In last week's article, we also wrote about Runes, but it was mainly based on the concept. With the official halving of BTC yesterday, the Rune protocol was officially launched, and many people were busy playing with it, which resulted in the gas fee of the Bitcoin network going up. In the first 60 blocks after the halving, the transaction fees alone brought miners a new historical high of $54 million.
Why do so many people play runes despite high gas consumption? This may be mainly due to the sudden wealth effect of BRC-20.
Let's take a simple example:
Lao Wang opened a fishing farm. It was said that he had developed a kind of mermaid. As long as one paid a few dollars for a ticket, one could go and fish there freely. However, not many people went there after it opened. It was not until later that the mermaids from this fishery were sold at a high price in the market that more and more people paid attention to it. The business of the fishery became more and more popular, and the trading speculation in various fish markets was also very lively.
Later, Lao Wang decided to open a new fishery and planned to launch an improved mermaid variety. He also announced his first business hours in advance. As a result, many people were eager to be the first to go fishing. In order to improve their own advantages, some bought wooden boats, some bought motorboats, some simply bought aircraft carriers, and some planned to fly airplanes to go fishing...
After the new fishery was officially opened, everyone rushed to the fishery, but because the number of mermaids was limited, everyone fought and hyped up the ticket prices as they rushed. In the end, the first group of people who caught mermaids cost $200 per fish, and those who came in later might have spent $400 per fish. Of course, there were also unlucky people who spent money but didn't catch any fish.
In the end, most people happily took their fish to the trading market, but when they arrived they found that everyone there was fisherman, and there were no buyers. So everyone tacitly shouted the slogan "Fishermen don't take orders from each other", and everyone squatted in place waiting for the buyers to come in.
Of course, the current results do not mean that these mermaids have no value. Their hype value still exists, but the market needs to calm down. So, if you want to participate in Rune, you don’t have to rush. You might as well wait a little longer, for example, half a month later to pay attention to some new opportunities or selectively participate.
In addition, because the rune casting will not be locked, the GAS will not be refunded if it fails, that is, whoever has a higher GAS and confirms the block first can successfully cast the rune, so it will be very risky to rush in at the beginning. For those runes with a large total amount, there is no need to rush to cast now, you can wait until the GAS on the chain is low.
At present, there are many tutorials on the Internet about rune playing, many of which teach you how to operate, but do not tell you why for some problems. So next, we will do another basic knowledge supplement for some problems of runes, which can be regarded as an extension of the previous rune topic.
1. Why should UTXO be split?
UTXO (Unspent Transaction Output) is a technical term. We have also introduced the specific concept in previous articles. In simple terms, it refers to the small amount of tokens remaining after a crypto asset transaction. For example: suppose you have 1 BTC and you want to buy something worth 0.1 BTC. After you send 0.1 BTC to the seller, the remaining 0.9 will become your UTXO.
So, since UTXO is the equivalent of the "balance" in your wallet, which contains your Bitcoins, if you have a UTXO containing all your Bitcoins, it is better to split them up so that you can trade more frequently at the same time. In plain words, you split the BTC in your wallet into several pieces so that you can mint more runes quickly.
For example, if Zhang San has 1 UTXO worth $1,000 and Li Si has 10 UTXOs worth $100, the balance of both wallets is $1,000. If Zhang San and Li Si simultaneously mint an NFT worth $100, they need to wait for confirmation on the chain after submitting the minting. Before the chain is fully confirmed, Zhang San's wallet shows a balance of $900 but cannot continue to spend, because the UTXO is in an occupied state (the previous transaction is being confirmed on the chain), while Li Si can continue to mint more NFTs because he still has 9 UTXOs worth $100.
Currently, there are many tools that can provide UTXO splitting, such as Ordinals Wallet, WizzCash, Luminex, Magisat, etc. These tool platforms can all perform operations. Here we take Ordinals Wallet as an example to make a simple explanation:
After connecting to the Ordinals Wallet official website through the wallet, click the avatar in the upper right corner and you will see the asset page. There are several corresponding display items on this page:
The numbers shown in FROZEN BALANCE represent frozen bitcoins, because these bitcoins contain inscriptions that prevent users from spending them as ordinary bitcoins.
The number displayed in UTXOS represents the number of available UTXOs in the address. Click the corresponding number to see the number of available UTXOs in the wallet and the number of BTC contained in each UTXO. These UTXOs are automatically removed from those containing inscriptions, so you can split them without any worries.
The number displayed in INSCRIPTIONS represents the number of inscriptions currently held in the wallet address.
If you need to split, just click the UTXOS button at the bottom of the asset page, then click the Manage UTXOs button, and follow the prompts (supports one-to-many, multiple-to-many, and multiple-to-one operations). When splitting, you should also consider the current Bitcoin network's GAS fee. Don't split it too small. If it is too small, the UTXO will be pieced together for payment during the transaction, which will increase your GAS cost.
