How a failed soft fork exposed the real mechanics of Bitcoin\u2019s governance\u200a\u2014\u200aand why miners said\u00a0\u201cno.”<\/p>\n
BIP-110<\/em><\/p>\n Bitcoin doesn\u2019t have a clear \u201cCEO, a board, or a shareholder vote\u201d. So when people say Bitcoin\u2019s rules changed, what they usually mean is: a small group of developers writes code, miners either run it or didn\u2019t, and the market watched to see whose incentives \u201cwins”. BIP-110 just gave us a clean, real-time demonstration of exactly how that works\u200a\u2014\u200aand as someone who spends his time engineering<\/p>\n tokens, I think it\u2019s one of the best case studies we\u2019ve had in years. BIP-110\u2019s Proposition<\/em><\/p>\n BIP-110, officially the “Reduced Data Temporary Softfork,” was written by a pseudonymous developer going by0 Dathon Ohm, with Bitcoin Core contributor, Dashjr credited for the original draft and technical input. It was assigned in December 2025 and reached “Complete” status on the official Bitcoin BIPs repository by June 2026. So far, this is the interesting part; it\u2019s failure. But interesting?<\/p>\n BIP-110<\/p>\n Yes, Bitcoin\u2019s biggest protocol changes have historically needed something close to unanimous miner buy-in. Taproot activated with well over 90% signaling support. BIP-110 asked for a comparatively modest 55% threshold and hence, yet it couldn\u2019t get there. By the time its signaling window approached in early August, support sat under 1%. Ask me from the token-engineering lens: this was a coordination game, and the game was rigged against consensus.<\/p>\n Try stripping away the Bitcoin-specific vocabulary and BIP-110 is a textbook multi-stakeholder coordination problem. You\u2019ve got miners (who earn fees from the exact transactions being restricted), node operators (who bear the cost of storing and relaying that data), long-term holders (who care about money), and builders on Ordinals\/BRC-20\/Runes (who have real economic activity riding on the status quo). Each group has different, partially conflicting incentives, and there\u2019s no formal voting mechanism to reconcile them\u200a\u2014\u200aonly a norm that “rough consensus<\/em>” across all these groups is required before miners will even bother signaling. Moreso, there\u2019s also a governance angle worth sitting calmly with. Legal scholar, Angela Walch has argued for years that Bitcoin\u2019s “decentralized<\/em><\/strong>” branding functions as a kind of liability shield\u200a\u2014\u200ain practice, a small set of core developers and large miners hold outsized influence over what counts as a valid rule change, even though nobody formally elected them to that role. BIP-110 is a live example: a pseudonymous author and a handful of prominent developers and businesses effectively decided whether to try reshaping Bitcoin\u2019s block space economics for everyone, and the market\u2019s answer was a near-unanimous no. That\u2019s governance happening in public, in real time, without a vote\u200a\u2014\u200awhich is either beautifully emergent or deeply opaque depending on which side of the debate you\u2019re on, ask yourself. A few takeaways I keep coming back\u00a0to:<\/p>\n Fee markets are tokenomics, whether or not a chain<\/em><\/strong> calls it that. Bitcoin doesn\u2019t have a “protocol revenue<\/em><\/strong>” line item, but Ordinals and BRC-20 activity function exactly like a demand-side subsidy for miner security. Any proposal to restrict that demand is, functionally, a proposal to cut protocol revenue\u200a\u2014\u200aand should be modeled that way. “Credible neutrality<\/strong>” is a real design constraint, not a slogan. Saylor\u2019s objection\u200a\u2014\u200athat policing transaction purpose breaks Bitcoin\u2019s promise of treating all valid transactions the same\u200a\u2014\u200ais the same principle we (serious protocol designers) reach for when we build permissionless systems: rules should apply to what a transaction does, not why someone sent it. If you\u2019re building or researching token systems and want to dig into the sources: Eric Budish\u2019s “The Economic Limits of Bitcoin and the Blockchain” (NBER Working Paper No. 24717, 2018) and Angela Walch\u2019s “In Code(rs) We Trust: Software Developers as Fiduciaries in Public Blockchains” (in Regulating Blockchain: Techno-Social and Legal Challenges, Oxford University Press, 2019) are both worth the full\u00a0read.