Tech
Runes, Casey Rodarmor’s protocol for ‘Sh*tcoins’ on Bitcoin, ready to be published at halving
Bitcoin’s next four-year halving is imminent – now likely to happen early Friday or Saturday morning. But a large number of developers and users of the 15-year-old blockchain are turning their attention to an event that is expected to take place immediately after the halving: the launch of Casey Rodarmor’s Runes protocol.
The big project Rodarmor launched last year – the Ordinals protocol for creating NFT-like “inscriptions” on Bitcoin – has brought a new spirit of playfulness and development vigor to the notoriously conservative blockchain ecosystem, flooding cryptocurrency miners with a total turnover of 256 million dollars. (The popularity of transactions has caused, among the trade-offs, thorny problems like network congestion and skyrocketing user fees.)
The Runes protocol, which will allow users to create a quantity of tokens on top of Bitcoin like those commonly seen on other blockchains such as Ethereum and Solana, could build on the success of Ordinals. But the arrival of Rodarmor’s new platform could also radically push the boundaries of what was previously considered acceptable in Bitcoin culture, where any digital token beyond the native cryptocurrency bitcoin has long been considered taboo.
Ordinals allowed data known as “subscriptions” to be attached to satoshis, the smallest denomination of BTC, effectively allowing non-fungible tokens (NFTs) to be minted and traded on Bitcoin, an activity that was previously only available on other blockchains. Shortly after, another developer, Domo, introduced “BRC-20,” a standard for creating fungible or tradable tokens, another feature that previously did not exist on Bitcoin.
Rodarmor himself described Runes as a more efficient method of creating new tokens on Bitcoin, writing in a in a post on X on April 1st that the protocol was “built for degens and memecoins.”
“I’m creating a place where people can create sh*tcoin,” Rodarmor said in an episode of his podcast in February, Hell money.
The question is whether they will take off, as the Ordinals did.
Rodarmor describes Runes as a protocol and token standard that can address some of the shortcomings of BRC-20.
With BRC-20, users can only transfer one type of token to a destination with an enrollment. Runes, however, will allow users to distribute several tokens in a single transaction that transfers any number of runes from inputs to outputs.
Rodarmor says Runes will offer greater simplicity and security to users than the current BRC-20 standard.
“Transferring a BRC-20 token requires three transactions due to the way memberships work. Two transcripts are required to create the memberships and one to transfer the resulting membership to the recipient,” Rodarmor told CoinDesk in an email. interview.
“The other flaw is complexity. BRC-20 is essentially a superset of Ordinal entries, so if you’re writing a BRC-20 index, you have to include an Ordinal index and then add the BRC-20 logic for that on top as well .”
Runes, by comparison, is a standalone protocol with no dependencies on Ordinals, Rodarmor said.
It is also designed to be more efficient. With the exception of creating a rune, which is done via a two-inscription process, everything else requires a transaction.
“The transactions are very small and the transfers are very efficient,” he added.
The first rune, technically “rune 0”, was called “UNCOMMON MERI” by Rodarmor, he said.
“It has an open tick, which starts with the halving and ends with the next halving,” Rodarmor said. “It is indivisible, so the unit cannot be divided into subunits, and each minting transaction gets one unit.”
There’s no real technical reason why Runes needs to be cast at that moment halving.
It’s just “thematically interesting,” Rodarmor said.
However, he argues that there are post-halving trends that the runes will influence.
The halving – Bitcoin’s fourth in its 15-year history, a key feature of Satoshi Nakamoto’s original programming – will see miners’ reward for adding new blocks to Bitcoin reduced by 50% from 6.25 BTC to 3.125 BTC.
Bitcoin’s security is linked to the difficulty of the network, i.e. the number of hashes needed to add a new block. If the hash rate were to decrease because the block reward was reduced by 50%, among many possible reasons, the network would be less secure, as it would be easier to add new blocks.
“The halving schedule is a very aggressive schedule,” Rodarmor said. “I wouldn’t recommend changing it, but if I had designed Bitcoin from scratch, I probably wouldn’t have chosen such a fast decay.”
As a result of the halving, network security may depend more on transaction fees – the small amounts of bitcoin paid to miners for validating a transaction by including it in the last block.
The halving of block rewards should therefore be offset by an increase in the price of BTC, incentivizing greater mining activity and thus increasing the hash rate. If that doesn’t happen, rates would have to increase instead.
“We already often see blocks where the fee is larger than the block subsidy, and this will become more common over time with each halving,” Rodarmor said.
Runes could therefore play a role in generating sources of demand for block space, helping to increase fees that could become more important for protecting the network.
This view is by no means universal in the Bitcoin community. Sort them proved controversial among some developers for causing congestion on the network and resulting in increased rates, a charge that Runes could also face if it proves effective.
Runes builds on Ordinals by using UTXO – unspent transaction output, a key element of Bitcoin creator Satoshi Nakamoto’s network design – to generate transactions. UTXO is the term for cryptocurrency amounts left after a transaction, similar to the change remaining after completing a cash purchase.
The new protocol extends the UTXO concept through the ability to hold a balance in any number of Rune tokens. A single Rune can contain 10 units of Rune A, 100 units of Rune B, and 1,000 units of Rune C, and so on, with any unspent UTXO from a transaction destroyed.
Users would then send a bunch of runes on different inputs, which would be transferred to an OP_RETURN to be burned. Unless they mark it with a “runestone”, a pointer that specifies an alternative output, making it unspendable and therefore ignored by Bitcoin Core, the network’s software. A runestone can be used to create a new rune, known as an “engraving”, or to mint or transfer existing runes.
Rodarmor summarizes Runes as a “simple OP_RETURN-based protocol”, presented through approximately 2,000 lines of code.
“Subscriptions have doubled the size of the UTXO set in the last year alone, and most of them will be forever useless,” he wrote.