Since its much-hyped debut during the latest Bitcoin halving, activity on the Runes protocol has experienced a significant downturn.
The protocol, which allows users to create fungible tokens on the Bitcoin blockchain, saw a surge in transactions initially but has since declined in activity, particularly on May 10.
Runes Protocol Decline
According to data from a Dune Analytics dashboard, the protocol’s fee revenue has steadily decreased following its launch. While Runes continues to generate notable fees daily, surpassing $1 million only twice in the last 12 days means the trend is on a downward trajectory. This decline contrasts with the frenzied activity witnessed during its first trading week.
Runes, created by Ordinals creator Casey Rodarmor, entered the market on April 20, coinciding with the Bitcoin halving. The launch caused a frenzy among investors, resulting in an increase in transaction fees and record-breaking earnings for Bitcoin miners, exceeding $135 million in costs during the first week alone. However, the excitement has since reduced.
Data from Dune Analytics reveals that Runes-related transactions dominated the Bitcoin network until April 24, with the protocol claiming 81.3% transaction share on April 23. This dominance reduced steadily over the following days, reaching a low point on May 2 before showing signs of recovery from May 3 onwards. Despite this attempt, activity levels have failed to return to their initial heights.
The decline in Runes activity comes when Bitcoin miners are dealing with reduced earnings. In May, total revenue for miners plummeted to under $30 million per day.
Runes Thrive Amidst Slowdown
Despite the slowdown, Runes has achieved notable success, with several Rune collections boasting market capitalizations in the hundreds of millions of dollars, according to data from Magic Eden.
Runes like Ordinals enable different token standards on the Bitcoin blockchain. It leverages Bitcoin’s UTXO model and the OP_RETURN opcode to offer a more efficient tokenization solution than the BRC20 standard, leading to more meme coin trading activity on the largest blockchain.
The Bitcoin network also recently processed its one billionth transaction, achieving a significant milestone. This results from the increase in daily transactions over the past month, caused by the introduction of new protocols such as Ordinals, Runes, and the BRC-20 token standard.
Meanwhile, developer Casey Rodarmor, who also created Bitcoin Ordinals, recently teased an audioreactive generative art project at an Ordinals event in Hong Kong.