Behind the Controversy of BRC-20 Index Upgrade: Choosing the Conservative Path of Stability and Security, or the Risky Path of Innovative Attack.

By: Xiyu, ChainCatcher

Recently, BRC20 has been deeply embroiled in a "fork" controversy. Unisat's insistence on following the Ordinals upgrade has been met with opposition and criticism from Domo, the founder of BRC20, tearing open the power struggle behind the BRC20 protocol.

Currently, the total market value of BRC20 tokens has approached nearly ten billion US dollars, making it the hottest and most popular product in the Bitcoin ecosystem. Every move related to it tugs at the heartstrings of cryptocurrency users. The controversy behind this storm will determine whether BRC20 and the Ordinals protocol will develop in sync or gradually drift apart.

Why is the controversy over the BRC20 upgrade attracting so much attention? Will it lead to a "fork"?

Unisat's Insistence on the Ordinals Jubilee Upgrade Sparks the BRC20 "Fork" Power Struggle

Unisat's announcement to follow the Ordinals Jubilee upgrade has sparked a storm of controversy over the BRC20 indexer, even elevating it to a battle for control behind the BRC20 protocol.

On January 2, Bitcoin Inscription Infrastructure UniSat announced that it would follow the Ordinals Jubilee upgrade and ensure that BRC20 continues to run on Ordinals without splitting into isolated protocols. In addition, they will release a white paper on January 31.

UniSat claimed that this is the best gift they have provided for BRC20, Ordinals, Bitcoin, and the community users since February 2023.

However, UniSat's statement was met with opposition and criticism from Domo, the founder of BRC20, who claimed that UniSat's wallet behavior might lead to conflicts in the BRC-20 accounting standards, attempting to "fork" BRC20 and seize control of the protocol, and called on the community to reject UniSat's upgrade behavior.

In response to UniSat's insistence on following the Ordinals upgrade, BRC20 founder Domo stated in a post that UniSat's insistence on the Ordinals Jubilee upgrade did not consider the serious consequences it might cause. He argued that these updates to BRC20 were reckless and ignored their peer indexers, which could harm the overall interests of the BRC20 user community. He also believed that this was not a one-time, technology-driven action by UniSat, but a long-planned and thoughtful strategic move to take control of the protocol.

In the post, Domo explained that the Ordinal 0.8/0.9 upgrade event highlighted the complexity of integrating new updates into the BRC20 standard. While he also desired to implement protocol improvements, it was clear that without a strong foundation of testing, coordination, and verification infrastructure under construction, these changes might not be safe.

Domo also added that L1Fxyz, a non-profit foundation dedicated to ensuring that the BRC20 standard is not controlled by centralized enterprises, is currently maintaining an indexer with the explicit intention of ensuring the security of all funds in BRC20 assets. We jointly implore the entire BRC20 community to reject UniSat's proposed fork and support a non-profit, security-first approach to maintaining the protocol.

As the founder of BRC20, Domo's statement quickly stirred up a storm in the cryptocurrency community. The debate over whether UniSat and Domo would adhere to the Ordinal upgrade sparked a BRC20 fork power struggle.

Why Doesn't the BRC20 Indexer Update Along with the Ordinal Upgrade?

Why is there so much controversy when UniSat insists on following the Ordinal upgrade? Why is it called the "BRC20 Indexer Battle," and what does it have to do with the BRC20 indexer?

To understand this, we need to know how BRC20 tokens operate. BRC20 is an experimental format standard created by Domo in March 2023 based on the Ordinals protocol for issuing homogeneous tokens, while Ordinals is a system for numbering and tracking the smallest unit of Bitcoin, satoshis (sats).

It can be seen that BRC20 is a meta-protocol built on the Ordinals protocol, which in turn is built on Bitcoin. However, because BRC20 is a token standard without smart contract functionality, it currently relies on centralized indexers to maintain the balance status of the entire system and to track the relevant transaction data of BRC20.

The so-called indexer is a database that can read and register all BRC20 transaction data, such as checking the name of the inscription that deploys the new token, tracking the wallet balance changes of minted tokens, and related transaction address data.

In simple terms, while Bitcoin serves as the "data layer," BRC20 tokens are inscribed on satoshis through the Ordinals protocol and are tracked and recorded by the indexer database for BRC20 token transaction data and account balance changes issued by Ordinals.

As a new protocol, Ordinals and many Ord developers are still continuously upgrading and iterating. Last year alone, multiple versions were released. Among them, the Ordinals Jubilee upgrade is the release of version 0.13.0, mainly to fix the curse inscription vulnerability. Different versions of Ordinals may track the binding of inscriptions differently, which could lead to errors in the BRC20 index database and report incorrect balances.

In October last year, users discovered problems with the sequence index of BRC20 tokens, with different versions running simultaneously on major exchanges, indicating the possibility of double payments and resulting in asset losses. They advised other users not to trade BRC20 tokens at that time. Subsequently, Unisat found that the problem was due to inconsistencies in the BRC20 index caused by different versions of the Ord software.

In addition, it was found that inscriptions #35321413 and #35329860 could be indexed by version 0.9.0 of the Ordinals protocol but not by versions 0.7.0 and 0.8.0. Because different markets adopt different versions of the Ordinals protocol, some inscriptions cannot be correctly indexed in some markets, leading to actual inscription number offsets.

