How does the Rune Protocol drive market speculation, beyond inscriptions?
Recently, the Ordinals protocol has sparked a frenzy of token minting, leading to many issues and debates. In response, the developers of Ordinals have made a compromise and proposed the Runes protocol, which provides speculators with a better and safer token investment option. However, this has also resulted in the emergence of many derivative projects that further promote a speculative atmosphere.
Background: Chaos in the BRC-20
The BRC-20 protocol has generated a large amount of garbage data, causing congestion in the Bitcoin network. The situation has become so severe that Luke Dashjr, a core developer of Bitcoin, has threatened to ban the BRC-20 and Ordinals protocols. Casey Rodarmor, the developer behind Ordinals, has expressed his opposition to the BRC-20 multiple times due to these issues.
Insufficient Infrastructure of BRC-20
Since the token data is not recorded in the Bitcoin UTXO ledger, existing BRC-20 tokens rely on off-chain indexers to establish a separate database to determine the order of token transactions and ownership changes. This has resulted in various problems, such as version discrepancies among indexes, which can easily lead to double-spending issues and the inability to integrate other features of the Bitcoin network. The concentration of power in the indexers is also a concern, causing instability in the industry. However, for speculators, these issues are a different story.
The Vision of Runes: A New Concept by the Founder of Ordinals
Although Casey Rodarmor does not want everyone to mint BRC-20 tokens, the speculative atmosphere in the market is still strong. Casey has proposed a compromise solution – designing a better, simpler, and safer protocol for homogeneous tokens on the Bitcoin network. Therefore, in September of last year, Casey announced the development of a new protocol called Runes, aiming to be an alternative to BRC-20, ARC-20, and Stamps.
Unlike the Ordinals protocol, which stores data in the segregated witness data, the Runes protocol stores data in the native OP_RETURN of the Bitcoin network. Built on top of the native Bitcoin UTXO, the Runes protocol is more easily integrated with other Bitcoin infrastructure, such as the Lightning Network. This enhances the security of the protocol and reduces the generation of garbage UTXOs.
Although Casey has 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 seized the opportunity to make money, and there are already several projects using similar concepts to Runes in the market.
Rune Alpha, an independent project unrelated to Casey’s Runes protocol, was officially launched in December 2023. It provides blockchain browser services for tokens issued based on the Runes protocol and has issued the first token on the protocol, COOK. In October of last year, community developers also released an improved version of the Runes protocol called the Pipe protocol, which adds minting functionality to enhance 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, leading to an increase in the number of speculative derivative projects.
In conclusion, the concept of Runes has not yet been implemented in an actual project but has instead given rise to more speculative ventures. Casey’s concerns and visions seem to have fueled the market sentiment.
BRC-20
Ordinals
Runes
