The Project Launched During the Bitcoin Halving
- The New Project Launching on during the Bitcoin Halving
There is a project launching during the anticipated Bitcoin halving that has garnered significant attention.
A lot of investors and key opinion leaders(KOLs) have been mentioning since early this year, “Runes” is finally launched by the founder of Ordinals to overcome the challenges associated with Ordinals within the Bitcoin ecosystem.
Bitcoin, unlike Ethereum, does not support smart contracts. Therefore the ordinals are basically each unique number on Bitcoin’s smallest units, “Satoshi”. These satoshi have been utilized to embed content called ‘inscriptions,’ which is similar to creating NFTs. The issuance of tokens inscribed in the BRC-20 format surpassed a market cap of $1 billion within two months, generating considerable buzz.
However, according to the founder of Ordinals, this process resulted in numerous ‘junk’ UTXOs being transferred to Bitcoin, causing an overload on the Bitcoin transactions.
To mitigate this, Casey Rodarmor developed a new protocol, “Runes,” aimed at leaving smaller footprints on-chain while managing UTXOs more effectively.
2. Will Runes continue to Boom?
The Bitcoin Defi ecosystem, which is expected to grow as the approval of a Bitcoin ETF, is related to current hype of the Runes Protocol. This is a new meta, as there was a debate between RGB protocol and bitcoin narrative among bitcoin maxi.
Also based on the feedback from bitcoin maxi, this narrative, while prevalent among many AI and DePIN projects, questions whether institutional money can really flow into Bitcoin DeFi, regardless of its feasibility.
Like Ordinals and BRC-20, Bitcoin Layer 2, such as Merlin, has been the most hyped in current landscape. The Bitcoin Layer 2 narrative is more connected to the inception of the Bitcoin DeFi ecosystem with the approval of a Bitcoin ETF.
Thus, Runes represents a meme and community-centric ecosystem where it shows crypto market sentiment rather than it is one of the narratives. However, it’s also true that the anticipated growth of Runes after the halving has not been as significant as expected.
The graph above compares transaction numbers between BRC-20, Ordinals, and Runes. The marketing timed with the Bitcoin halving was highly successful, but growth has been slowed after the halving.
Interestingly, transactions for BRC-20 and Ordinals have been significantly decreased, suggesting that Runes is replacing BRC-20 transactions rather than onboarding more users to the Bitcoin ecosystem. This indicates that movement is still stronger within the existing Bitcoin community.
The graph of transaction also shows a similar trend. This is related to Casey, who led the Ordinals boom, and now pioneering the Runes protocol. Currently, the data suggest not an expansion but a cannibalization of the existing pie, which warrants a more cautious observation of the emerging Bitcoin Layer2 and its potential for DeFi.
Nevertheless, the fact that this is a community-driven project indicates it possesses the potential to spread and sustain hype beyond the Bitcoin community itself, which is an undeniable strength compared to other projects’ narratives.
This is particularly the case with projects like Monad and Berachain, which are prominent market players in the EVM (Ethereum Virtual Machine) ecosystem and are oriented towards community-driven infrastructure and utility-focused infrastructures that encompass the DeFi ecosystem. The current focus in the cryptocurrency ecosystem appears to be less on technological advancements but more focus on how to onboard more users.
3. Introducing Projects based on Runes
- Runestone’s Dog and RSIC’s Runecoin
Runestone and RSIC are key competitors within Runes. The NFT project Runestone achieved a market cap of $7.3 billion on April 11, ranking second among all NFT projects, and recently airdropped $DOG to Runestone holders. Meanwhile, RSIC listed $Runestone on a major CEX, OKX. The Bitcoin community is currently debating who initiated the Runes meta, comparing airdrop volumes and investor participation, and discussing which project is more community-focused or has a better narrative. Runestone started by airdropping collections to 112,383 wallets, marking significant events in the blockchain community with two of the largest inscriptions made to date, nearly 3.97MB each. Airdrops were made to those holding inscriptions in block 826,000. RSIC, meaning Rune Specific Inscription Circuits, is a collection of 21k inscriptions known as Ordinals. The goal is to enable the mining of tokens upon launch by holding Ordinal NFTs, with tokens allocated to holders for every Bitcoin block. This project distributed all 21k Ordinals to the community for free.
- Runespad / Terminal
Various meme coins on the Base has been experiencing dismal returns. As such, high-risk individual meme coins may not be worth investing in without receiving airdrops or employing bot trading, and some may prefer to diversify. While there might not be full confidence in individual Runes projects, there’s considerable bullish sentiment for the Runes ecosystem. Runespad, a launchpad, and Runes Terminal, offering token issuance and distribution tools and an explorer, also have their own token, $RUNI, necessary for participating in Runespad.
- OP_CAT
Contrary to what one might expect from the name CAT, OP_CAT derives from the word ‘con’cat’enate’, meaning to join things together. This is closer to a proposal for a Bitcoin soft fork rather than a separate project. In particular, there is considerable anticipation that OP_CAT could be revived to implement bridges, zk proofs, and layer 2 solutions within Bitcoin scripts, as outlined in BIP-420. This proposal can be seen as discussing the longer-term technical implications for the Bitcoin ecosystem, standing in contrast to Ordinals and Rune.
4. The future of Runes and Community
Considering the rebound of Farcaster around ETHDenver after its hype in February, Runes is also expected to revitalize its community around the May 2024 during Bitcoin Asia event in Hong Kong. Since Web3 is still an early industry, the offline events of Bitcoin ecosystem opinion leaders are anticipated to strengthen the Runes community. Therefore, it’s important to carefully observe which projects are currently gaining attention on Runes.
Particularly interesting is the community-level growth of Runes, sensitive to the allocation of tokens to KOLs (Key Opinion Leaders) for investment and marketing assistance, and the volume of tokens held by VCs in its tokenomics.
Starting and growing at the community level always significantly impacts opinion leaders, so while Runes and the Bitcoin ecosystem cannot be considered retail-driven projects, there’s still reason to anticipate community consolidation and growth.
