We are less than two days away from the 840,000 block where the BTC halving will take place, which also means that Runes, which the entire BTC ecosystem has been looking forward to for a long time, will be launched soon. As the largest fair launch in the BTC ecosystem, although it may face huge pressure from internal competition, it is still the largest and most public Alpha opportunity in the crypto world.
Although platforms such as OKX Wallet and Unisat have already provided public etching platforms, if you want to get more chips in the competition, running your own Bitcoin full node and index, and understanding the relevant principles of Runes operation, so as to optimize it in a targeted manner will bring certain advantages.
This article attempts to introduce Runes from the aspects of technical implementation, distribution rules, and estimated costs.
Runes protocol is an asset protocol deployed by Casey, the founder of Ordinals, on the Bitcoin network to issue homogeneous tokens. The fundamentals of Runes are the window of legitimacy and fair distribution of the Ordinals protocol. The Ordinals community needs to rely on Runes to fight for the pricing power of BTC ecosystem token assets. Casey even called for suicide one month after the launch of Runes ecosystem with a market value of less than 1 billion US dollars...
It can be expected that after the halving, the Runes protocol will bring very active on-chain interactions. Hot topics to watch include but are not limited to:
• Casey's hardcoded genesis rune in the Runes protocol
• Runes token airdrops corresponding to NFTs such as Rsic and Runestone
• Community-led deployment and fomo of Runes tokens
principle
The Brc20 method is called engraving, which is to write the token data into the signature of the isolated witness and bind the data to a specific satoshi. In essence, this is to use BTC as storage space, and the transfer is completely dependent on the Brc20 index ledger under the chain. In order to ensure the legality of the transaction, the Brc20 transfer must first make the corresponding token transferable through engraving, and then transfer the corresponding engraved UTXO through a second transaction to complete the transfer.
The atomics method is called coloring. The balance of Arc20 is represented by the number of satoshis under a UTXO, strictly following the correspondence of 1 token = 1 sats. Therefore, Arc20 transfers can be completely treated as general transactions by the BTC network. The index is relatively simple and can use BTC native features.
The Runes method is called etching. The balance of a Runes is bound to a UTXO. The data on the balance, token symbol, and other information are recorded in the OP-RETURN of the transaction. OP-RETURN can be regarded as a note of the transaction (maximum 80 bytes). The json contained in its data marks how many Runes tokens are represented by the utxo under the BTC transaction. The Runes indexer is required to identify these tokens.
In short, Runes is bound to BTC UTXO, or BTC UTXO is regarded as a pointer to the Runes token, and OP-RETURN is the assignment statement of the pointer.
When the Runes token is transferred, the UTXO representing the Runes token needs to be used as input, the amount of the transfer is written in the OP-RETURN, and the specified utxo is used as the first output. The set number of Runes tokens will be transferred to the target address of utxo1, and the remaining Runes tokens will be automatically bound to other utxo such as utxo2 in sequence. Utxo1 can be output to someone else's address, and utxo2 can be output to yourself as change, thus completing a Runes transfer. At the same time, Runes also comes with a burn function, which can declare the destruction of tokens.
Unlike Brc20, which only uses BTC to store transfer records, Runes tokens are strictly bound to UTXO, allowing them to apply the various benefits that come with BTC UTXO; this method is similar to Arc20, but the difference is that Runes's utxo can represent any number of tokens, while the number of Arc20 is strictly related to the number of sats contained in the bound UTXO (difficult to split); but at the same time, Arc20
It is also less dependent on the indexer. The legitimacy of Runes token transfers still requires the records of the Ord index ledger.
The flexibility of JSON data under OP-RETURN allows batch transfer of Runes tokens in one operation, including transferring different types of Rune assets such as RuneA and RuneB in the same Bitcoin transaction.
Distribution rules
In the initial distribution process of Runes tokens, the token information and distribution rules need to be etched first.
Token information This includes the smallest split unit, asset name, name separator, symbol, etc. It should be noted that the name of the Runes asset has no limit on length and includes • This type of separator may be more complicated, so be sure to identify it when minting new assets.
In the distribution rules section, Runes allows deployers to pre-allocate tokens to themselves, so be careful to identify whether it is a fair launch. This feature can be used for the distribution of assets such as Runestone and Rsic.
Under the Terms data of the distribution rules, there are data such as the limit on the number of tokens that can be mined at a time, the total number of tokens that can be mined, and the start and end blocks of minting. Here, the total number of mints can be set to unlimited, with a limited time and unlimited quantity, which is the case for the rune No. 0 UNCOMMON•GOODS deployed by casey.
At the same time, the user's spontaneous minting process needs to write the Runestone data type under OP-RETURN (not related to the rune NFT Runestone). A transaction can only be mined once, so if you want to get more chips, you need to divide it into multiple UTXOs under one address.
Runes will start at block 840000, and the ord index has been updated to the latest version 0.18.1. It now fully supports runes token query, etch (equivalent to Brc20 deploy), mint and other functions. At the same time, Casey also said that a part of the Runes tokens will be deployed hard-coded into the ord indexer and activated at the halving block. These assets are completely fairly distributed and can be minted freely. Casey has mentioned names such as COMMUNISTRUNE, ANARCHISTRUNE, and CYPERPUNKRUNE. Now the creation rune named UNCOMMOM.GOODS can be seen in the index.
The deployment of Runes asset names is restricted by the Ord index. Names of 13-26 characters can be freely deployed after 840,000 blocks, and 12-character names are gradually unlocked. The deployment of shorter names is unlocked every 17,500 blocks (about 120 days), so it takes 3 years to mint to a 4-character token.
Although the extremely long names in the early days were not conducive to hype, fortunately, special symbols can be designed to represent assets. This symbol complies with the Unicode standard, so many emoji expressions can be written. Choosing a good emoji is also something you need to pay attention to when deploying memes.
Estimated costs
The current Runes protocol code has been basically finalized and has been running on the testnet for a while, so some cost predictions can be made. By running the ord index on signet, we can see that as many as 497 runes test tokens have been deployed on the signet testnet, and as many as 963 on the testnet testnet. At the same time, we have also conducted some experiments and tests on signet to measure the cost and progress of mint.
Signet Testnet Runes 0~9:
We have performed multiple mint and ord commands for runes tokens on the signet testnet:
The transaction is as follows: https://mempool.space/zh/signet/tx/645829bdaf105ccecc012629a3bbb6e9dfcfe92fa09499ea54b87092c9100946
Specify destination as the address to receive Runes tokens:
The transaction is as follows: https://mempool.space/zh/signet/tx/32125d247a282ebf53b893a17f3c2c99a7747749233dc010bd9ae2934540c981
It can be seen that a mint transaction consumes about 230vB in size. Referring to the market heat to speculate the FOMO sentiment, if the feerate is 300-1000 sats/vB in extreme cases, the cost of minting one piece is about 0.0023-0.00069 BTC (150u-50u). At the same time, ord supports specifying the destination address, so the UTXO can be split and minted to the target address in batches.
If FOMO sentiment is high after the halving, and there are 3,000 transactions in each block in the early stage for Runes mint transactions, and the average feerate is 200 sats/vb, the mint of Runes tokens consumes about 198.72 BTC of gas cost per day, which can provide some reference for calculating the early FOMO chip market value.
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