Inscription Estimates

To guarantee the safety of user funds, a watchtower/validator inscribes the state difference to bitcoin as a refundTx to safeguard user funds in case of liveness failure. This ensure the data availability of refund is guaranteed by the bitcoin blocks itself, ie. It uses bitcoin as a data availability layer to commit state difference transaction.

Some points to consider:

1. Inscription size of RefundTx is largely depended on number of accounts in the system = number of refund outputs.

2. Every refund output in the refundTx adds ~30vbytes

3. The size of the compressed refundTx can change based on ratio of compression.

4. The 4 byte identifier reduces the output size by 26 bytes per address.

5. Estimated fees in USD changes with BTC price and network fee rate. Calculations below assumes 36 sats/byte for the calculations. BTC/USD price and current fee rate in the network are variable parameters and will change fee in USD numbers.

6. This document assumes a bull case for Bitcoin. Assumptions may be different for a bear case.

What we don’t consider:

1. Consuming more than half the block space by other L2 projects will create fee pressure in the system, leading to much higher sats/byte

Number of refund Output	Inscription Size (vBytes)	Fee in Sats @ 36 sats/byte	Fee in USD @ BTC = ~$65,500	Inscription Size (bytes) with 4 byte identifier	Fee in Sats with 4 byte identifier @ 36 sats/byte	Fee in USD with 4 byte identifier @ BTC = ~$65,500	Fees in USD with 4 byte identifier @ BTC = $100,000 , 36 sats/byte	Fees in USD with 4 byte identifier @ BTC = $100,000, 50 sats/byte
1	600	21600	14	585	21060	14	21	29
100	2760	99360	65	2748	98938	53	99	137
250	6015	216540	142	4768	171648	113	171	239
500	12015	432540	284	8970	322920	212	323	448
750	18866	679176	445	13170	474120	311	474	658
1000	24291	874476	572	17370	625320	411	625	868

For ~ 100 bitcoin blocks a day, we assume 100 inscriptions committing a state difference.

Per day cost of inscriptions for 100 inscriptions a day ~ $ 411 * 100 = $41,100

Per month cost if BTC/USD price remains the same = $41,100 *30 = $1,233,000

6 month estimate if price remains the same = $7,398,000

6 month estimate with BTC @ $100k and fee rate @ 36 sats/byte = $11,255,760

6 month estimate if fee rate rises to 50 sats/byte with BTC @100k = $15,633,000