I. New Assets - The Historical Mission of Runes

Runes are a new asset, and the emergence of new assets inevitably brings a new wave of minting frenzy, as history has shown. It is foreseeable that in the near future, we will inevitably participate in a grand wave of new asset minting, with countless project teams and participants reaping significant benefits. Our task is to remain engaged, anchoring ourselves in the market and waiting for the opportune moment.

There are several angles from which we can understand the emergence of this new asset:

1. Bitcoin Halving: With Bitcoin halving, miners need to prosper the Bitcoin ecosystem and promote transactions, leading to the creation of inscriptions and runes.

2.Domo’s Implementation of Casey’s Vision: Casey proposed runes to reclaim his own glory and wealth after Domo realized Casey’s vision.

3.BTCFI’s Grand Narrative: Project teams need a suitable carrier for issuing assets on the BTC chain. For more details, you can refer to my previous article: “Detailed Explanation of How to Play with Runes (Written in Excitement Before the Halving).”

In this article, I want to explore a more grandiose topic: minting rights.

On the surface, it seems that every project in the crypto world is issuing coins. Even individual investors can deploy a meme coin, a token, an NFT, an inscription, or a rune on the blockchain using protocols like ERC20, ERC721, or Ordinals. Everyone can mint fairly, depending on the gas fees they are willing to pay. But do we really possess minting rights? In my view, we do not. The assets we issue do not directly generate value or lead to the distribution and transfer of assets, except through persuading others to buy in. It boils down to who has more influence, who can operate the market, and who can set the market trends.

However, true currency has absolute influence. For example, since the Age of Exploration, gold and silver have been globally recognized as standards of value. Those who controlled gold mines and had the largest reserves could directly plunder global resources, bypassing value extraction through exploitation. After the Bretton Woods system was abandoned by Nixon, the US dollar, backed by America’s superpower status, became the international currency linked to oil. By simply increasing or decreasing its supply, the US could amass and extract global wealth. Upon securing true minting rights, the US began deindustrialization, globalization, and full-scale development of financial services, standing atop the pyramid and becoming a global leader.

Who Holds the Minting Rights in the Crypto World?

Before Ethereum (ETH) existed, Bitcoin (BTC) was the dominant force, but it lacked scalability and could not support a broader ecosystem. With the advent of ETH, it effectively became the entity with true minting rights. All project deployments and asset circulations are inextricably linked to Ethereum. Others have attempted to replicate its success and build their own empires, such as various Layer 1 solutions, but none have matched ETH’s strength and influence. These alternatives are like local chieftains in their small territories.

Now, the times are changing. With the approval of ETFs, Wall Street has legitimate reasons and channels to enter the crypto space. Understanding the significance of minting rights, they naturally aim to gain the most significant voice in the industry. But who controls ETH? It belongs to Vitalik Buterin (V God) from Russia and the Ethereum Foundation, not to Wall Street. Thus, from a conspiracy theory perspective, a battle for minting rights between ETH and BTC began with the creation of the Ordinals protocol. BTC must gain scalability and develop an ecosystem robust enough to compete with, if not surpass, ETH. People need to get used to BTC as a unit for deployment and transaction settlement. Therefore, we can expect a surge in various BTC scaling solutions. Even if they merely replicate the ETH ecosystem without innovation, they will receive support and funding.

I can confidently predict that significant capital will soon flow into various BTC protocols, leveraging runes for coin issuance to achieve growth and profit. To draw an analogy, after World War II, the United States provided extensive funding and technology to Japan and Germany to help them rebuild. The fundamental goal was to establish a community that used the US dollar. Similarly, in today’s BTC ecosystem, the same principle applies.

Why not inscriptions? Because they are sold fairly and are not suitable for project teams to manipulate. The answer is straightforward. Thus, a surge in rune popularity is inevitable, particularly among project teams building the Bitcoin ecosystem. This might seem to violate the spirit of decentralization, but no ideology can withstand the greed and madness of capital.

If we delve deeper into conspiracy theories, why does Wall Street want to seize minting rights in the crypto world? I believe it is part of maintaining the dominance of the US dollar, as cryptocurrencies are becoming a significant global asset class. This year, China has been aggressively buying gold. Why? Think carefully about this question, although we won’t elaborate here.

From this perspective, we can explain certain phenomena. For instance, why do inscriptions still have a market cap of only 2 billion? Because there is no incentive to drive their value up. They have not fundamentally addressed the expansion of the Bitcoin ecosystem, nor do they directly benefit any project teams. Runes might be discredited due to miners’ greed, as miners are merely beneficiaries and lack the power to initiate and rewrite such a grand narrative.

