What Are Proto-Runes? A Beginner's Guide to Programmable Runes

The introduction of the Runes protocol simplified fungible token development on Bitcoin. However, the protocol lacks a programmability standard, which has led to innovations like programmable runes, known as proto-runes.

Proto-runes are still in development, but they have the potential to improve Bitcoin's functionality and versatility by introducing more complex programmability and token management.

This article examines proto-runes, how programmable runes would work, their features, and potential applications. 

What Are Proto-Runes?

Proto-Runes is a sub-protocol of Runes where you can build extensions and indexers that assume all the rules of Runes with added programmability and functionality. 

In the beginning, the tokens, called proto-runes, should be minted through a one-way burn of runes. In the future, they could be minted by locking up runes, so you won’t need to destroy them.

What Are Programmable Runes and How Do They Work?

Programmable runes are a sub-protocol of Runes that enhances Bitcoin's functionality by allowing more complex computation and smart contract functionality on the network. They should also simplify token issuance and increase token utility by allowing you to add more complex functionality to runes.

How Does Proto-Runes Facilitate Programmability of Runes?

Proto-Runes allows you to create rune indexers that add functionality and logic that are compatible with existing runes. The sub-protocol introduces more complex smart contract capabilities, overcoming the barriers of Bitcoin’s scripting language.

Features of Programmable Runes on Proto-Runes

Programmable runes or proto-runes have the following features:

• Compatible with runes
• Complex functionality
• Created through burning runes
• Smart contract capability

Proto-runes leverage the UTXO model, making integration with Bitcoin-native assets more efficient and allowing them to inherit existing security features. This increases accessibility to token creation and improves adoption through leveraging existing tools in the Bitcoin ecosystem.

Applications of Proto-Runes

Let’s look at how proto-runes can revolutionize the Bitcoin ecosystem.

Governance

Unlike Bitcoin, some blockchains integrate formal governance processes, such as voting. Proto-runes have the potential to introduce native governance tokens to the network that will enable on-chain voting powered by smart contracts. 

In theory, the proto-runes standard could support decentralized and transparent decision-making on Bitcoin through smart contract capabilities.

Synthetics

Proto-runes could help create synthetic crypto assets or crypto derivatives that provide users with exposure to, for example, real-world assets. 

The sub-protocol could unlock more complex DeFi capabilities on Bitcoin, introducing new financial services to the network.

AMMs

Programmable runes could also facilitate the development of automated market makers (AMMs) on Bitcoin, allowing you to trade native assets through smart contracts. An AMM is a type of decentralized exchange (DEX) that uses liquidity pools, allowing individuals to trade crypto assets through the AMM rather than directly with each other. 

Proto-runes can improve the efficiency of DEXs on Bitcoin by integrating more complex trading mechanisms into the ecosystem.

Interoperable Bitcoin-native Assets

As Proto-Runes is a sub-protocol of the Runes standard, they have a similar implementation as Runes with a difference in protocol tags and are compatible with the parent protocol. Every proto-rune indexer runs the runes indexer with additional functionalities.

Escrow Implementation

Proto-runes could also aid in developing escrow services within the Bitcoin ecosystem. Escrow is a type of service that releases funds when the parties' predefined conditions are satisfied. 

Proto-runes transactions are said to be able to provide an extra layer of trust and security between parties by implementing escrow functionalities. 

The Takeaway

The Proto-Runes sub-protocol is still under development, and developers continue to explore its capabilities. If successful, the innovation has the potential to revolutionize how transactions are conducted on Bitcoin and give the network a stronger foothold in the DeFi landscape.

You can seamlessly buy, sell, store, and manage your runes tokens using your Xverse wallet. Xverse is the most popular and user-friendly Bitcoin Web3 wallet that enables you to manage all your Bitcoin-native assets, such as Ordinals, Rare Sats, and Runes, in one place. 

‍Download the Xverse wallet to securel store and manage your runes token.