Understanding Bitcoin's Layer 1 Runes Protocol

Forward the Original Title：Understand Bitcoin’s first-level Runes protocol | Lay out Alpha two months in advance

If the Ordinals and Atomicals, the two strongest protocols on BTC L1, were born in obscurity, then Runes has been launched under the full attention of the entire industry. As the founder of the Ordinals protocol, which opened the “Pandora’s box” of the Bitcoin ecosystem, Casey Rodarmor (@rodarmor) announced the launch of the Runes protocol in September last year, drawing significant attention from the entire ecosystem. Now, with only two months left until the official launch of Runes, what Alpha opportunities are there?

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1.Why Runes?

In the first chapter of the previous article “A Brief History of BTC L1’s New Protocols Easy Enough for a 60-Year-Old Grandma to Understand,” we mentioned that Casey initially created the Ordinals protocol for the purpose of art/NFT on-chain, not for issuing tokens. However, the emergence of BRC-20 broke this situation, and BRC-20’s transaction volume has been dominating the entire Ordinals protocol. With BRC-20’s two waves of popularity last year, the industry accepted the existence of this inscription token, and Casey changed his view: although 99% of tokens are scams and gimmicks, they are not going to disappear like a casino. Creating a good token protocol for Bitcoin might bring considerable transaction fee income, attract more developers and users, and ultimately increase the usage rate of BTC.

Therefore, on September 26, 2023, Casey first fully published the concept of Runes through his blog, which is to build a new homogeneous token protocol on Bitcoin.

Article Link:

https://rodarmor.com/blog/runes/

In this article, Casey pointed out some problems with existing protocols like BRC-20, RGB, Taproot Assets, etc., and proposed that a better BTC token protocol should be simple, independent of off-chain services, and based on UTXO. This is the core idea and origin of Runes, commonly referred to as the “Runes Protocol” in the Chinese community. By the way, the unofficial symbol for Runes is ▣, while Ordinals is represented by ◉.

2. When Were Runes Launched?

Runes were announced on September 21, just 5 days after Casey published his article. That day, the Atomic Protocol @atomicalsxyz was also released, with its first token $atom being minted for free through Proof of Work (PoW) within five hours, bringing another innovation to the Bitcoin L1. Consequently, over the following months, the market has held high expectations for Runes, with many people making various preparations, hoping to get their hands on the first token of the Runes protocol.

However, during these months, Casey’s team had to maintain the normal upgrades of Ordinals and deal with sudden issues caused by unique bugs like cursed inscriptions. The launch date for Runes remained undecided.

Cursed Inscriptions:

https://twitter.com/0xSea/status/1743512063593546052

It wasn’t until December 16, at an event during Taipei Blockchain Week, that Casey announced the launch date of the Runes protocol on the mainnet. It was scheduled to be released at Bitcoin block height 840,000, which coincides with Bitcoin’s 4th halving, approximately in late April.

Now, there are less than 2 months left until the official release of Runes. Hopefully, Casey has already completed the game Baldur’s Gate 3 and will not postpone the launch of Runes 🤣.

3. It Seems There Are Already Several Protocols Named Rune

As mentioned earlier, Casey announced the concept of Runes on September 26 and has been updating the code for Runes on Github over the past few months. Although the Runes protocol has not officially launched, many developers are already looking to build on this concept.

There are two categories here: one is to create protocols similar to Runes, and the other is to develop specific projects. Let’s talk about the protocols first. There are mainly two projects:

The first one is the @PipeBtc protocol launched by Benny, based on the concept of Runes and was very quick to act. For those unfamiliar with Benny, you can read the article “A Simple History of BTC L1 Protocols Even a 60-Year-Old Grandma Can Understand,” particularly the second chapter. Benny is an energetic, idea-rich technical speculator who has launched several tokens.

The second one, @runealpha_btc, was launched in December, similar to Pipe. The first rune on Runealpha is Cook, but it does not limit the total number or amount of tokens. Instead, it restricts to 150 blocks (equivalent to limiting time), counting all minted within this block range. I saw Runealpha’s financing BP on other channels last week. The project’s next position aims to become the infrastructure for the Runes protocol, including a browser, index, trading platform, etc. The $Cook token is also expected to migrate to the Runes protocol, although specific rules are yet to be determined.

4.Some Runes Concept Projects

Beyond the protocol types discussed earlier, the second category involves specific projects. These projects have emerged within the last 1-2 months, primarily operating on the following logic: Before the official release of Runes at block 840,000, they leverage strong market anticipation to stage a pre-launch, initiating activities early by issuing NFTs on Ordinals to build community consensus. Once the Runes protocol is officially deployed, they will issue project tokens on the Runes protocol and airdrop them to NFT holders.

Below, I’ve listed some of the projects I’ve noticed. Please forgive any omissions, and feel free to add more in the comments section below.

RSIC

RSIC stands for Rune Specific Inscription Circuits, an NFT on Ordinals with a total of 21,000 units, 10% of which are reserved by the project team. The project team has airdropped 90% of RSICs, costing over 3 BTC, which was highly praised by the community for its grand vision. The specific rules and standards for the airdrop were not disclosed, but it’s speculated to mainly target wallets holding blue-chip NFTs. Since it’s an airdrop, some wallets may not be aware they’ve received the NFT, so a transfer (either by sale or to oneself) is required to activate it. Once activated, “mining” begins for a token share of a future project to be deployed on Runes.

