Summary: ⏰
1️⃣What is the Runes Protocol?
So-called #Runes The agreement is$BTC The protocol for issuing homogeneous tokens on the Bitcoin network was rebuilt by Casey, the founder of Ordinals, after releasing the Ordinals solution. It is based on the characteristics of Bitcoin UTXO, and the overall design idea is very simple:
●Simplicity and decentralization: The Runes protocol is as simple as possible, does not rely on off-chain data, has no native tokens, and fits Bitcoin’s UTXO model.
●UTXO-based: Runes balance is held by UTXO, and each UTXO can contain any number of Runes.
●Symbol Assignment: Runes can have symbols associated with them, but the protocol does not try to avoid symbol squatting, to keep it simple.
●Issuance: If there is a second data push in the protocol message, it will be considered an issuance transaction, allowing the creation of new Runes.
●Transactions and Protocol Information: Outputs that contain specific scripts are considered part of the protocol information. These scripts specify how Runes are transferred and distributed.
●Flexibility: The transfer of Runes is defined by interpreting the data push in the transaction, allowing for flexible allocation of Runes to different outputs.
2️⃣What are the main sources of its advantages?
From a technical point of view: The Runes protocol is built based on Bitcoin UTXO and additional information. The triggering of each transaction requires the digital signature information generated off-chain to be on-chain. We can carry messages in a specific format in the signature information.
The Runes protocol uses the OP_RETURN opcode to mark "specific messages", which are information related to Runes asset changes.
3️⃣Compared to#BRC-20 Protocol, Runes highlights:
● The transaction steps are simplified, and no unnecessary UTXO is generated, which can better "reduce the burden" for Bitcoin nodes. In addition, a transfer transaction of BRC-20 only supports one recipient and one token, while Runes supports transfers to multiple recipients at the same time, and can transfer multiple Runes tokens.
● Storage and indexing of asset data are simpler: BRC-20 data is stored in the witness data of a specific transaction in JSON format, and BRC-20 is based on an account model, with asset balances associated with specified accounts. The Runes protocol data is stored in the OP_RETURN field of a specific transaction, and the asset is recorded using the UTXO model, which can be directly "isomorphically bound" to the UTXO on the Bitcoin chain.
When confirming a person’s Runes asset status, it is only necessary to verify the special UTXO that the person owns and is bound to the Runes asset. Although some information still needs to be traced back to complete the calculation, there is no need to scan the complete UTXO set on the Bitcoin chain like BRC-20. This lightweight method is more friendly to data indexing.
● Compatible with UTXO function extension layer: Runes is based on UTXO design, which makes it more compatible with UTXO-based function extension layers such as CKB, Cardano, and Fuel. Through UTXO isomorphic binding similar to RGB++, the above function extension layer can provide smart contract scenarios for Runes.
4️⃣ Casting of Runes Protocol:
Casey designed two distribution methods for Runes, namely "fixed total amount" and "public inscriptions":
● Fixed total amount means that the issuer directly engraves all Runes and then distributes them, which is relatively more centralized
● Public inscriptions set parameters for the issuance of Runes, such as specifying a block height or timestamp. The total amount of Runes is determined by how much assets the user minted within a specified time period.
5️⃣The impact of Runes protocol on Bitcoin ecology will be multifaceted:
▲Innovation drive: The Runes protocol encourages developers to innovate in novel ways, providing users with the opportunity to experience activities on the Bitcoin blockchain that were previously unimaginable. It opens the door to developers who want to innovate Bitcoin on the world's most stable and secure public blockchain.
▲Expanding the user base: The Runes protocol allows projects to issue various types of fungible tokens on the Bitcoin blockchain, such as security tokens, stablecoins, and governance tokens. This will expand the utility of Bitcoin and attract more users. Since the protocol has potential Lightning Network compatibility, users will be able to enjoy an almost instant and low-cost transaction experience. In other words, Runes helps achieve the goal of widespread Bitcoin adoption.
▲Increase sources of income: As more and more people interact with Runes tokens, more transaction fees will be generated. This will increase miners' income and incentivize them to continue to protect the security of the Bitcoin network. Especially when block rewards will be further reduced in April 2024, Bitcoin miners will need more sources of income to stay motivated, and Runes may be one of the protocols needed to maintain miners' enthusiasm.
▲ Efficient issuance of homogeneous tokens: The Runes protocol aims to issue assets directly on Bitcoin to minimize negative impacts. The protocol is improving the current alternative token protocol that relies on native tokens and off-chain data.
In addition, it is more thoughtfully designed than the BRC-20 token standard, which was launched mainly to show what functions the Ordinals protocol can achieve, more for entertainment. Therefore, the rigor of the protocol may make Runes more successful than BRC-20 tokens.
6️⃣Runes Opportunities, risks and prospects of the rune track:
From the current perspective, the development of the Runes protocol has indeed injected new vitality into the Bitcoin ecosystem. Through the full support of the OKX Web3 wallet and the launch of the Runes test network by Xverse, the recognition and support of the Runes protocol will help promote its development.
At the same time, the concept of the Runes track and the emerging issuance model have brought new ideas and opportunities to the cryptocurrency community. However, when the project is in the conceptual stage, investors need to be cautious and have a certain degree of trust in the project's commitment.
In addition, the high risks brought by the emerging issuance model also need to be paid attention to. Success depends on many factors, including technical implementation, market acceptance and community consensus. When choosing a rune token, it is indeed necessary to consider the issuer's positioning and narrative, as well as future value capture opportunities. When the Runes track is still in its early stages, it is necessary to maintain a cautious investment mentality and avoid blindly following the trend.
With the launch of the Runes protocol mainnet, more rune tokens are expected to be born, providing new value creation and capture opportunities for the community and issuers. At the same time, the development of the Runes track is also expected to promote the transformation of Bitcoin into a diversified application platform and contribute to the vision of a global economic settlement center.
🏁Personal opinions and summary:
The blockchain world after Bitcoin halving is in a critical period of transition from the old to the new and innovation. Rune Protocol Rune made its debut at this moment, using the "Rune War" as the clarion call, sounding the prelude to a new era of blockchain. This war is not only a contest of technical strength, but also an exploration and practice of the future form and value concept of blockchain.
We have reason to believe that with the in-depth development of the Rune protocol and the construction of the ecosystem, "Rune Wars" will stimulate the unlimited potential of the blockchain industry and usher in a new era full of opportunities, innovation and change.
