Bitcoin Ecosystem New Protocol Trend: Focusing on Spark and its LRC20 Ecosystem

The Bitcoin ecosystem has recently sparked a new wave of protocol enthusiasm, but most projects are merely leveraging the inscription concept for speculation. Amidst this chaos, Spark has emerged as a legitimate Bitcoin L2 project. On May 20th, a well-known trading platform announced its integration with Spark and will co-host an event on May 26th. Spark launched its mainnet test version on April 29th, and the first LRC20 token, FSPK, was born on May 8th. Despite a poor minting experience, it has still triggered community FOMO, with FSPK's current OTC price having more than doubled.

Spark: A Bitcoin Layer 2 Scaling Solution Focused on Payments and Settlements

Spark is an off-chain scaling solution that does not support smart contracts and virtual machines. It allows users to conduct instant, low-fee transactions of Bitcoin and other tokens off-chain, while natively interoperating with the Lightning Network.

The Spark network currently has two operators, and theoretically, all transactions require the joint authorization of at least one operator and the user. This design poses potential risks; if both operators go down simultaneously, the safety of user funds may be threatened.

However, Spark still maintains its non-custodial and Bitcoin native characteristics. It uses a Bitcoin-based shared signature protocol and operates in the form of a distributed ledger. User funds are always non-custodial, meaning that even if the operator disappears or refuses to cooperate, users can forcibly withdraw to the Bitcoin mainnet, ensuring the safety of their funds.

The parent company of Spark, Lightspark, was founded by former PayPal president David Marcus. In May 2022, Lightspark completed over $170 million in Series A financing, with a luxurious lineup of investors.

On April 29, Spark launched its public beta, and the core functions are fully operational. Transactions on the network are temporarily free, and only on-chain fees are charged for Bitcoin deposits and withdrawals. The official statement clearly indicates that Spark has no token plans, but the LRC20 protocol will soon be mined by the market.

LRC20: Spark Native Token Protocol

LRC20 is a native token protocol launched by Spark, compatible with the Bitcoin mainnet and Lightning Network, but currently only supports operation on the Spark network. Anyone can issue LRC20 tokens, but they must first broadcast a transaction on the mainnet, embedding the token information in the OP_RETURN output.

LRC20 does not support fair issuance; only the original issuance wallet can mint. It supports freezing and burning operations, and the original issuance wallet holds significant power, posing a centralization risk. Currently, there are several widely recognized LRC20 tokens in the market:

1. FSPK(8b93 end ): the first LRC20 token, total of 21 coins, off-market price 12-20 dollars/piece.

2. FSPKS: Revised version of FSPK, with a total supply of 21 million coins, airdropped to FSPK holders at a ratio of 1:1000.

3. FSPK(6c82 ending ): Total supply 21 million coins, airdropped to the first batch of FSPK minters, off-market price 4-10 USD per piece.

4. SAT: Total supply of 210 trillion coins, airdropped to FSPK minters, no off-market price available.

5. SNOW: Issued by a legitimate project, with a total supply of 21 million coins, off-market price of $19 per piece.

Early Projects in the Spark Ecosystem

The Spark ecosystem already has some steadfast builders collaborating with multiple projects:

1. sparkscan: Spark network explorer, which can query address balances, transaction records, etc.

2. SparkSat: The first fully functional Spark web wallet, supporting asset management, trading, and LRC20 issuance.

3. Flashnet: One of the Spark operators, is developing a Bitcoin native DEX and has collaborated with a stablecoin protocol to launch USDB.

The Spark ecosystem is still in its early stages, but it has already shown potential. As more projects join, it is expected to form a prosperous Bitcoin L2 ecosystem.