Can the Runes protocol become the dominant issue coin standard in the crypto market?

In the field of cryptocurrency, Ethereum's ERC20 protocol has long been the preferred standard for issuing tokens. It has not only driven the development of the Ethereum public chain, making it the most widely used smart contract platform, but also opened up new avenues for decentralized finance (DeFi) and startup financing. However, with the evolution of blockchain technology, emerging protocols are challenging the dominance of ERC20.

Among numerous competitors, the Runes protocol has attracted attention due to its unique advantages. As an asset issuance protocol on the Bitcoin network, Runes combines the fair issuance concept of BRC20 with the flexibility of ERC20. It utilizes the OP_RETURN opcode in the UTXO model to record key operations such as token deployment, minting, and transfer.

Runes have significant advantages compared to BRC20 and ERC20:

1. Compared to BRC20, Runes are more flexible. It not only supports fair issuance but also allows project parties to reserve a portion of tokens for team incentives and financing. In addition, the trading structure of Runes is more efficient, requiring no additional minting steps, which helps reduce network burden and user costs.

2. Compared to ERC20, Runes is based on the Bitcoin network and enjoys a more stable foundation. Although ERC20 has established a mature ecosystem, Runes, as an emerging protocol, has greater innovation space and development potential. It is worth noting that Runes can achieve complex business logic similar to Ethereum through the Bitcoin Layer 2 network.

The Runes protocol offers multiple options for token deployment. Project parties can choose to fully reserve, completely fair issuance, or a combination of both. This flexibility allows Runes to adapt to the needs of different projects.

In the minting and transfer stages, Runes uses a simple and efficient mechanism. Users only need to include specific OP_RETURN information in the transaction to complete the operation, greatly simplifying the entire process.

Despite the many advantages that Runes showcase, it still faces challenges in surpassing ERC20 to become the mainstream issue coin protocol. ERC20 has first-mover advantage and a large ecosystem, which Runes needs time to catch up with. Additionally, the limitations of the Bitcoin network's scripting capabilities may also restrict the development of Runes in certain application scenarios.

Overall, the Runes protocol represents an important innovation in the cryptocurrency field. It combines the security of Bitcoin, the fairness of BRC20, and the flexibility of ERC20, providing new possibilities for asset issuance. As technology continues to improve and the ecosystem is gradually built, Runes has the potential to occupy an important position in the future crypto market. However, whether it can ultimately surpass ERC20 still requires the test of time and recognition from the market.