Recent Ordinals protocol has brought about a frenzy of inscription casting, resulting in many questions and debates. The developers of Ordinals have made a compromise and proposed the Runes protocol, providing speculators with a better and safer token investment option. However, this has led to the emergence of many derivative projects that further promote a speculative atmosphere.
Background: Chaos in the BRC-20
BRC-20 has a large amount of junk data
BRC-20 infrastructure is insufficient
Founder of the Ordinals protocol’s new concept: Runes
Derivative projects based on the Rune protocol concept
Rune Alpha
Pipe
Market sentiment drives developers to pursue profits
Bitcoin developer Casey Rodarmor introduced the Ordinals protocol in 2022, opening up the narrative of Bitcoin NFTs. Later, a demo using the protocol launched the BRC-20 protocol, bringing the speculative atmosphere of homogeneous tokens to the Bitcoin network.
Recently, the market heat of the BRC-20 protocol has continued to rise. According to CoinGecko data, the total market value of BRC-20 tokens has reached $3.5 billion, with a trading volume of over $1.4 billion in the past 24 hours, accounting for over 80% of the Ordinals protocol’s trading volume.
However, BRC-20 has generated a lot of junk UTXOs, causing congestion on the Bitcoin network. The situation has become so severe that Bitcoin core developer Luke Dashjr has threatened to ban the BRC-20 and Ordinals protocols. Casey has also expressed his attitude of rejecting the BRC-20 multiple times.
Since inscription data is not recorded in the Bitcoin UTXO ledger, existing BRC-20 relies on off-chain indexers to create separate databases to determine the order of inscription transactions and ownership changes.
However, this has caused many problems, such as the potential version discrepancies of different indexes, which may easily lead to double-spending issues, the inability to natively integrate with other Bitcoin network functionalities, and the centralization of power in indexers. The industry’s foundation becomes unstable, with various chaos. Of course, speculation is another matter.
Although Casey does not want everyone to cast BRC-20, the speculative atmosphere in the market remains unshaken. Casey decided to propose a compromise solution – to design a better, simpler, and safer homogeneous token protocol for the Bitcoin network.
Therefore, in September last year, Casey announced the development of a protocol called Runes, which aims to serve as an alternative to BRC-20, ARC-20, and Stamps.
Different from the Ordinals protocol, which stores data in segregated witness data, the Runes protocol stores data in the native OP_RETURN of the Bitcoin network.
The Runes protocol is built on top of the native Bitcoin network UTXOs, making it easier to integrate with other Bitcoin infrastructure in the future without rebuilding everything from scratch, such as the Lightning Network. This can enhance protocol security and reduce the generation of junk UTXOs.
Although Casey proposed the concept of Runes, he is disgusted by the speculative market atmosphere surrounding homogeneous tokens. Therefore, he has not actually implemented the project nor indicated whether he will promote it in the future.
However, many people have sensed the opportunity to make money in the market, and there have been many projects using similar concepts to Runes.
In December 2023, the Rune Alpha project officially launched, providing a blockchain browser service for tokens issued based on the Runes protocol and issuing the first token on the protocol – COOK.
However, Rune Alpha and Casey’s proposed Runes protocol are not directly related but are independent projects that have gained market attention due to their similar names.
In October last year, community developers launched an improved version of the Runes protocol called the Pipe protocol, which adds minting functionality to the foundation of Runes to improve token issuance and exchange.
Whether it is the recent BRC-20, ARC-20, SRC-20, or Runes protocol-related projects, they are all developing in a chaotic and speculative environment. For most participants, they evaluate the value of tokens based on narratives rather than actual impact. Therefore, the number of similar derivative speculative projects has increased.
The concept of Runes has not yet been implemented in actual projects but has given rise to more speculative projects. Casey’s concerns and visions seem to have inadvertently fueled market sentiment.
BRC-20
Ordinals
Runes