Trac Network

The Ordinal and BRC20 ecosystems were born unique. Their developers did not release comprehensive protocols backed by academic whitepapers and years of in-depth research. Ordinal was born from a few website posts, and BRC20 was born as an idea on Twitter. What followed the release of Ordinal and BRC20 was an explosion in popularity of meme coins, scams, and overnight projects. But, such was the demand for new Bitcoin use cases, that BRC20 hit the $1M market cap within a few months.

Now, this ecosystem is starting to change. We are starting to see the emergence of more intentional and long-term projects, which utilise Ordinal technology. It's about time. There are some "fruits" that protocols can "reap" if they go first to market with decentralised indexers, scalability, functionality, and other things.

One such project is the Trac Network. Let's take a brief look at it!

What is Trac Network?

Trac Network is a network of protocols and platforms under the support of their parent company, Trac Systems. Trac Network aims to release a series of tools for users, developers, and Bitcoin holders to utilise Ordinal technology.

Trac Network announced 3 core projects: Trac Core, TAP Protocol, and Pipe Protocol.

Trac Core

So far, Trac Core is the most exciting Trac Network project.

Ordinal and BRC20 require indexers to function. The indexer indexes the inscription and ensures that everyone participating in the Ordinal protocol agrees on its status. Ordinal needs an indexer for their inscription discovery and for compiling their Ordinal.

• For example: If people exchange sat inscriptions, they must run the same indexer to ensure proper sat exchange. Therefore, indexers are key infrastructure for the entire Ordinal ecosystem.

The most common indexer is ord v0.9. However, the new version ord v1.0 broke BRC20 until the market decided to "freeze" their indexers to the old version. This situation highlights the importance and challenges surrounding indexers. Not only is the version important, but also the relationship with other indexers.

• For example, Unisat has its own indexer, as well as Hiro's wallet. It is possible that other indexers will emerge in the future. The question about indexers highlighted the issue of BRC20 and Ordinal. Currently, everyone is using the ord indexer because of its popularity. That may change.

The Ordinal team is the maintainer of ord and the one that releases updates. In a way, the Ordinal team controls the Ordinal market because their ord software is at the centre of it. The Ordinal team is honest, open, and competent. But, 1 sector of the Bitcoin ecosystem built on software controlled by this 1 entity is a recipe for disaster. Therefore, to reach its potential, Ordinal needs a decentralised indexer.

This is where Trac Core comes in. Trac Network markets Trac Core as a decentralised indexer and oracle managed by $TRAC token holders. As a decentralised indexer, control of the Ordinal protocol is in the hands of token holders, which also helps ensure that the Ordinal ecosystem is skewed in favour of the "official" inscription index.

However, this is all theoretical, as I have yet to see a working indexer from Trac. Nonetheless, Trac Core's value proposition is strong. Especially if they decide to support more blockchains. Trac announced their intention to support DRC20, the Doge token standard.

TAP Protocol

Trac Network's second product is TAP Protocol. I am less interested in this offering. There isn't much information about what exactly TAP is and how it works. But, it is said to be a "multi-asset metaprotocol for Ordinal Bitcoin".

Ordinal metaprotocols usually denote an inscription standard. Bitmap is a metaprotocol, so are BRC20, BRC721, ORC20, etc. TAP Protocol mentions OrdFi several times, indicating that TAP will focus on utilising Ordinal technology for DeFi. Articles about TAP indicate that it will be a token standard with many DeFi functions, such as staking, LP pools, NFTs, etc.

I am less interested in this because the 'network effect' of BRC20 is very strong. I have a hard time seeing BRC20 being replaced by a new metaprotocol - with the exception of Runes (which will be released in April). The BRC20 market is very strong, and attracting people to the adoption of new metaprotocols is complicated. Imagine the release of many new DeFi protocols on Ethereum that use other token standards than ERC20. It wouldn't work.

However, there may be some kind of compatibility between TAP and BRC20. It might permit migration between the two, but it's too early to speculate. Regardless, I think Runes and BRC20 will be better known than this. Also, TAP will have its own token ($TAP) which is yet to be released.

Pipe Protocol

The third and final product from Trac Network is Pipe Protocol. It continues Bitcoin's UTXO system and focuses on artwork and collectibles. Information about it is very limited, but according to the description, it looks like a Bitcoin Stamp.

Stamp stores 8KB of data at the output of a Bitcoin transaction. Unlike Ordinal which stores data in the witness, Stamp cannot be pruned (people criticise this for meeting the UTXO set).

However, since there is very little information on this protocol, I will not provide any analysis on this. Like Tap Protocol, Pipe Protocol will have its own governance token.

"Chain" Governance

Trac Network is also experimenting with a strange governance method, named "chained" governance. There is no full explanation of how this model works, but each token can vote in the governance of other protocols. Some images in the article indicate that voting will "cascade" like a waterfall. $TRAC can vote in TAP Protocol, $TAP can vote in Pipe, and $PIPE can vote in... somewhere else (?).

However, this process makes less sense as $TRAC appears to be the only token people want to hold, as it provides the best exposure in this ecosystem. Well, further analysis will have to wait for the next information on this.

It seems clear that holding $TRAC can qualify for airdrops of other tokens in this ecosystem. The article mentions the airdrop mechanism several times.

Token Dynamics

One thing to note is 1 company behind all this. Trac Systems, the parent company of Trac Network, will probably control a significant amount of the tokens of the above protocols. And as a company, they may have some equity that has been sold to various investors. And if each product has its own token, dilution will be a real issue.

There is also the difficult question of who is "entitled" to the protocol revenue: The token holders or Trac Systems? I don't know.

Concluding Remarks

Without a doubt, Trac Network is a project worth monitoring-even if only for the reason of its decentralised indexer. The emergence of the team that built this has been eagerly awaited. Ordinal and BRC20 require some kind of decentralised indexer ownership/governance. Only 1 team controlling the development of this market is an additional risk to the system. A centralised entity could tell the ord developers to censor some inscriptions and make them undiscoverable, by removing them from the "official" index. Decentralising this layer and making it more robust is a critical step for Ordinal and its entire ecosystem.

There are some governance dynamics and tokens that don't quite fit. But the project is very new, so my opinion may change as new information emerges. I would like to see Trac Systems' clarity on the integration of the above protocols.

Bottom line, if you enjoy Ordinal, this Trac Network is one to watch!