The Protocol: Analyzing Runes Impact as Bitcoin Fee Bonanza Fades

Last week marked the pre-scheduled Bitcoin halving event, which happens every four years. This was initially set up by Satoshi Nakamoto 15 years ago. The surprising development, however, was the swift adoption of Casey Rodarmor’s new Runes protocol. His latest innovation on the original blockchain has been a success in the past two years. Currently, there are concerns that the initial fee surge may be subsiding. A pressing question arises: will Runes transactions offer miners a consistent source of income, given that the block rewards have now been reduced by half? Here’s what you need to know.

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The Protocol: Analyzing Runes Impact as Bitcoin Fee Bonanza Fades

The graph indicates a significant increase in Bitcoin transaction fees following the launch of Rune’s platform, which later saw a partial decrease. (Paraphrased by me)

Paraphrasing: The Bitcoin community was anticipating a significant decrease in miner revenue due to the once-every-four-years “halving” event. However, an unexpected surge in popularity for Casey Rodarmor’s new Runes protocol resulted in unprecedented network congestion and skyrocketing transaction fees. Consequently, Bitcoin miners experienced a windfall instead of the expected revenue reduction. During a halving watch party hosted by Tone Vays, experts were taken aback by transaction fees surpassing $2 million per block, compared to the usual level of under $100,000. The main concerns now revolve around whether this Runes craze will persist and how Bitcoin will respond. A chart from BitDigest newsletter showed a significant drop-off in fees as the initial post-Runes launch subsided. However, discussions among the community quickly shifted to the possibility of developers accelerating their efforts to expand and enhance Bitcoin’s layer-2 networks. On Monday, one of the prominent projects, Stacks, introduced its highly anticipated “Nakamoto” upgrade, which is expected to significantly increase transaction speed. Bitcoin Core developer Ava Chow stated that any event causing fee rates to surge would likely drive people to explore alternative solutions. Rodarmor, the creator of last year’s Ordinals protocol for Bitcoin NFTs, has been criticized for describing Runes as a means of minting “sh!tcoins” on Bitcoin. There is speculation that top Ordinals collections might opt to airdrop runes, following a trend from other blockchains. The Bitcoin NFT project Runestones, led by the pseudonymous developer Leonidas, has reportedly begun airdropping DOG coins to holders of its inscriptions. Some newly minted runes have already garnered astonishing valuations upon listing on various cryptocurrency exchanges. According to Bitcoin.com, a rune named “Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z,” or “Z•FEHU” for short, already has a fully diluted valuation of over $2 billion. (To type the dot in the middle of the trading ticker as per Runes convention, use option-8 on a Mac keyboard.)

CELO GOES WITH OPTIMISTIC CHOICE.After extensively scouring potential technology partners for Celo’s transition into an Ethereum layer-2 network, the lead developer behind this blockchain opted for Optimistic’s OP Stack. Several competing layer-2 networks, including Arbitrum, Polygon, and zkSync, had eagerly pursued Celo’s business. The selection process evolved into a dramatic competition reminiscent of reality TV show “The Bachelorette.”

Asymmetric Research, a security company collaborating with Wormhole on interoperability for Cosmos, revealed information about a weakness in the Cosmos blockchain network which, if exploited, could potentially endanger over $150 million in assets.

Ava Chow, a Bitcoin Core developer, spearheaded the selection of five new editors for Bitcoin Improvement Proposals (BIPs) in a lengthy nomination process reported by Daniel Kuhn. The process concluded on Monday following Jonatack’s adjustments to the BIP GitHub repository. However, there remains uncertainty if the appointment of new editors will expedite proposal approvals, such as OP_CAT, which lacks an official number despite initial reports suggesting otherwise.

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Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

The Metis group announced the launch of phase 2 for their decentralized sequencer, bringing fresh technological enhancements and a new concept called “Sequencer Mining” that users can take part in, as stated by the team.

Screenshot from Metis video showing how its decentralized sequencer architecture works (Metis)

2. The Ankr team’s blockchain project, Neura, which is EVM-compatible and designed for artificial intelligence applications on Cosmos SDK, has made its public testnet accessible to developers. This allows them to create decentralized apps (dApps) that combine AI and Web3 technologies.

High-level architecture of Neura. (Neura)

3. (Protocol Village Exclusive): The Omni Foundation, responsible for Omni Network – a layer-1 chain that specializes in Ethereum compatibility and interoperability using EigenLayer restaking technology – has unveiled the debut of Omni Network’s mainnet on the Ethereum layer-2 platforms, Arbitrum and Optimism.

4. (PROTOCOL VILLAGE EXCLUSIVE) The DODO team, which previously developed the “Proactive Market Maker” algorithm and features including a cross-chain swap aggregator, announced the launch DODOchain, an Omni Trading Layer3, powered by Arbitrum Orbit, EigenLayer and AltLayer, according to the team.