2. Why is there a prompt to release UTXO?
The carriers of inscriptions and runes are both UTXOs. The difference between them lies mainly in the technical implementation. Inscriptions are engraved in the isolated witness data, while runes are engraved in OP_RETURN. In plain words, inscriptions and runes are stored in UTXOs. Each UTXO not only contains a certain amount of Bitcoin, owner information, and availability status, but also has a new inscription or rune attached, which is similar to a special check.
Let's take a simple example to understand: if you have a check (UTXO) with a face value of $100, when you need to use the check to buy something, normally you just sign the check and give it to someone else, and then you can get a refund or a supplement based on the actual value of the goods. But if your check is not an ordinary check, and has Jay Chou's autograph (analogous to an inscription or rune), then this check may be worth $1,000. If you accidentally spend it at $100, you will lose money, right?
Therefore, in order to prevent your special check from being spent accidentally, mainstream wallets such as Unisat, OKX Web3, Ordinals Wallet, etc. have also launched a protection mechanism, which means that the checks in your account will be displayed by category, and the checks with inscriptions and runes will be locked to prevent you from spending them accidentally.
This is why some people may have a question: there is still enough BTC balance in their wallet, why does it prompt that the balance is insufficient when trading?
Therefore, you will be given an option to release the occupied space. Here is an example of OKX Web3 wallet:
Click on the BTC balance in the wallet BTC network, click on the "UTXO" button, you can see the specific amount of the occupied UTXO, continue to click on a certain UTXO to see the details of the occupied assets. If you are sure that the Ordinals in it are useless, you can cancel the operation.
Of course, OKX Web3 will also automatically help you identify those worthless inscriptions and runes, and you can directly remove them with one click. As shown in the figure below.
After the lock is released, your corresponding check will become a normal check again, and you can spend it at will. If you accidentally release the wrong lock, you can restore the lock operation on the "Released" page before making any transactions.
But we still need to remind you that before releasing the occupation, you must confirm that the inscriptions and runes contained in the corresponding UTXO are useless and worthless assets. Otherwise, once this part of the UTXO is transferred or used as a balance, the corresponding inscription rune assets will either be sent directly to the receiving address or directly used as Gas consumption (along with the Gas fee sent to the miners), and you will basically not be able to get them back.
3. What is the difference between engraving and etching?
When I was reading the comments yesterday, I found that a friend asked an interesting question: Why is it that when we play inscriptions, we always say "engraving", but now we say "etching" for runes. What is the difference between engraving and etching?
Inscription = inscribe , that is, it uses segregated witness and Taproot technology to enable content to be "inscribed" on the Bitcoin network and bound to specific sats (satoshis), so that it can be transferred and traded. Inscription essentially treats BTC as storage space. Taking BRC-20 as an example, its transfer process depends on the off-chain indexer, and in order to ensure the legitimacy of the transaction, its transfer must first be made transferable through inscription, and then the corresponding inscribed UTXO is transferred through a second transaction to complete the transfer (that is, two steps are required).
Rune = Etch , that is, the balance of a Runes is bound to a UTXO, and the data of the balance amount, token symbol and other information are recorded in the OP-RETURN of the transaction. OP-RETURN can be regarded as a note of the transaction (maximum 80 bytes). The json contained in its data marks how many Runes tokens are represented by the UTXO under the BTC transaction. The Runes indexer is required to identify these tokens.
This is why, from a technical point of view, runes are superior to inscriptions, because compared to BRC-20 tokens inscribed on sats (and causing congestion to the Bitcoin network), Runes will be more efficient and better suited to the architecture of the Bitcoin network.
But in general, inscriptions and runes have their own advantages and disadvantages:
The main advantage of engraving is that it has almost no size limit and can be played in a variety of ways, such as time lock, proof of work, etc. But its disadvantage is that the transaction process needs to be chained twice, the commint duration is also relatively long, and the pressure on the full node memory pool is relatively large.
The main advantage of etching is that its logic is simple and intuitive, the transaction cost is relatively low, and it does not occupy the full node memory pool. But it also has disadvantages, such as the data size that OP_RETURN can store is very limited (as mentioned above, it will be limited to 80 bytes in length), and highly compressed data encoding is required, but it is more than enough for issuing coins.
So, to put it simply, the different names for engraving and etching are mainly just to distinguish the different engraving locations of inscriptions and runes.
4. Is the Rune Project still worth participating in?
Casey, the developer of the Rune Protocol, only hard-coded the first Rune (the Genesis Rune), so most of the Runes numbered from 1 to 1,000 were minted by some miners or project parties. After the game started yesterday, the first 10 runes were directly rolled out of the new sky.
