Bitcoin Runes and BRC-20 tokens could potentially be just the beginning of the evolution of Bitcoin-native decentralized finance (DeFi).
According to Rich Rines, a Core DAO contributor who is actively involved in building Bitcoin DeFi solutions, the development of Runes and Bitcoin DeFi stemmed from a desire to enhance the utility of the world’s most secure blockchain network. Rines explained to Cointelegraph that Runes is a fresh protocol that allows for the issuance of fungible tokens on the Bitcoin network. It was launched on April 20, which coincided with the Bitcoin halving event. Runes is part of a larger movement within the developer community called Bitcoin DeFi (BTCFi), which seeks to expand the functionality of the Bitcoin network.
Although Runes has generated significant excitement among Bitcoin holders, Rines believes that this token standard may merely serve as a stepping stone towards the advancement of BTCFi, primarily due to the decentralized nature of the network.
Interestingly, Runes-related transactions dominated the Bitcoin network on April 20, accounting for a staggering 81.3% of daily BTC transactions, as reported by Dune Analytics Data.
To further encourage innovation in BTCFi, Core Chain recently introduced the first noncustodial Bitcoin staking product on April 23. This groundbreaking staking mechanism enables users to stake their Bitcoin without compromising the security of the network, as the underlying asset remains in the user’s wallet. Rines highlighted that this noncustodial staking option presents a risk-free opportunity for Bitcoin holders to earn yield.
Additionally, other protocols are also working towards enhancing the utility of Bitcoin. Hermetica, for instance, announced on May 6 that they will be launching the first-ever Bitcoin-backed synthetic United States dollar, which will offer yield-generating capabilities. This new token, called USDh, is set to be released in June and aims to bring more liquidity and use cases to BTCFi.
In summary, Runes and BRC-20 tokens are just the beginning of Bitcoin DeFi’s evolution. These developments, along with other initiatives like noncustodial staking and the introduction of Bitcoin-backed synthetic assets, are paving the way for a more robust and efficient Bitcoin-native decentralized finance ecosystem.