Bitcoin Runes and BRC-20 tokens could just be the beginning of the evolution of Bitcoin-native decentralized finance (DeFi).
According to Rich Rines, a Core DAO contributor who is involved in building Bitcoin DeFi solutions, the introduction of Runes and Bitcoin DeFi was driven by a desire to enhance the functionality of the world’s most secure blockchain network. Rines stated in an interview with 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, the same day as the Bitcoin halving event. Runes is part of a larger movement within the developer community known as Bitcoin DeFi, or BTCFi, which aims to expand the utility of the Bitcoin network.
While the introduction of Runes generated a lot of excitement among Bitcoin holders, Rines believes that this token standard may just be a stepping stone in the evolution of BTCFi. This is mainly due to the decentralized nature of the network. Rines further explained that Bitcoin Runes made a strong comeback recently. On April 20, transactions related to Runes accounted for the majority of Bitcoin transactions, representing 81.3% of daily BTC transactions, as per data from Dune Analytics.
In order to foster innovation in BTCFi, Core Chain launched the first noncustodial Bitcoin staking product on April 23. This product allows users to stake their Bitcoin without compromising the security of the network. Since noncustodial staking does not require the underlying asset to leave a user’s wallet, it presents a risk-free opportunity for Bitcoin holders to earn yields.
In addition to Runes and Core Chain, other protocols are also working on enhancing the utility of Bitcoin. Hermetica, for example, 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 product, called USDh, is set to be released in June and aims to increase liquidity and provide more use cases for BTCFi.
Overall, Bitcoin Runes and the development of Bitcoin DeFi solutions are paving the way for a more comprehensive and versatile ecosystem. These initiatives demonstrate the growing interest and potential for decentralized finance within the Bitcoin network.