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The launch of Runes will help Bitcoin “close the gap” with Ethereum and Solana in the fungible digital asset space, investment firm Franklin Templeton Digital Assets said in a new report released Monday.
“Currently the fungible token market for Bitcoin is quite small in comparison to ETH and SOL,” the investment firm said. “However, with the launch of a more efficient token standard (Runes), Bitcoin is positioned well to close the gap between its fungible market cap versus that of other blockchains.”
Runes – Bitcoin’s new Fungible Token Standard pic.twitter.com/0VmlFbyKPc
— Franklin Templeton Digital Assets (@FTI_DA) April 15, 2024
With “1.4 trillion [assets under management], Franklin Templeton is bullish on Runes, and somehow I know most of you guys will mid-curve this,” Runestone spokesperson Leonidas said, responding to the firm’s tweet.
While the Franklin Templeton report acknowledged the role the BRC-20 standard played in the proliferation of fungible tokens on Bitcoin, the firm said the standard’s burn and minting process creates a significant amount of junk UTXO, or Unspent Transaction Output (UTXO).
UTXO bloats the network and increases fees due to Bitcoin fragments that remains after a transaction. The unspent funds are eventually used in new transactions.
With the Bitcoin halving days away, BRC-20 tokens have taken a beating in recent weeks, with the first Ordi (ORDI) falling 40% in the last seven days. The downturn for BRC-20 tokens could be related to Runes, according to blockchain intelligence company LunarCrush.
“It could be people more bullish on Runes, meaning less positive sentiment on BRC-20 versus actual negative sentiment,” LunarCrush co-founder and CEO Joe Vezzani told Decrypt.
For its part, Franklin Templeton Digital Assets noted that the launch of the Runes protocol will bring many improvements, including no junk UTXOs, no need to rely on off-chain data, no need for additional tokens, and increased privacy and compatibility with the Bitcoin Lightning Network.
Runes aren’t the only emerging digital asset that has caught the attention of Franklin Templeton. Earlier this month, the firm hailed Ordinals as driving a “Renaissance in BTC activity,” highlighting NodeMonkes, Runestone, Bitcoin Puppets, Ordinal Maxi Biz, and Bitmap with a combined market capitalization of $1.11billion.
“In the past year, Bitcoin innovation and development has seen a renaissance in activity,” Franklin Templeton Digital Assets previously said. “Positive momentum in innovations is primarily driven through Bitcoin NFTs, known as Ordinals, new fungible token starts such as BRC-20 and Runes, Bitcoin Layer 2s, and other Bitcoin DeFi primitives.”
In a separate report published on Monday, Franklin Templeton said the total number of crypto users will surpass 1.2 billion by 2025.
