Runes and BRC-20s are stepping stones for Bitcoin DeFi.
Bitcoin Runes and BRC-20 tokens may just be the next step in the evolution of Bitcoin-native decentralized finance (DeFi).
Rich Runes, a core DAO contributor building Bitcoin DeFi solutions, said the emergence of Runes and Bitcoin DeFi came from the desire to add more utility to the world's most secure blockchain network. Reigns told Cointelegraph:
“[Bitcoin] What started out as a peer-to-peer electronic money system then evolved further into store value and now protects $1.5 trillion in assets. Over the past year and a half we have seen this demand for the original Bitcoin with the rise of Ordinals, the addition of token protocols such as BRC 20s and now Runes.
Runes is a new protocol for hashing tokens on the Bitcoin network that launched on April 20, Bitcoin's halving day. Runes are part of a broader developer movement known as Bitcoin DeFi, or BTCFi, to add more utility to the Bitcoin network.
While Runes has generated widespread excitement among Bitcoin owners, the token requirement may only be a stepping stone in BTCFi's evolution due to the decentralized nature of the network, Rines explained.
“If so, it's hard to say [Runes] Bitcoin is decentralized because it is decentralized. We need to reach some kind of social consensus on some criteria that will prevail. It will be market demand and people's dollar preferences that will help them agree on the final answer.
Bitcoin Runes made a recovery this week. On April 20, Runes-related transactions accounted for the majority of Bitcoin transactions, or 81.3% of daily BTC transactions, according to Dune Analytics data.
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Bitcoin is becoming the first yielding asset.
Aiming to bolster BTCFi's innovation, CoreChain introduced the first unregulated Bitcoin (BTC) on April 23, enabling Bitcoin to be stored without compromising the security of the Bitcoin network.
Because custodial-based storage doesn't require the underlying asset to leave the user's wallet, it introduces a risk-free product opportunity for Bitcoin owners, Rines explained.
“That's where Bitcoin's deregulated stock shines, where you don't take any risk. It's completely trustless, Bitcoin is a first-time producing asset and with those rewards you can invest in more Bitcoin, creating a feedback loop.
Other protocols are also creating add-ons for Bitcoin. On May 6, Hermetica announced the debut of a Bitcoin-backed synthetic U.S. dollar with the ability to generate output.
Scheduled to be released in June, USDh will offer up to 25% yield, aiming to bring more liquidity and play an important role in bringing issues to BTCFi.
Related: Runes Are Offering a Significant Lifeline to Bitcoin Miners – TeraWulf COO
