What is DRC-20? The origin of the memecoin storm on Dogecoin
DRC-20, a token standard launched in May 2023 and currently causing a storm in the market with the price increase of a series of memecoins, may also be one of such short-term trends. So what is DRC-20? Should I invest in DRC-20 tokens or not? What advantages and limitations do they have?
What is DRC-20?
DRC-20 is a token standard built by the Cardinals protocol on the Dogecoin blockchain. DRC-20 provides a set of standards & framework allows developers and users to create digital assets such as tokens or NFTs to interact with the entire network Dogecoin .
The DRC-20 token standard was first introduced by the Dogewow community on May 9, 2023, with a similar design to the BRC-20 token standard of the Bitcoin blockchain, with the aim of overcoming problems and limitations related to BRC-20 such as high fees and slow transaction speeds.
Until now, the most popular application of the DRC-20 token is meme coin. 
DRC-20 is a token standard on the Dogecoin blockchain
How DRC-20 works
The DRC-20 token standard operates on the Dogecoin network and has a design that simulates the BRC-20 token standard on Bitcoin.
Accordingly, the BRC-20 tokens on the Bitcoin network are called Ordinal, created using inscription technology according to mechanism of Bitcoin NFT, which means attaching custom metadata to each smallest unit of Bitcoin , called Satoshi.
This metadata must be less than 4MB and contain information about token/NFT . They can be anything from text files, jpeg images, audio, video, to applications, games... and it ensures that the Bitcoin network can read, decode and recognize that data. valid BRC-20 token.
Engraving data onto each token unit will turn them into separate BRC-20 tokens.
Similarly, the DRC-20 token on the Dogecoin network will be called Doginal, created by engraving metadata on the application. the smallest unit of Dogecoin, called Shibe.
Read more: Instructions on how to mint & Buy and sell DRC-20tokens
Advantages & DRC-20 limitations
Advantage
Users only need to pay a very low fee to create (mint) DRC-20 tokens, about 0.1 DOGE (equivalent to 0.0093 USD) . This allows users to test and mint many different types of DRC-20 tokens without excessive fees, providing high cost efficiency and minimizing financial risk.
Besides, DRC-20 is still in the early stages of development. This gives a first-mover advantage to both projects deploying DRC-20 tokens and users on Dogecoin, as they can become the ones to catch the wave and cash flow in this emerging trend, thereby taking advantage of opportunity to learn and explore its development potential.
Limit
Embracing innovation often comes with facing its many new risks and problems. Accordingly, DRC-20 is a completely new type of token and faces many problems:
- There aren't many use cases yet: Dogecoin was born in 2013 but the blockchain network is still new and young. In theory, the DRC-20 token will make interaction between dApp in the network easier, but reality shows that There are not many projects built on this blockchain. Therefore, DRC-20 tokens currently have almost no specific utility or use cases, most users hold DRC-20 tokens as a form of meme coin for the purpose of speculation.
- Blockchain explorer is not complete: Tracking token information, wallets and transactions related to DRC-20 tokens is also difficult many difficulties, because there is no complete blockchain explorer, or even many tokens are not updated on popular tools like CoinGeko or CoinMarketCap. Currently, the popular explorer for DRC-20 tokens is Ordifind, however the UI/UX is still not optimized and does not have many features.
- Limited trading market: DRC-20 tokens are easily created and usually do not have a serious development project behind them, so are often not listed Listed on large and reputable exchanges such as Binance, Bybit, OKX... Along with liquidity limitations, the process of buying and selling DRC-20 tokens becomes more complicated and difficult.
- Strong price fluctuations: DRC-20 tokens are often created as memecoins for speculative purposes, so price fluctuations can be stronger than other other token types. Reality shows that the token price can increase by x2 x3 or vice versa, decrease by /2 /3 in just a few hours or days.
For example: TEXO coin was minted according to DRC-20 standard on December 12, 2023 at a price of 0.0162 USD:
- On December 16, 2023, TEXO price decreased to 0.00628 USD, down 2.5 times compared to the original price.
- By December 19, 2023, TEXO price increased to 0.0247 USD, an increase of 1.5 times compared to the original price and 3.9 times compared to the lowest price.
More information: Memecoin: Billion dollar fever in the crypto market
Price fluctuations of TEXO tokens. Source: Coinranking
How does the DRC-20 token impact trading on Dogecoin?
Previously, the Dogecoin network usually only had about 20,000 transactions/day. However, immediately after the DRC-20 standard was introduced on May 9, 2023, daily trading volume on the Dogecoin network saw a spike , which was notably 10 times higher than the average for the week at that time.
Statistics of BitInfoCharts (here) also show that there are times when the number of transactions on Dogecoin is 3 times higher than with Bitcoin. At its peak on June 13, 2023, the transaction volume on Dogecoin recorded the highest level (ATH) in the network's history, reaching 2,178 million transactions.
About 6 months since its launch, DRC-20 continues to attract attention in the market and causes transaction volume on Dogecoin to increase sharply. This increase may come from more people minting and trading DRC-20 tokens on the network because of FOMO.
Trading volume on Dogecoin increased dramatically after the launch of the DRC-20 token standard. Source: BitInfoCharts
Should I invest in DRC-20 tokens?
DRC-20 has contributed to attracting the attention of both users and projects to the Dogecoin network, thereby bringing notable growth to the network. However, when talking about the investment aspect, users need to be very cautious.
As mentioned before, most of the current DRC-20 tokens were created as meme coins for speculation but have no real use cases on the network. Therefore, users should only invest in DRC-20 tokens after thorough research and with idle capital, they may lose without affecting your life.