<\/p>\n BIP-110 and The political Economy of Bitcoin\u2019s “Non-Monetary” Data<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" How a failed soft fork exposed the real mechanics of Bitcoin\u2019s governance\u200a\u2014\u200aand why miners said\u00a0\u201cno.” BIP-110 Bitcoin doesn\u2019t have a clear \u201cCEO, a board, or a shareholder vote\u201d. So when people say Bitcoin\u2019s rules changed, what they usually mean is: a small group of developers writes code, miners either run it or didn\u2019t, and the […]<\/p>\n","protected":false},"author":0,"featured_media":208493,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-208492","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/208492"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=208492"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/208492\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/208493"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=208492"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=208492"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=208492"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Here\u2019s the story, and why it matters way beyond Bitcoin maximalist Twitter\u2026\u2026<\/p>\nWhat BIP-110 actually\u00a0proposed<\/h3>\n
The proposal was narrow on paper: for about one year, it would have capped new transaction outputs at 34 bytes, limited OP_RETURN payloads to 83 bytes, and restricted certain Taproot witness data. Anything created before activation would stay exempt forever\u200a\u2014\u200athis really wasn\u2019t retroactive, neither does it ever named its target directly, but technically everyone knew it was aimed at Ordinals inscriptions, BRC-20 tokens, and Runes\u200a(\u200athe protocols that let people attach images, text, and token balances to individual satoshis using space that Taproot made cheap to fill). To one camp, that\u2019s spam clogging up a payments network. To another, it\u2019s simply people paying fees for valid transactions, and Bitcoin itself doesn\u2019t get to have opinions about what a transaction is\u00a0for.<\/p>\n
Michael Saylor came out hard and strong against it, publishing a lengthy essay laying out dozens of objections. His core argument wasn\u2019t really technical rather constitutional. He argued that once Bitcoin\u2019s consensus rules start policing which valid transactions are acceptable based on their purpose, you\u2019ve created a precedent that can be pointed at privacy tools, stablecoin settlement, or anything else a future majority decides it doesn\u2019t like.<\/a> Adam Back and JAN3\u2019s Samson Mow pushed back too, and Bitcoin Core developers themselves declined to fold the change into the reference client.
That near-total rejection is exactly what token engineers should be paying attention to. This wasn\u2019t a failure of the code\u200a\u2014\u200athe specification was technically sound. It was a failure of the mechanism design around how the change was supposed to get\u00a0adopted.<\/p>\n
This is where the economics gets genuinely deep. University of Chicago economist Eric Budish\u2019s well-known 2018 paper on Bitcoin\u2019s security<\/a> model, which updates the model for proof-of-stake systems (worth noting that Budish later revised and extended this work into a peer-reviewed piece published in the Quarterly Journal of Economics 2024, co-authored with Andrew Lewis-Pye and Tim Roughgarden<\/a>) too shows that Bitcoin\u2019s whole security guarantee rests on a delicate balance: miners must earn enough in ongoing rewards that attacking the network is never worth more than playing along honestly. Ordinals and BRC-20 traffic isn\u2019t just noise\u200a\u2014\u200ait\u2019s real fee revenue that helps sustain that balance, especially as the block subsidy keeps halving. Restricting that traffic without a plan to replace the fee income isn\u2019t just a philosophical question, it\u2019s a security-budget question. That\u2019s likely a big part of why miners had zero appetite to lock it\u00a0in.<\/p>\n
What this means if you build or write about\u00a0tokens<\/p>\n
Soft forks are a governance mechanism, not just a technical one. The 55% threshold BIP-110 needed wasn\u2019t arbitrary\u200a,\u200ait\u2019s a coordination bar meant to approximate rough social consensus. When a proposal can\u2019t clear even a lowered bar, that\u2019s the market pricing doing the work itself in disagreement about legitimacy, not just about\u00a0bytes.<\/p>\n
BIP-110 is probably going to fade from the headlines fast, especially with no activation and a market that\u2019s already moved on. But as a case study in what happens when tokenomics, security-budget economics, and informal governance collide in public, it\u2019s about as good as it gets. I\u2019d bet we\u2019re still citing it in five\u00a0years.<\/p>\n