The transaction fee mania has come and gone.

The second wave of an Inscription-based fee surge–the largest since the China Bitcoin mining ban–have left miners on a fresh hangover, desiring more so called ‘BRC-20’ tokens.

While the fees were fun, we also saw a glimpse of the future in how transaction ordering could become more important than historic norms–a form of miner extractable value (MEV) on Bitcoin.

For the uninitiated, BRC20s are a type of Inscription on Bitcoin that creates a fungible token. If you want to get caught up, read our previous writeups.

MEV is the profit to be made by including, excluding, or reordering the transaction in a block. We’ve seen MEV on blockchains like Ethereum where transaction ordering is very important for price execution, but we’ve not seen this activity be a meaningful amount of revenue for block producers on Bitcoin. Why? Mainly because it has one sole asset, Bitcoin, and slow block times, which makes landing a transaction on-chain at a certain place and time nearly irrelevant.

BRC-20 could change that, however. BRC20 Inscriptions are more of a messaging system than a balance-tracking mechanism. Balances are tracked off-chain by third parties who watch the blockchain and update the balances internally. Theoretically, these third parties would make sure that double-spends aren’t happening or accounts are trying to send more than their balance, etc.

But the important mechanism here is that “First is First”, meaning that the first BRC20 transaction to be included into a block is the one that counts, not the first transaction to be signed & broadcasted. This is particularly important when “minting” new BRC20 tokens.

Let’s step back for a moment. First, a BRC20 is created with a “deploy” transaction. This defines the token ticker, total supply, and maximum amount that can be “minted” at a time (”limit” or “lim”).

An example of the BRC20 token “ORDI” of maximum supply 21 million & maximum mint limit amount of 1,000 below:

{
"p": "brc-20",
"op": "deploy",
"tick": "ordi",
"max": "21000000",
"lim": "1000"
}

Once the token is deployed, anyone can mint it. So for ORDI above, the first transactions to mint 1,000 ORDI up to a total supply of 1 million are counted. That means that the race to mint becomes a game of getting your transaction in before the other guy. This race was the primary mechanic driving fees in the past week.

Consider this scenario: a BRC20 token is deployed and a pool/miner wins the next block. This miner sees that a previously-deployed BRC20 has not been fully minted out. Said miner could theoretically produce a block filled with their own transactions to mint out as much of the token as possible, frontrunning others.

In this scenario the miner may not necessarily choose the transactions with the highest fees. Perhaps these transactions are also paid for out-of-band by someone else wishing to be the first to mint?

While BRC20s appear to be largely memecoins & mania-driven, those interested in the evolution of Bitcoin mining might look a little closer at one of the first times we’ve seen this incentive at-scale in the wild. Perhaps these markets could become more sophisticated as Ordinals drive innovation across Bitcoin’s blockspace data-layer. We will have to see!