What is the best asset代打 model on BTC?

Author: Shijiu Jun

Trading is the soul of web3, attention is the core resource of web3, price is the starting point of the crowd, and value is the endpoint of time.

A month has passed since the BTC halving, and the highly anticipated Runes protocol has also been around for a month. During this time, more than a dozen代打 platforms and trading markets have emerged. On the day of the halving, even a single代打 for a Runes asset required a cost of over 100 USD.

This article takes Runes assets as an example to analyze which is the best mechanism for Bitcoin asset代打 (etching) model?

1. Runes代打 Platform GAS Ranking

The following is an overview chart organized by Shijiu Jun.

From the perspective of the scheme ranking, the core conclusions are:

1. Gas cost split + chain scheme < chain < split < single打
2. Degree of centralization: chain (no intermediate address) < split (no intermediate address) < chain (with intermediate address) < split (with intermediate address)
3. Asset aggregation: chain > split + chain > split
4. Batch on-chain speed: split = split + chain > chain

At first glance, it may be a bit confusing; what is chain, and what is split?

This goes back to the Runes protocol itself. It is recommended to read more: 《BTC Halving Approaches, Interpreting the Underlying Design Mechanism and Limitations of the Runes Protocol》

1.1. Brief Introduction to Runes Etching Mechanism

Runes uses etching technology, which is a simple and intuitive way to record information on the chain: that is, writing into the op-return field of UTXO (unspent transaction output) in BTC, which started to be enabled in Bitcoin Core client version 0.9 (2014). OP-RETURN creates a clear verifiable non-consumable output, allowing data to exist on the blockchain, similar to UTXO outputs, but cannot be consumed.

In the BTC blockchain explorer, it is easy to see that this transaction is attached with an op-return message, as shown in the figure below:

Here, we can see that output #3 is actually floating; although it occupies an output position of this UTXO, it is a closed-loop rectangle, indicating that it cannot be transferred or consumed again. Thus, it serves as a note area for the transaction, remaining in Bitcoin's storage space, indexed by the transaction hash.

You may have noticed that there is a RUNETEST after OPRETURN, which is the result of decoding the specific content. After clicking the detail button, you can find a coding string like 52554e455f54455354, which is actually a string of hexadecimal encoded data. After decoding, it becomes RUNE_TEST. Similarly, there are other encodings in the details, which ultimately decode into a string, roughly in JSON format, reflecting the deployment, minting, issuance, and other meanings of Runes assets.

Therefore, the so-called代打 mechanism can be summarized as: a Runes transaction can only代打 one asset.

As for the transaction cost, in BTC, it is reflected by the size of the data on the transaction chain. Thus, the design of the代打 platform is equivalent to who can minimize the number of UTXOs appearing in the transaction, which is the optimal model.

Now let’s elaborate on the split model and chain model.

1.2. Split Model

The so-called split model involves first splitting a transaction into multiple sub-transactions during the代打 process, and each sub-transaction then undergoes the asset minting process.

For example, the代打 scheme of tools.mempool executes as shown in the figure below:

The first transaction will estimate the fee consumption for each sub-transaction, then reserve 546 (common dust value in Bitcoin) + fee amount, and split into multiple UTXOs, where it will be transferred to a new address.

The second transaction then transfers back from the new address to the user’s address, completing the代打, and the user also collects the Runes assets.

The significant issue with this model is:

It requires an initial transaction split, and the user receives scattered UTXOs.

So when the user wants to place an order to sell, they either have to place orders one by one or merge them first before placing an order, which increases transaction costs for large clients.

Moreover, the tools.mempool platform does not perform a代打 for the user during the split transaction, so the overall loss is relatively high in the split model.

1.3. Chain Model

The chain model resembles the following structure, where the user initially has 20,000 satoshis, and each transaction consumes the previous transaction still in the memory pool, resulting in multiple transactions.

Here, we can see that the 6144 satoshis charged to the tail number s2t4 is the代打 fee of the platform. Compared to the fee of 3892 required for executing the代打, it can be said that the revenue of the代打 platform is quite high.

This platform, known for claiming to complete the Runes代打 + trading market in 5 days, has actually long been ignored in terms of trading. However, in the initial days, it generated nearly 3 BTC (over 1.5 million) in fee revenue, which is quite significant for individual developers.

However, this is actually a meaningless fee. Several platforms have already open-sourced代打 code, such as OKX, which has also open-sourced Runes code: perfectly solving the Runes encoding and代打 issue, allowing developers to directly reference and build their own代打 tools at https://github.com/okx/js-wallet-sdk.

Returning to the chain model, since it almost collects fees from the first transaction, subsequent transactions are processed in a loop as shown in the figure below, so the data volume is relatively small.

