Bitcoin NFT marketplace Bioniq eyes lofty goal of alleviating network congestion

Bitcoin News

A new Bitcoin nonfungible token (NFT) marketplace aims to reduce network fees associated with the advent of Bitcoin Ordinals inscriptions by tapping into the Internet Computer Protocol (ICP).

Developed off the back of the creation of Bitcoin Ordinals in early 2023, Bioniq operates on the ICP and taps into its native Bitcoin integration to power the trade of Bitcoin-based Ordinals inscriptions.

Speaking to Cointelegraph on the eve of the platform’s launch, Bioniq CEO and co-founder Bob Bodily said the project has been in development since February 2023. The team has built a marketplace featuring Ordinals smart contracts auctions on the ICP, a complete cross-chain wallet between Bitcoin and the ICP, as well as an inscription tool.

“It had only been two weeks after Casey Rodarmor released Ord 0.4.0, and I knew Ordinals were going to be absolutely massive.”

The Bioniq team highlighted the growth in the market capitalization of BRC-20 tokens since their inception in Jan. 2023. The market cap now exceeds $3 billion, with over 42.6 million Ordinals minted to date. This has directly affected Bitcoin network congestion, leading to a spike in Bitcoin (BTC) transaction fees last seen since 2021.

Bitcoin transaction fees showed significant spikes in 2023 following the advent of Bitcoin Ordinals and BRC-20 tokens. Source: Blockchain.com

Bioniq’s platform features a smart wallet for users to manage private keys using Web3Auth. This allows users to log into the platform using conventional Web2 Google accounts while maintaining noncustodial control of their wallets and assets.

The platform also uses partially signed Bitcoin transactions (PSBTs) through the ICP’s Bitcoin network integration. This unlocks smart contract capabilities for Bitcoin, removing the need for users to use centralized cross-chain bridges.

ICP is a “fantastic Bitcoin sidechain”

Building on ICP also allows Bioniq to claim transaction finality times below two seconds, as well as zero gas or network fees. Its architecture provides optimized storage costs, averaging around $5 per gigabyte of data stored annually.

Bodily added that Toniq, the studio behind Bioniq, has been developing on the ICP since May 2021 and has extensive experience building smart contract wallets, marketplaces, NFT launchpads and collateralized NFT lending protocols:

“ICP is a fantastic Bitcoin sidechain right now because it has wonderful Bitcoin primitives at the protocol layer.”

Bodily explains that ICP operates a Bitcoin light node running fully on-chain, which facilitates reading the Bitcoin blockchain via native smart contract calls. The ICP also has a threshold digital signature algorithm, known as an Elliptic Curve Digital Signature Algorithm. The implementation allows ICP smart contracts to sign layer-1 Bitcoin transactions and broadcast them to the mempool.

“These protocol primitives also enabled us to build an Ordinals wrapper entirely at the application layer; we didn’t have to touch the consensus layer of the protocol at all. So it is very fast to build Bitcoin tech on ICP right now,” Bodily added.

Bitcoin users and trust assumptions

Cointelegraph also inquired whether Bioniq’s wrapping process could be a potential barrier to entry for users. Bodily admits that while the process is largely automated by the Bioniq wallet and only requires BTC, there are two considerations that are pertinent for more discerning users.

“Wrapping requires a Bitcoin transaction. This means you have to pay in order to wrap. This is a significant barrier. One way we are addressing the problem is by integrating open Nostr PSBT listings into Bioniq,” Bodily explained.

This integration means that PSBT listings stored on Nostr through decentralized Ordinals marketplaces OpenOrdex or Deezy Place will be accessible on Bioniq. He added that it removes the need to wrap Bitcoin transactions, as users could list directly on Bioniq using open PSBTs.

Perhaps more importantly, Bodily explained that the wrapping process requires “trust assumptions” on both protocols:

“Wrapping over to ICP means in addition to trusting Bitcoin, you are now trusting the Internet Computer Protocol. Some Bitcoin users won’t want the counterparty risk of bridging assets to another chain.”

Bodily adds that Bioniq is focusing on developing user experience ahead of inheriting Bitcoin’s security, which is ensured by the finality of layer-1 transactions. However, he envisions a “nice decentralization path” for applications like Bioniq.

This would involve the evolution from being built on a sidechain with additional trust assumptions to “becoming a Bitcoin sovereign rollup on ICP that is trust minimized.” The final step would see Bioniq becoming a Bitcoin zero-knowledge rollup (ZK-rollup) on the ICP with no additional trust assumptions, inheriting the full security and decentralization of Bitcoin.

“ICP fits perfectly into this plan as well because ICP can provide a replicated execution environment (decentralized sequencer) or validium (extra off-Bitcoin storage for rollups).”

Banking on Bitcoin’s value proposition

A number of NFT marketplaces already offer Bitcoin Ordinals auctions and trading, which begs the question of what an exclusively Ordinals platform will bring to the ecosystem.

Bodily believes that existing offerings that featured “softer pivots” to Ordinals on their platforms were hamstrung by confusing user experiences. Developing a “dedicated Bitcoin Ordinals marketplace, built for Bitcoin users natively” hinges on developing a native cross-chain, BTC-ICP wallet.

In addition, Bitcoin’s unchallenged position as the preeminent and largest cryptocurrency by market cap remains another drawcard for the continued interest in Bitcoin NFTs into the future.

“If you look at the numbers, 89% of people in the world have heard about Bitcoin, Bitcoin accounts for around 50% of the total crypto market cap, and Ordinals have done over $500 million in volume this year — so there is massive demand.”

Bioniq joins the likes of Ordinals Market as a Bitcoin-only Ordinals marketplace. Gamma is another Ordinals marketplace that directly mints to Bitcoin’s layer-1 chain. Ordswap was an early Ordinals marketplace that has since closed down after losing control of its website to hackers. Meanwhile, multichain platforms like Magic Eden prominently list Bitcoin Ordinals NFTs.

Magazine: Recursive inscriptions: Bitcoin ‘supercomputer’ and BTC DeFi coming soon

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