- After setting the bar high with its launch, Runes has been performing below expectations.
- Runes activity has plummeted significantly since launch, hitting rock bottom over the weekend.
- The decline could be interpreted as a natural correction as the protocol finds its footing amid the miners’ exodus and declining network activity.
Bitcoinโs novel protocol, Runes, sparked quite the excitement with its launch. It promised to bring significant revenue for miners by introducing memecoins into the foray through its platform.ย
In its first week, starting April 19, the protocolโs high-profile debut spurred record network activity even after the halving, generating millions in transaction fees and leading everyone to assume that Runes would help offset the hit to block rewards.
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However, with Bitcoin now struggling to perform and miners exploring alternate options, Runes struggles to live up to the hype.ย
Rune Activity Plunges to the Depths
Three weeks ago, Runes made quite the splash with its grand entrance after raking in a whopping $135 million in transaction fees during its debut week. With the protocol making up nearly half of all transactions on Bitcoin, the anticipation surrounding it was sky-high, with many expecting it to maintain its momentum. However, the novel protocol’s journey has been far from expectations.
Since setting the bar high in its first week, Runes activity has taken a nosedive, hitting rock bottom over the weekend. Data from Dune showed a severe decrease in total Runes minted, falling from a peak of 23,061 on April 26 to just 62 by May 12. Similarly, fees earned from Runes plummeted from a peak of $321,263 on April 26 to just $970 on May 12.
While Runes still generates considerable fees on Bitcoin, according to data from the Block, the sum of fees generated has breached $1 million only twice in the past two weeks.
Nonetheless, even with network activity plunging, Runesโ decline isnโt necessarily a cause for alarm.
Donโt Let it Rune Your Day
Runesโ recent downturn could be seen as a natural correction as the protocol finds its ceiling and floor. The protocol continues to perform exceptionally well, with collections already surpassing market caps exceeding $100 million, according to data from Magic Eden.
Runes are likely bearing the brunt of the miner exodus as Bitcoin miners weigh whether itโs worth continuing their operations. Over the past week, Bitcoinโs mining difficulty dropped by 6%, making the largest reduction since July 2021, suggesting that miners are leaving the network due to the hit on their profitability.
To put things into perspective, daily mining revenue has stumbled from as high as $107.8 million before the reward halving to $29.9 million on Saturday, May 11, a 29-week low, according to data from Ycharts.
Until miners regain confidence in the network and Bitcoin stabilizes in the current market conditions, Runes could remain a second thought for many.
On the Flipside
- Many developers are concerned that memecoins tarnish crypto’s long-term vision and drive developers away.
- Experts suggest that memecoins’ success stems from human desperation to get rich quickly.
Why This Matters
Runes is undergoing a natural correction, so it would be unfair to call it a flop at this time, especially considering the protocol is just three weeks old. However, in hindsight, it does raise concerns for the network since Runes hoped to offset the hit by blocking rewards for miners, but it isnโt a strong enough reason to retain miners.
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