Key Points
- The Bitcoin Runes protocol is struggling to maintain its share in Bitcoin transactions after initial hype.
- Despite the decrease, the Runes protocol still represents a significant portion of Bitcoin transactions.
The Bitcoin Runes protocol, which was launched on April 20, initially dominated the Bitcoin blockchain traffic but is now struggling to maintain its share of transactions. On eight different days, primarily over the weekends, Runes transactions were the majority.
Bitcoin Runes and the Fourth Bitcoin Halving
The launch of Bitcoin Runes coincided with the fourth Bitcoin halving, which resulted in a surge in transaction volume on the Bitcoin blockchain. Notably, Bitcoin (BTC) mining revenue exceeded $100 million for the first time, hitting a record daily earning of $107.7 million.
Users spent $2.4 million in fees to inscribe runes and rare satoshis on the first halving block. Up until April 24, transactions attributed to the Runes protocol accounted for over 50% of all Bitcoin transactions. The peak was on April 23, with these transactions making up 81.3% of the bandwidth. However, by May 2, this had decreased to 11.1%.
Current State of Bitcoin Runes Protocol
Despite the initial decrease, the Runes protocol saw a resurgence over the weekend of May 4, 5, and 6. However, the trend has been downwards since then. As of May 22, Runes represented 12.7% of Bitcoin transactions, which is significantly higher than Bitcoin Ordinals (0.7%) and BRC-20 (1.5%). Consequently, Runes transactions have decreased by over 84% since their all-time high.
Runes are part of the wider Bitcoin decentralized finance (DeFi), or BTCFi, movement that aims to add more utility to the Bitcoin network. With the addition of the new protocol to Ordinals and BRC-20, the Bitcoin network saw a record high of 926,000 daily transactions.
The real market opportunity for the Runes protocol may only emerge months after the first wave of investor hype has diminished. Nazar Khan, the co-founder and CEO of TeraWulf, stated that Runes and Ordinals are demonstrating the value of block space. He also mentioned that the Bitcoin network is the most decentralized, secure, and robust network that exists, so there will be use cases and value derived from that block space.