5. (Protocol Village Exclusive): Alchemy, a blockchain development company, recently introduced “Pipelines.” This innovative tool simplifies the process of constructing and managing data pipelines for engineers with minimal clicks, as stated by the team.

Money Center

Fundraisings

Turnkey co-founders Jack Kearney and Bryce Ferguson (Turnkey)

A company called Turnkey, which creates wallet structures for blockchain project builders, has secured $15 million in their Series A financing, with Lightspeed Faction and Galaxy Ventures spearheading the investment.

In simpler terms, Runes DEX, which is an automated market maker platform dealing with runes on Bitcoin, has completed its seed funding round, raising a total of 2 million dollars, as stated in a recent announcement.

Deals and grants

Gavin Wood made a presentation on JAM at Token 2049 in Dubai last week. (@mattunchi via Polkadot)

The Web3 Foundation (W3F), which is responsible for the Polkadot network, has declared a reward of 10 million DOT ($74.5 million) to encourage varied contributions towards JAM, a novel protocol that merges features from both Polkadot and Ethereum.

In simpler terms, Safe, which offers blockchain smart accounts, has announced the addition of Multis’ senior executives to its foundation and has finalized the purchase of Multis’ source code through a strategic acquisition.

Chia Network Makes Progress Toward an IPO, CEO Says

Data and Tokens

Renzo Restaked ETH Suffers a Brief Crash on Uniswap

Avail Confirms Token Airdrop Plans, a Week After Leaked Screenshots

Shiba Inu Fetches $12M Investment in Token Sale to Build Privacy-Focused Blockchain

Tether Reorganizes Into 4 Divisions as It Expands Beyond Stablecoins

Akash Network, Decentralized Cloud Computing Platform on Cosmos, Sees Token Surge

The 200-day average price of Bitcoin is nearing a record high, which historically has signaled the start of a particularly strong bull market phase.

Regulatory, Policy and Legal

Mango Markets Exploiter Avi Eisenberg Found Guilty of Fraud and Manipulation

Ripple Says $10M Penalty Enough, Rejects SEC’s Ask of $1.95B Fine in Final Judgment

Tether Will Freeze Wallets Evading Venezuelan Sanctions

Nigeria Directs Entities to Identify Those Dealing Crypto With Bybit, KuCoin, OKX and Binance

Bitcoin Startups Underrepresented in VC Funding

You can rephrase the given text as follows: When discussing Bitcoin ecosystem with some venture capitalists, they will provide diverse reasons for the lack of significant investment in blockchain-focused startups. One explanation is that major Bitcoin investors are “HODLers,” meaning they prefer to hold onto their Bitcoins rather than use them to fund a startup. Another reason given is that cryptocurrency venture capital firms often seek token rewards for their investments, which isn’t feasible in the case of Bitcoin startups since the community has historically been skeptical towards non-Bitcoin tokens. Lastly, some argue that the Bitcoin developer community (until recently) was quite conservative and less conducive to innovation and entrepreneurship compared to other blockchain platforms.

Nowadays, a number of venture capitalists and investment firms are increasingly interested in investing in Bitcoin-related startups. For instance, Trammell Venture Partners (TVP) and Ten31 are among those willing to provide financial support. In February, Dan Held, a former marketing executive at Kraken, who previously worked as fractional CMO for Taproot Wizards and Trust Machines, announced his decision to join Joe McCann’s crypto fund, Asymmetric Financial, as a general partner. Together, they aim to launch a new Bitcoin Decentralized Finance (DeFi) Venture Fund I, with an intended raise of $21 million.

Recently, TVP published a report named “The Emerging Venture Capital Scene for Bitcoin-Dominant Cryptos.” This illustrates the significant potential in this area. The graphic below reveals that Bitcoins make up over half of the total cryptocurrency market value, but they receive only a minimal portion of venture investment and deals:

(Trammell Venture Partners)

Calendar

May 9-10: Bitcoin Asia, Hong Kong.

May 29-31: Consensus, Austin Texas.

May 29-31: Bitcoin Seoul.

June 11-13: Apex, the XRP Ledger Developer Summit, Amsterdam.

July 8-11: EthCC, Brussels.

July 25-27: Bitcoin 2024, Nashville.

Aug. 19-21: Web3 Summit, Berlin.

Sept. 19-21: Solana Breakpoint, Singapore.

Sept. 1-7: Korea Blockchain Week, Seoul.

Sept. 30-Oct. 2: Messari Mainnet, New York.

Oct. 9-11: Permissionless, Salt Lake City.

Oct. 21-22: Cosmoverse, Dubai.

Oct. 23-24: Cardano Summit, Dubai.

Oct. 30-31: Chainlink SmartCon, Hong Kong

Nov 12-14: Devcon 7, Bangkok.

Nov. 20-21: North American Blockchain Summit, Dallas.

Feb. 19-20, 2025: ConsensusHK, Hong Kong

2024-04-24 21:16