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L1 Foundation Drafts Governance Structure for BRC-20 Tokens

The initiative, supported by leaders in the BRC-20 community, aims to standardize protocol management and foster innovation and safety within Bitcoin’s expanding ecosystem.

L1 Foundation Drafts Governance Structure for BRC-20 Tokens

Originally starting as a proof-of-concept experiment with uncertain prospects, the BRC-20 protocol has emerged as a significant element in the Bitcoin ecosystem. In light of this success, its founders have taken a pivotal step forward by setting up a comprehensive governance framework for BRC-20 tokens.

The initiative is led by the recently established Layer 1 Foundation. According to its website, the foundation is dedicated to the longevity of BRC-20, adhering to the highest standards of user safety and championing decentralized governance wherever feasible. 

At the forefront of the Layer 1 Foundation’s agenda is the establishment of firm governance standards for the BRC-20 protocol. This initiative is critical, aiming to create a transparent consensus on how the protocol and its indexing mechanisms are managed — a cornerstone for the safety and reliability of users. 

In pursuit of these objectives, the Layer 1 Foundation has set forth governance resolutions and procedural standards for the development of BRC-20. It has also called upon leading indexers and key stakeholders in the BRC-20 community to publicly commit to these guiding principles.

The Layer 1 Foundation’s collaborative circle includes notable entities such as Alex Labs, Hiro, Oyl Dynamics, UTXO Management, and Allium Labs. Furthermore, Bitcoin wallet creator Unisat and Ordinals aggregator Best in Slot have been tasked with jointly overseeing the maintenance of the BRC-20 protocol.

Unisat’s involvement is particularly noteworthy, having developed the first BRC-20 indexer in collaboration with @domo (founder of the BRC-20 protocol). At the time this development was a game-changer, enhancing the protocol’s functionality significantly. However, recognizing the limitations and risks of centralized indexing, Best in Slot stepped in with a decentralized solution. Their collaboration marks a crucial step towards the decentralization of BRC-20 indexing, a goal that aligns with the community’s ethos.

The Foundation’s vision extends beyond governance. It is committed to providing tools, resources, and forums to support the broader development community. These efforts aim to foster innovation and dialogue among developers building on Bitcoin’s metaprotocols and ensuring the ecosystem remains vibrant and inclusive.

The BRC-20 governance journey has not been without challenges so far. In January, a debate emerged over whether to implement the Jubilee update to Bitcoin Ordinals, which @domo warned could alter BRC-20 token indexing. This led to a standoff between Unisat and @domo, with @domo recommending a pause on the update until Jubilee could be thoroughly tested, citing potential risks to the community’s safety.

Despite the ebbs and flows of community sentiment, the BRC-20 protocol continues to see robust activity, with daily transactions numbering in the tens of thousands. This enduring engagement underscores the protocol’s critical role within the Bitcoin ecosystem, marking it as a cornerstone of innovation and collaboration.