There has been a noticeable surge in transaction activity on the main Ethereum Virtual Machine (EVM) chains as of late. Around 95% of these transactions have inscriptions, according to blockchain analytics tool Etherscan.
Ordinals inscriptions have gained favor as a direct means of creating non-fungible tokens (NFTs) on the blockchain by embedding unique data in transaction call data.
Imagine tiny capsules, embedded within Bitcoin itself, holding images, text, or even videos. That’s what Ordinals Inscriptions are: digital artifacts etched permanently onto the Bitcoin blockchain. Each inscription sits on a single Satoshi, the smallest unit of Bitcoin, creating unique, indestructible assets. Think of them as NFTs forged within the Bitcoin network itself.
Decoding The Drop In Inscriptions
These inscriptions boast the same durability and security as Bitcoin, while offering exciting possibilities. Artists can directly upload their work, creating verifiable digital art. Limited-edition items and collectibles can be minted, unlocking a new realm for digital ownership.
However, after a brief flurry a few weeks ago, the inscription protocol surge around networks supporting EVM smart contracts has slowed off.
Share of weekly transactions driven by inscriptions. Source: Dune Analytics.
Inscriptions continue to account for a disproportionate amount of activity on Avalanche and Ethereum’s Goerli testnet, according to data from Dune Analytics, but they have since decreased on other popular Layer 2 networks, such as the Polygon PoS sidechain and BNB Chain.
A recent analysis of the charts reveals a notable decline in these transactions. According to the most recent data, the Avalanche network’s highest recorded inscription count was approximately 370,000.
As of today, the market cap of cryptocurrencies stood at $1.596 trillion. Chart: TradingView.com
In terms of gas fees, some networks paid over $1 million in gas expenses in December, when the inscription frenzy was at its peak. Notably, Avalanche and Arbitrum reported gas fees of more than $5 million and $2 million, respectively, on December 16.
While some networks began to see gas fees that were less than $1 million, Avalanche maintained this pattern through December 21st. Gas prices dropped dramatically after that, with the highest recorded gas price being roughly $16,000 at the time of writing.
Inscriptions made up 77% of Avalanche transactions during the last seven days, 67% of Goerli transactions, 10% of Base transactions, 7.5% of ZkSync Era transactions, less than 5% of BNB Chain and OP Mainnet transactions, and 1% of Polygon PoS Chain transactions.
Is The Party Over?
In contrast, in mid-December, inscriptions accounted for over 40% of transactions on BNB Chain and Polygon PoS Chain, and between 50% and 75% of transactions on Gnosis, Arbitrum, and ZkSync Era.
The decrease in inscription activity comes after a spike in recent weeks as inscription protocols spread over networks that are compatible with EVM.
Following the release of native inscription procedures in late November, there was a surge of activity that resulted in transaction fees on Near, Polygon, and Fantom rising by 4,500%, 6,900%, and around 9,000%, respectively.
This significant cut suggested a sharp decline in the contribution to network fees as the year came to an end. It’s still unclear if this signals a brief lull in the popularity of inscriptions on EVMs or their eventual demise.
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