Runes- Building on the Past to create a different future
Exploring the Emergence and Potential of Runes
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Topics Covered
An overview of Runes
The Nascency of Runes
Builders in the Runes Ecosystem
Quick Notes🏃♂️
Bitcoin was originally designed to focus on payments, despite its current reputation as a store of value. But, its mission is to escape the traditional financial system by integrating other financial services on-chain.
There has been a movement to build decentralized applications (dApps) on the Bitcoin network, aimed at enhancing scalability and utility.
To build a sustainable Bitcoin Network, it has to be easier for developers to build on-chain. Thus, Runes was created to improve upon BRC-20 and Ordinal technology.
Shortly after its launch, Runes achieved a market cap of $346 million, driven by strong pre-launch community activities, boot camps, and educational sessions.
As the Runes ecosystem continues to develop, it promises increased utility and community engagement. Institutional investors may find Runes an attractive addition to their portfolios, especially given the positive sentiment surrounding Bitcoin.
Full Analysis📝
How Runes and dApps Are Revolutionizing Bitcoin
While Bitcoin is commonly viewed as a store of value in today’s landscape,
The network was designed to be centered around payments.
With this in mind, it is important to note that the mission of Bitcoin is meant to be an escape from the financial system. However, to build out the mission of Bitcoin, the layer one needs to have other financial services on-chain.
Ironically, with the influx of institutional interest, there has been a movement to build dApps on the Bitcoin network.
Many of these dApps are focused on scaling the network with lightning capabilities or EVM-compatible chains. This aids in smart contract development and ultimately greater utility for the network. The next phase of Bitcoin scalability and usability comes from the creation of fungible tokens on the Bitcoin layer one network.
Bringing fungible tokens on the chain began with the creation of BRC-20 tokens. This has since evolved into the creation of Runes.
Runes builds upon Bitcoin’s Ordinals protocol and is an evolution of the BRC-20 token standard.
The Ordinals protocol introduced the concept of inscribing data, such as images and text, directly onto the Bitcoin blockchain, similar to creating non-fungible tokens (NFTs).
Similar to NFTs, Runes are issued and can be minted and can be managed by their holders.
By studying Runes, we can understand a key component of Bitcoin’s future status.
Runes represents a powerful narrative for the future of tokenization and decentralized finance on the Bitcoin blockchain.
Building a Thriving Community in Runes’s Nascency
In under a week of launch, Runes achieved a market cap of $346 million.
The nine-figure market capitalization post-launch shows a demand for this technology. The demand was built before the launch of Runes.
Members of the Runes community were active with pre-launch projects, community-organized boot camps, and educational sessions.
By engaging the community early, Runes has the potential to experience a domino effect for community growth.
Currently, Runes has a growing builder community as some developers find building using BRC-20 tokens can be challenging for developers. Developer challenges will not lead to adoption. Thus, Runes presents an opportunity to lead more developers into the Bitcoin community.
Thus far, one of the key applications in all crypto ecosystems is the exchange.
One project that is enabling the foundations of a thriving Runes community is Runechain. This chain is an L2 that is designed to scale Bitcoin for Rune trading.
Runechain has a decentralized exchange (DEX) with very low transaction fees. Additionally, the block time is around 2 second block time which has been a hurdle for the broader crypto ecosystem.
Additionally, Runes DEX is adding automated market making capabilities to the Runes ecosystem. The project has recently raised 2 million dollars from top crypto investors. These include notable venture firms Kenetic Capital and Mechanism Capital along with top angels like Pascal Gauthier, CEO of Ledger.
With this level of existing support, Runes DEX has a foundation to be a major player in the progression of the Runes ecosystem.
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The Unwritten Future of Runes
The future of Runes is largely still unwritten.
Runechain is building the foundations of ecosystems with spot and futures trading. It appears that the L2 is also building staking capabilities as well.
Runes DEX also has the backing to create differentiated features or features that enable it to compete with other DEXs.
Runes DEX currently has an experience called the Meme Casino to merge finance with digital culture in unprecedented ways. With this being an exclusive feature, it seems like Runes DEX could continue to improve upon.
Taking heed from the communities built around these coins, Runes DEX could create incentive and loyalty programs to encourage the trading of these coins.
Additionally, many protocols give grants to builders to create the applications that drive adoption on the chain. Runes protocols can follow this model to spur the growth of their projects.
Moreover, since Runes is very new, builders in this space will need to educate consumers on the benefits of Bitcoin as well as the benefits of Runes. Thus, there will need to be experiences that will spur interest in this new technology.
Casey Rodarmor and the Pioneers of the Runes Ecosystem
Ironically, Casey Rodarmor, the inventor of the Ordinals is the inventor of Runes.
Casey has been a Bitcoiner and has made code commits to Bitcoin core.
Despite looking to make Bitcoin a blockchain that could bring art on-chain like Ethereum or Solana, Ordinals had some critics. Primary complaints consisted of the safety validity concerns that would arise.
From a company standpoint, the teams behind Runes DEX and Runeschain are the first movers in the Runes community. It will be exciting to see how they innovate and build the Runes ecosystem.
Lastly, one major brand that has shown an outpour of support for Runes is Magic Eden. Magic Eden is an NFT marketplace that opened its doors in 2021 and has been a mainstay in the NFT space.
Runes are The Next Frontier in Bitcoin's Evolution
Runes are a new technology launching during a time of positive Bitcoin sentiment. In the last week, Runes accounted for 70 percent of the Bitcoin transactions.
Like NFTs, the initial use case for Runes revolves around the art arena. But, this is likely just the beginning. It is not incomprehensible that like NFTs, there will be a demand for greater utility and community engagement.
The Runes ecosystem is still very nascent which makes it a great time for crypto enthusiasts to tune into the new developments happening in this area of Web3. New projects present opportunities for people to be early adopters of the technology to be active parts of a growing community.
With the institutional interest in Bitcoin core, it wouldn’t be surprising to see institutions buy Runes to diversify their portfolios. Thus, creating legitimacy of this technology for a non-web3 native audience.
As Runes continues to evolve and gain traction, it presents a unique opportunity for both early adopters and institutional investors to shape and benefit from the future of decentralized finance on the Bitcoin blockchain.