The "Fragmented" Bitcoin Domain: BRC-137 How to Build a Value-Driven Social Network on Bitcoin?

Author: Communities ID

The Ordinals protocol brings new possibilities to Bitcoin, transforming it from a network that merely serves decentralized payments and value storage into a versatile chain with a rich ecosystem and multi-layered applications. With the increasing adoption of blockchain technology and the surge of Bitcoin ETFs, various token issuance protocols and NFT protocols derived from the Ordinals protocol have emerged. Inspired by Ordinals, Bitcoin domain names have also come into existence due to its simplicity and scalability.

btcName and Sats Name Service

The Bitcoin ecosystem's domain name track has not yet established a broad consensus foundation like Ethereum's ENS. From btcName to Sats Name Service (SNS), they have defined domain names on Bitcoin in different ways.

btcName adopts a simple plain text txt format, directly showcasing the application potential of the Ordinals protocol. In contrast, Sats Name Service draws on the commonly used json format in inscriptions. When inscribing, the Protocol field ("p": "sns") is required to index the protocol, while also indicating the type of operation ("op": "reg").

Both have their pros and cons; btcName is purer and has lower inscribing costs. However, due to the richer fields in SNS's json format, it can expand upon btcName. In addition to names, SNS can also include avatars, reverse resolution addresses (rev), and relay inscriptions, meeting the needs for diversified identity verification.

Domain name 0000.btc following the btcName protocol (data source: GeniiData)

Domain name 0000.sats following the Sats Name Service protocol (data source: GeniiData)

Although the community believes there is a certain level of consensus between btcName and SNS, the Bitcoin ecosystem's domain names are still in their infancy compared to ENS's millions of mints and over $10 million in annual profits.

The Inscription Craze and the Silence of Bitcoin Domain Names

Since their inception, Bitcoin domain names have indeed gained some popularity within the OG circle of the Ordinals ecosystem. However, compared to BRC20 tokens that create myths of thousands of times in appreciation, btcName and SNS have not stirred much excitement, which seems out of place in an extremely FOMO market. The silence in the domain name track can be attributed to three main reasons:

• Unlimited issuance dilutes the value of existing domain names.
• Poor liquidity; currently, the daily transaction volume of domain names in various inscription markets is in single digits. Since the most basic use case of DID is as a personal identity identifier, the value of most domain names and DIDs is assigned by the creators themselves, making it difficult to circulate widely in the secondary market.
• The Bitcoin ecosystem has yet to have scenarios for large-scale use of domain names like Ethereum. Without a wealth effect, these domain names will gradually be forgotten.

Truncated Domain Names: What New Tricks Does BRC-137 Play?

As the market gradually forgets Bitcoin ecosystem DIDs, the Communities ID team released the first composable DID protocol BRC-137 on January 1, 2024. This protocol proposes a brand new DID format ------ \<DID>.(\<TLD>)*.

Compared to the common practice of using secondary domains as DIDs in traditional Ethereum and Bitcoin domain names, the BRC-137 protocol splits the DID into two parts, dividing the commonly combined domain names into BRC137-DID (prefix) and BRC137-TLD (suffix). The prefix can be used for resolution independently or combined with multiple suffixes to present a traditional secondary domain name format.

The combinatorial resolution mechanism proposed by the BRC-137 protocol

Based on this combinatorial model, the BRC-137 protocol not only completes the basic resolution function of DID but also creates many new ways to play.

Asset Innovation

BRC-137 creates two entirely new asset types: the prefix "BRC137-DIDs" representing social individuals based on BRC20 tokens, and "BRC137-TLDs" social nodes that gather isolated individual consciousness.

BRC137-DIDs are a new asset that combines the concepts of EIP-3525 (semi-fungible tokens) and the BRC-20 protocol, achieving seamless conversion between DIDs and fungible tokens, significantly increasing the liquidity of DID assets.

At the same time, BRC137-DIDs and BRC137-TLDs are based on the fixed total supply of BRC20 and NFTs, and as user registrations and the development of the Bitcoin social ecosystem continue, they will experience ongoing deflation, providing long-term appreciation potential for holders.

Combinatorial Mechanism

Beyond asset innovation, the composable DID innovation not only enhances the flexibility of domain names but also introduces a new identity verification and social interaction model to the Bitcoin ecosystem.

Through BRC137-TLD, organizations and communities can establish their own brand recognition systems. Additionally, holders of BRC137-TLDs can earn royalties from the DID combinatorial process. This innovative economic model further promotes the construction of social graphs and the monetization of identities within the Bitcoin network.

The combinatorial mechanism in the BRC-137 protocol

Value-Driven Bitcoin Social Network

Starting from the DID framework defined by the BRC-137 protocol, it is easy to see that it adds a layer of social attributes to DIDs based on SNS's diversified identity verification. An individual can act independently using the prefix as their identity in the decentralized world of blockchain; they can also pay a royalty to combine with a suffix, resolving into a new secondary domain identity for activities.

The combination of BRC137-DID and BRC137-TLD abstractly expresses the behavior of building connections in human society on-chain, which is fundamentally different from the traditional fixed secondary domain form of DID. The actions of combining and paying royalties are defined as operations at the protocol level by code. However, in the real world, these simple actions can be imbued with different meanings.

• Joining a Bitcoin on-chain community or group.
• Paying royalties to holders of BRC137-TLDs in exchange for paid services.
• Joining the Layer2 GameFi user network built on the Bitcoin network based on BRC137-TLD with a unified identity of BRC137-DID.
• ……

Based on these use cases, it is clear that holding a BRC137-DID is not just acquiring a domain name; it is a key to unlocking a value-driven Bitcoin social network. Additionally, holding a BRC137-TLD not only secures the naming rights of the root domain but also serves as a node in that social network, continuously mining the value of the on-chain social graph.

Conclusion

BRC-137 is an important innovation in the expansion of the Bitcoin network from a peer-to-peer electronic cash system to a decentralized social network. It provides a novel, composable DID that combines identity verification with social networks. Its unique asset innovations and combinatorial royalty mechanisms not only enhance the value of DIDs but also promote the formation of a decentralized, value-driven social layer on the Bitcoin network.

Although BRC-137 breaks out of the inherent thinking paradigm and reconstructs the concept of DID from an asset logic perspective, whether it can lead the entire track out of the shadows remains to be seen, given the multiple tests of technology, use cases, and market that the entire DID track faces.