BisoSwap - AMM Marketplace for BRC-20


It's summer in the northern hemisphere, and the Bitcoin network is getting hotter with it, thanks to the emergence of Ordinals earlier in the year and the subsequent growth of BRC-20. What exactly is BRC-20? Why is it so trending? Let's talk about it today.

It's summer in the northern hemisphere, and the Bitcoin network is getting hotter with it, thanks to the emergence of Ordinals earlier in the year and the subsequent growth of BRC-20. Since May, BRC-20-based transactions have averaged over 300,000 per day, and according to Dune Analytics@cryptokoryo, nearly 900 $BTC have been used as transaction fees for BRC-20. What exactly is BRC-20? Why is it so trending? Let's talk about it today.

BRC-20 Transactions. Source: Dune Analytics@cryptokoryo

What is BRC-20?

BRC-20 is a set of standards of fungible tokens for the Bitcoin network similar to ERC-20. The main difference is that ERC-20 tokens are minted "out of nowhere" through smart contracts on Ethereum, while BRC-20 tokens are converted by artificially marking the smallest unit of Bitcoin, $SAT (1 $BTC = 100 million $SAT), since the Bitcoin network does not support complex smart contracts. In other words, ERC-20 tokens issued on Ethereum can go to zero at any time, but BRC-20 tokens are worth a minimum of $1 SAT because they can still be used as regular $SAT, for example as gas fees.

If you are interested in learning more about BRC-20 and Ordinals, please refer to our course on Bitcoin NFT and BRC-20.

As of May 10, there were 14,307 BRC-20 tokens with a total market value of more than $800 million. Source:

So the question is, since BRC-20s are manually marked $SAT and the price is not equal to $SAT, how is the price determined? It comes down to scarcity and secondary market trading. When a BRC-20 token is created, a maximum supply is set, and this maximum supply represents how much $SAT can be marked as the BRC-20 token, as shown below.

Top 10 BRC-20 tokens by market cap as of May 10. Source:

In the image above, Supply stands for the maximum supply, and Mint is the process of marking $SAT from one's wallet as the corresponding BRC-20 tokens. You can see that all the top 10 BRC-20 tokens are 100% Minted, which means that you can't get these tokens by marking $SAT. People have to buy them on the secondary market. In the secondary market, the price is determined by supply and demand, and because of their scarcity, it is natural that the price of BRC-20 tokens will be higher than $SAT.

BRC-20 Marketplaces

We all know that the Bitcoin network does not support complex smart contracts, and therefore DEXs like UniSwap are not supported. The marketplaces on the Bitcoin network are dominated by order books, such as UniSat,, and Ordinals Wallet. The main reason why they are called "BRC-20 marketplaces" is that the process of funds transfer is done entirely on-chain in a decentralized way, but the process of transaction matching is centralized and done off-chain by each marketplace.

Specifically, let's suppose Seller A wants to sell 100 $ORDI on UniSat for $500 SAT. UniSat will post a sell order for Seller A accordingly. However, this step is not recorded on-chain through a smart contract The data on-chain shows that $ORDI still belongs to seller A, but UniSat fully acts as a proxy for $ORDI. Buyer B then accepts the order and buys $100 ORDI from Seller B for $500 $SAT, at which point UniSat sends $ORDI to Buyer B's address on behalf of Seller A.

After this transaction is completed, the only records left on-chain are

  • Seller A sends $100 ORDI to Buyer B
  • Buyer B sends $500 $SAT to Seller A

As we can see, the order information (price, quantity, etc.) of seller A cannot be recorded on the blockchain. This step is fully proxied by the marketplace, so there is a certain degree of centralized risk. In addition to the risk of centralization, the orderbook BRC-20 marketplace has a number of liquidity issues, including:

  • Sellers can only list orders and buyers can only take orders
  • Due to the performance of the Bitcoin network, orders can only be fully filled and not partially filled
  • Sellers can only place orders on one marketplace, and orders placed on one marketplace are not visible on others
  • BRC-20 tokens can only be traded via $SAT


BisoSwap has made some trade-offs based on the liquidity issues of the current order book marketplaces and has switched to the AMM model. It works in the following manner:

Provide liquidity in BisoSwap AMM. Source: BisoSwap

LPs need to send a trading pair of BRC-20-based tokens to the address managed by BisoSwap, and BisoSwap sends back to LP the corresponding LP Tokens based on the deposited asset share.

LP will receive a transaction fee share and BisoSwap's native token (in BRC-20 standard) incentive.

Swap in BisoSwap AMM. Source: BisoSwap

Traders need to find the BRC-20 trading pair, and send Token A to the address managed by BisoSwap. BisoSwap calculates the exchange ratio, deducts the transaction fee, and sends the corresponding amount of Token B back to the trader.

Advantages of BisoSwap's AMM model:

  • Supports trading between any two BRC-20 tokens without the need for $SAT intermediate transactions
  • Transactions are completed instantly, no waiting for orders to be filled
  • Any size of orders are supported
  • Incentives for LPs to attract more liquidity

Risks of BisoSwap's AMM model:

  • LPs need to place their assets in custody with BisoSwap, with a higher risk of centralization
  • Unpredictable losses and slippage that AMM cannot avoid

BisoSwap is not launched yet and product details, including the algorithmic formula used in AMM, LP reward allocation, etc., have not been disclosed. However, we are always optimistic about innovation. We'll see if BRC-20 is really the right fit for AMMs, which are all the rage on Ethereum.

BRC 20




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