What are the controversies and hype logic surrounding the not-so-ideal launch of Runes?

Author: Jaleel, BlockBeats

With many assets and chaos, the Runes ecosystem is currently in its Cambrian period.

In the week leading up to the halving, the overall market in the crypto space was not doing well, but the Bitcoin ecosystem has become active since entering April, with rising gas fees, indicating a potential third wave of Bitcoin. Especially during the process of the Runes protocol launching its mainnet, the community was enthusiastic, actively preparing for wallet minting, UTXO splitting, and testing the entire minting process, hoping to seize the opportunity.

However, with the launch of the Runes mainnet coinciding with the Bitcoin halving, project teams rushed to claim the top runes, causing gas prices to soar to unbelievable heights. Under such high minting costs, most people chose to wait and see, while the prices of previously rushed rune concept NFTs, such as Runes tone and RSIC, continued to decline. "I don't know what to buy, I don't know what to play," became the voice of these prepared community members, and the market appeared somewhat confused.

"We are in a relatively chaotic and confused period, and a broad consensus has not yet formed." BTC ecosystem observer and player 0xSea said in an interview with BlockBeats, reflecting the current state of the Runes ecosystem.

High Expectations but Controversy

Looking back at several previous token issuance protocols in the Bitcoin ecosystem, from Brc20's ORDI to Arc20's ATOM, the heat and liquidity of the entire protocol are driven by the leading assets of the protocol. "First is First" has always been the slogan of the Bitcoin ecosystem, so the leader is generally the first token deployed by the protocol. However, this investment theorem briefly failed on Runes.

Casey hardcoded his deployed zero rune "UNCOMMON • GOODS" into the Runes protocol, which was directly written into the code. Starting from Bitcoin block height 840,000, this "genesis rune" can be minted in unlimited quantities, with one minted per transaction, and its minting window will last for four years until the next Bitcoin halving. During these four years, although the quantity of "UNCOMMON • GOODS" continues to increase, its market value declines due to dilution, thus deeply binding the genesis rune and the Runes protocol.

"From this mechanism, it can be seen that Casey hopes the genesis rune and the Runes protocol will at least be a game that can be played for four years." 0xSea told BlockBeats.

Long Character Count, Low Recognition

Old players of memes pay great attention to recognition, but the current length of runes has reduced the recognition of memes.

In Casey's design of Runes, the length of rune names is set to a maximum of 26 characters, which actually reduces the recognition of memes. It is worth noting that although Casey's hardcoded "UNCOMMON • GOODS" is not subject to this rule, the "•" separator does not count towards the total character count, which is intended to improve the ticker's recognition, such as "WO • YAO • DISS • YOU."

Current names of Runes assets

In simple terms, after the "rune" was officially activated at block height 840,000, all tickers of 13-26 characters could be deployed immediately, but "ZZZZZZZZZZZZ" is the first deployable 12-character ticker. These 12-character tickers will be gradually unlocked between blocks 840,000 and 857,500, with a shorter ticker of one character unlocked every 17,500 blocks.

The next halving is expected in February 2028, when the block height will reach 1,050,000. During the next halving, there will be a total of 210,000 blocks, which will be divided into about 12 update cycles, each containing about 17,500 blocks, approximately completed every three to four months. Therefore, from now until the next halving in four years, for every 17,500 blocks, the number of ticker characters will decrease by one, until it is reduced to a single character.

Thus, for old players accustomed to four-character tickers, such as $PEPE, they will have to wait about three years to see the unlocking of such short tickers.

Related article: 《The "Runes" are coming, is a war of Ordinals about to break out?》

Sea believes that Casey designed this gradually decreasing ticker rule to keep attracting industry and community attention during the slow reduction of character count, thereby maintaining intermittent but lasting interest in Runes. "By 2027, when the ticker is reduced to the minimum number of characters, we expect to see a peak in attention."

Old Players Find Runes Dull

"BRC20 old players will feel that Runes has no innovation in gameplay itself and is quite dull." Sea told BlockBeats: "Whether it's Fair Launch, airdrops, or rushing BRC20, or mining ARC20 based on hash POW, everyone has already played through it, Runes has not brought much freshness. In the absence of novelty, unless there is a clear wealth effect that can be foreseen, players' interest may quickly fade and become weak."

Although Runes has made some technical improvements—such as simplifying the two transactions originally required for BRC20 into one, thereby lowering the threshold and cost for players—this improvement has already been achieved by ARC20.

