The Bitcoin Runes protocol is currently facing challenges in maintaining its share of Bitcoin transactions. Since its launch on April 20, Runes transactions have dominated the Bitcoin blockchain traffic on eight different occasions, mainly during weekends.
The launch of Bitcoin Runes happened to coincide with the fourth Bitcoin halving, which created a lot of hype and resulted in a surge in transaction volume on the Bitcoin blockchain. Mining revenue from Bitcoin exceeded $100 million for the first time, reaching an all-time high daily earnings of $107.7 million.
Users spent $2.4 million in fees to inscribe runes and rare satoshis on the first halving block, as reported by Mempool.space.
Initially, transactions attributed to the Runes protocol accounted for more than 50% of all Bitcoin transactions, reaching a peak on April 23 when they represented 81.3% of the bandwidth. However, by May 2, this figure had dropped to 11.1%.
After a brief resurgence on May 4, 5, and 6, as shown in the Dune chart above, the popularity of Runes has been on a downward trend. As of May 22, Runes accounted for 12.7% of Bitcoin transactions, significantly higher than Bitcoin Ordinals (0.7%) and BRC-20 (1.5%). The majority of transactions were still dominated by BTC. Overall, Runes transactions have decreased by more than 84% since their all-time high.
Runes and BRC-20s are part of the Bitcoin decentralized finance (DeFi) movement, also known as BTCFi, which aims to enhance the utility of the Bitcoin network. With the addition of the newly launched protocol to Ordinals and BRC-20, the Bitcoin network achieved a record high of 926,000 daily transactions, as shown in the Glassnode chart above.
However, the true market opportunity for the Runes protocol may only become apparent months after the initial wave of investor hype subsides. Nazar Khan, the co-founder and CEO of TeraWulf, believes that Runes and Ordinals are demonstrating the value of block space, and that the decentralized, secure, and robust nature of the Bitcoin network will lead to various use cases and value derived from that block space.
In conclusion, the Bitcoin Runes protocol has experienced fluctuations in its share of Bitcoin transactions since its launch. While it initially dominated the Bitcoin blockchain traffic, its market position has gradually declined. However, the potential value and use cases for the Runes protocol are expected to become more apparent in the future.