As the much-anticipated Bitcoin halving approaches, a new native digital commodity protocol is coming to the fore in the cryptocurrency space. Developed by Casey Rodarmor, founder of Ordinal Theory, the Runes protocol is gaining attention for introducing a new standard for Bitcoin fungible tokens.
A recent report by cryptocurrency analysis firm Delphi Digital reveals the potential of the Runes protocol to disrupt the cryptocurrency standardization space and challenge the dominance of BRC-20.
A peek inside the Runes Protocol
Unlike its predecessor, Runes is not a token, but a framework that enables the creation of fungible coins on the Bitcoin network. Tokens created using the Runes protocol (called "Runes") are fungible, meaning that each Rune is interchangeable.
According to the research firm, the token standard offers several unique features that set it apart from existing token standards.
The Runes protocol utilizes Bitcoin’s UTXO (unspent transaction output) to store Bitcoin and Runes balances. This approach allows users to instantly create and trade Runes in the Bitcoin ecosystem.
The Runes Protocol aims to increase transparency and security by shifting trust from the Indexer level back to the Bitcoin blockchain.
It is worth noting that the Runes ecosystem adopts a unique fair release mechanism. The first one is called UNCOMMON•GOODS (Runes 0), which is open to minting from the upcoming halving event to the next halving event.
The Runes Protocol stipulates that the first rune (called UNCOMMON•GOODS, or Runes 00) will begin at the upcoming Bitcoin halving event and will remain open for minting until the next halving event.
In addition, the Runes ecosystem has specific requirements for the naming of tokens: initially, token names must contain at least 13 characters, and over time, this character requirement will be gradually reduced until all names can be used.
The battle for token standards
With a market size of over $1.5 billion, BRC-20 dominates the tokenization space. However, the emergence of Runes has sparked speculation about its potential to replace BRC-20. Delphi Digital’s report highlights the main differences between the two token standards, with Runes offering potential advantages.
Potential BRC-20 Upgrades
While the Runes protocol provides significant benefits, it also has some limitations. The report notes that the current state of infrastructure development presents challenges in realizing the full potential of Runes compatibility.
Additionally, the introduction of the Cenotaph model to allow for protocol upgrades has raised concerns about the potential loss of Runes due to “malformed Runes Stones.”
As the Runes protocol has gradually gained traction, rumors have surfaced about potential updates to the BRC-20 standard, including the ability for BRC-20 indexers to compute Ethereum Virtual Machine (EVM) smart contract code.
Delphi Digital noted that this development could solve some of the design issues facing BRC-20, thereby intensifying the competition between the two token standards.
Overall, with the upcoming launch of the Runes protocol, the cryptocurrency community is eagerly anticipating the disruption it could bring to the tokenization space.
Delphi Digital’s report highlights Runes’ unique attributes and strengths, positioning it as a strong contender to challenge the competition for BRC-20 dominance.
Currently, the leading BRC-20 token Ordinal (ORDI) is trading at $42.62 on the cryptocurrency market. However, its value has dropped significantly by more than 32% over the past month. #符文 #比特币减半