Rune Craze Returns: Track Development Analysis and DOG Project Evaluation

1. Overview of Rune

At the beginning of 2023, the BRC-20 standard based on the Ordinals protocol triggered a wave of construction and speculation around Bitcoin assets, promoting the development of BTC Layer 2, DeFi, and other ecological infrastructure. However, the speculation around BRC-20 also led to congestion and data redundancy on the Bitcoin network. In response, Casey Rodarmor, the founder of the Ordinals protocol, proposed the Runes protocol in September 2023, aiming to build an alternative token protocol based on BTC UTXO, known as the "rune protocol".

The Runes protocol was officially launched on April 20 of this year during the Bitcoin halving. Initially, due to the popularity of the first batch of rune minting, the BTC network's Gas fee soared to over 1000 sats. However, market attention quickly shifted to other areas. Recently, as DOG has risen from its sideways bottom price to a new high, it has sparked a wave of increase and renewed interest in the rune assets.

1. The operation mechanism of runes

The Runes protocol utilizes Bitcoin's native UTXO model to issue and track tokens, making it more native and decentralized. The rune balance is held directly by UTXOs, and a single UTXO can accommodate any number of runes, avoiding the creation of "garbage" UTXOs, thereby improving efficiency and reducing on-chain space usage.

Specifically, the data of Runes is stored in the OP_RETURN field, which is the operation code of Bitcoin transactions that allows 80 bytes of data to be stored in the transaction output. Transactions use the OP_RETURN tag in the protocol message, followed by the data push of the uppercase letter R. Issuance or transfer transactions are specified and assigned to UTXO in subsequent data pushes. Invalid protocol messages will result in the runes being destroyed.

2. Comparison between rune and BRC-20

Compared to BRC-20, the Runes protocol has the following characteristics:

(1) Runes are designed for fungible tokens, based on the native BTC architecture, not relying on off-chain data and requiring only a single minting, making it simpler and more efficient. On the other hand, BRC-20 is based on the Ordinals protocol, which is more suitable for building non-fungible tokens, relies on off-chain indexing, and requires two mintings, making it overall more complex.

(2) Runes data is stored in an 80-byte OP_RETURN field, while BRC-20 uses witness data, which can occupy up to 4MB. In comparison, tokens built on Runes are more compatible, take up less space, and reduce blockchain bloat.

(3) The Runes protocol is based on the UTXO model, which can be integrated with the native BTC architecture and inherit its security. It has stronger scalability in the future and can be perfectly compatible with the development routes of the BTC ecosystem, such as the Lightning Network and BTC L2.

3. The meaning of runes

(1) further created a BTC asset issuance method that can break through layers. Since BRC-20 brought inscription assets, this new form of asset has attracted more attention and funds into the BTC ecosystem. The 2023 meme craze on SOL and Base chain proves that the attractiveness of memes to the funds on the chain cannot be ignored, while the Runes protocol has created a dedicated, fungible, and more suitable token standard for speculative activities in BTC.

( The asset issuance method is simpler, more efficient, and more compatible than before. The Runes protocol issuance is based on Bitcoin's native UTXO architecture, without relying on third parties and off-chain data, occupying less space, reducing network congestion, and being seamlessly compatible with various upgrades and ecological solutions of the BTC network in the future, such as L2, cross-chain bridges, etc. ).

(3) The popularity of this asset can further address the security budget issue of Bitcoin. The trading of runes can contribute more transaction fees to the network, especially after the halving, providing a new source of income when miners' block rewards decrease, which is beneficial for maintaining the security and sustainability of the network.

2. Track Data Overview

From the BTC network data, in terms of transaction volume and transaction share, rune currently accounts for about 20% of the total network. When the rune protocol was first launched, trading was very active, reaching a peak share of 81.3%, and then quickly entering a cooling period. Currently, the share of rune in the network is about 10-40%, which can be used to observe the current market heat of rune.

Compared to rune and BRC-20, rune has currently become the most active L1 asset for transactions outside of BTC trading, with a ratio of about 4:1 between the two. The highest proportion of rune appeared during the halving launch, at around 99%, and the lowest was about 55%. Currently, the trading heat of rune has surpassed that of BRC-20 tokens.

In terms of fee contribution, the current native Bitcoin transaction fees account for 70-80%, runes account for 10-20%, and Ordinals along with BRC-20 together account for about 10%, with the rune proportion peaking at 70% on halving day. Currently, the speculation around runes has broadened the income sources for BTC network miners, and they have the highest proportion among new assets.

If both runes and BRC20 are regarded as memes, the market capitalization of meme coins on the Bitcoin chain is the lowest compared to that of meme coins on other chains, accounting for less than 0.1% of that chain. In horizontal comparison, the leading meme coins on the ETH and SOL chains account for more than 3% of their respective market capitalizations. As the chain with the highest consensus, market capitalization, and mainstream funding attention, BTC's meme coins have the potential for further market share expansion. In vertical comparison, the overall trading volume and contribution fees of runes have already surpassed those of BRC-20, but the leading runes still lag behind the leading BRC-20. If they can be listed on a top centralized exchange, they have the potential to surpass ORDI.

3. Rune Evaluation System and DOG Analysis

The evaluation of popular projects in runes can be analyzed from three stages and nine dimensions: early stage focuses on distribution methods, decentralization, founders and storytelling; mid-stage focuses on continuity of dissemination and price continuity; mature stage focuses on trading volume, market capitalization, chip structure, and price stability.

