DOGE hit a new all-time high in transactions, with 719,000 daily transactions but the price was stagnant Dogecoin users have imitated the Ordinals structure from ...
The price of Dogecoin (DOGE) has been pretty stable dtime uring the last three weeks, hovering between the $0.072 and $0.075 zone. However, on May 22, DOGE suddenly hit a new all-time high in transactions, with 719,000 daily transactions. This number of daily transactions even surpassed Bitcoin’s, which registered 566,000 daily transactions.
Behind this rapid increase in transactions is DRC-20, the name of the new Ordinals on the block, cashing in, even though the BRC-20 frenzy is not near its end.
However, on-chain data shows that this new standard for Doge appears to be undermining the chances of a bullish DOGE price breakout.
Dogecoin users have imitated the Ordinals structure from Bitcoin and built their very own “Doginals.” These tokens, similar to NFTs but without using smart contracts, are the newest craze that is reminiscent of Bitcoin ordinals, BRC-20, that have been in the headlines for the last few weeks.
Similar to BRC-20, which has its smallest denomination, Satoshis, Dogecoin users made “Shibes,” the smallest denomination of DOGE that can be tracked on the network.
With Doginals on these Shibes, on May 13, the daily Dogecoin transactions stormed above 628,000, more than BTC and Litecoin, which stood at 575,490 and 341,082, respectively.
Yet, despite the high transaction volume, the DOGE price remained almost intact, which is surprising as throughout the DOGE history, the price of the token rose whenever there would be a persistent rise in transactional activity.
This time, even though there was a 1400% jump in Dogecoin network activity, from 88,450 transactions on May 14 to 1.35 million transactions recorded on May 22 – nothing really happened with regard to the price.
This negative divergence between price and transaction count raised concerns as there appears to be something (in this case, DRC-20) taking up precious block space without adding extra economic value.
Is DRC-20 is New BRC-20 With ‘100x potential’?
Same as Bitcoin Ordinals, DRC-20 quickly gathered certain popularity among DOGE advocates. Some of them have gone as far as to describe the new DOGE Ordinals as the new BRC-20 with “100x potential” or a “game-changing” model.
Truth is, there are advantages, such as being an early bird in the Ordinals space, but also, cost-effective fees.
Minting new tokens with DRC-20 is affordable, costing approximately 0.1 DOGE per mint. Such a low fee structure makes it easier to experiment with different token mints without significant risk.
Dogecoin core developer Patrick Lodder is, however, very skeptical when it comes to DRC-20.
“Something like this cannot become a real ‘feature’ because it has not had enough thought given to it,” Lodder said, and added that “sustained and growing pressure on Dogecoin will cause this to die off quickly.”
Lodder also elaborated that the main risk is “under-engineering,” and he “hasn’t discovered a good way to program these tokens and give it actual function in a trustless way, like you can on an ERC-20 token.”
Just for a reminder, when the BRC-20 hype started, one of the leading Bitcoin Core developers, Luke Dashjr, said he is annoyed with the whole BRC-20 ordinals and memecoin hype. He then stated that immediate corrective actions in order to address the Ordinals trend are necessary and that these should have been provided already.
The thing is, crypto traditionalists are in no way excited about the Ordinals surge. Same as with BRC-20, which suffered major criticism from Bitcoin maximalists, now happening with the Dogecoin network as well.
The main problem seems to be the fact that the network fees are rising. In less than two weeks, between May 10 and May 22, the average transaction fees on the Dogecoin network increased three-fold.
It is not certain what will happen, but if we look at what happened with BRC-20 and Bitcoin, things may get a little complicated for DOGE.
When transaction fees grow, it deters users from carrying out transactions. This brings to a decrease in whole network traction and, therefore, a decrease in price.
That could make whale investors give up DOGE, and whale transactions are critical to any crypto project because it gives it liquidity. There is, therefore, a fear that this Doginal mania will lead to DOGE’s price depression.