Concepts

BRC-100 is an extensible decentralized computing protocol based on Ordinals Theory

This chapter will define and explain some concepts in the BRC-100 protocol to help developers to understand better.

1. Protocol and Application

In the BRC-100 protocol stack, the protocol is a standard that describes the attributes, states, operations, and computing operations of the application. The application is an instance created after the protocol is deployed to the Bitcoin network through inscriptions. The application is essentially a token with computing capabilities and states. The computing capabilities of an application are described in detail in the protocol. Without adding child applications, the application cannot have computing capabilities not described in the protocol. The added child applications can also only have the computing capabilities of the protocol, otherwise the public indexers cannot verify the states of the application, resulting in states inconsistency of users and applications.

2. Protocol Inheritance

The BRC-100 protocol introduces the concept of inheritance. The protocols that directly or indirectly inherit from BRC-100 are called BRC-100 extension protocols. BRC-100 extension protocols must inherit from only one protocol. The extension protocol will inherit the properties, operations and computing operations of the parent protocol, and can only extend the properties and computing operations. All tokens/applications that implement BRC-100 and its extension protocols are compatible with each other, which means that a token/application can be used in any other applications/tokens or child applications/tokens.

3. Application Nesting

Applications deployed based on BRC-100 and its extension protocols can be nested, that is, another application can be created under one application, which is called child application. The ticker of the child application starts with "parent application ticker:", and multiple applications can be created under one application, to complete multiple independent computing logics. For example, in the classic AMM DEX scenario, multiple LP child applications/tokens need to be created in one DEX application, like "amm_dex:LP_BRC100_BTC".

4. State of Application and Address

Besides the UTXO model, the BRC-100 protocol also introduces the state machine model to extend the computing capabilities of the protocol. Applications, child applications and addresses can all have states. For example, an application can hold tokens, and the address can have a balance in the application. The conversion of UTXO and state is completed through the operators: burn2/burn3 and mint2/mint3. The computing operation(cop) is used to represent specific computing logic, that is, the transition logic of application and address state. For example, address A burn 10 token1 to the application through the burn3 inscription. At this time, the application owns this UTXO and 10 token1. The application can allocate these 10 token1 by changing the internal state of any address or application by its computing logic. Then the address or application who has token1 in the application can mint it through the mint3 operator.

5. Protocol Parameters

When defining BRC-100 and its extension protocols, 5 parameters need to be defined: extends, upgradeFrom, openAsChild, onlyChild, stoppable, please find the explanation in the following table. These parameters are defined when defining the protocol and do not need to be set when deploying the application. For example, AMM DEX's LP Protocol: BRC-102, extends: BRC-100, upgradeFrom: --, openAsChild: true, onlyChild: No, stoppable: Yes.

Parameter	Description
extends	Inherit from which protocol
upgradeFrom	Which protocols can be upgraded to this protocol
openAsChild	Can be deployed by anyone as a child application
onlyChild	Can only be deployed as child application
stoppable	Can be stopped

6. Privileges

The BRC-100 protocol introduces two kinds of roles: owner and admin. The address with the application deployment inscription is called owner. The owner can follow the UTXO transfer of the deployment inscription. The owner of all child applications is the owner of the parent application. The admin is managed by the owner, and the admin cannot manage other admins. The privileges of the owner and the admin are strictly limited. They cannot censor users and can only do: govern applications that have not started DAO, complete the computing operation of mint2/burn2. Admin can be an address or an application or a child application. An application and its child applications are each other's admin by default, no additional settings are required, but child applications are not admins of each other. The inscriptions of burn2/burn3 need to be sent to the deployer of the application in order to be processed correctly.

The part of token needed to be mint by "mint2" can only be allocated by the application/child application logic, and the application/child application need to be the admin of the token, also "burn2" operator has similar logic. The inscriptions of burn2/burn3 need to be sent to the deployer of the application in order to be processed correctly according to the logic of the computing operation.

7. Decentralized Governance of Application

The BRC-100 protocol stack introduces a governance protocol: BRC-101, which can govern applications that implement BRC-100 or its extension protocol standard. And after the application starts DAO, governance needs to be completed through decentralized voting. The governance of application includes: update the attributes of application and child applications, deploy child applications, and stop application. Application governance is on-chain governance. After the voting on-chain is passed, the application should be notified through the computing operation: egov, then the application will automatically execute governance after the time lock.

8. Deploy Application/Token

In the BRC-100 protocol, there are two ways to deploy application: one is to deploy directly using the deploy operator, and the other one is to deploy through the governance protocol: BRC-101. The first one is used to deploy parent applications and child applications configured not to require governance, and the other one is used to deploy child applications that require governance.

9. Mint Token

BRC-100 protocol provides three mint operators: mint, mint2, and mint3, which are used to mint token in different scenarios. When deploying applications, you need to set the number of tokens that can mint by public (using operator: "mint"). The remaining tokens will use operator: "mint" to mint.

