Franklin Templeton: Runes Could Bridge the Divide Between Bitcoin and Ethereum
Franklin Templeton: Runes Could Bridge the Divide Between Bitcoin and Ethereum
Bitcoin’s new “Runes” token standard could help the leading cryptocurrency network catch up to its rivals in the realm of decentralized finance (DeFi), according to a recent report from asset manager Franklin Templeton.
The Promise of Runes
In a fact sheet shared on Twitter, Franklin Templeton discussed the upcoming technology, which is set to launch alongside the next Bitcoin halving. The firm explained that “Runes introduces a new token standard on Bitcoin layer 1 that enhances the existing fungible token standards on Bitcoin (BRC-20s).”
Tokens are blockchain-based assets distinct from the native currency of a blockchain, such as BTC on Bitcoin or ETH on Ethereum. Until 2023, Bitcoin's main blockchain could not mint tokens, limiting its potential applications compared to other blockchains, such as NFTs, stablecoins, and DeFi.
This changed in early 2023 with the introduction of Ordinals, a protocol developed by Casey Rodarmor that allows users to inscribe individual satoshis with unique identification numbers and embed them with arbitrary data, enabling NFTs.
Bitcoin's NFTs are unique in that their image data is directly embedded into Bitcoin’s blockchain rather than on a centralized server, unlike Ethereum and Solana NFTs.
The Future of Runes
Today, Bitcoin's NFT market has surpassed both Ethereum and Solana, processing $462 million in NFT trading volume over the past 30 days, compared to Ethereum's $296 million, according to Cryptoslam.
Building on the Ordinals protocol, developer Domo introduced BRC-20 tokens, though he noted their inefficiency.
Runes, also developed by Rodarmor, aim to increase efficiency by using less blockchain data compared to BRC-20 and Ethereum's ERC-20 tokens. Runes also offer compatibility with the Lightning Network and improved transaction privacy.
“Bitcoin is well-positioned to narrow the gap between its fungible market cap and those of other blockchains,” wrote Franklin Templeton.
Bitcoin's total market cap currently stands at $1.2 trillion, with a fungible token cap of $600 million. Meanwhile, Ethereum's market cap is $378 billion, with a fungible token market cap of $499 billion.
“We are excited to see if Runes can do for Bitcoin's fungible token and DeFi market what Ordinals did for its non-fungible token market,” the report concluded.