What are we even RUNEing here?
Runes - a fungible token standard built on Bitcoin blockchain
What is a RUNE?
Runes are a fungible token protocol built on top of Bitcoin that allow for on-chain speculating on Bitcoin blockchain. Insert from Hell Money Podcast ‘Rune 2’-
“Creating a decent token standard exists so that people can experiment with it and 99.99% of those experiments will be worthless but I think it is useful to have a good protocol just sitting around on the shelf so people can try it out”.
“My biggest contribution to bitcoin will be launching this fungible (rune) and non-fungible (Ordinal) token protocols and then not adding features which add harmful MEV”. Further to this Rodarmor closed with stating that he has no intentions to bring MEV functionality to Bitcoin or anything of that nature that drives value away from the miners and or centralises mining on Bitcoin.
So while following along with the technical understandings as best I can it appears that Rune protocols is NOT just ‘another protocol’ built on Bitcoin, there is a purposeful reason behind it to allow for a better onchain shitcoining experience while not extracting value away from the underlaying bitcoin protocol. So, to summarise this creation would give current bitcoin miners the opportunity to maximise revenue from the newly generated fees from the participation of the Runes/Ordinals protocol.
Is trading on chain garbage on Bitcoin desirable?
Currently? No, from observations Solana/Pump(dot)fun still maintains a lot of the speculation for on garbage at this stage, Ethereum still will garner attention for this as well, and with newcomers like Sankochain coming to light the mass speculation currently is NOT with Runes on Bitcoin (shock).
In my opinion, I don’t see the speculation and appetite necessarily shifting all to runes, but the speculation and memes may not need to come to runes in order for it to do well. If the token standard of Runes fits into a broader ethos of Bitcoin native trading and speculation, then that is a better outcome than marketing for memecoins on Bitcoin as a forced narrative.
What does RUNE achieve in comparison to BRC-20 built on top of the Ordinal protocol?
Limits MEV and achieves a native fungible token standard while driving value back to Bitcoin miners.
Building fungibility into the Bitcoin blockchain (Runes) rather than building fungibility on top of a nonfungible standard (BRC20’s on top of Ordinal/Inscriptions). **my understanding may have that wrong on various technicalities.
Trading experiences for Runes similar to BRC-20’s with being listed on major exchanges?
Yet to be explored, but from observations the most successful BRC-20’s ‘ORDI’, ‘SATS’ & ‘TRAC’ probably had a leg up in achieving a large market caps due to the available liquidity from major exchanges and due to a ‘high bitcoin fee’ and ‘build on bitcoin’ narrative that drove these coins to higher price valuations. BRC’s provided some of the best short-term performers late 2023. If Runes were to be listed and market conditions are favourable we could see price extrapolations similar to the BRC20’s in the past.
What can you expect from Runes in the next 12 months?
In short, no clue, I’m hopeful for some level of fun innovation and participation with Runes similar to the hype and exploratory nature that Ordinals/inscriptions provided for Bitcoin. I’m hopeful for some onchain laughable investment decisions that are native to Bitcoin. However, you can’t deny that the ‘hype’ that surrounded the Ordinal protocol (post the Ordinal launch) was much higher than what the current hype for Runes are now. I reserve that we are still early(ish) to the whole idea of building on bitcoin, while I don’t necessarily see any investable options in Runes currently, I still think long term, that because the Runes protocol was built out to honour the Bitcoin chain and its ethos of not extracting value away from the miners, then I don’t see why there can’t be some level of fun investing on chain through Runes that is fun and easily accessible for people to try.
Pre-Rune Meta, an interesting market dynamic
Its also worth noting that an interesting market dynamic played out before the Runes protocol launched which was the ‘Pre-Rune’ meta. Essentially there were Ordinal collections old and new that appeared with the ‘loose’ promise of a future airdrop to a Runes allocation. While this caused a stir in the Ordinals market, it made for an interesting ‘stalemate’ investing dilemma in my opinion.
For example, if you were fortunate enough to receive a free airdrop Ordinal called ‘Runestone’ then you were going to receive an allocation of Runes (later was named to the memecoin Dog-To-The-Moon). However, since the creator of Runestone Ordinal announced they were giving an allocation of Runes to the Runestone holders, holders were incentivised to hold their current Ordinal Runestone and new market participants were incentivised to buy Runestone in order to receive a future airdrop of Runes (DTTM). This drove the price of Runestone the ordinal collection to 0.09btc(avg $6,000). However, since a lot of people received Runestone as a free airdrop, they weren’t really incentivised to buy more Runestone, and since the people who did not yet own Runestone were incentivised to buy some before the Runes protocol launched to receive the free airdrop. This ultimately meant that it left very few Ordinal/Runes participants to again buy the Runes airdrop (DTTM).
