What is Runes Protocol？
Runes is another Bitcoin-based colored coin protocol designed by Casey Rodarmor in September 2023. The main idea is to allow the issuance of tokens on top of the native UTXO set.
Colored coins have been around for a long time. The main idea is that you can “color” certain Bitcoin transaction outputs, giving them additional meaning besides the Bitcoin amount. It can represent another “asset” and be issued as tokens. The first implementation of this protocol occurred 11 years ago in 2013, with subsequent attempts including MasterCoin (renamed to Omni), CounterParty, and more recently RGB, Taro Assets, and BRC-20.
Casey is also the founder of the Ordinals protocol. Transactions involving BRC-20 related tokens born out of Ordinals protocol constitute a significant portion, and Casey believes that BRC-20 could generate “garbage” occupying Bitcoin space. This led Casey Rodarmor to develop a new protocol named Runes, which is a simple, UTXO-based (Unspent Transaction Output), FT (Fungible Token) protocol designed to provide Bitcoin users with a good user experience.
Runes garnered attention for two reasons: firstly, because its founder is Casey Rodarmor, and secondly, because the creation of the Runes protocol is aimed at issuing fungible tokens on BTC.
A Deep Dive into the Issues Surrounding the Development of Runes
Amidst high market expectations and extensive pre-launch hype, the Runes protocol has failed to demonstrate significant profit-making or breakout effects days after its launch. Various voices of FUD (Fear, Uncertainty, and Doubt) and controversies surrounding Runes have begun to emerge. After careful analysis, several reasons for the current development obstacles have been identified.
Runes protocol addresses only token issuance
The popularity of BRC-20 has attracted the attention of institutions and retail investors to the BTC ecosystem. Several projects are building Layer 2 solutions around BTC and starting to develop their own ecosystems. Essentially, Runes only optimizes the issuance of fungible tokens on the Bitcoin blockchain, lacking sufficient innovation.
Overhyped market expectations
Before the launch of Runes, the market had already experienced a wave of asset issuance on the BTC blockchain, providing a reference for market judgments. Consequently, during the fair launch of Runes, Bitcoin network congestion occurred, leading to Gas Wars and escalating participant costs. Contrary to expectations, Runes did not produce significant wealth creation effects. Many Runes projects incurred high Gas fees far exceeding their inherent value, resulting in criticism from participants.
Cumbersome naming hampers dissemination
The name of Runes consists of uppercase letters and dots (·). If two names are the same except for the dots, they represent the same Rune, meaning names without dots cannot be duplicated. Additionally, Runes cannot contain numbers.
Currently, the more popular Runes launched have complex names, which are contrary to MEME culture and hinder dissemination.
