You may have noticed over the past week some unusual blockchain activity. Arbitrum, a L2 scaling solution for Ethereum, stopped producing blocks. Congestion on Polygon, another L2, and Avalanche sent gas prices sky high. And other chains suffered outages. The cause?
It appears meme coin and inscription fever are reaching other ecosystems, specifically those compatible with EVM or the Ethereum Virtual Machine.
According to a dashboard on Dune Analytics, transactions involving inscriptions on blockchains in that ecosystem are often accounting for more than 50% of total transactions, including for some major chains. Here is a screenshot of 24-hour activity, where inscription transactions account for more than 1% of the total:
The statistics are telling. Transactions involving inscriptions account for 91% of transactions on the Avalanche C-Chain, 79% on Goerli, 56% on Arbitrum, 21% on the BNB Smart Chain, 17% on Fantom, and 15% on Polygon. In the past 24 hours, 358 inscripted collections were created on BNB, 344 on Avalanche, 324 on Polygon, and 95 on Ethereum.
Given the amount of activity, it is perhaps unsurprising that gas prices have rocketed on numerous chains, befuddling users that have no interest in inscriptions and angering those that are used to normal, non-expensive fees. The source of the inscriptions fever this time around seems to be the creation of meme tokens on the chains, which lead to rampant financial speculation.
For instance, while CryptoSlam shows that Bitcoin is leading all blockchains in 7-day sales volume for NFTs, the top collections on that chain are really BRC-20 tokens, which are inscripted meme coins. In fact, of the top 10 collections for sales volume (all of which are on Bitcoin), just two would be considered NFT collections. Eight are meme coins.
Strap yourselves in, ladies and gents. Meme coin season is upon us.
Why resort to inscriptions instead of just launching tokens?
It may seem odd that people are launching meme coins in an ecosystem that already supports meme coins — in this case through the ERC-20 protocol. But a quick analysis of the system shows that inscriptions are not just easier to create, but also cheaper.
For instance, ERC-20 tokens require the creation of a smart contract, which may be costly depending on the service that the person is using. Inscriptions involve storing data in the “calldata” section. It is read-only and off-chain, therefore using less energy and costing less money than employing a smart contract to store data.
And while ERC-20 tokens function on the Ethereum blockchain, inscriptions can be created on any EVM-compatible blockchain, such as the ones mentioned in the previous section. That means Arbitrum, Avalanche, BNB, and Polygon can have their own meme coins, which may appeal to those that are maxis of those chains.
Still, they do clog the chains and result in higher than typical gas fees. Time will tell if the movement continues for long or burns out, like many meme coin seasons do. We’ll be here to report back on any developments in this ongoing story.