This fully demonstrates that the RSIC project team is an OG in the Ordinals ecosystem, otherwise, it would be difficult to receive quick support from the Ordiscan browser. Due to space limitations, more details about RSIC are not expanded here. For those interested, you can check out the article written by @lilyanna_btc previously: Twitter Link

• Official Twitter: @rune_coin

• Website: Runecoin

• More documents: Ordiscan - Browse multiple Child inscriptions for more interesting details

• Magic Eden Collection: Magic Eden

• Mining Inquiry: You can enter your wallet address on Ordiscan and check under the Runes section.

RSIC Boost

RSIC Boost is an additional tool launched by the RSIC project. Unlike the airdrop, this requires wallets holding RSIC to mint (costing ~$170 or more), which, when stored in the wallet, accelerates the RSIC mining process. This move further filters out active wallets on the chain, adding to the market gameplay, and proves once again that the project team is skilled at creating buzz.

• Total Volume: 3.9K, Magic Eden Collection: Magic Eden RSIC-Boost

Rune Mania Miner

Indeed, it didn’t take long for another project team to airdrop to RSIC Boost holders (who also hold RSIC), named Rune Mania Miner. With a total of 3,800 units, 3,547 were airdropped to the community, and 253 were reserved by the team. Like RSIC, a transfer (even to oneself) is required to activate and start mining.

• Official Twitter: @RuneManiaMiner

• Website/Documents: Ord.io

• Magic Eden Collection: Magic Eden RMM

• Mining Inquiry: Not available

Runestone

Runestone is another airdrop project that has gained attention following RSIC, led by the well-known KOL in the Ordinals domain, @LeonidasNFT. Over the past 2 weeks, Leonidas has raised funds from the industry through 𝕏, with each person donating 0.15 BTC × 15 people = 2.25 BTC for the airdrop gas expenses, which has now been completed. RSIC also contributed a 0.15 BTC donation.

The airdrop rules for Runestone are relatively transparent, requiring wallets to hold 3 inscriptions at block height 826,600, excluding inscriptions starting with “text/plain” or “application/json,” such as BRC-20, which do not count.

The number of whitelisted wallet addresses for Runestone has reached 113,376, indicating a large-scale airdrop. Once everything is ready, the official airdrop is expected to take place soon.

• Whitelist Inquiry: Runestone LFG and Google Docs

• Magic Eden Collection: Not available

• Mining Inquiry: Not available

The Rune Guardians

Guardians, similar to RSIC, airdrops to holders of blue-chip NFTs on Ordinals, with the project team covering all gas costs. However, the specific rules have not been disclosed.

• Official Twitter: @RuneGuardians

• Website: The Rune Guardians

• Magic Eden Collection: Magic Eden TRG

• Mining Inquiry: Not available

In addition to the projects mentioned above, I have also participated in other fee-based projects, such as RuneDogecoin, which involves a tiered fee for minting and then airdropping, but lacks specific products and a roadmap. Genesis Runes was promoted as free, but in reality, it charges a $50 “developer fee” per unit, and the total volume was oversupplied to 33.7K. Later, some repurchases and destructions were conducted, but the total volume still reached 29.9K, and the price has since fallen below its initial offering.

5.How to Participate in Runes?

Alright, let’s talk about Runes itself.

Casey has also noticed the hype around Runes in the market is very hot, with many project teams eager to snatch the title of being the first token. Hence, Casey decided a while ago that he would deploy the first 0-9 tokens himself, with the specific names currently being solicited from the community. Moreover, when Runes initially launches, all token names will start with a length of 12 or more, with token lengths of up to 13 characters gradually being released, allowing interested project teams to pay (burn) for shorter token tickers. @Jasmine9m88 shared some details Casey mentioned in a podcast before, and also recommends reading “Runes Founder Cesay’s First Comprehensive Introduction to the Runes Protocol.”

The image below was posted by Casey in October last year, and the BTC price has nearly doubled since then.

So, once Runes officially launches, there are several ways to participate in Runes:

1.Directly mint the first 10 tokens numbered 0-9 deployed by Casey’s team, with names to be determined. And due to the high attention on Runes and the comprehensive infrastructure ecosystem of Ordinals, it is expected that many third-party tools will support it immediately, so a local BTC full node might not be necessary. This is expected to trigger a gas war for a while.

2.Own the NFTs or certificates of the “pre-mining projects” mentioned above, as well as those launched in the next two months. Once the project team deploys the corresponding tokens on Runes, directly receive the respective airdrop.

6.What is the relationship between Runes, Ordinals, and BRC-20?

As Runes launches, we can take another look at the protocol landscape on Bitcoin’s first layer. Previously, I thought Runes was a protocol parallel to Ordinals, but I recently discovered this is not the case. Runes and Ordinals share a GitHub code repository, and structurally, Runes and Inscriptions are on the same level. To put it more straightforwardly, Runes and BRC-20 are peer token protocols, both belonging to the Ordinals ecosystem. However, from the perspective of Casey’s team: BRC-20 is an “unofficial” token protocol, while Runes is more like an “official” token protocol.

The competition between Runes and BRC-20 is about to begin, with Runes likely to attract more people to deploy/speculate on altcoins in the short term. Of course, the ordi of BRC-20 remains the first altcoin on Bitcoin, which is an indisputable fact.

Additionally, I am also interested in whether Runes has some undisclosed innovations beyond being a “token issuance protocol”, as mentioned in previous blog posts. This will probably have to wait until Runes is officially released to see.

7.Conclusion

Overall, based on the appeal of Casey’s team and the well-developed infrastructure of Ordinals, Runes has the potential to trigger the third wave of excitement in the BTC ecosystem.

Disclaimer: This article is for reference only and should not be used as legal, tax, investment, financial, or other advice.

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