It is no secret that I have been focusing much of my analysis on Bitcoin lately. With the creation of Ordinals, BRC-20s, Bitmaps, Recursive Inscriptions, and the growing ecosystem of platforms and products to support them, focusing on Bitcoin has never been more exciting. As much as I am sympathetic to the non-government hard money disempowering bloated Keynesian war economies responsible for the suffering of millions narrative, it does get boring constantly talking about it.
Ordinals, and the increase in fees they have caused, have brought much attention to Bitcoin scaling solutions – especially with Stacks. As the most advanced – in terms of users and adoption – Stacks brings a smart contract layer to Bitcoin, potentially unlocking an ETH-like economy for the orange coin. Stacks project AlexLabs, to their credit, harnessed the increased Bitcoin attention from Ordinals by onboarding BRC-20 creator Domo as an advisor and being one of the first teams to pursue a trustless Indexer solution for Ordinals.
But, I am still determining whether Ordinals and inscriptions provide any downstream value or opportunity to Stacks. As a smart contract layer, Stacks does not need inscription technology on Bitcoin. Stacks can create NFTs and tokens with their own smart contracts. On the surface, it seems Ordinals are a direct competitor to Stacks. As such, I decided to look into the Stacks <> Ordinal connection, but not in the form of a report, but in an open-ended exploration using our activity feed. I am curious to see if there is demand for Stacks’ service, how many people are using it, how they are using it, if there is any change in metrics post-Ordinals, and does Ordinal tech bleed over to Stacks at all. My hunch is that Ordinals and their downstream tech like BRC-20s have little benefit to Stacks, but we will find out together.
One of the big questions in the age of HODL is, is there a market for smart contract Bitcoin? The HODL meme demands holders never use BTC, stack sats, and die with their keys. However, the popularity of wrapped Bitcoin suggests that some users want to use their BTC for something. Due to its neutrality, liquidity, and limited supply, Bitcoin is one of the more popular assets users bring to different chains through wrapped or synthetic assets. As we can see from the chart above, wrapped Bitcoin on Ethereum is dominated by WBTC, distantly followed by HBTC. According to the data, there is around $5B (167K BTC) of BTC on Ethereum. Some Users want to use their Bitcoin for something, and smart contracts could reduce counterparty risk to an attractive enough degree for people to risk their BTC in smart contracts. Stacks does have a market.
In the next post on my exploration of Stacks, I will briefly examine how Stacks works and present any interesting metrics I find on its use.