II. Distribution Models - Review and Outlook

1. Current Models Review

Through examining runes 0-9, we observe several distribution methods: PRE-RUNE, MINT, mining, and rush sale. PRE-RUNE can be further subdivided into snapshot and holding duration.

MINT: This method involves fair minting with participants competing by paying gas fees. The only question is how much the project team pre-mines. For instance, rune 0 was minted in unlimited quantities as an example set by the founder. Rune 1 had 99.9% pre-mined, with the remaining 0.1% minted quickly under high gas fees by “卧龙风雏” (Wolong Fengchu). Runes 6 and 7 had 20% pre-mined, with the remaining 80% available for fair minting, similar to the inscriptions model.

Mining: Rune 4 used this approach, where 10% was distributed via PRE-RUNE (holders of an associated NFT received this portion), and the remaining 90% required staking the NFT to mine. The mining rewards halved monthly, and the yields were released linearly. Personally, I’m not fond of the team behind rune 4, as they seem stingy and scheming compared to other projects. This distribution method seems to be more suited for onlookers.

PRE-RUNE:

Snapshot Method: Holding an NFT at the snapshot moment determines eligibility for rune distribution. This method was used by runes 3 and 9, but the value of the NFT tends to plummet after the snapshot.

Holding Duration: Rune 8 utilized this method, where the NFT continuously mines runes while held, and runes mined during the holding period remain with the original address even after transferring the NFT. Additionally, it introduced algorithms to incentivize holding, such as random rewards and lotteries. For more details, refer to my article “Seriously Reviewing the Money-Making Logic of Runes 0-9 (Part 2).”

Rush Sale: This method was introduced by DOTSWAP, where the project team pre-mints all runes, and participants can rush to buy at launch, similar to the excitement of minting meme coins.

These models do not encompass the entire spectrum of rune distribution methods. Apart from rune 8, the other distribution methods are quite common.

1. Outlook on Rune Distribution Models

The essence of distribution models can be divided into two primary categories: “Why you get it” and “When you get it.” The “Why” can be broken down into three types: WORK, HOLD, and LUCKY. The “When” can be split into one-time distribution and linear distribution.

WORK: This refers to proof of contribution. Both Bitcoin mining and airdrops fall under this category. Those who contribute have the right to distribution. Bitcoin mining involves linear distribution, where rewards can be mined, retrieved, and sold, akin to daily or monthly wages. Airdrops, on the other hand, are one-time distributions, similar to annual bonuses or equity dividends.

HOLD: This means holding to receive distribution. Examples include the dog airdrop from rune 3, the wolf airdrop from rune 9, and the RSIC airdrop from rune 8. The distinction lies in snapshot distribution versus holding duration distribution. I prefer the latter because the former can exploit expectations to distribute holdings at high prices, often leading to a sharp drop post-snapshot unless the project team is exceptionally strong. This is why rune 8’s NFTs did not drop significantly, while rune 3 and 9’s NFTs plummeted after the snapshots.

LUCKY: This relies on luck, such as DOTSWAP’s rush sales or Initial Exchange Offerings (IEOs). This method attracts attention quickly and can increase the platform’s token value by encouraging users to create multiple accounts to increase their chances.

In terms of transactions, the share of pre-seed trading increased slightly in the first quarter, indicating growth in newly established startups.

In the future, when encountering new distribution methods, it’s better to understand them within this framework to better grasp the project team’s motives and strategies rather than focusing merely on whether it’s an airdrop or MINT.

You can compare distribution models to a company’s compensation system. Just like good compensation models incentivize positive efforts among employees, effective distribution models can drive user engagement and loyalty. Conversely, poor compensation systems can lead to dissatisfaction and distrust, similar to the tactics of exploitative employers.

For example, pure mining projects often fail outside of Bitcoin. These are akin to daily or even hourly payouts. Employees (or miners) lack loyalty, especially in new companies, and will likely exit quickly. If a new project offers high mining rewards, it’s often a red flag, much like dubious job offers that promise high pay for minimal work, often leading to scams.

Airdrop Blind Boxes: SOL (Solana) has revolutionized the PUA-style practices of the ETH ecosystem. Solana projects use a point system for airdrops, akin to year-end bonuses. The ETH ecosystem’s airdrops are often unpredictable, with criteria not disclosed in advance, leading to insider trading and exploitation. Solana’s point-based system is transparent and equitable.