After comparing various protocols in the Bitcoin ecosystem, KOL scientist Box also believes that Runes does not have significant breakthroughs technically.

Ordinals early OTC merchants and market makers have bluntly pointed out: "Casey borrowed the ideas from the Atomicals protocol without mentioning a word from start to finish."

On an emotional level, Sea agrees with the view of the market maker, believing that the so-called innovation of Runes is actually very limited, mainly relying on Casey's personal influence and catering to the Western community's feelings of missing out, thus reaping the fruits of BRC-20 and Atomicals.

Sea believes that BRC-20 represents innovation from 0 to 1, albeit somewhat rough; while Runes is a culmination of the optimization faction, mainly satisfying the Western community's demand for BRC-20, but has not brought about paradigm innovation. In contrast, Atomicals represents true paradigm innovation, not just minor optimizations. After all, when Arthur began writing Atomicals last February, BRC-20 had not yet emerged.

Although Sea points out that the innovation of the Runes protocol is limited, he also believes that a protocol becoming a "standard" does not necessarily require innovative breakthroughs;** market choice is the decisive factor. "It's like Tencent in the internet industry; many of the products made over the years are not original (including WeChat), but are optimizations + micro-innovations."**

What Trading Logic Will Runes Have?

Despite the high expectations for the Runes protocol, which has faced much controversy regarding its degree of innovation and gameplay, for most users entering the crypto space, profit is the primary goal. They do not care how much innovation Runes has but are more concerned about which Runes protocol assets are suitable for speculation.

Moreover, having disagreements creates more room for profit. Although many early Runes projects have not yet conducted airdrops, with the recent decrease in gas fees, most project teams' airdrops are already on the way. Besides the usual Runes tone and RSIC, what other trading logic will the Runes protocol have?

Runestones May Become the New Favorite of Swing Traders

After the snapshot was completed at block 840,269, each user holding a Runestone NFT received 889,806 DOG • GO • TO • THE • MOON (the 3rd rune). After the snapshot, the floor price of Runestone plummeted to 0.032 BTC, with a drop of up to 59.5% within 24 hours. As of the time of writing, the floor price of Runestone has further dropped to 0.029 BTC.

Despite the continuous decline in the price of Runestone, the airdropped Runes meme coin DOG has been on the rise since its airdrop on April 24. According to data from Magic Eden, the current unit price of DOG • GO • TO • THE • MOON is 7.79 sats, with a 24-hour trading volume of 111 BTC, crushing other Runes assets and temporarily ranking as Runes' leading asset.

At the same time, the total market capitalization of DOG • GO • TO • THE • MOON has reached $500 million, and the current market capitalization of Runestone plus DOG is close to Runestone's historical high.

After the airdrop, Runestone seems like a shell that has shed its shell, with part of the liquidity of its consensus having shifted to DOG. This change raises a question: does this "shell" still hold value?

Sea commented: "Regarding this issue, the Runestone team has already considered it, so founder Leonidas has consistently emphasized that three tokens will be issued, and DOG is just one of them." The current price has fallen below $0.02 and may even drop below $0.01, as it seems to have little practical use in the short term. However, the situation may change in the coming months. If by October, the project team announces the airdrop details for the second token, it could potentially attract market attention again and drive up prices.

Thus, Runestones may be one of the assets in the current Runes ecosystem that is extremely suitable for swing trading, although this still poses a certain challenge for holders in terms of information acquisition and processing.

On the other hand, the price of RSIC has seen a smaller decline after the airdrop, which can be attributed to its stronger mining attributes. Unlike Runestone, RSIC is snapshot based on the holding block time, meaning that even if sold, the previously held block time still belongs to the original holder. "Even if the details for the second season of RSIC have not yet been announced, the currently held blocks are already being counted for points, which is very likely," Sea told BlockBeats.

Degen Meme Culture in Bitcoin

Simply put, the tokens on the Runes protocol are still all memes. Therefore, besides Runes tone and RSIC, which are part of the Runes rush faction, there are many meme coins released in a completely fair manner, incorporating Bitcoin's native elements, indicating huge alpha opportunities.

Fairness is one of the core values of memes. If a meme reserves too much share for itself, the community usually will not support it. A true "fair launch" means no funds are reserved for founders or early investors, ensuring that all participants have equal opportunities.