2. The Best代打 Model for Runes: Split + Chain

Luminex is currently a relatively optimal scheme model, capable of large-scale minting, with a UTXO splitting tool for ease of use, adopting a split + chain scheme.

As shown in the figure below:

1. The platform will first give the user an asset during the split, wasting nothing.
2. If minting is within 25 times, it will split enough chain minting gas and then execute the minting.
3. Finally, if minting exceeds 25 times, it will split multiple chain-required gas and then execute the minting.

Although the basic fee is not superior to the chain model, it can achieve crucial large-scale minting, and its on-chain efficiency can be completed within a maximum of 2 blocks.

2.1. Why is there an on-chain efficiency metric?

This is because BTC nodes have a mechanism to prevent DoS attacks.

In a single UTXO's vout being consumed and its consumption chain, it limits a maximum of 25 transactions in the memory pool.

This is why most large-scale minting often uses intermediate addresses to lift such restrictions. For the chain model, assets will accumulate and ultimately transfer to the user.

Thus, the chain model can only have 25 transactions in the memory pool at the same time, but the split model can place an unlimited number of transactions in the memory pool after the split transactions go on-chain (because the parent transaction is no longer in the memory pool, each UTXO's vout is independently calculated against the 25 limit).

Therefore, luminex, as the optimal model, is not only about having the lowest gas but also maintaining low gas while having large minting capabilities.

However, there are actually models better than luminex.

Because the split transactions of luminex will also separately代打 to the user, but this asset does not need to be transferred to the user; instead, it can be transferred to the UTXO of the second chain transaction, as Runes has a default liquidity mechanism for assets, thus reducing the cost of one UTXO in the case of luminex.

2.2. Comparison of BTC Fee Optimization Rates

After discussing costs for a while, how is the cost actually measured? It's quite simple; users usually set a unit price, similar to gasPrice, but in BTC, it completely relies on the amount of data stored as a quantity unit, i.e., vsize.

So let's take the taproot address as an example (different addresses have different fees, and taproot addresses belong to lower fee categories). In this address structure:

1. Each additional input increases vsize by 58.
2. Each additional output increases vsize by 43.
3. Writing each OP_RETURN requires about 30 vsize.

Therefore, we can calculate the following optimization rates:

For chain batch minting of 10 transactions, the cost: i * 10 + o * 10 + p * 10 = 1310

For split batch minting of 10 transactions, the cost: i * 10 + o * 10 + o * 9 + p * 10 = 1697

Gas optimization rate: (1697 - 1310) / 1697 = 22.8%

For chain batch minting of 20 transactions, the cost: i * 20 + o * 20 + p * 20 = 2620

For split batch minting of 20 transactions, the cost: i * 20 + o * 20 + o * 19 + p * 20 = 3437

Gas optimization rate: (3437 - 2620) / 3437 = 23.8%

It may seem that 20% is not much, but during peak periods when a single minting consumes 100 USD, a batch of 10 can reduce costs by 200 USD. The subtle cost difference ultimately reflects on the psychological threshold of transactions.

In the face of high代打 fees, those who hope to get the earliest share in the web3 circle still need to learn basic node.js to directly run various open-source codes (such as the signature component mentioned above from OKX) to bypass platform fee issues. In the next article on trading markets, they can even directly bypass multiple platform barriers to build cross-platform trading, or even directly listen to the memory pool to seize opportunities for profit.

3. Conclusion

One month after the issuance of the Runes asset protocol, unfortunately, it did not break the 1 billion USD threshold, and there were rumors of a live stream where Ordinals and Runes founder Casey joked about seppuku.

But ultimately, it still comes down to the fact that the two core infrastructures of代打 and the market in the ecosystem are not perfect, making it too costly for retail investors to participate and lacking ecological operation for institutions.

Currently, the platforms that have emerged either charge high fees or lack complete functionality. For example, while Runestone has low chain costs, its gas estimation is inaccurate, easily leading to wear and tear on the last transaction, gradually pushing it out of the market due to the uncertainty of going on-chain.

Moreover, the current代打 models still overlook the real demands of users, which is the transaction itself.

The various assets that are打 often need to be turned over more quickly, but in the early market with huge price fluctuations and extreme congestion in BTC, aside from the market behavior of the project parties themselves, there is not much demand for large-scale打 assets. In other words, those with such a large amount of funds to打 1000 assets can do it themselves; the core users of the platform are retail investors.

Thus, while the chain model has low costs, it is not suitable for the very early stages, where in high-speed fluctuating pricing, the lack of splitting tools in the market can cause the 20 or more composites in one transaction to raise the threshold for transaction purchases.

Finally, this article discusses the代打 mechanism for assets on BTC. There will be a follow-up article on trading market models that can adapt to trading patterns of new assets such as (BRC20, Ordinals, Atomical, Runes), so please stay tuned and don’t miss it.