slower pace when compared to inscriptions.


🚀 DeFi Catalysts

Dinero, the stablecoin from the Redacted Cartel, is now live. Users can borrow DINERO against pxETH, their Liquid Staking Token.

Ondo Finance has expanded to Solana. Their flagship products, USDY and OUSG, will now be available on Solana.

Immutable launched its web3 gaming “Passport.” It allows players to use identities and assets across multiple platforms.

MetisDAO, the team behind Metis L2, has created a ~$100 million (4.6 m $METIS) fund to accelerate the growth of its ecosystem.

Osmosis is discussing the extension of its Grants Program (“OGP”) for a further 12 months. It aims to support those who deliver long-term value to Osmosis.

Polytrade Finance launched its RWA marketplace. It’ll unfold in three phases: private, whitelist, and public.

Frax Finance announced a partnership with Axelar Network to issue Frax assets on Osmosis, Kujira, Linea, Manta, & Scroll.

MilkyWay released the Liquid Staking Protocol for the TIA token from Celestia. The liquidity pool for TIA:milkTIA is available on Osmosis.

Gyroscope, a stablecoin protocol, introduced its governance system. There are several voting vaults to represent different stakeholders.

IPOR Protocol introduced a Stake Rate Swap for Lido’s stETH. Users can now hedge, speculate, or arbitrage stETH rate with up to 500x leverage.


📰 Industry News

FTX filed a proposal to end the bankruptcy. The creditors will repaid at prices of their assets on the day FTX filed for bankruptcy in November 2022.

SEC has delayed the decision on multiple spot Ether Exchange-Traded Funds. Multiple Ether futures-based ETFs are already live.

Circle issued $EURC natively on Solana. It is a fully-reserved, Euro-backed stablecoin that is pegged to Euro.

Lumio, a new Layer 2. testnet is live. It is EVM-compatible and uses Move VM, which was designed by Facebook and is used in Aptos and Sui.

Manta Network became the first major Ethereum L2 to use Celestia for Modular Data Availability. The txn fee will go down even more on Manta.


🧠 Twitter Alpha

  1. Reasons to be Bullish.
  2. Some projects just need time.
  3. SOL and Base Business case.
  4. Biggest challenge in Crypto right now.
  5. Coinbase Outlook 2024

😂 Meme

Meme