Can Runes promote the birth of the "Eternal Era" of the BTC ecosystem?

Original author: Haotian, crypto researcher

How to understand the innovative value of Runes and its potential subsequent market impact? In my opinion, Runes is a set of FT token issuance standards based on the Ordinals protocol, which will become the asset issuance basis for the subsequent construction of a huge ecosystem on the BTC network. If the stage before the halving when standards such as BRC 20, ARC 20, and SRC 20 were flying around was regarded as the "chaotic era", will the Runes standard promote the birth of a "stable era" for the development of the BTC ecosystem? Next, let me talk about my understanding:

1) Ordinals is a protocol for issuing and transferring various crypto assets based on the BTC network through off-chain indexing. Ordinals was initially more suitable for NFT-type assets. The emergence of the Rune standard made up for its shortcomings in the issuance and management of FT homogeneous token assets, and truly helped it become a BTC-derivative crypto asset issuance and management protocol;

2) After Ordinals, a series of derivative innovative standards such as BRC 20, ARC 20, SRC 20, etc. were born, all of which revolve around the Script space in UTXO, with the goal of issuing FT homogeneous assets on BTC.

BRC 20, as the first token standard, realizes asset issuance by placing data in the Witness segregated witness, and realizes asset management through subsequent Ordinals and joint management between other multi-indexers; ARC 20 is a derivative and improved token standard, which realizes the transfer management of derivative inscription assets based on the transfer characteristics of the chain UTXO itself, reducing the dependence on multiple indexers; SRC 20 directly embeds the original data into the UTXO transaction in the form of stamp code, and can realize asset issuance and management without relying on third-party indexers.

The above three types of token issuance standards each have their own advantages and disadvantages: Although BRC 20 has a strong consensus early, the market Fomo sentiment will cause the UTXO set to expand and cause a lot of dust, which will harm the BTC network in the long run; ARC 20 is deeply loved by the technical community for its simplicity of colored coin transfer model and Bitwork's POW mining paradigm, but its reliance on isolated witness for data storage is not perfect, and subsequent token splitting has also encountered some troubles; although SRC 20 can be independent of the indexer, the problem of its own data storage creating dust for the BTC network has not been solved.

3) As you can see, this chaotic era of warring factions fighting for supremacy lasted for a long time. Casey (X: @rodarmor), founder of Ordinals, proposed a new Runes standard to solve this chaos. There are two innovations:

· The OP_RETURN Bitcoin script opcode was introduced to mark and store any non-payment related data, solving the UTXO dust problem at the source;

· The asset transfer features of the UTXO model dominated by ARC 20 were adopted. Users can transfer and manage inscription-derived assets by transferring UTXO.

OP_RETURN is equivalent to the Blob space applied on Ethereum layer 2, which can effectively record data but will not be operated by the full node. Through the OP_RETURN mark, the Ordinals protocol can manage and account according to the transfer direction of UTXO, which can well realize asset splitting and avoid asset loss. How to realize asset splitting? For example, if Alice has 10 Rune tokens, and now wants to send 2 Rune tokens to Bob: · Alice initiates a regular transaction transfer on the chain and specifies Bob’s address as the receiving address; · The wallet or asset management platform will follow up by initiating an OP_RETURN transaction and mark 2 tokens as being transferred to Bob, and the remaining 8 tokens are transferred to Alice’s change address (there are actually 2 transactions for the inscription transfer);

(This is why the assets in ARC 20 are burned. If the user does not specify the change address, the default assets will "disappear" with the UTXO and be transferred to the miners)

· The Ordinals protocol index data found that OP_RETURN recorded a request to transfer 2 tokens, giving Bob’s address + 2 and Alice’s new address + 8, completing the asset splitting and transfer management.

4) It is not difficult to see that the Runes standard adopts the advantages of many and fundamentally solves the problem of UTXO expansion. The key is that the Runes standard can achieve the unification of FT and NFT asset issuance in conjunction with the Ordinals protocol, further consolidating the foundation of the Ordinals protocol.

In layman's terms, the Runes standard is actually a set of FT token standards attached to the Ordinals protocol. The combination of the Runes standard and the Ordinals protocol will output a healthy and well-founded asset issuance and management method to the BTC market. Runes abandons the defect of BRC 20's over-reliance on the indexer, and makes more use of the transfer ability of UTXO itself to assist in marking, thereby realizing an asset issuance method close to BTC's native.

It has all the advantages of other standards, and it does not have the defects that other standards cannot solve. Unless you really want to be serious about whether the Ordinals protocol is credible, otherwise, Ordinals+Rune must be the "perfect" issuance paradigm for current BTC derivative assets.

5) The combination of Runes and Ordinals will have an impact on BRC 20, ARC 20, SRC 20 and other token issuance standards in the short term. After all, its comprehensive consensus + technical advantages + long-term stability have advantages, and other standards will be directly sucked away and a lot of attention and supporters.

However, this is by no means a complete replacement. If you pay attention to ARC 20, it is still possible to have amazing developments in the future. In my opinion, Ordinals can be regarded as an indexer or a Layer 2 index chain. To some extent, it is at the same level as the CKB chain @NervosNetwork with isomorphic binding characteristics. Although the consensus of the Ordinals protocol is very strong, it is impossible to prevent the birth and development of other protocols that coexist with it. (If you are still based on Ordinals but still try to get rid of Runes to make "standard" differentiated innovation, you'd better save your energy)

6) With the emergence of the Runes standard, we were surprised to find that the market has changed. The sky-high mining fee and Premine mechanism, as well as Runestone, RISC and other NFT airdrops and other gameplays have made the entire BTC derivative asset market issuance more like the early NFT market.

Some people say that it has changed the fundamentals of Fair Mint, but it is wrong. Such a token issuance standard driven by the project party, with an open and transparent distribution mechanism, subsequent empowerment development potential, and a foundation for the continuous growth of the community is "healthy".

If an asset issuance can only be Fomo for a wave, allowing a group of people to become rich without generating any subsequent imagination space, its significance is also very limited.

The above

As mentioned at the beginning, I hope that the emergence of the Runes standard will usher in a "constant era" of development for the BTC ecosystem, and it seems to have started well. I also hope that as a mainstream asset issuance paradigm, it can truly accelerate the BTC ecosystem from the stage of speculative asset issuance paradigm to a stage of empowering the Layer 2 development ecosystem.

Only when the asset issuance of the Runes standard creates wealth and attracts new users and the subsequent BTC Layer 2 chain continues to generate linkage at the ecological operation level, will the BTC ecosystem begin to explode.

Note: The above content only represents personal objective investment research position, and some technical details may be biased, so it is not an investment advice or reference.

Original link

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群： https://t.me/theblockbeats

Telegram 交流群： https://t.me/BlockBeats_App

Twitter 官方账号： https://twitter.com/BlockBeatsAsia