Holding NFTs to Receive Tokens: This resembles pre-IPO options granted to employees. If it’s a robust company like Tencent, it’s a guaranteed win. However, if it’s an average company, it might entice employees and others to buy in with dreams of wealth, akin to disguised ICOs.

Distribution methods are tools and means. The focus should be on the project team’s capabilities and intentions. Projects lacking strength but using manipulative tactics should be approached with caution. However, if a weaker project clearly defines its distribution rules, it can be quite beneficial. Ideally, strong projects with transparent rules are the best opportunities.

Suggested Process for Evaluating Projects:

• Assess the project’s strength.
• Determine if the distribution method aligns with the project’s capabilities.
• Evaluate whether the project aims to achieve something meaningful or is merely a cash grab.
• For serious projects, consider if their distribution model effectively incentivizes users, whether for the short term, long term, or a combination of both.

By following this approach, you can make more informed decisions about which projects to participate in.

III. Circulation Methods - How to Find More Buyers

1. Circulation

The foundational infrastructure for rune circulation has seen some rapid developments across various projects.

Order Book Marketplaces:

OKX, UNISAT, MAGIC EDEN: Among these, UNISAT boasts the best liquidity, favored by many international users. MAGIC EDEN, though launched later, excels with its bulk purchase functionality. I remain optimistic about MAGIC EDEN, particularly due to the valuable points system it offers. Trading runes on MAGIC EDEN allows users to earn airdrops, making it a dual-benefit process. I hope some experts will publish a guide on maximizing point farming through rune order placement. Similar to BLUR, one could potentially manipulate rune prices to earn significant MAGIC EDEN points, making profits while also farming points—a win-win situation.

Centralized Exchanges (CEX):

Although inscriptions are difficult to handle, they have managed to get listed on CEXs, making rune listings much easier. It largely depends on the project team’s resources and their ability to get their project listed on platforms like OKX and Binance. However, if a project only gets listed on smaller exchanges and fails to get on Binance, it’s a red flag. Listing on smaller exchanges might indicate a strategy to accumulate tokens rather than driving up prices, increasing the risk of a prolonged price decline.

Decentralized Exchanges (DEX):

DOTSWAP: DOTSWAP was the first to introduce a DEX for runes. Rune 4 also introduced cross-chain functionality, allowing its runes to be swapped on Ethereum. However, this feature does not support other assets, merely adjusting internal token balances. Therefore, while DOTSWAP’s current market cap is low, it is worth monitoring for future developments.

1. Staking/Collateralization

Both runes and pre-mined rune-related assets should eventually serve as collateral or staking assets, similar to providing liquidity pools (LPs). Currently, the available information on this is limited, and the market demand for such features is low due to the relatively small market cap of runes. However, it’s essential to keep an eye on related protocols. As the market cap grows, the significance of such features will become more apparent.

This article provides an overview of the current state of rune circulation. More developments require continuous tracking and observation. If you have other valuable insights or perspectives on investment and research, feel free to share for further discussion.

IV. Reflections

Simply summarizing the current state doesn’t provide much value, so let’s focus on some actionable insights:

1. Invest in and Accumulate RSIC

Pay close attention to and continuously accumulate assets like RSIC, which appears to be on par with runes. Holding RSIC equates to mining points, without any exploitative practices, and it’s an early rune project with potential for various airdrops from future projects. Review their official Twitter feed—RSIC presents a strong, silent leadership style and has partnered with MEMELAND, showcasing significant strength. Comparing influencers, @LeonidasNFT is akin to Jack Ma—outgoing and charismatic, attracting numerous followers. In contrast, RSIC’s leadership resembles Pony Ma—low-key yet exuding a natural leadership aura. Both play crucial roles in the early rune ecosystem, but in the long run, RSIC might prove more dominant. Thus, I plan to allocate my holdings evenly between runes and RSIC.

1. Farm MAGIC EDEN Points

Actively farm points on MAGIC EDEN, which is poised to become the leading trading platform for Bitcoin ecosystem assets. While individual Bitcoin projects might fail, exchanges are typically low-risk and profitable. Earning points on MAGIC EDEN can yield substantial benefits, including potential airdrops.

1. Engage with Genuine BTCEI Projects

Focus on genuine projects working on Bitcoin Ecosystem Infrastructure (BTCEI). Interact with these projects, participate in their Pre-Rune offerings, and strive to obtain their tools and airdrops. Additionally, support protocols that provide liquidity for runes. For example, participating in new launches and holding assets on platforms like DOTSWAP can be advantageous.

Disclaimer：

1. This article is reprinted from [SevenUp DAO]. All copyrights belong to the original author [Eth527]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.