- Runes were designed as a new way to store fungible tokens on the Bitcoin network.
- Since launch, 10,739 Rune tokens have been created.
Daily transactions with Runes on Bitcoin [BTC] climbed to their highest level according to data from April 23 Runic Alpha.
On that day, 802,977 transactions involving Runes were completed.
To date, 52,365 Runes transactions have been completed, bringing the total number of transactions to 2,560,005 since its launch on April 20 after Bitcoin’s fourth halving.
Runes take up space on the Bitcoin network
According to Dune Analytics dashboard prepared by Crypto Koryo, transactions involving Runes have been the most important on the Bitcoin network since April 20.
When the Runes Protocol was launched, it was responsible for 58% of all transactions on the Bitcoin network. Transactions selling BTC accounted for 42% on the same day.
On the other hand, Ordinals and all other BRC-20 tokens on layer one network recorded a combined 0.7% of all completed network transactions.
Due to the spike in Runes’ daily transactions on April 23, its share of the total transactions on the Bitcoin network rose to 78% on that day.
According to data from Dune Analytics, transactions involving Runes on that day exceeded transactions completed for the sale of BTC on the network by 45%.
Source: Dune Analytics
When launched on April 20, transactions involving Runes made up 57% of all fees paid on the Bitcoin network, pushing total fees for the blockchain to an all-time high of over $80 million.
On that day, average transaction fees on the network peaked at $128, surpassing the peak of $30 when interest in Ordinals first peaked.
As a result of the increase in transaction fees on the Bitcoin network, miners’ revenues skyrocketed. This happened despite the fact that inflation rewards had fallen by 50% after the halving.
Per IntoTheBlocks According to data, miners’ turnover on halving day exceeded $100 million.
Source: IntoTheBlock
By comparison, as of April 20, fees paid for processing BTC sales transactions represented only 38% of all fees paid on the network.
Drop in new etching
The Runes Protocol supports three types of transactions: etching, minting, and transferring. Etching allows users to create Rune tokens with fixed conditions.
Minting allows users to mint previously etched tokens, which they can transfer to different wallet addresses.
Despite the surge in Runes daily transactions, the number of new etchings completed has steadily declined since the halving. On April 20, the number of Rune tokens etched was 2647.
However, since then the trend has been downward and as of April 23, fewer than 1000 new Runes have been created. Since launch, 10,739 Runes have been created, according to data from Runes Alpha.
A new way of doing things
Simply put, the Runes Protocol, created by Casey Rodmarmor, the creator of Bitcoin Ordinals, is a new standard for creating fungible tokens directly on the Bitcoin blockchain.
The method of generating fungible tokens on the Bitcoin network was first made possible by the introduction of the BRC-20 token standard by a pseudonymous developer, Domo, in March 2023.
These assets became increasingly popular, reaching a market capitalization of $1 billion in June of the same year. However, as the surrounding hype grew, they often led to congestion on the Bitcoin network.
A large number of unused transaction outputs (UTXOs) were created, clogging the network.
Like in the past, for example reportedOn December 3, the number of BRC-20 tokens minted rose above 450,000.
This caused significant congestion on the Bitcoin network as more than 267,000 transactions remained pending for several hours before being confirmed.
This left the network’s mempool behind. The increase in the number of pending transactions caused the memory pool to reach 1.54 GB, exceeding the 300 MB capacity.
How does it work?
The Runes Protocol essentially adopts Bitcoin’s UTXO model and the OP_RETURN opcode, a special instruction within transactions on the network.
When a new Rune token is created, it is associated with a specific UTXO.
Information about the token, such as its name, divisibility, symbol, coin terms, amount, etc. are stored in the UTXO using the OP_RETURN opcode within the Bitcoin transaction.
This is done so that the UTXO is marked as a Rune-bearing unit.
When a transaction is initiated to send a Rune token, it essentially involves sending the UTXO in which the details are encoded.
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The transaction specifies how many Rune tokens (part of the UTXO value) are sent and creates new UTXOs representing the remaining balance and tokens received.
By design, Runes avoids the need for extensive token contract information on the Bitcoin network. This prevents unnecessary data presence, which often causes network congestion.