A recent phenomenon in the cryptocurrency space, Ethereum Virtual Machine (EVM) inscriptions, has created a surge in demand for low-cap crypto assets. However, this trend has also led to significant challenges, including blockchain network outages and concerns about rationality within the crypto community.

Blockchain networks are overwhelmed by EVM inscriptions

In the past week, several blockchain networks, including Arbitrum, Avalanche, Cronos, zkSync, and The Open Network, have experienced partial or full outages due to the overwhelming number of inscriptions. Celestia, a modular data availability network, became the latest victim of this trend, with its block explorer showing signs of strain on December 18.

Arbitrum confirmed on December 16 that a sustained surge of inscriptions had triggered a 78-minute outage on its network. To address these challenges, Cronos implemented a network update to activate dynamic transaction fees that adapt to transaction volume, enhancing its ability to withstand traffic spikes caused by high demand for inscriptions.

EVM inscriptions allow users to embed data, such as text, images, and videos, directly on-chain, similar to Bitcoin Ordinals. This functionality has become popular not only on Ethereum but also on other EVM-based chains. 

Users leverage inscriptions to create BRC-20-type tokens, often themed after various collections or with unique tickers. These tokens are being minted and transferred to themselves repeatedly, primarily because minting costs are lower than smart contract interactions.

Crypto developer Shardul Mahadik likened Bitcoin inscriptions to writing on a currency bill, while EVM inscriptions resemble adding remarks to a payment app. This approach has gained traction, allowing retail traders to access low-cap crypto assets without relying on traditional methods like initial coin offerings (ICOs) that have become increasingly regulated and restricted.

Mixed perspectives on EVM inscriptions

Opinions on EVM inscriptions vary within the crypto community. Some see it as a revolutionary way for retail traders to participate in the crypto market’s early stages. Burning gas and utilizing block space for inscriptions offer open access to anyone interested, presenting one of the last remaining avenues for retail investors to get in on the ground floor of new crypto projects.

However, others, like Michael Rinko, an analyst at crypto research firm Delphi Digital, view EVM inscriptions as an irrational trend driven by hype. The lack of a clear rationale behind this surge raises concerns about its sustainability.

Crypto influencers and cautionary warnings

ZachXBT, a blockchain sleuth, has warned about crypto influencers promoting low-value cryptocurrencies through EVM inscriptions. He suggests that some influencers resort to these tactics even during upward market trends, potentially leading to losses for unsuspecting investors.

The recent surge in EVM inscriptions is evident from the substantial gas fees being spent. On December 18, more than $6 million was spent on gas for inscriptions, while on December 16, it set a record with $8.3 million in gas fees.

Due to rising gas fees on Ethereum and other EVM-compatible chains, minters have begun to switch to Polygon. This layer-2 scaling solution has gained popularity due to its cost-efficient gas fees. It is an attractive alternative for those looking to participate in the inscription frenzy without breaking the bank.