With me so far? Essentially if everyone is buying the ‘Pre-Rune’ allocation of assets (Runestone Ordinals) then WHO is left to buy the actual Rune that launches after nearly everyone receives it for free?
Coming back to the ‘Stalemate investment decision’ part of this rant, its all to do with how you would position, if you know there is demand for the Ordinal you hold (Runestone) that drives the price of the Ordinal up, and you know that there is a free allocation of Runes after the Rune protocol launches. Do you sell with the large Ordinal price increase and miss out on the free airdrop? Or do you wait until you receive the free airdrop before you sell? It was an interesting play of events, and the results are below.
Runestone(the Ordinal collection)
High (0.09btc)
Current (0.01btc)
80% correction on the Ordinal Runestone (its not looking good brav).
Dog-To-The-Moon (Rune token)
DTTM Performance wise not so bad, at a relatively high market cap with no major exchange listings yet, current market conditions aren’t too favourable, however I wouldn’t rule out the possibility that this performs similar to the Runestone(ordinal) with a reduction of 80% (given that the creator of Runestone Ordinal has promised more memecoins to be launched as a free airdrop to Runestone holders) so diluting the supply for more free airdrops probably doesn’t end well for DTTM from my perspective.
To summarise you may or may not have ended up okay with the free allocation of Runestone (depending on when you sold or if you had sold) but you would currently be down 80% on Runestone Ordinal if you had bought at 0.09btc.
Runes worth punting?
In my opinion probably not, again Rodarmor confirmed that the whole purpose of Runes is to build out a fungible token protocol that was more beneficial to onchain shitcoining for Bitcoin – he’s not necessarily advising that this new protocol is the future of France with grandiose expectations. With current attention diverted to other easier more retail accessible places to be a degenerate on chain shitcoining gambler (Solana), Runes would essentially be competing for that market share. However, I wouldn’t rule out people’s preference for onchain gambling on Bitcoin as something fun to do if they were tired of losing money on Jeet-chain central.
What to look for in terms of capturing upside, distinguishing signs of froth and innovation?
In the current environment (June, 2024) the largest market cap for a runes token by far is the Dog-To-The-Moon token at ($600m Market cap) if you were paying attention to the twitter timeline then you would notice that the whole PumpnDump program for DTTM is that it is the memecoin of bitcoin, not necessarily the innovation marketing bid that would carry this to higher valuations. With Runes, me personally, I am not looking for a memecoin to punt just because it is on bitcoin however, I will be looking for something cool to do with runes and looking for something that catches my eye to join in the fun. If there are memecoins being launched for the purpose of them ‘being on Bitcoin’ as their selling proposition, then I’m not interested in that as the sole reason to buy Runes and would contribute that as froth overall. Anything new, fun, different with Runes on Bitcoin is what I’ll be looking for.
Conclusion
What are we even RUNEing here? Lets not forget the sheer fact that there is now a ‘fungible shitcoin standard’ (can’t believe I am saying this) on Bitcoin a year or so after a non-fungible standard (Ordinals) was brought to Bitcoin. Looking at innovation alone, its exciting to see that there is innovation being brought to Bitcoin making it somewhat ‘c00l’ again. In terms of ‘upside’ and or ‘next 1000x gem’ type analysis, I’m doubtful in the short term, hopeful in the long term and will continue to keep an eye out for opportunities. All in all, I think the Runes protocol is a success if the overall goal was to create a standard of onchain gambling that doesn’t extract value away from the Bitcoin protocol.
Thanks for reading.
Wanna keep up to date yourself? Here are some easy follows.
Youtube
Hell Money Podcast (Casey Rodarmor podcast with co-host Erin)
Marketplace
Magic Eden (https://magiceden.io/runes)
UniSat (https://unisat.io/runes/market)
Twitter(X) acc’s
Casey Rodarmor (https://twitter.com/rodarmor)
Websites
Rodamor.com (Casey Rodarmor website for published works on Ordinals/Runes)