How Avalanche and Polygon View an Inscriptions Surge
As inscriptions surge on both chains, Avalanche and Polygon strive for Crypto Project of the Year
By: André Beganski
December 20, 2023
NFT-like assets on Bitcoin called “inscriptions” were introduced this year by the launch of Ordinals. But as versions of the protocol spread to different networks in Web3, an associated jump in transactions has presented fresh hurdles for certain projects.
The Ethereum layer-2 network Arbitrum succumbed to a surge of inscriptions last week, going offline for an hour and a half amid a sudden increase in network traffic. A bevy of inscriptions has recently hit Avalanche and Polygon too, among a handful of other platforms, which just so happen to already support NFTs.
“Right now, you're seeing a lot of speculation on the inscription side, you're seeing a lot of botted activity,” said Ava Labs VP of Marketing Jay Kurahashi-Sofue, describing the trend as an effective “stress test” for networks where inscriptions crop up.
“Avalanche is one of the few platforms that was able to stand [its ground] and scale pretty well,” he said, referencing the “insane amount of transactions and gas consumption in the last few weeks” on Avalanche’s so-called C-Chain.
Over the past three days, Avalanche users have spent $15 million on gas fees making inscriptions, according to a Dune dashboard created by Hildobby, a pseudonymous researcher at VC firm Dragonfly. And on November 16, a wave of 14 million inscriptions sent gas fees on Polygon’s proof of stake chain skyrocketing 1000%, per Decrypt.
“To maintain the robustness of the chain and for the validators to continue to validate transactions, even with the higher congestion — It's been amazing to watch,” said Brian Trunzo, Head of BD for North America at Polygon Labs, adding that inscriptions, at one point, pushed transactions on Polygon to eight times what they normally are.
While neither Avalanche nor Polygon have folded yet under the computational weight of inscriptions, Kurahashi-Sofue underscored Avalanche Subnets as a solution that prevents participants from competing with other Avalanche users in terms of gas fees.
“Flexibility is really important,” he said. “We're seeing that firsthand with the load of inscriptions — You can't be a financial institution and also competing with inscriptions.”
When it comes to enterprises tapping blockchain tech, Trunzo said that the retail industry has plenty of “touch points for crypto,” whether that’s in areas like logistics, digital receipts, or post-sale communications. Highlighting Starbucks’ use of Polygon for its Starbucks Odyssey rewards experience, he said rewards programs have been a logical place for firms to dip their toes into the Web3 space.
“I think it's been a great use case for large enterprises to learn some lessons and start to disseminate these findings,” he said. “And I think loyalty rewards was a really great Trojan Horse for retail, particularly in the case of Starbucks.”
Loyalty reward programs have been an effective way for firms to plug into Avalanche’s ecosystem too, said Kurahashi-Sofue, describing it as an easy lift for firms looking to upgrade their existing royalty systems.
“We found a lot of success there because that's simply a low-hanging fruit,” he said. “If you really distill down what loyalty rewards are, it is basically a centralized blockchain with a bunch of intermediaries in between.”
But a lot of firms that utilize Avalanche aren’t infusing their marketing materials with crypto lingo, Kurahashi-Sofue noted, as the tech serves as a background element.
“A lot of projects, especially in the Avalanche ecosystem, decided to forego the classic marketing decision of putting the protocol up front and center,” he said. “Netflix isn't saying, ‘Hey, this is Netflix, powered by AWS’ [...] You just have a streaming service that gets you content and that's all you need to know.”
As retailers gain more familiarity with Web3, Trunzo said that he’s excited about the prospect of phygital goods. Enabling something like a piece of clothing to be embedded with a chip that’s tied to an NFT serves both businesses and consumers, he said, by stifling the spread of knock-offs and enabling new experiences.
“That's really what the retailers want,” Trunzo said, pointing to an initiative between the NFT company Legitimate, shoemaker PUMA, and entertainment firm Roc Nation. “Puma said, ‘Hey, we actually want to create unique stories with our physical goods. We also, behind the scenes, want to combat counterfeit items.’”
“At the end of the day, they don't know that it's an NFT,” Trunzo continued. “They just know that it's a sneaker, and they're able to interact with it very casually, as you would with any other Web2 or mobile technology.”
Avalanche advanced past Sui in Round 1 voting among our community of NFT holders, while Solana topped Flow.
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