25 December 2023
The surge in inscriptions on blockchain networks has caused partial or full outages on several platforms, including Arbitrum, Avalanche, and Celestia.
In recent days, the growing trend of inscribing data on blockchain networks has led to a “gold rush” of activity. Blockchain networks such as Arbitrum, Avalanche, Cronos, zkSync, and The Open Network have experienced partial or full outages due to the surge in inscriptions. The latest victim, Celestia, recently suffered a breakdown as well. This article delves into the reasons behind the gold rush, the impact on blockchain networks, and the implications for the wider cryptocurrency community.
The Impact on Blockchain Networks
The surge in inscriptions has put significant strain on blockchain networks, causing partial or full outages. Arbitrum, for example, experienced a 78-minute outage due to a sustained surge of inscriptions. Celestia, the latest network to cave under the pressure, is currently being investigated by its team. These outages highlight the challenges faced by blockchain networks in handling the sudden influx of inscriptions.
Inscriptions involve the process of inscribing data directly on-chain, similar to Bitcoin Ordinals. People have realized that they can do the same on Ethereum and other Ethereum Virtual Machine (EVM)-based chains by inscribing data on transaction call data. This allows for the inclusion of text, images, and videos on the blockchain. Inscriptions are often associated with BRC-20 tokens, which replicate the success of ERC-20 tokens on other chains. Users are taking advantage of the lower cost of minting compared to smart contract interactions, resulting in a surge of activity.
The Motivation Behind the Gold Rush
The motivation behind the gold rush of inscriptions is multifaceted. Some speculate that it provides an opportunity for retail investors to access low-cap crypto assets, as initial coin offerings have become more regulated and restricted. Inscriptions are seen as a distribution mechanism that allows anyone to participate in the issuance of a specific token from day one. However, others argue that there is little rationality behind the surge in inscriptions and that it is simply a new trend in the cryptocurrency space.
Warning Against Shilling Shitcoins
As the gold rush of inscriptions continues, crypto influencers have been accused of shilling shitcoins with lower market caps or liquidity. Blockchain sleuth ZachXBT warned followers about influencers who promote these coins, urging caution to avoid getting dumped on. This highlights the potential risks associated with the current frenzy surrounding inscriptions and the need for investors to exercise caution.
The surge in inscriptions on blockchain networks has caused significant disruptions, with several platforms experiencing partial or full outages. The gold rush of inscriptions is driven by various factors, including the opportunity for retail investors to access low-cap crypto assets and the allure of participating in token issuance from the ground floor. However, the surge in inscriptions has also raised concerns about the rationality behind the trend and the potential for market manipulation. As the cryptocurrency community grapples with the impact of inscriptions, it is crucial for investors to exercise caution and remain vigilant in navigating this evolving landscape.