Bitcoin Fees Normalize After Runes’ Coming Out Party Abruptly Ends

Bitcoin’s transaction fees have returned to normal after a brief parabolic spike triggered by the launch of Runes, the hyped protocol enabling the creation of Bitcon-based tokens.

Data from Dune analytics shows that Runes’ daily transaction count tanked 97.5% to 19,000 from an all-time high of 753,584 on April 23. The pull-back coincides with Runes’ share of Bitcoin’s on-chain activity dropping to 30% from 81.3% over the same period.

However, the sharp decline in Runes activity has provided a respite for ordinary Bitcoin users.

Average transaction fees on the network have pulled back by 97% to $3.60 since posting an all-time high of $128 on April 20 coinciding with the launch of Runes, according to BitInfoCharts. The record high marked a 4,375% increase in fees from $2.86 two weeks prior.

Ryan Song, head at CoinWestern Ventures, a Bitcoin mining consultancy firm, told The Defiant that Bitcoin’s Rune-induced congestion was the result of an initial flurry of token minting driven by rampant Runes speculation.

“The Bitcoin network was experiencing a heavy increase in load, which can be largely attributed to minting,” Song said. “A wave of minting operations ensued due to heightened speculation around Runes, placing unnatural demands on the already limited Bitcoin block space.”

On April 29, Glassnode reported that 53% of the $117 million in fee revenue collected by Runes was accrued on its first day. On April 28, daily fee revenue had crashed to just $1.03 million, down 98% since the protocol’s debut.

Bitcoin tokens

Runes went live on April 20, the same day as Bitcoin’s fourth halving event, leading to a bottleneck in network activity that spiked transactions as users raced to deploy tokens using the protocol.

Runes leverages Ordinals inscriptions in a bid to overcome the efficiencies associated with the BRC-20 protocol — which allowed users to create fungible tokens on Bitcoin for the first time when it launched in March 2023. While BRC-20 tokens quickly exploded in popularity, the protocol garnered criticism for being data-intensive, driving mempool congestion, and pushing up transaction fees on Bitcoin.

Despite the sharp decline in Runes activity, the protocol appears to have secured a healthy dominance over Bitcoin token activity — which accounted for nearly one-quarter of Bitcoin transactions on May 3.

Runes made up 81% of Bitcoin token transactions, followed by BRC-20 tokens with 12%, and Ordinals with 5.65%.