Introducing the Runes Protocol: A Solution for Fungible Tokens on Bitcoin
A new protocol called “Runes” has been developed by Casey Rodarmor, the creator of the Bitcoin Ordinals protocol. The Ordinals protocol allowed for the issuance of meme tokens and NFT-like assets on the Bitcoin blockchain using the BRC-20 standard. However, this design has led to network congestion and increased transfer fees.
Rodarmor acknowledged that Ordinals have caused an undesirable proliferation of Unspent Transaction Outputs (UTXOs) on the Bitcoin network. UTXOs represent the balance of a Bitcoin address after a transaction is completed.
In contrast to Ordinals, the Runes protocol will store token balances within UTXOs, allowing each transaction output to contain any amount of any number of runes. This approach makes Runes more lightweight, malleable, and easier to transfer and swap.
The Benefits of Runes
The team behind Ordinals Wallet, an Ordinals marketplace, has expressed their support for Runes. They believe that Runes is superior to the BRC-20 standard when it comes to fungible tokens due to its lightweight nature and improved transferability.
The team also deployed the first token using the Rune protocol, called RUNE. This token serves as a practical use case for the concepts introduced by Rodarmor.
The Future of Runes
In addition to developing and deploying tokens using the Rune protocol, the Ordinals Wallet team plans to offer a $100,000 grant to developers who can build a Rune indexer, issuance and/or transfer app. They are also working on launching a product that does not require running a node for deployment.
Decrypt has reached out to other Ordinals marketplaces like Magic Eden and Unisat to inquire about their plans to support Runes token trading.
Hot Take: Runes Protocol Solves Fungible Token Issues on Bitcoin
The introduction of the Runes protocol by Casey Rodarmor offers a promising solution to the challenges faced by fungible tokens on the Bitcoin blockchain. By addressing the proliferation of UTXOs and improving transferability, Runes provides a more efficient and lightweight alternative to the existing BRC-20 standard. The support from the Ordinals Wallet team and their deployment of the first token using the Rune protocol demonstrates the practicality and potential of this new protocol. With further development and adoption, Runes has the potential to revolutionize the world of fungible tokens on Bitcoin.
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