Memecoins
The lure of Bitcoin miners that boosts Memecoins is already starting to wane
(Bloomberg) — The respite brought by the debut of memecoins on the Bitcoin blockchain, which helped soften the financial blow from a recent software update suffered by crypto miners, already appears to be fading.
Just as the April 19 “halving” halved the number of tokens allocated to miners to validate transactions, transaction fees on the network surged as users rushed to mint the first time. speculative coins on Bitcoin. The process is enabled by the Rune protocol, through which users can create their own fungible tokens. Data from Dune Analytics shows that the total number of rune transactions fell to around 45,700 on Monday, after peaking above 750,000 on April 23.
The runes are similar to the popular Shiba Inu tokens on the Ethereum blockchain. Proponents are betting that one day Runes can be used as a utility token for Bitcoin-based decentralized finance, a type of financial applications built on blockchains without any intermediaries. However, with the development of Bitcoin DeFi still early, runes have so far only proven popular as tokens without any utility or, as everyone knows them, as memecoins.
“Runes is kind of capitalizing on two big themes right now, one is memecoins and the other is innovation on Bitcoin,” said Brian Rudick, senior strategist at the investment firm in GSR digital assets.
Since the protocol’s launch, Runes has generated 2,169 Bitcoins, or approximately $137 million in fees, according to data compiled by Dune Analytics user cryptokoryo. The share of Runes-related transactions peaked on April 23, where it accounted for 81% of all Bitcoin transactions.
The Rune protocol is the brainchild of developer Casey Rodarmor, who also created another mechanism, Bitcoin Ordinals, which allows users to create non-fungible tokens on Bitcoin. Like Runes, the Ordinals frenzy has also turned into a revenue windfall for Bitcoin miners, as well as so-called BRC-20 tokens – an earlier version of fungible tokens on Bitcoin that is more expensive than Runes. The increase in revenue is particularly valuable for Bitcoin miners, as a key indicator indicates that Bitcoin mining profitability is near an all-time low.
“Miners are excited about the increase in transactions on the Bitcoin blockchain,” said Dan Held, general partner at Bitcoin venture capital firm Ametric. “Because Bitcoin block space is limited, so as transactions increase – whether it’s Runes, BRC-20 or whatever – the only way to be included in the block as it’s becoming more and more crowded is paying more fees, which means miners are paid more.
Shares of Marathon Digital Holding Inc. and Riot Platforms Inc., two of the largest publicly traded mining companies, were both down about 3% on Monday. Bitcoin was down slightly and trading near a one-week low of around $63,000.
Read: Memecoins Mania caused Bitcoin fees to skyrocket during the “halving”
Some in the Bitcoin community have argued that building different things, whether Runes, Ordinals, or BRC-20, would crowd out regular transactions with high fees, especially most of these tokens have no real use. But not just Runes, many projects are now focusing on introducing DeFi into Bitcoin, in which Runes can eventually become the utility tokens of many DeFi projects, just like UNI tokens for the decentralized exchange Uniswap.
The total value of cryptocurrencies sent to the Ethereum blockchain is around $55 billion, according to tracker DefiLlama. The market value of DOG•GO•TO•THE•MOON, one of the most popular memecoins using runes today, is around $382 million, according to the Magic Eden marketplace.
“For the most part, the acceptance has been much greater than ever,” Rudick said. “The opportunity space is immense. »
–With the help of Sidhartha Shukla.
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