To maintain the stability of the index, on November 9, after Bitcoin block height 816000, the BRC20 index standard was "frozen" at Ord v0.9, and all BRC20 indexers in the market need to be synchronized with Ordinals 0.9.0. Subsequently, they will no longer be updated along with the Ordinals protocol upgrades.

The reason for implementing this rule is that no matter from the perspective of TVL, users, infrastructure, wallets, or market capacity, BRC20 is already a massive protocol. Currently, the total market value of BRC20 tokens has long exceeded tens of billions of US dollars, with the number of issued tokens exceeding hundreds of thousands, and with the support of CEX exchanges, there are a large number of users holding BRC20 tokens. Ensuring the security and stability of BRC20 assets has become the top priority. If innovation leads to user asset losses, it will cause huge damage to the BRC20 ecosystem.

However, now UniSat has decided to follow the Ordinals Jubilee upgrade, which may lead to two different indexing standards for BRC20 on Bitcoin. This means that the choice of upgrading the indexing system is one accounting standard, while the non-upgraded one is an indexing standard. This could lead to differences in the rules of the accounting system, resulting in different balances in different places, or mismatches in account balances, leading to fragmentation of the BRC20 market due to different indexing standards of the Ord version.

Of course, the indexing standard of BRC20 will continue to be maintained at version 0.9.0. If the Ordinals protocol iterates to a more stable new version in the future, this standard should also be changed accordingly, similar to the node clients of the Bitcoin and Ethereum networks, which are updated with system upgrades. Domo has also expressed on the L1F forum that they are considering slowly adopting the Ordinals upgrade in maintenance mode, meaning freezing first and then upgrading later.

Will the controversy over the index upgrade cause a BRC20 fork?

Currently, there are three main viewpoints in the crypto community regarding whether the BRC20 index should be updated along with the Ordinals upgrade: the coexistence faction, the freeze faction, and the upgrade faction.

The coexistence faction refers to the simultaneous existence of the freeze faction and the upgrade faction, but this may lead to community division and confusion in BRC20 asset balances. The freeze plan means that everything remains frozen at the Ord 0.9 version, leading to isolation of BRC20 from the Ordinals ecosystem. The upgrade plan refers to all BRC20 indexers being uniformly upgraded to the latest version of Ord, leading to a period of instability in the short term. The freeze faction compromises and joins the upgrade faction, which may lead to a period of instability in the short term.

Members of the L1F organization led by Domo hope to postpone the upgrade because hasty upgrades may lead to more errors. First, Domo publicly opposed the UniSat upgrade, and then another representative of L1F, the ordinal aggregator BestinSlot, stated in a post yesterday that a serious error affecting the correctness of BRC20 balances was found in the Ordinals protocol version 0.13.1, strongly recommending that BRC20 indexers continue to use version 0.9.0 to maintain protocol stability. The post also pointed out that there are likely other bugs in version 0.13.1 that could affect the BRC20 protocol. Currently, stability is the top priority for BRC20, a protocol worth billions of dollars that cannot withstand continuous, untested upgrades.

However, the founder of the decentralized indexing protocol Trac stated that always sticking to version 0.9.0 of the BRC20 index is not the correct solution. We need an upgrade path and need to conduct testing several weeks to months in advance before switching to the new version.

BestinSlot's response to this is that freezing at version 0.9 does not mean forever; it has always been a temporary stability solution until the ecosystem finds a good upgrade path. But rushing to upgrade is definitely not a good choice at the moment.

The number one supporter of the upgrade faction, UniSat, hopes to push the BRC20 protocol forward. In an interview with Decrypt, they stated that the Jubilee upgrade is important for both Ordinals and BRC20. For Ordinals, this upgrade can fix historical legacy issues, and for BRC20, although the upgrade process may introduce new issues, these can be resolved in subsequent patches. For the entire ecosystem, the long-term benefits brought by the Jubilee upgrade are worthwhile.

UniSat also explained that the initial agreement to freeze at 0.9 was because it was understood to be a temporary measure, but when the freeze could evolve into a permanent separation from the Ordinals protocol, it would threaten future compatibility with the Ordinals protocol. UniSat chose to take the initiative rather than permanently separate. Despite the potential for division, UniSat still hopes to keep up with the development of Ordinals, allowing BRC20 to seamlessly interact with other protocols on the same platform.

Regarding the upgrade, the founder of UniSat stated that in order to ensure its smooth execution, other ongoing tasks have been postponed. Personally, I have canceled all meetings this week to fully focus on the upgrade.

Regarding the current controversy over BRC20, user @lilyanna_btc stated that whether it is a fork or a persistent freeze without an upgrade, it will bring significant flaws to the BRC20 protocol (such as high costs, inconsistent inscription numbers, etc.), allowing protocols claiming to be optimized (such as CBRC20) to take advantage. In addition, the Ordinals ecosystem protocol is facing the continuous emergence of Atomicals and increasing competition from other protocols in the Bitcoin ecosystem. As the most successful product of the Ordinals protocol, BRC20, whether it forks or is forcibly frozen without an upgrade, is not the best choice.

Some users also expressed that the upcoming Jubilee will bring about changes in the regulations that will affect the indexing of BRC-20. If the regulation changes affect the indexing, then the BRC20 protocol should publicly explain and follow the regulation agreement, rather than directly deciding whether to upgrade.

It can be seen that whether it is Ordinals or BRC20, these new entities are still immature, with various vulnerabilities and issues that need to be continuously addressed.

Now, BRC20 is at a crossroads of choice, and no matter which direction is ultimately chosen, it will have far-reaching implications for its future.

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