BIP-110 was dead on arrival. A soft fork proposal to restrict Bitcoin’s block space—limiting OP_RETURN, data block sizes, and script formats for one year—it never cracked 1% miner support. The UASF (User Activated Soft Fork) threshold of 55% was a joke; the proposal was a symptom, not a solution. Yet the noise it generated tells us something uncomfortable: Bitcoin’s governance is not as robust as its hashpower.
Leverage doesn’t care about your ideological purity. The market ignored BIP-110. But the scars from this debate will shape the next battle over how Bitcoin’s most scarce resource—block space—is allocated. This is not a technical failure. It’s a sociological one.
Context: The Blockspace War
Bitcoin’s block space is a fixed asset. Every transaction competes in a fee auction. For years, the highest-value use case was financial transfers. Then came Ordinals in early 2023—arbitrary data inscribed onto satoshis, creating NFTs, BRC-20 tokens, and a flood of non-financial transactions. The network’s fee revenue spiked, miners celebrated, and purists screamed.
BIP-110, proposed by a faction aligned with Bitcoin Knots (the alternative client maintained by Luke Dashjr), aimed to cut off Ordinals at the knees. Its mechanism: restrict data-heavy scripts, limit OP_RETURN output sizes, and make the changes temporary (one year) to soften opposition. Activation would be via UASF—a soft fork enforced by nodes, bypassing miner consensus. The threshold: 55% of nodes within a signaling period ending August 2025.
Key voices opposed: Michael Saylor (MicroStrategy), Adam Back (Blockstream), and Jameson Lopp (Casa). They argued the proposal set a dangerous precedent—arbitrarily invalidating valid, fee-paying transactions. Supporters called Ordinals “spam.” The debate was classic Bitcoin: purists vs. pragmatists, decentralization vs. usability, code vs. culture.
Core: The Autopsy of a Failed Proposal
Technical Reality: A Parameter Tweak, Not an Upgrade
BIP-110 is not a technological innovation. It’s a regulatory intervention. Compare it to Ethereum’s EIP-4844 (proto-danksharding), which structurally scales data availability. BIP-110 simply restricts existing functionality. No new opcodes. No scalability gains. Just limits.
Based on my experience auditing ICO smart contracts in 2017—where I caught reentrancy bugs in fund distribution logic that led to 40% ROI shorts—I learned that governance failures are rarely about code. They’re about incentives. BIP-110’s code is trivial. Its governance model is a minefield.
UASF with a 55% threshold is a recipe for chain split. If even 45% of nodes disagree, you get two competing versions of Bitcoin. Lopp warned exactly this: “UASF creates a high risk of chain division.” The proposal never reached implementation stage—no audited code, no peer review. Its technical maturity was zero.
Tokenomics: The Fee Market Battle
Bitcoin’s security budget relies on block rewards and fees. Post-halving (April 2024), block rewards halved to 3.125 BTC per block. Fees now account for 1–5% of miner revenue, but that number spikes during Ordinals activity. In May 2024, fees hit 20% of total revenue during a BRC-20 minting frenzy.
BIP-110 directly attacks this fee source. If Ordinals transactions were banned, miner fee income could drop 10–30% in the short term. Paradoxically, miners rejected the proposal too (1% support). Why? Because they prefer optionality. A miner can always drop low-fee transactions. But a protocol-level ban removes choice.
Saylor’s opposition was self-interested: he holds hundreds of thousands of Bitcoin. Any governance risk that could lead to a chain split threatens his balance sheet. The “precedent danger” argument is just a high-minded veneer for capital preservation. Trust me, I’ve audited enough smart contracts to know that governance is the real smart contract. BIP-110’s tokenomics impact is zero because it failed, but its intent reveals a deep divide: should Bitcoin optimize for financial settlement or for open data?
Market: Already Priced In
The market shrugged. Bitcoin’s price stayed range-bound ($50k–$55k) during the proposal’s life. Funding rates were neutral. No panic. No FOMO. The failure was 90% discounted from day one. This is efficient pricing—but it masks the second-order effect: community trust erosion.
Every failed proposal that leaves a faction disgruntled chips away at Bitcoin’s narrative of being “the settlement layer for the world.” If the community cannot even agree on what block space is for, how can institutions trust it as a risk-free asset?
Ecosystem: The Ordinals Paradox
Ordinals brought new users to Bitcoin, but retention is low—most inscriptions are one-off mints. The BIP-110 debate hardened the positions of both camps: the “Bitcoin is only money” faction and the “Bitcoin is a platform” faction. This isn’t just a philosophical spat—it affects L2 development. Lightning Network grows, but it doesn’t support rich data. RGB and Taproot Assets do, but adoption is slow.
The winner from BIP-110’s failure? Ordinals. They live to fight another day. But the loser is Bitcoin’s upgrade pace. Core developers are now hesitant to propose anything controversial. The network’s ossification accelerates.
Contrarian: The Failure is a Pyrrhic Victory
Everyone celebrates BIP-110’s death as a win for Bitcoin’s conservatism. I disagree. The real risk is that Bitcoin’s governance becomes so averse to change that it cannot adapt when real threats emerge. Quantum computing? A massive blockspace demand from tokenized real estate? The current process took months to reject a proposal with 1% support. What happens when a proposal has 30% support but still fails? The minorities grow, the forks multiply, and the “one Bitcoin” illusion breaks.
The protocol isn’t the product—the liquidity cycle is. Bitcoin’s value comes from network effects, not code quality. BIP-110 exposed that the network effects are strained. The Ordinals crowd may not leave today, but if fee spikes make Bitcoin too expensive for small transactions, they’ll move to Litecoin, Dogecoin, or a Bitcoin fork. That’s a slow bleed, not a sudden crash.
Meanwhile, the UASF mechanism remains dormant. If a future proposal gains 20% miner support and tries UASF, the risk of a chain split is real. BIP-110’s failure normalizes the idea that “no upgrade is better than a bad upgrade.” But that attitude also prevents good upgrades.
Takeaway: Watch the Mempool, Not the Forum
BIP-110 is dead. The deadline passed in August 2025 with support still at 1%. But the blockspace war is not over. The next battlefield will not be the BIP repository—it will be the mempool. If Ordinals activity pushes fee rates above $100 per transaction for extended periods, the call for restrictions will return with more miners on board.
Leverage doesn’t care about your ideological purity. The market will decide, not the forums. Monitor the share of block space taken by non-financial data. Above 15%, and the debate reignites. Below 5%, and BIP-110 becomes a historical footnote.
I’ve seen this pattern before—in DeFi, in ICOs, in NFT manias. The cycle repeats: innovation, conflict, resolution, stagnation, repeat. Bitcoin’s governance just bought itself more time. The question is: time for what? More of the same, or real evolution?
The answer will be written in the blocks.