Bitcoin Runes Revival: Asia’s Investors Drive Growth

The Bitcoin memecoin protocol rapidly subsided following its explosive debut. However, Asian institutional investors are notably optimistic regarding the long-term prospects of Runes

BRC-20 tokens, the inaugural cohort of Bitcoin memecoins, generated tremendous organic enthusiasm in 2023 when they swept the cryptocurrency landscape. They originated from a rudimentary modification to the Bitcoin Ordinals code. Their decentralized, chaotic, and highly experimental debut was the ideal maelstrom for success in the cryptosphere.

In contrast, the Runes protocol was implemented more systematically, overseen by esteemed engineers prioritizing security, scalability, and intuitive development tools. Indeed, it originated from Casey Rodarmor, the progenitor of the Ordinals protocol, who held the conviction that he could devise a more superior fungible token protocol than the one that merely iterated upon his prior code.

Arguably, this emphasis has not yet significantly impacted degen traders. However, East Asian investors claim that it has already transformed their lives.

“Runes is designed with scalability, efficiency, and security in mind to meet the stringent requirements of institutional investors potentially,” Ciara Sun, managing partner and founder of C Squared Ventures, an Asia-focused crypto investment firm, told Decrypt. “A wider range of institutions may find Runes more appealing due to this alignment.”

Certain Asian investment firms, including the Newman Group, headquartered in Hong Kong, have invested heavily in Runes. The organization asserts that it is actively promoting Runes development through portfolio companies such as Xverse and Liquidium in light of Runes’ potential to serve as an industry-wide infrastructure layer.

“Considering institutional interest, we believe Runes could end up being larger than BRC-20,” Adrian Lai, the founder of Newman Group, told Decrypt. Due to its technical prowess and capacity to facilitate streamlined cross-chain transactions, Runes may emerge as the cryptocurrency of choice for institutions seeking DeFi access on Bitcoin.

Several prominent cryptocurrency companies have already formed an alliance supporting the protocol. In April, the industry-leading cross-chain NFT marketplace Magic Eden introduced a Runes-specific platform. OKX, one of Asia’s leading centralized cryptocurrency exchanges, was the first to offer Runes trading at no cost. The exchange has enthusiastically adopted the protocol.

OKX investor Paige Xu asserts that Runes were virtually flawlessly crafted to satisfy every requirement of an institutional investor. She emphasized the protocol’s unspent transaction output (UTXO) paradigm, which enables tokens to interact with layer-2 networks, DeFi applications, and crypto-wallets far more seamlessly than BRC-20 tokens or ordinal inscriptions can now.

“Institutive institutions typically seek out technology with efficiency and a small blockchain footprint that can securely handle heavy demand,” Xu told Decrypt, adding that her personal views do not necessarily reflect those of her employer.

Nevertheless, according to the investor, Runes’ ascent to dominance through institutional backing is not yet assured.

She stated, “Adoption of Bitcoin-based technologies such as this is still in its infancy, and much will depend on our ability to educate and integrate these assets into the larger financial world.”

Interest in Runes skyrocketed following its April 19 introduction; according to on-chain data from Dune, the protocol witnessed over a million transactions in its first three days. In the following weeks, transaction volume dropped by as much as 90%, coinciding with a general cooling-off period throughout the cryptocurrency ecosystem.

However, activity on Runes more than tripled by late May. GeniiData reports that the aggregate market capitalization of assets associated with the protocol surpassed $1 billion for the first time. Subsequently, that amount surpassed $2 billion, suggesting that Runes might be experiencing a revival less than a month old.

As was once widely believed, institutional enthusiasm for Runes does not guarantee the protocol will eventually dominate the cryptocurrency industry. However, if present sentiment in East Asia serves as any indication, the largest actors in the cryptocurrency industry are concluding that Runes is the only viable path to mainstreaming fungible Bitcoin tokens.

MiXWeb3, the fictitious founder of the Runes China community, told Decrypt, “If issuing fungible tokens on the Bitcoin blockchain is the right move, then choosing between Runes and BRC-20 boils down to which has a greater chance of long-term viability and diversity.” “That considerably clarifies the case.”