DRC-20 is a token standard that has gained popularity in the world of cryptocurrencies, particularly in the context of Dogecoin (DOGE). Alongside the successful use of the BRC-20 standard, new token standards such as ORC-20 have been developed, and now - DRC-20.
Table of Contents:
- What is DRC-20?
- Advantages and Disadvantages
- How Does DRC-20 Work?
- Impact of the DRC-20 Standard
- Conclusion
What is DRC-20?
On May 9th, the DRC-20 token was released, which is based on the same technological foundation as the BRC-20 coin.
Digital works, such as the BRC-20 standard, can be read at an extremely low value called Elon, which is part of DOGE. According to the established conversion, 100,000,000 Elon equals one DOGE.
When the need for the best solution arises, a creative potential emerges that helps save time. It is precisely for these purposes that the DRC-20 protocol was developed.
Using arbitrary content, it is possible to create digital artifacts of Dogecoin that correspond to both the criteria of interchangeability and non-interchangeability (NFT) of tokens, without the need for a sidechain or a special token.
During participation in Bitcoin Ordinals, the standard was named Doginals, and Cheems - a meme project based on Solana - adopted this new standard.
Initially, there was no DRC-20 token compiler. However, Enigma named some of the future DRC-20 tokens: Cheems, Dogewow, Misu, Pepe, and Meme. They have published instructions on how to create and issue these tokens.
Advantages and Disadvantages
Advantages:
- Unique investment opportunities: One of the main advantages of the early stage of the DRC-20 project is the immense potential it offers for investments. Being at the forefront of a new token standard, you can become an expert and delve into its possibilities.
- Minimal fees: The DRC-20 standard ensures incredibly low token creation costs - only 0.1 DOGE per operation. This cost-effective technology allows you to experiment with different tokens while minimizing risks to your own capital.
- Confidentiality: The DRC-20 protocol provides a high level of asset protection by storing the registry on the Ethereum blockchain. Unlike the BRC-20 protocol, where the ledger is centrally stored in a wallet, the DRC-20 protocol keeps the registry data on the Ethereum blockchain. DRC-20 transactions are executed on the Dogecoin blockchain. This ensures the complete security of assets even in case of wallet loss since the relevant information is always accessible. The method of linking data in the blockchain guarantees reliable asset confidentiality.
- High transaction speed: To achieve long-term growth and enhance the DeFi (Decentralized Finance) ecosystem, the BRC-20 protocol constantly introduces new features such as stablecoins and oracles. However, high gas fees can limit the onboarding of new users. With the introduction of the DRC-20 standard token on the Dogecoin blockchain, the number of daily transactions in the Dogecoin network is rapidly increasing, surpassing both Bitcoin and Litecoin simultaneously. The growing interest in the DRC-20 token standard has a positive impact on the Dogecoin network, causing speculative growth and increased activity.
- UTXO model: BTC, LTC, and Dogecoin are cryptocurrencies that do not support smart contracts, limiting developers' capabilities in creating programmable tokens and financial products. In contrast, the DRC-20 token has a large user base and offers unique "meme" functionality, which is the key to its potential.
Cons:
Limited infrastructure Currently, DRC-20 is in the early stages of development as it is a relatively new standard. This may result in a lack of specialized explorers, making it difficult to track wallets and transactions associated with these tokens. No exchange market Currently, there is a lack of established market for the DRC-20 token, which can make the process of buying and selling it more challenging. Limited liquidity and restricted access pose difficulties in this process. Origin and authentication risks Due to the absence of an effective method for tracking the authenticity and genuineness of DRC-20 minting, there can be challenges in ensuring their security. Without a reliable verification system, the created tokens can pose significant risks.
How does DRC-20 work?
The Cardinals protocol serves as the foundation for the token standard. Within this standard, the smallest indivisible unit of Dogecoin is called an "Elon". In this case, 1 Dogecoin is equivalent to 100,000,000 Elons.
The Cardinals protocol is a numbering scheme for Elons, and each Elon has a serial number that increases in the sequence they were mined. These serial numbers are called "cardinals". They give each Elon a unique identity. At the same time, the "inscription" refers to the act of text, images, audio, and video data on the Elon. Cardinals NFT refers to all the files obtained on Elons, which now mainly consist of images and words, associated with the Ordinals protocol.
Influence of the DRC-20 Standard
Remarkably, the daily transaction volume of Dogecoin has reached an unprecedented level, surpassing all previous records. Over the past few weeks, we have observed a tenfold increase in daily transactions compared to the standard level. This surge in activity may be related to the implementation of a revolutionary technology that allows for the creation of tokens on the Dogecoin network. Based on historical statistics, Dogecoin typically executes around 20,000 transactions per day. However, with the introduction of the DRC-20 token standard on May 9th, network activity instantly surged.
The sudden resurgence of interest in DRC-20 can be partially attributed to marketing campaigns and active messages spread through various Twitter accounts. According to these narratives, DRC-20 is a new promising token standard similar to the previous BRC-20, with the potential to generate significant profits by increasing the value of tokens created based on it up to 100 times. These stories have attracted the attention of several participants in the cryptocurrency community. With the release of DRC-20 and its counterpart, ORC-20, developers have gained the ability to create tokens that operate within the Dogecoin network and use DOGE as a transaction fee. This innovation not only enhances the value of Dogecoin but also lays the foundation for potential development of decentralized financial (DeFi) services on the blockchain.
Interest in DRC-20 arose from the frenzy surrounding the BRC-20 coin, which reached its peak at $1 billion on May 8th. This surge was driven by the fear of missing out (FOMO) on acquiring meme coins, which became highly popular. Unfortunately, due to the current market downturn, the value of BRC-20 tokens has decreased to $410 million.
Conclusion
The launch of DRC-20 tokens has undoubtedly attracted attention to the Dogecoin blockchain and its potential applications. It is important to note that the future path of Dogecoin and its ecosystem will be determined by the collective choices and actions of the community. It will be interesting to observe how this trend evolves over time.
Despite the increased transaction volume, there is discontent regarding the introduction of DRC-20 tokens. Critics argue that DRC-20 may cause network congestion and deviate from DOGE's primary goal of being used as an everyday currency.
High fees and network congestion are legitimate concerns for any blockchain as they can make the network costly and slow for everyday users, hindering adoption goals.
However, as more people learn about the advantages of DRC-20 tokens on the Dogecoin network, it is expected that transaction volume and network activity will increase even further.
