Observe: A Bitcoin soft fork proposal with a miner support rate of 1% does not die — it was never alive. BIP-110, ostensibly a clean-up mechanism for non-financial transactions like Ordinals, arrived with a quiet whimper. The code was technically sound. The political mechanism was not. And the silence from the few who backed it spoke louder than any white paper.
This is not a story of a proposal that failed. It is a story of a governance immune system rejecting a foreign body. But as with any immune response, the cost is inflammation. The underlying pathogen — the debate over Bitcoin’s block space usage — remains untreated.
Context: The Anatomy of a Controversy
BIP-110, formally the 'Reduced Data Temporary Soft Fork,' was authored by an anonymous developer in late 2023. Its goal: temporarily limit the amount of data that could be included in a Bitcoin block, specifically targeting inscriptions, BRC-20 tokens, and other non-monetary protocols. The rationale was straightforward — reduce congestion and lower transaction fees for the average user. The mechanism was more clever: instead of requiring the traditional 95% miner activation threshold, the proposal lowered it to 55%.
That single change turned a sprucing up into a schism.
By mid-2024, the proposal had been debated across mailing lists, GitHub threads, and Twitter spaces. The largest holder of Bitcoin, Michael Saylor of Strategy, broke his usual silence on protocol changes. He called the proposal 'reckless' and warned it could 'set a precedent for censorship.' Core developers Adam Back and Jameson Lopp echoed his sentiment, calling it a 'minority soft fork in disguise.' Miner support never rose above 1%.
Core: A Forensic Autopsy of BIP-110
Let me dismantle this proposal the way I dismantled Curve’s constant product formula in 2020 — piece by piece, variable by variable.
First, the activation threshold. Bitcoin has maintained a 95% miner threshold for soft forks since its inception. This is not a technical constant; it is a social contract. It ensures that only proposals with overwhelming support from the network’s physical security providers can activate. Dropping to 55% creates a fork window. Any group controlling a simple majority of hash power could force a rule change that the rest of the network rejects. This is not a hypothetical. I have seen similar minority-chain splits in other protocols during my EigenLayer re-audit in 2024, where a slashing condition edge case could have been exploited if only a subset of validators agreed. The difference is that Bitcoin’s stakes are orders of magnitude larger.
Second, the economic impact. BIP-110 would have reduced transaction fee revenue for miners. In 2023, Ordinals-related fees accounted for roughly 15% of total miner income during peak activity. Suppressing that demand does not make it disappear; it migrates to alternative channels — most likely Bitcoin L2s. The proposal’s authors assumed this would lower fees for regular users. But in practice, reducing supply of block space for a given demand leads to fee spikes for the remaining transactions. This is basic microeconomics. I calculated during my Terra analysis that the UST mechanism failed because it assumed infinite liquidity. Here, the BIP-110 mechanism assumes infinite user patience. Both assumptions are false.
Third, the permissionless principle. Bitcoin’s value proposition rests on the idea that no entity can censor transactions. BIP-110, even if temporary, would have created a precedent that the protocol can pick winners and losers. Saylor was right to see the long tail: once you allow the network to decide that Ordinals are 'spam,' you allow it to decide that a privacy tool is 'suspect' or a coinjoin is 'illegal.' Complexity is often a veil for incompetence. But here, the incompetence is not technical — it is ideological. The proposal tried to solve a social problem with a code change. That never works.
I have tested this pattern before. In 2017, I audited the Tezos pre-launch smart contracts and found type-safety vulnerabilities that formal verification missed. The lesson: cryptographic elegance does not equal functional safety. The same applies to governance. A mathematically perfect activation threshold means nothing if the community does not trust the outcome.
Contrarian: What the Bulls Got Right
Every dissector must also acknowledge where the opposition was correct. The community’s overwhelming rejection of BIP-110 preserved Bitcoin’s most valuable asset: its invariant of permissionlessness. Trust is a variable, verification is a constant. Here, the community verified that the proposal would break the constant. They were right.
But here is the contrarian edge: the victory is pyrrhic. By rejecting BIP-110, the community also rejected any path to actively manage block space contention. The Ordinals ecosystem continues to consume bandwidth. Transaction fees will remain volatile, peaking during moments of minting mania. The long-term consequence is that Bitcoin’s base layer becomes less usable for everyday transactions, pushing users toward custodial or semi-custodial L2 solutions. This increases centralization risk in the secondary market.
Moreover, the governance rigidity that defeated BIP-110 is the same rigidity that will defeat future proposals to add features like covenants or cross-chain composability. Bitcoin will remain a conservative settlement layer. That is a feature for some, a bug for others. The bulls celebrate immutability without acknowledging its opportunity cost. Silence in the code is the loudest warning sign — and the silence on any future upgrade path is deafening.
Takeaway: The Unfinished Autopsy
BIP-110 is dead. The proposal will not be resurrected. The market has already priced in its failure — Bitcoin’s price moved less than 0.5% on the news. But the underlying fault line remains. The question for every due diligence analyst is not whether Bitcoin’s governance works, but whether it can work well enough to handle the next disruption. I have been in this industry since the days of Tezos audits and Curve’s first bug bounty. I know that code does not care about roadmaps. And I know that the next soft fork proposal will be more clever, more subtle, and more carefully designed to bypass community antibodies.
Until then, I will be watching miner revenue composition and L2 TVL growth. Because when the base layer refuses to change, the periphery must innovate. Or the periphery will die. And the chain will remember — even if the marketing team forgets.
