Bitcoin Runes activity drops significantly, weeks after generating $135m in fees

Activity on Bitcoin’s Rune protocol has dropped significantly, with data showing it reached its lowest level on May 11.

The Runes protocol has been making waves in the crypto space since its launch on April 19, coinciding with the latest Bitcoin (BTC) halving event. The protocol’s launch on April 19, coinciding with the latest Bitcoin halving, was nothing short of a blockbuster event. Bitcoin caused an increase in transaction fees, reaching a record high of $107 million in a single day and $135 million in the first week.

However, interest in Runes seems to have faded in the weeks following its release. According to data compiled by crypto analyst Runes Is on the Dune analysis dashboard, activities have decreased since the initial craze and key growth metrics have witnessed a noticeable decline.

The Runes protocol generated $135 million in fees in its first week after the bitcoin halving, but activity has dropped dramatically since then; May 10 was the lowest day for activity, with over $1 million in fares produced only twice in the last twelve days. …

— Wu Blockchain (@WuBlockchain) May 12, 2024

According to the data, only 5,023 Runes have been engraved since May 1, while there were 9,639 Runes engraved on April 30 alone. The lowest engraving activities at that time were recorded on 11 May with 129.

Runes engraving activity | Source: Dune

In terms of trading volumes, April 20 and April 23 were good days for Runes; The protocol has proven its dominance by capturing 77% and 69% of the transaction share in the Bitcoin network, respectively.

This change was warmly welcomed by the mining community, which saw its earnings take a hit following the Bitcoin halving, which reduced block rewards to 3,125 BTC.

Additionally, the Rune protocol had an impact on Bitcoin’s average transaction fee. At the beginning of April, transaction fees were hovering around $5. However, as reported by YCharts, they skyrocketed above $128 on April 20 following the launch of Runes, reaching a historic high.

However, in the days that followed, there was a consistent decline in Runes transactions, which accounted for less than 30% of total transactions on the Bitcoin network by May 5, when a reversal occurred.

Runes and other Bitcoin transactions | Source: Dune

May 11 marked a new low for Runes activity, with the protocol experiencing its lowest interaction levels ever. The number of new mints decreased and fewer new wallets interacted with the protocol, resulting in reduced fees generated.

While analysts are still trying to find the exact reason for the decline in Runes activity, this comes amid declining on-chain activity on the Bitcoin network, where various metrics such as transaction volumes, daily active addresses, and number of whale transactions are determined. It is almost approaching the lowest levels in the last decade.

Although unconfirmed, it is not hard to speculate that the general slowdown in the broader Bitcoin ecosystem may have also affected activity in the Rune protocol.

The fungible token protocol represents a significant advance in technology on the Bitcoin blockchain by enabling various token standards through the UTXO model and OP_RETURN transaction code.

This innovation offers a more efficient tokenization solution compared to older standards such as BRC20 and primarily serves meme coin trading on the Bitcoin network.

Despite the slowdown, some Rune collectibles continue to have high market valuations, indicating the existence of a resilient niche market within the protocol’s ecosystem.

Also included is Casey Rodarmor, the brains behind Bitcoin Ordinals and the Runes protocol. implied Featured in a sound-sensitive generative art project at the recent Ordinals event in Hong Kong, this work further underlines the innovative spirit that drives the Runes ecosystem forward.