Runes are Taking Off: Bitcoin-Based Tokens Get Performance Boost on Exchanges

The market for Runes, the new generation of Bitcoin-based tokens, is taking off and showing both growing volumes and some clear winners. Runes are still in the discovery stage, but recent OKX statistics show mainstream trading may soon take off. 

🚨Runes are thriving on our Marketplace🚨

In the first few weeks since launch we've had:

#️⃣ +1K BTC trading volume
#️⃣ +100K no. of transactions
#️⃣ +57K cumulative no. of pending orders

Etch, manage & trade #Runes with full self-custody using #OKXWallet now. pic.twitter.com/0lDIVfNLrG

— OKX (@okx) May 13, 2024

OKX is also turning into an informal hub for early Runes trading. More than 50% of current volumes are concentrated on the exchange, where price discovery is happening. 

The appearance of runes followed a few months of testing out BRC-20 tokens as the main tool on the Bitcoin network. Runes are specific assets based on direct UTXO records, which first went live in April 2024. The early-stage asset may greatly impact the ecosystem, while avoiding blockchain bloat. 

Runes Aim for Efficient Bitcoin-Based Tokenization

The potential to create runes has existed since Bitcoin block 840,000, or for fewer than 4,000 blocks. Runes are the brainchild of Bitcoin developer Casey Rodarmore, to boost the creation of fungible tokens with a minimal effect on the blockchain. 

Overall, Runes are trying to offer a better tokenization standard, following previous attempts to generate Bitcoin-based tokens. Previously, Bitcoin offered technologies like colored coins. Later, Taproot assets, RGB tokens and BRC-20 assets went through their own hype cycle, but started causing network overload and high transaction fees.

If Runes fulfills its promises, it may become the tool for the long-awaited “Bitcoin summer of DeFi”. The only drawback is that the expansion of Runes may take some time, and projects may already be dedicated to an older type of token. 

Runes Boost New Wave of Meme Tokens

In the early days of Runes application, the chief driver for new projects is the creation or expansion of memes. The current leader of Rune technology tokens is Dog-Go-To-The-Moon (DOG), which is relatively obscure compared to other meme assets. 

DOG is ranked 268 based on market capitalization, with a supply of 100B tokens. The new meme token Rune launched on April 27, at $0.004, then slid by 50% to the current range of $0.002. 

Overall, Runes-based tokens have a market cap of just under $200M in total, but even at this early stage are showing competition and hype. 

Who Will Bring Liquidity to Runes?

Runes offer some novelty, but token generation has become almost trivial in crypto space. In fact, more than 1 million tokens have been created, and very few make it into a liquid asset with meaningful trading. 

Finding the users, investors and markets for those tokens is a whole other issue. Just as soon as Runes launched on Bitcoin, there are projects that aim to bridge them with the Ethereum ecosystem, which still has the most liquid decentralized financial services. 

🫂 #RunesBridge and @TunaChain forge a strategic alliance, Aiming to cultivate a vibrant and robust Bitcoin ecosystem for all users.

🔗 Tuna Chain, a modular Layer 2 solution built on #Bitcoin, introduces a native stablecoin and a Hybrid ZK-OP solution. It effortlessly… pic.twitter.com/T45SkUcVLy

— RunesBridge (@RunesBridge) May 14, 2024

Currently, Runes projects are trying to build liquidity models, including Ordinals, NFT, and fungible tokens. Collections are dropping almost daily, competing for attention. Runes fungible tokens are still extremely volatile, even the earliest tokens with the most recognizable brands. 

Gentlemen, it's been a privilege playing with you #Runes pic.twitter.com/0JNzFhqswO

— RomanSoldier (@RomanSoldierNFT) May 14, 2024

At the current early stage, Runes are all about hype and seeing which memes and collections will rise. Early investors are trying to buy up as much Runes as possible. The Runes and NFT trading systems are still trying to smooth out order books to avoid volatility. 

Runes hopes to create an environment similar to Ethereum-based DeFi. But for now, the market is driven by factors like the recently renewed GameStop stock rally after the renewed messages from Roaring Kitty.

The Top 10 Rune coins with the highest trading volume in the last 24 hours have seen a few new entries, including GameStop and Roaring Kitty.

Can traditional finance memes also find a home in Bitcoin?👀 pic.twitter.com/qPakgkJrX7

— GeniiData (@GeniiData) May 14, 2024

The greatest appeal of Runes is that they are currently near rock-bottom valuations. The main hope is that the Bitcoin DeFi summer may build value similar to that locked on Solana and Ethereum. Runes may also be used for airdrops, or tied to Ordinals collections. 

Since anyone can “etch” a Rune and airdrop it, wallets are already receiving copycat tokens and new assets, with no known history or liquidity. Additionally, valid Runes in 2024 are those minted after block 840,000. Earlier projects also claimed to mint Runes, but some of the early assets may be destroyed or invalid.