Based on the above logic, the leader in the current rune track is DOG:

1. Distribution Method: The distribution design progresses layer by layer and bears all on-chain costs, with a large scale. The Rune protocol will be released in phases before its launch, starting with the promotion of the Rune Stone NFT ( Runestone ), waiting for the halving day when the Rune protocol goes live, to airdrop the first rune to Rune Stone holders. Whether it is the airdrop of the Rune Stone or the airdrop of the first rune, it is free for the airdrop recipients, funded by the community, with the project party bearing the on-chain costs of issuance.

2. Degree of Decentralization: Early stakeholders had high quality and a large number, achieving rapid cold start and extensive dissemination among core users. The rune airdrop was given to over 110,000 users who actively participated in the BTC inscription ecosystem, and the first rune DOG airdrop was given to more than 70,000 steadfast rune stone holders.

3. Founders and Storytelling: Founder Leonidas is a veteran of the BTC community and a co-founder of the cutting-edge Ordinals browser Ord.io, maintaining a close and frequent interaction with Ordinals founder Casey. The name of the rune stone links the Runes protocol that launched on halving day with the Runestone coding instructions in the protocol, which is highly topical and legitimate. In terms of the design of the rune stone, Leo collaborated with a sculptural artist for custom creations, showcasing artistic value. The name of the first airdropped rune is DOG, which is the most viral meme image in the crypto world, and it is issued in the form of a new token on the most consensus-driven Bitcoin network.

4. Continuity of Dissemination: Strong and sustained attention attraction. Founder Leo, as a veteran of the BTC community, possesses strong dissemination power and resources, especially in the European and American communities, with frequent promotions. The number of posts on Twitter can reach up to about 100 per day, most of which contain detailed data and provocative content, continuously capturing the market's attention.

5. Price Continuity: Rune Stones and Rune Relay Speculation. The Rune Stone NFTs were preheated before the launch of the Runes protocol, with NFT prices steadily rising from March to April, reaching a peak of 0.1166 BTC for one piece. After the first Rune DOG airdrop, the price of the Rune Stones dropped, while the Rune DOG took over the speculation. After a month of market pricing and consolidation, starting from mid-May, the price rose from around 0.0025 to a peak of 0.0097, currently falling back to 0.0078. There are two more airdrops of Rune Stones later this year, and when DOG becomes the first meme coin at (, the price of Rune Stones may rise again based on the price situation of DOG.

![DOG leads the rune popularity back, when will the track usher in an explosion?])https://img-cdn.gateio.im/webp-social/moments-5dba07164c130e4c683659d62d2526b0.webp(

6. Trading Volume: The trading volume is drastically ahead of other runes, with the best liquidity. The overall liquidity of the rune sector is relatively poor, while DOG has been the number one traded asset on the overall timeline since its launch. The current trading volume is mainly concentrated on a certain trading platform, accounting for over 80%, followed by several other trading platforms. The current daily trading volume exceeds 70 million USD, while the second-ranked Runes x has a trading volume of around 2 million USD. DOG is drastically ahead of all rune assets and has reached the trading volume of mainstream tokens.

![DOG leads rune popularity back, when will the track see an explosion?])https://img-cdn.gateio.im/webp-social/moments-75d0c66c3cd2af6015e7e1c96dbfe497.webp(

7. Market Cap: In terms of overall market cap, it ranks first. After excluding ZZZ runes with very low trading volume and high unit price, DOG's market cap has basically maintained the status of being number one in market cap throughout its issuance.

![DOG leads the rune trend back, when will the track usher in an explosion?])https://img-cdn.gateio.im/webp-social/moments-808cae98824e7196e8bfaade6e246f24.webp(

8. Chip Structure: The number of holders is large, but the chips are not concentrated enough. The on-chain holders of DOG remain stable at over 70,000, ranking third in runes. Since the main liquidity is on centralized exchanges, the actual number of holders should still be the first. The number of holders is large, and the consensus is strong. However, the largest holding ratio of on-chain addresses is about 1.69%, and it has been continuously reducing recently. Only 5 addresses hold more than 1%, and the fifth-ranked address is increasing its holdings rapidly. However, the overall concentration of chips is not sufficient, which may be the reason for the current leading position being clear but unable to enter top centralized exchanges.

![DOG leads rune popularity back, when will the track usher in an outbreak?])https://img-cdn.gateio.im/webp-social/moments-bdb7458e5eaa76cde904f29a4573763d.webp(

9. Price Stability: The price is steadily rising. After consolidating around the bottom of about 0.002, the DOG price has risen steadily and strongly. After stable consolidation at the levels of 0.004 and 0.007, it can further surge, and the buying power in terms of volume and price remains strong even during overall market corrections.

![DOG leads rune popularity back, when will the track see an explosion?])https://img-cdn.gateio.im/webp-social/moments-f34363e2c2e0e61a683f3cb0451e929a.webp(

IV. Summary

1. Rune is a protocol specifically designed for fungible tokens, which is technically simpler, more efficient, and more compatible compared to BRC-20. It has surpassed BRC-20 tokens in terms of trading share and contribution to transaction fees, becoming a new asset form that must be taken seriously.

2. Runes currently primarily serve as meme coins to enhance the attention and capital attraction of the Bitcoin network, holding significance for sustainable development. However, based on the data, a full-blown explosion has yet to occur, indicating further price discovery potential.

3. This article proposes a three-phase, nine-dimensional evaluation system for the rune project. Currently, DOG is in a leading position compared to other targets, but the current chip structure is relatively dispersed, and it may take some time to accumulate before landing on a first-tier exchange.