Hook:
In early 2024, a proposal to modify Bitcoin’s consensus layer—BIP-110—floated through developer channels with a deceptively simple goal: restrict block data to suppress non-monetary transactions like Ordinals inscriptions. The result? A resounding failure. Miner signaling barely scraped 1%. The proposal died before it ever reached a vote. But this wasn't just a technical rejection. It was a narrative stress test that revealed Bitcoin’s immune system against content censorship—and, paradoxically, the strongest signal yet for the next wave of L2 infrastructure.
Context:
BIP-110, or the “Reduced Data Temporary Soft Fork,” proposed lowering the miner activation threshold from the historical 95% to 55%, allowing a minority of hash rate to enforce new rules that would cap the data footprint of transactions. Its target was clear: the Ordinals and BRC-20 ecosystems that had been clogging mempools and driving up fees since early 2023. Proponents argued that spam data harmed Bitcoin’s user experience. Opponents—including Michael Saylor, Adam Back, and Jameson Lopp—countered that any rule restricting transaction content would set a precedent for censorship, potentially enabling future proposals to block privacy tools or even comply with sanctions. The debate wasn’t about tech specs; it was about Bitcoin’s soul.
Core:
I’ve spent the last four years dissecting crypto narratives through the lens of structural liquidity and incentive alignment. From the 2020 DeFi summer, where I modeled Curve’s CRV emissions against Uniswap’s liquidity depth, to the 2023 EigenLayer restaking thesis that I simulated slashing conditions for, I learned that the most powerful narratives are the ones that survive stress tests. BIP-110 was Bitcoin’s stress test—and it failed spectacularly.
The technical mechanics reveal why. Lowering the activation threshold to 55% introduced what Saylor called a “minority soft fork risk”: a scenario where a well-organized minority could force a chain split that the majority would not accept. Back and Lopp both argued that the existing 95% threshold is not arbitrary—it ensures that any soft fork has overwhelming social consensus. BIP-110’s design was inherently coercive. Moreover, the economic impact was poorly understood. By capping data, the proposal would reduce transaction fee revenue for miners—a direct hit to their income stream as block subsidies continue to halve. Saylor, whose firm Strategy holds over 84,000 BTC, correctly pointed out that “suppressing use cases reduces fees, weakening miner incentives over time.” In a world where restaking isn't a narrative shift in security (as EigenLayer later proved), BIP-110 was a narrative shift in control—and the market rejected it.
The data confirms this. Miner signaling never exceeded 1%. The community—developers, miners, and large holders—exercised a de facto veto. This is Bitcoin’s governance model: noisy, slow, but ultimately conservative. And it works.
Contrarian:
Now for the blind spot. Most analysts celebrate BIP-110’s death as a victory for permissionlessness. I see it as an open confirmation that Bitcoin’s base layer is structurally incapable of fixing its own congestion problems—and that is precisely why L2s will explode.
Consider: the Ordinals boom is not going away. Inscriptions and Runes continue to mint, mempool sizes fluctuate, and fees spike during hype cycles. Without BIP-110, the only solution is for high-value use cases to migrate off-chain—to Lightning, RGB, Rootstock, or Stacks. The signal from this episode is loud: don’t touch the main chain; build on top. Every L2 that can offer low-cost, secure execution for Bitcoin-native assets becomes strategically invaluable. I’ve seen this pattern before—in 2020, when Ethereum’s congestion pushed DeFi to L2s, and in 2023, when liquidity is the new security became the mantra for re-staking protocols. This time, the opportunity is for Bitcoin L2s to capture the narrative of “permissionless extensibility.”
Furthermore, the opposition by Saylor and Back was not just ideological; it was strategic. By blocking BIP-110, they preserved Bitcoin’s brand as the most secure, immutable store of value. But this conservatism comes at a cost: the network will increasingly become a settlement layer for high-value transactions, while the vast majority of economic activity (including speculative Ordinals trading) will happen on L2s. The contrarian take is that BIP-110’s failure is not a defeat for scalability—it’s the green light for a multi-trillion-dollar L2 ecosystem.
Takeaway:
BIP-110 will not be revived. But the problem it tried to solve remains. The next narrative cycle will not be about changing Bitcoin’s code; it will be about who builds the most robust L2 rails for Bitcoin-native assets. Watch for projects that can prove real security and liquidity without relying on soft forks. The hunters who understand that restaking isn't a narrative shift in security—it’s a mechanism for capital efficiency—will position themselves early. Bitcoin’s immunity to change is its greatest strength, and its greatest opportunity.