Moreover, recognition is also a key factor for the success of memes. For example, the puppets and wizards that previously had high recognition on BRC-20 saw their market value significantly rise before the launch of Runes. Now, the runes they deployed and airdropped are the 13th rune PUPS • WORLD • PEACE and the 17th rune MAGIC • INTERNET • MONEY. Another example is PEPE•WIT•HONKERS; Sea particularly appreciates the representation of Pepe elements on Runes, mentioning that "the image of Pepe, from early comics to its widespread circulation in various memes across internet communities, has a strong dissemination power, reaching audiences in the millions or even tens of millions."

"Then there's the ticker is elsa, which was the only project I participated in on the first day of Runes' launch." Sea said. Elsa is the name of Bitcoin OG Hal Finney's dog, who is recorded in history as the first person to conduct a transaction on the Bitcoin network, receiving 10 BTC from Satoshi Nakamoto. Hal Finney passed away in 2014 due to health issues, and his status in the community is significant, adding profound historical meaning to related memes. After all, this is in the Bitcoin ecosystem, and having Bitcoin elements naturally makes it more popular.

Hal Finney and his dog, image source: internet

Additionally, the epic Bitcoin NFT project Blob, which was auctioned for 33.3 BTC from Via BTC for the fourth Bitcoin halving block, is also worth noting. Its elements, such as laser eyes, rare coins, and halving, represent the pure elements of Bitcoin.

According to data from Magic Eden, Blob's floor price has risen over 55% within 24 hours, reaching 0.0543 BTC.

Recently, the co-founder of the Bitcoin NFT project Blob, who is also the current 6th contributor to the Ordinals protocol @Elocremarc, is currently developing "recursive runes," and it is expected that Blob will also take action in the runes ecosystem in the future.

In discussions with BlockBeats, Sea also expressed expectations for Blob in the Runes ecosystem: "If Blob launches a token in the future and operates it well, I think it will be an excellent meme, as the current Runes memes are still lacking. However, this is just my speculation; I estimate the probability of Blob launching a token to be around 30%."

Will Runes Have Product Narratives?

In the early stages, most people's impression of the Bitcoin ecosystem was that it was all memes, but after a year of development, the market has seen more things, including Bitcoin Layer 2 and lending.

Runes may also be like this; initially, it seems only related to memes, but over time, especially when viewed over a year, it will definitely not be just memes. BlockBeats has also observed that there are already Bitcoin lending protocols warming up on Runes.

A prominent example is Shell Finance, a trustless lending protocol built on Bitcoin Layer 1. Utilizing PSBT and DLC technology, Shell Finance has implemented a lending and settlement process in a trustless environment. This protocol includes two core modules: one is a synthetic stablecoin asset $BTC x anchored to the value of $BTC; the other is a lending protocol that supports using various inscribed assets (including Ordinals, Runes, Atomicals, Stamp, etc.) as collateral to borrow $BTC x.

Currently, Shell Finance is distributing its own NFTs—Darkman whitelist—across various NFT asset communities in Bitcoin, and Darkman holders will also have the opportunity to receive airdrops of Runes tokens released by Shell Finance in the future.

In discussions with BlockBeats, Shell Finance revealed that they will utilize the token launch on the Runes protocol to complete the core construction of the community as well as the cold start of the product and liquidity.

"Our approach is as follows: first, we choose to conduct functional testing (FT) because we are a lending project focused on practical landing. For lending projects, we mainly need two things: first, qualified users; second, necessary liquidity. To let potential users understand us, we did not conduct large-scale promotions in Q2 but adopted a productized mechanism by taking asset snapshots for specific asset holders. Therefore, users holding our FT are actually active users of these assets and are the target users we will focus on in the future," Shell Finance explained their market strategy and product positioning.

Once Shell Finance's main product (MP) launch is completed, they will have effectively built the core of the community. This strategy is not only to establish a solid user base but also to ensure the sustainability of product development and long-term market participation.

In addition to the three types of trading logic for the Runes protocol mentioned above (swing trading runestones, Bitcoin degen memes, and long-term product narratives), there are also some consensus opportunities in the market, including what 0xWizard mentioned about "projects launched by ordinals OG; well-known projects from ETH or other chains, like Prometheus; and projects that can introduce Solana liquidity in the future." These will not be elaborated on one by one.

Currently, after the Runes tone airdrop, both in terms of liquidity and floor price, Runestones and its airdropped DOG • GO • TO • THE • MOON still temporarily rank as "leading assets," but there is also a possibility of being "overtaken" in the long term. BlockBeats will continue to track the subsequent developments of the Runes protocol.