On the verge of the Bitcoin halving event, scheduled around April 19, 2024, the cryptocurrency community is witnessing a significant rise in transaction fees and network activity, particularly concerning Ordinals inscriptions. According to venture capital firm DWF Ventures, the transaction volumes on Ordinals, a system that allows more extensive data storage on Bitcoin’s blockchain, have surged in anticipation of the halving and the forthcoming launch of the Runes Protocol.
As detailed by DWF Ventures on X, Ordinals, introduced in January 2023 by developer Casey Rodarmor, has enabled a higher volume of on-chain data and spurred various applications like BRC-20 tokens and the upcoming Runes. Ordinals and its associated NFT collections, including Nodemonkes, BitcoinPuppets, and QuantumCatsXYZ, have seen increased attention due to their integration into the broader Bitcoin ecosystem.
As reported by on-chain tracker mempool.space on April 11, the cost per transaction reached over 90 satoshis per byte, translating to an average transaction fee of $8.50. This growth coincides with a surge in daily Ordinals inscriptions, which have more than doubled the monthly average to 162,000 inscriptions. The total daily fee spent for these inscriptions peaked at $1.24 million.
The Runes Protocol, also developed by Rodarmor, is designed to complement Ordinals by providing a fungible token counterpart that simplifies using Bitcoin’s UTXO model. It aims to reduce the data and storage demands associated with BRC-20 tokens, enhancing efficiency. DWF ventures expect the protocol to attract substantial developer and user interest by minimizing complexities inherent in previous token standards.
Furthermore, the firm highlighted that the Runes ecosystem has been enriched by strategic airdrops, such as Runecoin and PupsToken, which have built robust communities around these digital assets. PupsToken, in particular, has gained traction due to its interoperability with Solana, facilitated by the Multibit Bridge, a protocol linking BRC-20 and ERC-20 tokens.
The enthusiasm around the Ordinals and the Runes Protocol is not limited to technological advancements. DWF notes that users have benefited financially from high-value airdrops, creating a ‘wealth effect’ that strengthens community engagement and loyalty—a critical factor as the ecosystem approaches the halving event.
Amidst this backdrop, analyst James Van Stratten, noted the rising Bitcoin fees and speculated that the halving might soon lead Bitcoin to surpass Ethereum in transaction cost. With the activation of the Runes Protocol set for April 19, the same day as the Bitcoin halving, some analysts expect a new wave of trading activity that could push transaction fees even higher, reaching over $30 per transaction.
