Bitcoin Ordinals Gone Wild
The introduction of Ordinals represented a significant innovation for Bitcoin in 2023. These allow users to attach further data to individual Satoshis, the smallest unit of Bitcoin, creating what are called inscriptions. Unlike many Ethereum NFTs with off-chain metadata, Bitcoin inscriptions store all data on-chain.
The adoption was remarkable: over 47 million minted by more than 260k users. However, the innovation proved divisive. While some celebrated increased utility and demand for block space, critics argued that inscriptions represented inefficient use of resources. Miners benefited substantially, earning more than $170 million in fees on validating blocks with inscriptions.
The inscription phenomenon quickly spread beyond Bitcoin. On Ethereum, 122k users inscribed over 2.7 million tokens. NEAR experienced record transaction volumes of 13.9 million daily transactions, while Gnosis saw 50% of transactions as inscriptions in early December. Not all blockchains handled the surge well — TON slowed down to a halt under the load.
The Rise of Modular Blockchains
Modular blockchains gained prominence by optimizing specific features while allowing developers flexibility elsewhere. A key focus was data availability (DA) — the ability for network participants to reconstruct chain state.
Celestia emerged as the leading DA provider, with its mainnet launching in October 2023. The network achieved a monthly rolling average of 12,000 transactions, while its native token surged from initial trading at $2.31 to $12.35 following a Polygon integration announcement.
Decentralized RPC Protocols
The year highlighted centralization risks when MetaMask users in various US-sanctioned countries suddenly couldn’t execute transactions anymore. The problem lay not with wallets but with RPC providers like Infura that connect applications to blockchains.
Decentralized RPC networks emerged as solutions. Pocket Network achieved over 540 million relays in the last 24 hours, while DRPC hit more than 5 billion requests during 2023.
Web3 Data APIs
API3 continued expanding its decentralized data provider network, becoming available across 11 chains with feeds for on- and off-chain data.
Airstack gained significant traction, particularly within the Farcaster, BASE, and broader Ethereum ecosystem, providing access to transactions, NFT metadata, and social protocol data.
Blockchain Indexers
The proliferation of chains, layers, and off-chain data sources created indexing challenges. The Graph celebrated its third birthday while adjusting its operations, with active Indexers decreasing by 41% quarter over quarter in Q3 ‘23.
Competitors made progress: Subquery integrated more than 100 networks in 2023 and expanded to 85 indexers. Subsquid served over 30 billion requests with more than 40,000 indexers deployed.
Key Takeaway
The year demonstrated that Web3’s infrastructure complexity demands robust solutions for data access, availability, and decentralization across increasingly fragmented ecosystems.