🪙Protocol Overview

Definition and Purpose

The BRC-20, Runes, and CAT token standards represent an innovative approach to tokenization on blockchain platforms, diverging from traditional smart contract mechanisms. These standards utilize unique features of the Bitcoin blockchain to create efficient, decentralized methods of managing tokens without relying on complex code execution. This methodology facilitates lightweight, contract-less or simplified contract-based token management, reducing transaction complexity while enhancing network efficiency and scalability across various use cases.

Ordinal Framework

At the heart of BRC-20 and Runes is the ordinal theory. Ordinal theory suggests that each satoshi—the smallest unit of Bitcoin—can be individually identified and tracked through its ordinal number, which reflects the order of its creation. Through this, BRC-20 and Runes leverage ordinal inscriptions and UTXO models to mark or allocate value. These tokens enable an alternative to traditional smart contract-based ecosystems, allowing for the efficient use of Bitcoin’s robust security layer.

BRC-20 Inscriptions

BRC-20 is built on the concept of inscriptions, where token ownership information is encoded directly onto ordinal positions within the Bitcoin blockchain. By “marking” these positions as tokenized assets, BRC-20 tokens are managed in a contract-less manner, ensuring simplicity and reducing computational overhead. This approach avoids executing logic directly on-chain, making BRC-20 tokens lightweight while still benefiting from Bitcoin’s security guarantees.

Runes Token Standard

In contrast to the inscription-based model of BRC-20, the Runes token standard leverages Bitcoin’s UTXO (Unspent Transaction Output) model, allowing for more traditional Bitcoin-style transactions. With Runes, tokens are managed directly through UTXOs, transferring ownership via transactions that sign and allocate UTXOs to new owners. This method has several advantages:

• Enhanced privacy due to the UTXO model’s inherent features.

• Reduced transaction sizes, improving efficiency.

• Direct compatibility with Bitcoin's existing infrastructure, making it highly scalable.

Runes are ideal for creating fungible tokens on Bitcoin with reduced complexity, providing a seamless integration with the underlying Bitcoin transaction mechanism.

CAT Protocol: Covenant-Attested Tokens on Bitcoin

We also support the CAT20 standard, which is based on the Covenant-Attested Token (CAT) Protocol. This protocol introduces smart contract-like functionality on the Bitcoin blockchain using Bitcoin Script and covenants. CAT20 tokens are managed directly on-chain, with rules enforced by Bitcoin miners through the use of OP_CAT.

The CAT20 standard allows for more complex token management operations, such as programmable minting, locking mechanisms, and flexible transfer rules. This design makes CAT20 highly adaptable for decentralized applications (dApps) built on Bitcoin, enabling a wide range of use cases from decentralized finance (DeFi) to asset tokenization. With CAT20, tokens are fully integrated into Bitcoin’s trustless environment while offering advanced capabilities for both fungible and non-fungible token issuance.