The recent frenzy of inscription casting brought about by the Ordinals protocol has generated many issues and debates. In response, the developers of Ordinals proposed the Runes protocol as a compromise, offering speculators a better and safer token investment option. However, this has led to the emergence of many derivative projects that further fuel the speculative atmosphere.
Background of the Runes protocol: Chaos in the BRC-20
The BRC-20 protocol has seen a large amount of junk data.
The infrastructure of the BRC-20 protocol is insufficient.
New Concept of the Ordinals Protocol: Runes
Derivative projects based on the concept of the Rune protocol.
Rune Alpha
Pipe
Market sentiment drives developers to pursue profits
Bitcoin developer Casey Rodarmor introduced the Ordinals protocol in 2022, initiating the narrative of Bitcoin NFTs. Later, a demo using the protocol introduced the BRC-20 protocol, bringing the speculative atmosphere of fungible tokens to the Bitcoin network.
Recently, the market heat of the BRC-20 protocol has continued to rise. According to data from CoinGecko, 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 more than 80% of the trading volume of the Ordinals protocol.
However, the BRC-20 protocol has generated a lot of junk UTXOs, causing congestion in the Bitcoin network. This 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 excluding the BRC-20 several times.
Since the inscription data is not recorded in the Bitcoin UTXO ledger, existing BRC-20 relies on off-chain indexers to establish separate databases to determine the order of inscription transactions and ownership changes. However, this has resulted in many problems, such as the potential inconsistency of various index versions, which may easily lead to double-spending issues, the inability to natively integrate other Bitcoin network functionalities, and the concentration of power in indexers, making the foundation of the industry unstable. 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 more secure fungible token protocol for the Bitcoin network.
Therefore, in September of last year, Casey announced the development of a protocol called Runes, which attempted to serve as an alternative to BRC-20, ARC-20, and Stamps.
Unlike 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 other Bitcoin infrastructure in the future without having to reinvent the wheel entirely. For example, the Lightning Network, which can enhance protocol security and reduce the generation of junk UTXOs.
Although Casey proposed the concept of Runes, he is disgusted with the speculative market atmosphere surrounding fungible tokens. Therefore, he has not actually implemented the project or indicated whether he will promote it in the future. However, many people have seen the opportunity to make money in the market, and there have been many projects that utilize the concept of Runes.
In December 2023, the Rune Alpha project officially launched, providing blockchain browser services for tokens issued based on the Runes protocol and releasing the first token on the protocol – COOK. However, Rune Alpha and Casey’s proposed Runes protocol are not directly related but are separate projects that have gained market attention due to their similar names.
In October of 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, the evaluation of token value is based on narratives rather than actual impact, resulting in an increase in similar derivative speculative projects.
The concept of Runes has not yet been implemented in an actual project but has instead given rise to more speculative projects. Casey’s concerns and visions seem to have fueled the market sentiment.
BRC-20
Ordinals
Runes
For further reading:
UniSat Controls the BRC-20 Protocol? The Vicious Competition Brought by the Inscription Market
Ordinals Creator Challenged by “Bitcoin Maximalists”: A Guide to Facing the Challenges of Reality