From paragraph by papajams.eth

A year ago — Jan 2023 —  in the depths of the bear market, Casey Rodarmor created the Ordinals protocol for “Bitcoin NFTs” (non fungible tokens), breathing versatility into an ecosystem known for its more conservative values & ideals. To the chagrin of many loyalists.

Now — April 2024 — Casey Rodarmor has launched the Runes protocol   for minting digital fungible tokens on top of the oldest and largest blockchain.

“The Runes Protocol is a new fungible token standard on the Bitcoin network that utilizes the UTXO (Unspent Transaction Outputs) model and OP_RETURN data fields to create and manage digital tokens efficiently.” Kucoin

Runes is essentially a streamlined, efficient alternative to the earlier BRC-20 token standard underpinning the likes of $ORDI.

Why It Matters

I mostly faded ordinals except for procuring a Bitcoin Frog for $300. That same Frog has been worth up to $10k, and is currently sitting at circa $7k mcap. Of course I sold at $1.5k thinking jesus a 5x in a couple months is crazy — it is. 

So the degen profit incentive is real. 

Which is exactly what Casey is banking on, for the good of Bitcoin. You see every four years there is a “halvening” event wherein the rewards paid to Bitcoin miners are halved. Hence absent of other avenues of revenue there is less incentive over time for actors to invest the resources it requires to secure the network.

However, as this subsidy has fallen, initiatives like ordinals that have grown fees substantially — serving to maintain lucrative incentives for miners to provide their services. We can see this below where fees on BTC spike significantly when ordinals is introduced, and then again when Runes are introduced. 

mempool.space

Runes launched April 2024 (block 840,000) — during the latest halvening. 

What’s The Difference

TLDR Ordinals = Bitcoin NFT’s Runes = Bitcoin Memecoins

Of course its never as easy as that but it’s a useful heuristic.

Bitcoin Ordinals and Inscriptions are a way of assigning numismatic value and embedding digital data into individual satoshis on the Bitcoin network.

Ordinals track and label satoshis based on the order they are mined and transferred, while inscriptions allow users to embed data like images, text, & audio into transactions, enabled by upgrades like SegWit and Taproot.

The issue with Ordinals, they are built on a standard called BRC-20's.

BRC-20s have been the current Bitcoin token standard, but they have an issue of creating surplus “junk” UTXOs. These can clog up the network, making for a less-than seamless experience for users. UTXOs, or Unspent Transaction Outputs, are essentially digital assets that you have received but haven’t spent yet. Bitcoin Runes is an attempt to clean up the network, while allowing traders to enjoy their memecoins on the mother chain. Magic Eden

Sovryn — Image

Runestone

“Runestone, a pre-Runes NFT project, airdropped a free Runestone to wallets that had 3 or more digital items (inscriptions) on the Bitcoin blockchain before the Runestone project launched.” Magic Eden

Much akin to NFT ecosystems across other chains, Runes is an avenue for Ordinals communities to airdrop tokens to holders. A first adopter, pseudonymous developer Leonidas, airdropped $DOG coins (circa $400m market cap April 2024) to holders of his Runestone inscriptions. The stones themselves were airdropped simply for holding some ordinals. Hence the Runestone collection is massive, spanning over 112,000 Ordinals assets. Holders are promised further airdrops as the Runes protocol develops.

Launch

There is an ocean of Runes minting on the Luminex launchpad. Anyone can create them, and there is the option to premine some (i.e. founder or dev team give themselves allocation before putting the runes on the open market).

On the one hand there is a movement to avoid these highly premined runes, in favour of zero (or low percentage) pre-mine runes. 

On the other hand, there a view that…

“many of the first 100 runes have most/all of their supply premined. to me that signals that those are teams that are preparing for airdrops. as the days go by and hundreds of thousands of new runes are etched, the first 100 will find it easier to grab attention. that’s when you’ll start seeing those airdropped.” Udi Werthemeir

Other launchpads include:

Secondary Markets

Once minted out, specific Runes can only then be procured when holders list them on exchanges and marketplaces like the Unisat, OKX, & Magic Eden (who all offer a wallet). I really like the Leather wallet as an alternative too. 

