A Post-Halving Update on Runes

TL;DR

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ICYMI the Rune protocol is a new project by the creator of Bitcoin Ordinals (we wrote about how it works here) that launched at the same time as the BTC halving.

Like Ordinals, it lets people ‘etch’ (i.e. mint) tokens on-chain.

The two main differences are:

1. Ordinals are ‘non-fungible’ (one-of-a-kind) while Runes allow you to create fungible tokens on the Bitcoin network.

   This opens up all kinds of possibilities like stablecoins built on top of BTC, or new types of governance tokens.

2. The Rune protocol reduces the amount of ‘Unspent Transaction Outputs’ (UTXO’s – more on that here).

   In theory this means less congestion on the Bitcoin network, which should result in cheaper transaction fees.

Before the halving there was a ton of excitement about Runes so it’s no surprise that within the first few days there are already a few hundred Runes projects.

The great thing about Runes so far (and Ordinals that came before it) is that it has lead to an increase in the number of developers excited about contributing the the Bitcoin project again.

Unfortunately, just a few blocks after the halving, Runes minters have already paid over $5M USD in transaction fees.

As the dust settles, and the first mover advantage fades over time, it will be interesting to see if Runes is the next narrative to push BTC back to it’s all time highs.

Can it live up to the hype?

Only time will tell.