I am Ray.bit, a man with Bitcoin passion and technical insight, X (Twitter): https://x.com/bitlaser_btc
Recently, the peaceful Bitcoin ecosystem has been rippled. The market value of $METHANE, the first token of the Alkanes protocol, which is considered to be at its peak from the beginning, has exploded from about 1 M to 10 M+ in a short period of time, attracting the attention of many communities and KOLs, who have joined the construction of Alkanes, and the proxy tools have supported it one after another. The Bitcoin ecosystem has not been so lively for a long time, and it seems to have returned to the scene of the Bitcoin ecological protocol explosion in 2023. To date, $METHANE has stabilized at a market value of more than 10 million, and is called the next $ORDI by the community. This kind of daily doubling is common on SOL and BSC, but in the current Bitcoin ecological environment, even a ripple is like a thunder, causing countless noises. Just like a blind man suddenly seeing the light, full of beautiful visions for the future.
The Alkanes protocol I call Runes 2.0. Alkanes is built on Runes and is a meta-protocol that introduces smart contracts to Bitcoin L1.
So under what circumstances was the Alkanes protocol born?
The story begins with Runes...
The Birth of Runes
Runes was first proposed by Casey @rodarmor (founder of Ordinal Protocol) in September 2023 as an alternative to BRC20. BRC20 has been criticized for its reliance on JSON inscriptions, which leads to redundant on-chain data, network congestion, and high gas fees. Runes uses Bitcoins UTXO model and OP_RETURN opcode to design a more efficient and concise token issuance mechanism, with the goal of improving performance and reducing the burden on the network.
Features
Simple and efficient: Runes are directly based on Bitcoins native UTXO model, without the need for complex off-chain indexes or JSON inscriptions, resulting in smaller data footprint and faster transaction processing.
Decentralized minting: Similar to BRC20, Rune emphasizes fair issuance, allowing users to mint tokens freely.
Strong compatibility: Rune is highly compatible with the Bitcoin protocol and can be implemented without a soft fork, lowering the technical threshold.
Flexibility: Supports multiple token types (homogeneous/non-homogeneous) and provides developers with more creative space.
Development and influence
Launched in 2024: Runes will be officially activated at Bitcoin block height 840,000 (when the halving occurs in April 2024). The first batch of Rune tokens quickly triggered a market boom, and the market value of some projects surged in a short period of time. For example: $DOG
Miner income: Similar to BRC20, the rune casting craze brought a lot of transaction fees to miners (GAS was close to 3,000 at one point), especially after the halving, which made up for the loss of reduced block rewards.
Ecosystem expansion: Runes promote Bitcoin Layer 1 token experiments, attracting developers to explore decentralized applications (DeFi, NFT, etc.), and further enrich the ecosystem.
Community response: Although Rune optimizes the shortcomings of BRC20, there are still Bitcoin purists who criticize it for deviating from the original intention of peer-to-peer electronic cash and believe that the token craze has intensified speculation.
Current situation and challenges
As of April 2025, the Rune ecosystem has taken shape, with thousands of Rune tokens in circulation, and some leading projects (such as #RSIC, #DOG) have impressive market capitalization performance. However, Rune still faces challenges:
Application limitations: Similar to BRC20, runes mostly remain at the issuance + transaction level and lack complex application scenarios.
Market competition: The DeFi and MEME ecosystems of chains such as Ethereum and Solana are more mature, attracting a lot of funds and attention. Rune needs to find a unique positioning.
Turning Point
At this time, Alkanes quietly went online on March 18 with this responsibility, sparking heated discussions in the Bitcoin community.
What are Alkanes?
Alkanes is an application layer meta-protocol based on Bitcoin, which aims to implement smart contract functions on Bitcoin L1 through the Protorunes protocol and OP_RETURN output, and support the development of decentralized applications (dApps)
Technical Implementation
Alkanes uses Rust to write smart contracts, compiles them into WebAssembly (WASM), and stores them on the Bitcoin blockchain in the form of compressed files through witness scripts to ensure efficient deployment and execution.
Protocol Features
Inheriting the Runes and Ordinals protocols, Alkanes combines with the Metashrew indexer to provide verifiable on-chain state management and asset views, supporting complex trust protocols and state machines.
Advantages
There is no need to trust a third party. Alkanes leverages the decentralized nature of Bitcoin to ensure the security and transparency of smart contracts and provide developers with flexible dApp building tools.
Alkanes sparked heated discussions when it first went online, but the popularity did not last long and was soon overwhelmed by the current situation, becoming a representative of a project that reached its peak as soon as it debuted. With the support of iDclub @idclub_ord Marketplace, it has regained its vitality and ignited a raging fire, with the potential to illuminate the Bitcoin ecosystem.
The prelude to the DeFi empire of the Bitcoin ecosystem has quietly begun, but the story does not end there.
Alkanes is not the only one with the Runes 2.0 solution.
In June 2024, Mikael @MikaelBTC proposed the programmable rune solution RSM (Runes State Machine) @RSM_Runes, which was also the only Runes protocol at the time. It was very popular at the time, and the protocol token $RSM also reached a market value of tens of millions. Is this the next ORDI?
What is RSM?
RSM is a programmable rune solution, a Turing-complete state machine for #Runes on Bitcoin L1 and Bitcoin, Runes 2.0, RunesFi, and BTCFi by Mikael @MikaelBTC
Technical Implementation
Smart contracts drive state management, and transactions trigger decentralized computing; UTXO and state machine dual models are converted through burn 2/bur n3, mint 2/mint 3; decentralized computing without custody; token nesting supports independent logic; DAO governance contract (Contract-001). RSM uses Bitcoin consensus to ensure security, and modular design expands dApps development capabilities.
Protocol Features
The RSM protocol gives the Rune protocol powerful programmability and DeFi potential through Turing completeness, dual-model architecture, decentralized computing and governance, token nesting and other features. It takes into account the security and scalability of Bitcoin, supports the development of complex dApps, while maintaining decentralization and user control. Its openness and community-driven model inject vitality into the Bitcoin Layer 1 ecosystem.
Advantages
The RSM protocol gives the Rune protocol unique advantages through strong programmability, decentralized security, dual-model flexibility, modular expansion, community governance, Bitcoin compatibility and open ecology. While maintaining the core characteristics of Bitcoin, it significantly enhances the DeFi potential of Layer 1, provides developers with a flexible framework, and provides users with a safe and reliable experience.
The difference between the two Runes 2.0 solutions
Alkanes: Alkanes is based on Runes, but is an independent protocol. The challenge it faces is that it needs support from mainstream Bitcoin ecosystem trading markets such as OKX @OKXWallet_CN, UniSat @unisat_wallet, and Magic Eden @MEonBTC.
RSM: RSM is a solution for programmable Runes. The challenge is to convince Casey @rodarmor, the founder of the Runes protocol, to adopt its solution and upgrade the original Runes protocol.
Summarize
Although Alkanes and RSM are two different protocols, they have both made great contributions to solving the liquidity problem of the Bitcoin ecosystem and the inability to achieve decentralized DeFi.