It's easy enough to buy and sell, just note that transaction fees can be wild on BTC (was quoted $75 during the mania phase) and transactions can take ages (e.g. 30+ mins). You can also get sniped on buys, by someone who pays higher transaction fees than you, so be mindful of that on popular mints. Final note, its currently only possible to batch trade with holders i.e. there is no decentralised exchange (DEX) and therefore no swaps - just as in the early days of ordinals.

Early Runes

Given runes are only a week or so old, it’s remarkable the level of attention and activity being undertaken. Much akin to when ordinals was launched, the infrastructure is nascent but growing quickly which bodes well.

Infra in development includes:

NFA Due Dilligence

Of course the degen in me decided to dive in on some of the early moves playing out with Runes. What follows is a decidedly uninformed take on interesting ones to keep an eye on. I may or may not own some or all of them. This is meant for (my own) informational and entertainment purposes so please proceed with caution and only spend what you are happy to lose if you decide to partake. 

This leaderboard was a start for DD: https://marketplace.createrunes.com

BTC Runes Leaderboard: 28/04/24

Note: figs differ from those on magic eden. It seems they are solely based on unisat figures — the marketplace that’s had the most volume so far.

Beyond those I took a look at the following on Magic Eden

Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z (Rune #1)

23/04/24: mcap 40k BTC, 30d vol 33BTC, 13159 holders, price 36k sats.28/04/24: mcap 46k BTC, 1d vol 4.5BTC, 21931 holders, price 42k sats.Social media: @RuneFehu. Top Holder (TH) 99.53%. 

SATOSHI•NAKAMOTO (Rune #6)23/04/24: mcap 1196BTC, 1d vol 15BTC, 19667 holders, 36 buys pending.28/04/24: mcap 850BTC, 1d vol 3.7BTC, 19370 holders, 6 buys pending.

BITCOIN DRUG MONEY (Rune #81)

23/04/24: mcap 4BTC, 1d vol $95, 0 buys pending, TH 4.17%28/04/24: mcap 3.52BTC, 1 d vol $1k, 0 buys pending, TH 1.66%

THE•TICKER•IS•ELSA (Rune #242)

23/04/24: mcap 60.7BTC, 1d vol 0.3BTC, 2007 holders, 5 buys pend, TH 2%28/04/24: mcap 44BTC, 1d vol 0.1BTC, 2046 holders, 0 buys pending, TH 2%

ANARCHO•CATBUS (Rune #530)

23/04/24: mcap 26.25 BTC, 1d vol 0.5BTC, 2129 holders, TH 2.94%28/04/24: mcap 165BTC, 1d vol 1.4BTC, 2392 holders, TH 2.6%

CASEYS•MOM•HAS•GOT•IT•GOING•ON (Rune #1216)

23/04/24: mcap 11BTC, 1560 holders, 95M supply, TH 2.11%28/04/24: mcap 4.75 BTC, 1d vol $300, 1560 holders, TH 2.10%

Narratives

Cyberkongz have been busy. They spent $500k to get Rune #2 DECENTRALIZED. They then airdropped the PROMETHEANS ordinals to top collections on ordinals as well as to their community. They were at 0.08BTC each before the snapshot was taken to be eligible to get airdropped the DECENTRALIZED Rune airdrop. After the snapshot was taken they dropped to 0.02BTc (lost circa $4k in value) after. This is circa the same level for Runestone at the moment.

Recursive Runes will allow your rune balance to affect the state of your Ordinal. Elocremarc, a top contributor to Ordinals, proposed them allowing inscriptions to interact based on on-chain data & runes balances.

THE•RUNIX•TOKEN by @BVMnetwork Bitcoin Layer 2 has launched a DEX called RuneChain. Holders of the Runer Ordinal connected their Runers to RuneChain to activating mining capabilities. They were then eligible for a RUNIX airdrop which was bridged to ETH and to SOL as well, with the aim of growing exposure and liquidity. Trade any Runes on the RuneChain Dex to mine $RUNIX.

Plenty more here but those are my top most interesting ones.

Alpha