What are the advantages of Rune Protocol? Can it replace BRC20?

Rune will become the Bitcoin token standard

Background knowledge: BRC20, ARC20, SRC20

Ordinals protocol is a way to realize assets based on the Bitcoin network through off-chain indexing. agreement. Initially it is more suitable for issuing NFT type assets. However, the Bitcoin ecosystem still lacks standards for equal-value tokens.

After many improvements by other developers, a series of derived homogeneous token standards including BRC20, ARC20, SRC20, etc. were derived. As the first token standard based on the Ordinals protocol, BRC20 implements asset issuance by placing data in Witness Segregated Witness, and subsequently manages it through multiple external indexers (Indexer); ARC20 implements derivation based on the transfer characteristics of UTXO itself The transfer management of inscription assets reduces the dependence on indexers; SRC20 directly embeds original data in the form of stamp codes into UTXO transactions, and can realize asset issuance and management without relying on third-party indexers.

However, these standards all revolve around the Script space in UTXO, and their shortcomings are also very obvious. Although BRC20 has a strong early consensus, market FOMO will cause the dust problem of UTXO expansion, which will harm the Bitcoin network in the long term; although ARC20 has a simple dyed currency transfer model, its reliance on Segregated Witness for data storage is not perfect, and the follow-up Token splitting also encountered some troubles; although SRC20 can not rely on indexers, the problem of its own data storage creating dust for the Bitcoin network has not been solved.

Rune solves the problem of homogeneous assets in existing Bitcoins

The competition among the heroes to divide the world has been going on for a long time, and Ordinals developer Casey proposed The new standard intends to solve this chaos - Runes, with two innovations:

• introduces the OP_RETURN Bitcoin operation code, which can mark and store any non-payment-related data, fundamentally solving UTXO junk data The problem;
• Adopting the asset transfer feature of ARC20's UTXO model, users can realize the transfer and management of assets by transferring UTXO.

The first point of OP_RETURN is equivalent to the Blobs space of the Ethereum ecosystem. It can effectively record data but will not be executed by all nodes. Through the OP_RETURN mark, the Ordinals protocol can originally be based on UTXO The transfer is managed and accounted for, which not only creates data that burdens nodes, but also enables asset splitting and avoids asset loss issues.

As for the second point, how to achieve asset splitting and management? For example, if Alice has 10 rune tokens, she 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 to be transferred to Bob, and the remaining 8 tokens will be transferred to Alice's change address, so there are actually two transactions. The Ordinals protocol indexer found that OP_RETURN newly recorded a request to transfer 2 tokens, so it recorded the address 2 to Bob and the new address 8 to Alice, completing asset splitting and transfer management.

This is why ARC20 has the risk of assets being burned. If the wallet or asset management platform does not specify a change address, the default assets will disappear along with the UTXO and be transferred to the miners.

To sum up the above two advantages, the Runes protocol is actually a set of homogeneous token standards affiliated with the Ordinals protocol. It abandons the shortcomings of BRC20's over-reliance on indexers and makes more use of UTXO's own transfer capabilities to assist in marking. To achieve a standard that is close to the native asset form of BTC.

The Rune Protocol has the advantages that other standards have, and the Rune Protocol has none of the shortcomings that other standards cannot solve. Ordinals Runes are currently the most perfect standard for Bitcoin derivative assets.

Will Rune replace existing asset forms such as BRC20?

Haotian believes that the combination of Rune and Inscription protocols will have an impact on token issuance standards such as BRC20, ARC20, and SRC20 in the short term. After all, its comprehensive consensus, technical advantages, long-term stability, etc. all have advantages, while other Standard will even be drained directly.

But it is not expected to be completely replaced. There is still room for innovation in other standards. For example, ARC20 still does not rule out the possibility of other amazing developments in the future. Haotian believes that Ordinals can be regarded as an indexer or a Layer2 index chain, which to some extent competes with the CKB network with isomorphic binding characteristics.

Although the consensus of the Ordinals protocol is very strong, it cannot prevent the development of other protocols that stand alongside it. But if it is still based on the Ordinals protocol but tries to get rid of Runes and engage in new standard differentiated innovations, it is basically impossible.

Rune contributes to the long-term development of the Bitcoin ecosystem

The Rune protocol may usher in new growth in the Bitcoin ecosystem. The emergence of the Runes standard makes up for the shortcomings of the Bitcoin ecosystem in the issuance and management of homogeneous token assets. A more stable and long-term asset standard will help the sustainable development of higher-end applications.

On the other hand, the importance of the inscription agreement has undoubtedly increased. The Runes standard adopts the best of both worlds and fundamentally solves the problem of UTXO expansion. The key is that the Runes protocol and the Ordinals protocol can respectively realize the issuance of homogeneous and non-fungible assets (NFT), further solidifying the foundation of the Ordinals protocol.

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