Summary
Inscriptions, which are a coding technique for creating pseudo-NFTs on Ethereum, have seen a decline in activity on leading Layer 2 networks and other chains. Data from Dune Analytics shows that inscriptions still represent a significant share of activity on Avalanche and Ethereum’s Goerli testnet, but have dropped on other networks. Inscriptions accounted for 77% of transactions on Avalanche, 67% on Goerli, and less than 5% on BNB Chain and OP Mainnet in the past week. The decline follows an initial surge as inscription protocols were introduced across EVM-compatible chains. However, inscription tokens are not composable with third-party protocols and have limited utility beyond speculation.
Key Points
1. Inscriptions, which were initially popular on Ethereum L2 networks, now represent a small fraction of transactions on leading platforms such as Avalanche, Ethereum’s Goerli testnet, Polygon PoS sidechain, and BNB Chain.
2. In recent weeks, inscriptions accounted for a significant portion of transactions on certain networks, ranging from 77% on Avalanche to 1% on Polygon PoS Chain. However, these numbers have since decreased, indicating a decline in inscription activity.
3. The surge in inscription activity was fueled by the launch of native inscription protocols on EVM-compatible chains. Transaction fees on networks like Near, Polygon, and Fantom skyrocketed following the introduction of these protocols. However, inscriptions lack composability with third-party protocols and require off-chain indexing, limiting their utility in the DeFi space.