APPLICATION

The recent craze in major public blockchain token markets has brought real pressure tests to network performance.

share
The recent craze in major public blockchain token markets has brought real pressure tests to network performance.

The market frenzy for major public blockchain projects' tokens continues. In addition to the BTC blockchain, tokens from other networks have also successfully attracted market attention, bringing significant minting volume and trading volume. However, this has also caused delays in some networks, including Avalanche and zkSync.

This article is not investment advice.

The Craze of Tokenization in Various Blockchain Markets

Tokenization has become the biggest speculative narrative in the market recently.

In the BTC ecosystem, tokens are no longer limited to the BRC-20 protocol. Now, there are ARC-20 standards supported by the Atomicals protocol on the Bitcoin network, NostrAsset supported by Taproot Assets from the Lightning Network, and the Runes protocol to enhance the Ordinals user experience, and more.

There are even blockchain games being developed using tokenization systems, such as Bitmap and PixelWar.

Apart from the BTC blockchain, other networks including Ethereum, Polygon, Solana, Famton, etc., have seen tokenization projects emerging, successfully attracting market attention with significant trading volumes and minting amounts.

Yesterday, the first tokenization projects on zkSync and Celestia have opened for minting. The former completed minting within a few hours, while the latter experienced RPC endpoint failures and paused minting due to over a million access requests within a short period.

First tokenization project minted on zkSync network Source

All these phenomena indicate the market sentiment towards tokenization and the current short-term narrative, which may bring a speculative atmosphere at the beginning of a potential bull market. Although it revitalizes the industry, almost all projects at this stage require careful attention to corresponding risks.

Moreover, tokenization projects have caused some networks to experience downtime risks.

Tokenization Craze Leading to Network Delays

Due to market sentiment, many tokenization projects have focused on completing minting within a short period, leading to abnormal situations and even downtime in some networks.

Avalanche

The tokenization ecosystem on Avalanche began as early as June this year, with many token projects such as AVAL, ASCT, AVAV utilizing the ASC-20 standard.

However, the project that caused the downtime on Avalanche yesterday was BEEG, a token proposed by @cryptofishx, the founder of the largest decentralized exchange on the chain, Trader Joe. The project triggered a frenzy of minting, causing a more than fivefold increase in on-chain fees and burning costs, resulting in network delays.

Burned fees on Avalanche C Chain in the last seven days Source

@cryptofishx later apologized and mentioned that the performance design of the Avalanche network should be updated, and the usage of a single DApp should not be limited by network performance, affecting the entire network.

zkSync

On the other hand, the minting of the first tokenization project on zkSync yesterday also caused network delays. The blockchain explorer did not show the blocks, but developer Anthony Rose mentioned on Twitter that it only affected 15 minutes of user activity. The community views this event as a practical stress test for the network.

Tokenization Market Still Faces Insufficient Infrastructure

Driven by market sentiment, not only general users but also specialized teams, scientists, and studios are using various means to mint tokens, similar to the NFT craze in 2021. This significantly challenges the network's ability to handle peak usage, allowing the market to test whether existing blockchains can operate normally under extreme conditions.

Besides network performance, there are many unknowns regarding whether the tokenization industry can sustainably operate. Issues such as insufficient infrastructure, exchanges, blockchain explorers, or tokenization projects' business models for sustainable operation lack clear development and outlines. Participants in the market frenzy must be mindful of their asset risks.

This article is not investment advice.