The recent introduction of the Ordinals
Protocol illustrates how L2s can meet the demand for new use cases of Bitcoin outside of a store of value, while also serving as a scaling solution to facilitate more timely and cost effective transactions.
To the delight of miners, renewed demand for Bitcoin block space due to Ordinals caused total transaction fees to surpass last year’s totals in just the first five months of the year, hitting levels not seen since April 2021.
But with this increased demand, transaction finality and costs for users have taken a significant hit. Today, the average transaction fee is up 213% compared to last year as users have been clamoring to have transactions validated and settled.
The advent of Ordinals and their subsequent rise proves there is appetite for Bitcoin outside of just a store of value. With a carefully crafted layered strategy, L2s not only unleash hundreds of billions of dollars in latent value to participate across use cases encompassing DeFi, Web3, and payment solutions, but also ensures Bitcoin doesn’t become bogged down and plagued with costly fees hindering the network’s performance.
Perhaps most importantly, this transformative shift doesn’t just pave the way for a thriving ecosystem built on Bitcoin but also incentivizes miners with the promise of profitability via transaction fees, preserving the network's security and longevity for years to come.