Can the Runes protocol become the mainstream issue coin standard in the crypto market?

The ERC20 protocol of Ethereum, as the most widely used token standard in the crypto market, has an undeniable influence. It has not only promoted the development of the Ethereum public chain but also facilitated the prosperity of decentralized finance (DeFi), while providing convenience for decentralized financing and entrepreneurship.

In the face of Ethereum's success, many emerging public chains are seeking to replicate its path, trying to establish their own coin ecosystem. To achieve this goal, two key factors are usually required: first, the new public chain must have a sufficiently large market capitalization to establish a solid foundation; second, the issue coin protocol needs to be innovative to gain recognition from users and the community.

In the current cryptocurrency ecosystem, the Runes protocol is considered the most promising coin issuance standard to surpass ERC20. This assessment is based on the following reasons:

1. The market value advantage of Bitcoin: Bitcoin accounts for about 50% of the entire crypto market, providing a solid foundation for the Runes protocol.

2. Innovation of BRC20: The BRC20 inscription protocol introduces the concept of fair issuance, which has received widespread recognition from the community.

3. The comprehensive advantages of Runes: As an asset protocol on the BTC mainnet, Runes not only inherits the advantages of BRC20 but also integrates the features of ERC20, achieving further innovation.

Main Features of the Runes Protocol

The Runes protocol utilizes the OP_RETURN opcode in UTXO (Unspent Transaction Output) to record information about token deployment, minting, and transfer operations. This design allows token issuers to flexibly choose their issuance method, which can either adopt a completely fair launch model similar to BRC20 or implement team reserves and institutional fundraising like ERC20, or even combine both methods.

Runes vs BRC20

Compared to BRC20, the Runes protocol has the following advantages:

• A more flexible issuance mechanism that is beneficial for project teams to raise funds.
• More efficient transfer process, no additional engraving transactions required.
• Supports batch transfers, improving transaction efficiency.

Runes vs ERC20

Runes have their own advantages and disadvantages compared to ERC20:

• Runes is based on the Bitcoin network and has stronger underlying support.
• ERC20 has a mature ecosystem and application scenarios.
• Runes, as an emerging protocol, has greater development potential.
• Runes is compatible with a fair issuance mechanism, in line with current crypto market trends.
• ERC20 relies on the Turing completeness of Ethereum, while Runes can achieve similar functionality through Bitcoin's Layer 2 solutions.

Technical Details of Runes Protocol

The Runes protocol enables the deployment, minting, and transfer of tokens by including specific information in OP_RETURN. Different launch modes can be set during deployment, including full control by the project team, completely fair launch, or a combination of both. Minting and transfer operations are also encoded in a similar manner within the transactions.

Although the Runes protocol has demonstrated great potential, it still requires the test of time and the support of an ecosystem to truly surpass ERC20 and become the mainstream issue coin standard. As the crypto market continues to evolve, we will be watching the future performance of the Runes protocol.