• mint: Mint from Public, public mint, anyone can mint tokens to users, but the total number mint by "mint" operator cannot exceed the settings of the max and mma attributes of the application. After mint the circulating supply of token will be increased.

• mint2: Mint from Whitelist, the application records the number of users or applications that can mint, anyone can mint2 tokens to users or applications under the application rules. After mint2 the circulating supply of token will also be increased.

• mint3: Mint from State, mint3 the balance of users or applications in other applications, anyone can mint3 tokens to users or applications under the application rules. After mint3 the circulating supply of token will not be increased.

10. Burn Token

The burn is a newly introduced operation by the BRC-100 protocol. The user can inscribe the inscription of the burn operation and then transfer the inscription to the deployer of the application, which is similar to the semantics of the transfer operation. Then the inscribed token will be burned or transferred to the balance of the application. Similar to the definition of mint operation, there are three burn operators: burn, burn2, and burn3, which correspond logically to mint, mint2, and mint3 respectively. No extra configuration is required, all applications/tokens support these three burn operators.

• burn: Burn to Public, everyone can use the operator to burn token. After the token is burned successfully, the circulating supply will be reduced, and the burned token cannot be minted again.

• burn2: Burn to Whitelist, according to the application's preset rules, after burn2 token to application, the user's balance will be reduced, the state of the application will also be updated accordingly, the circulating supply will be reduced. In practice, the logic such as remove liquidity in AMM DEX can be realized by burn2.

• burn3: Burn to State, burn3 will reduce the user’s token balance and increase the balance of "to" application. In practice, it can be used with mint3 to complete swapping token, adding liquidity and other logic in AMM DEX.

11. Trading Tax and Deflation

The BRC-100 protocol introduces a new token trading mechanism: trading tax and deflation. Applications can set the trading tax percentage, tax receiver and trading black hole percentage. These settings only take effect when trading in decentralized exchanges based on AMM. Normal transfer, mint and burn operations will not trigger trading tax and deflation.

12. Computing Operation

The computing operation is the extended computing behavior of the BRC-100 protocol. It is expressed by cop attribute and is the smallest unit of the protocol computing capability. When used with the op operator: burn2/burn3/mint2/mint3, it can be understood as a state transition function, which defines how the state of the application and user can be updated under the corresponding op operator.

13. Oracle

Oracle is a common requirement for blockchains to interact with off-chain parties, and have been well implemented and applied on blockchains such as Ethereum. Without an oracle, the smart contract on the blockchain would be limited entirely to the on-chain data. But compared with blockchain, the BRC-100 protocol has very special characteristics. It not only has the computing capabilities as blockchains do, but also relies on the off-chain indexers to complete the computing. At the same time, the off-chain indexers are able to communicate with other blockchains or meta-protocols directly, but the blockchains cannot do this, which means that the indexers can verify any data off-chain or on-chain by sufficient proof data to meet the Oracle requirements of BRC-100 protocol. For example: verify a transfer of BTC or BRC-20 assets, verify the ETH price on a certain block of Ethereum, etc. In other words, in the BRC-100 protocol, the Oracle has a new paradigm: proof and verification, where the user submits proof data, and the indexers serve as the Oracle Verifier to verify the off-protocol proof data submitted by the user, and the independent Oracle service is not needed.

In the BRC-100 protocol, the operator: burn2/burn3/mint2/mint3 natively supports the proof attribute, which is used to submit the off-protocol proof data. Indexers can verify the proof data to ensure the consistency and correctness of the state, the proof can be Transfer Proof, Merkle Tree Proof, Zero-Knowledge Proof, Price Proof, etc., and can be used in scenarios such as Bridging Assets, Airdrop, Bitcoin Layer 2, Liquidation in Lending, etc.

14. Relay Protocol

Meta-protocols on Bitcoin are heterogeneous and cannot communicate with each other. Different protocols are similar to different blockchains, they share the security of the Bitcoin blockchain and have different computing capabilities. Also, meta-protocols cannot directly communicate with other blockchains: such as Ethereum, and cannot use the assets on other blockchains either. Therefore, the BRC-100 protocol stack needs Relay Protocols to complete the communication among Bitcoin, meta-protocols, blockchains and the BRC-100 protocol, to bridge assets on other protocols or blockchains to BRC-100 to participate in DeFi and other decentralized applications. At the same time, due to the diversity of protocols and blockchains, BRC-100 will have multiple Relay Protocols. First, we will release: BRC-103, which is responsible for bridging assets among Bitcoin, BRC-20 and BRC-100.

When bridging assets from meta-protocols or blockchains (source) to the BRC-100 protocol (target), for the indexers can verify the correctness of the transfer, the proof data needs to be submitted with "mint2" operator, which is called Transfer Proof. Transfer Proof means that when minting pegged assets on the target protocol (BRC-100), the transfer data on the source (such as Bitcoin, BRC-20, or other blockchains) needs to be submitted as proof at the same time, which can be transaction hash or Inscription ID. So that all the BRC-100 indexers can verify the correctness of the pegged asset mint. Transfer Proof is an very important application of the BRC-100 protocol Oracle.