As the hype around Ordinals NFTs continues, developers are now proposing the addition of two features to the Bitcoin network – staking and yield farming. This has sparked a series of comments from the crypto Twitter community. A major concern is its impact on the Bitcoin blockchain and its transaction fees.
The Bitcoin network was not originally designed to support the trading of non-fungible tokens. Bitcoin developer Casey Rodarmor created the idea for Bitcoin Ordinals in January. With this innovation, the Bitcoin blockchain was able to host NFTs like smart contract-enabled blockchains.
Proposed Staking and Yield Farming
A Twitter user with the pseudonym 0x_web3, published a Twitter thread that gave an overview of how staking and yield farming will work on the Bitcoin network.
Yield farming is a process of generating rewards by depositing cryptocurrencies into a decentralized app (dApp). This feature is common in smart contract-enabled blockchains like Solana, Polygon, Avalanche, and others.
For Bitcoin to support this, BRC-20 tokens, an experimental token standard for the minting and transferring of fungible tokens on the Ordinal protocol, come to play.
“While inscribing the ‘deploy’ method of BRC-20, we introduce an extra parameter called “yield”. ‘Yield’ indicates appreciation of tokens per block,” 0x_web3 wrote.
On the other hand, the staking feature allows a user to stake a cryptocurrency in a network to support its security while receiving crypto rewards. This feature is unique to the proof-of-stake (PoS) consensus mechanism.
For Bitcoin, which uses a proof-of-work (PoW) model to support staking, the Twitter user proposed that a staking address be introduced. This should allow users to transfer tokens and receive them back with rewards through transfer calls.
Impact On the Bitcoin Network
Several users bought the idea of introducing Bitcoin staking and yield farming features. On the other hand, some users were skeptical of the plan.
The reason behind their concerns is not far-fetched. If the proposal goes through, a major impact it would have on the Bitcoin network would be the rise in transaction fees. The Bitcoin blockchain is already experiencing congestion in transactions and high transaction fees due to Bitcoin Ordinals. This issue has benefited other blockchains like Litecoin.
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