Inscription Fever Causes Surge Transaction Fees Across Chains
The recent surge in inscriptions has caused transaction fees to increase across multiple blockchains, as Bitcoin average transaction fee crossed $35.
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Transaction fees surged on several blockchain networks over the weekend, and inscription activities reached new highs. What originally started on the Bitcoin network has now spread to other chains, and the demand for block space is costing more users. The incident further highlights the controversy over inscriptions and whether they have any real utility.
Bitcoin Transaction Fees Exceed $35
Average transaction fees on the Bitcoin network reached $37.59 on December 17, according to data from Bitinfocharts. This marks the highest transaction fee on the network since April 2021, when the transaction fees peaked at $59.88. The weekend surge in fees was mostly a result of Ordinals inscriptions.
Mempool reported 347,000 unconfirmed transactions on December 16, with memory pool usage exceeding 300 MB to reach 1.41 GB. Things now look slightly better, with the minimum transaction fee dropping to $10.65. However, there are over 291,000 unconfirmed transactions, and memory usage is 1.43 GB.
EVM Chains Spend Millions on Inscriptions
Meanwhile, the inscription frenzy has spread to smart contract networks. Networks such as Avalanche, Polygon, BNB Smart Chain, Arbitrum, and OKLink have all enabled inscriptions. The result has been increased transaction fees and network outages in some cases.
Unlike Bitcoin, where the inscription is on satoshis, the EVM inscription is on transaction call data. This is the optional data sent in a transaction and is cheaper than a smart contract.
Since the introduction, inscriptions have taken off, with millions spent on gas fees. The amount spent peaked on December 16 at $8.3 million. Avalanche and Arbitrum saw the most of this with $5.6 million and $2.1 million, respectively. Several chains, including Arbitrum, Avalanche, and zkSync, have experienced outages or degraded experience due to inscriptions.
Concerns About Inscriptions
The impact of inscriptions has made it a controversial topic in the crypto community. Among Bitcoiners, its block space consumption and increase in transaction fees are the major issues. Some people described inscriptions as a bug.
However, miners might disagree. Fees paid for inscriptions have reached $174.63 million (4,269.28 BTC). Thus, some see it as another way for miners to make money.
On EVM chains, it is more difficult to find a positive argument in support of inscriptions. Experts consider it a step backward because EVM chains can create NFTs. Unlike Bitcoin inscriptions, which are forever on-chain, pruning transaction call data is possible on EVM chains, and such inscriptions can be lost. There are also other disadvantages, such as the reliance on off-chain indexes.
Despite these concerns about inscriptions on the Bitcoin network and their clear disadvantages on EVM chains, inscriptions continue to increase. Advocates for inscriptions believe that it would encourage the development of Bitcoin Layer-2 solutions. For these EVM chains, it remains to be seen if the hype will last.
