Bitcoin’s transaction fees have returned to more typical levels following a sudden surge triggered by the launch of Runes, a much-discussed protocol facilitating the creation of Bitcoin-based tokens.
Data from Dune Analytics reveals a significant drop in Runes’ daily transaction count, plummeting by 97.5% to 19,000 from a peak of 753,584 on April 23. This decline aligns with Runes’ share of Bitcoin’s on-chain activity decreasing to 30% from 81.3% during the same period.
This reduction in Runes’ activity has offered relief to regular Bitcoin users. Average transaction fees on the network have decreased by 97% to $3.60 since reaching an all-time high of $128 on April 20, coinciding with Runes’ launch, according to BitInfoCharts. This record-high fee marked a staggering 4,375% increase from $2.86 just two weeks earlier.
Ryan Song, head of CoinWestern Ventures, a Bitcoin mining consultancy, attributed Bitcoin’s congestion to a surge in token minting driven by speculation around Runes. Song explained, “The Bitcoin network faced a significant increase in load due to minting activities driven by intense Runes speculation, exerting unnatural pressure on the already limited Bitcoin block space.”
Glassnode reported that on its first day, Runes collected 53% of the $117 million in fee revenue, which dramatically dropped to $1.03 million on April 28, representing a 98% decline since its launch.
Runes launched on April 20, coinciding with Bitcoin’s fourth halving event, causing a spike in network activity as users hurried to deploy tokens using the protocol. Runes aims to improve upon the inefficiencies of the BRC-20 protocol, which allowed the creation of fungible tokens on Bitcoin for the first time in March 2023. While BRC-20 tokens gained rapid popularity, the protocol faced criticism for its data-intensive nature, leading to mempool congestion and increased transaction fees on Bitcoin.
Despite the decrease in Runes activity, the protocol maintains a strong dominance in Bitcoin token activity, accounting for nearly one-quarter of Bitcoin transactions as of May 3. Runes constituted 81% of Bitcoin token transactions, followed by BRC-20 tokens with 12%, and Ordinals with 5.65%.