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

Original author: jolestar (X: @jolestar)

The waterfall washed my face, and there was a cry of grief in the group. I was no longer excited about the push. I calmed down and reviewed this bull market periodically.

In this bull market, we have not seen any replicable application models emerge. There is no grand occasion like the ICO in 2017 and the DeFi in 2020, where various projects were launched at the same time. So I always think that the real bull market has not yet arrived. However, there have been many attempts at new types of asset issuance models, including new asset protocols on Bitcoin (Inion, Atomicals, RGB/RGB++), inscription protocols on various chains, Meme Coin, Picture Coin, SFT, etc.

As a Builder, I look at the problem from the perspective of whether there is an opportunity to build an application. What are the revelations of these attempts? I have summarized two points.

CSV mode assets are initially validated

First of all, Bitcoin’s Inion has verified that the model of defining asset data on the chain and verifying legality off the chain is feasible, which indicates a new way of issuing assets and expanding capacity. All protocols derived from Bitcoin, including RGB/RGB++ and Atomicals, belong to this paradigm and can be called client-side validation in a broad sense. This asset is between L1 and Offchain (L2). It can define a bridge within the protocol to achieve the migration of assets from L1 to Offchain. This has been preliminarily verified by the RGB++ protocol, which is its transition mechanism. This capability indicates a way of expanding the capacity of blockchain, which is that assets overflow from Bitcoin to the infrastructure of Offchain (including other public chains), thereby bringing prosperity to the entire blockchain ecosystem.

Here 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, eliminating technical bottlenecks in the construction of applications.

Asset-first application startup mode is being verified

If the technical bottleneck of building applications is broken, another problem is how to start the application. The traditional way is to build applications, attract users, and then issue assets. The way this wave of new asset issuance models wants to verify is to start with assets, build communities, and then build applications based on the communities to provide usage scenarios for assets. This model has been initially verified for attracting users and building communities, but the application launch 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 an application?

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

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

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

2. Only with this model can there be a combinable scenario where the same asset is used in multiple applications, and this combination capability 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, but can directly benefit from providing scenarios for assets, thereby solving the compliance issues faced by the Web2 application development team.

The combination of the above two exploration directions will give rise to a large number of assets and applications. At that time, all flowers will bloom, and it will be a real bull market.