The names of runes are composed of uppercase letters and dots (·). If the names of two runes are the same except for the dots, they represent the same rune, which means that names without dots cannot be repeated. In addition, when the Runes protocol was first launched, the length of all token names was 12 characters or longer. Tokens with a length of less than 13 characters will be gradually released later, so that project parties in need can pay (burn) to have shorter token tickers. This was also the design when Casey developed the protocol, because he hoped to balance the issuance rhythm of runes and prevent short-name runes from being occupied in the early stages. In the first four months of the launch of the Runes protocol, the length of the token name must be at least 13 letters. Thereafter, the minimum name length will be reduced by 1 letter approximately every four months until the next halving event occurs, when runes containing only a single character can be created.
Next, let's look at the first 10 runes:
Rune No. 0: UNCOMMON•GOODS (Genesis Rune)
This rune is of limited time and unlimited quantity type, deployed by Casey, the founder of Rune Protocol (also the founder of Ordinals Protocol), and it takes four years to mine it all, which means that every block is under selling pressure, and it will double every year. After the start of yesterday, the gas cost basically remained above $200. So if you don’t get it, you don’t have to rush to get it. Rushing to participate now is equivalent to giving away money. You can participate when you want to participate when the gas is low in the future.
Rune No. 1 Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z
This rune is deployed by FehuLayer (a Bitcoin Rollup project), with a total of 111,111,111, 1 in each copy. 99% of the runes are pre-mined by the project, and 1,111,111 are publicly available for minting (only 1% and have been minted).
FehuLayer spent 6.732 BTC to deploy when they grabbed the No. 1 Rune, but when they deployed the settings, they directly reserved 99% for themselves, and users can only publicly mint 1% of the chips. As shown in the figure below. This kind of participation is not recommended at present, unless the project party can launch a fairer airdrop or other gameplay later.
Rune No. 2 DECENTRALIZED
The rune is deployed by CyberKongz (an NFT project party), with a total amount of 21 billion, 100% pre-mined by the project party, and it is said that all will be reserved for distribution to Prometheans NFT holders.
Rune No. 3 DOG•GO•TO•THE•MOON
The rune was deployed by Leonidas (the initiator of Runestone), with a total amount of 100 billion. The project party pre-mines 100%. It is said that all of it will be reserved for distribution to Runestone NFT holders. Each NFT holder can get an airdrop of 889,806 runes.
Rune No. 4 THE•RUNIX•TOKEN
The rune is deployed by BVMnetwork (a Bitcoin L2 project), with a total of 21 billion. The project party pre-mines 100% of it, and it is said that all of it will be reserved for Runers by BVM NFT holders.
Rune No. 5 DOG•DOG•DOG•DOG•DOG
The deployer of this rune is currently unknown. The total amount is 100 billion, 100% pre-mined by the project party, and the current distribution method is unknown.
Rune No. 6 SATOSHI•NAKAMOTO
The deployer of this rune is currently unknown. The total amount is 21 billion, and the project party has reserved 20% for itself. Users can publicly mint the remaining 80% of the chips (which have been minted).
Rune No. 7 MEME•ECONOMICS
The deployer of this rune is currently unknown. The total amount is 21 billion. Like the rune No. 6, the project owner has reserved 20% for himself, and the remaining 80% has been minted by users.
Rune No. 8 RSIC•GENESIS•RUNE
The rune is deployed by Runecoin (RSIC). The total amount is 21 billion, and the project party pre-mines 100%, which is said to be reserved for RSIC NFT holders.
Rune No. 9 LOBO•THE•WOLF•PUP
The rune is deployed by Buoyant Capital. The total amount is 21 billion, and the project party pre-mines 100%. It is said that all will be reserved and allocated to Rune doors NFT holders.
in conclusion:
Among the top 10 Rune projects, 6 are 100% pre-mined, which means that when these projects go online, they are all taken by the deployers (only one GAS fee is required for deployment). It is not recommended to participate in such projects in the short term, as they may face a relatively large selling pressure, and entering is basically to be a receiver. One is 99% pre-mined, and it is recommended to wait and see.
In comparison, it seems that runes 6 and 7 are relatively fair, one is named Satoshi Nakamoto and the other is named MEME, and they look more approachable. However, because the information of the current deployers of these two is temporarily unknown, and we don’t know what kind of people the deployers will be, as for which one you want to participate in, you can decide for yourself. The total issuance of these two is the same, the main difference is: SATOSHI is 100 pieces per sheet, MEME is 1,000 pieces per sheet, and SATOSHI supports decimals (8 digits, with decimals, it is convenient for runes to be split and sold), while MEME does not support decimals.
Moreover, while you are participating, it is recommended that you also consider the current number of holders. If a Rune project has a relatively small number of holders, it means that there is no community consensus yet. It is recommended to wait and see for such projects (or participate in a small amount).
In addition, participation in runes can actually summarize more ideas, such as:
- For runes that don't get minted quickly, you can choose to participate when Bitcoin network fees are lower (weekends and late night hours in North America are usually lower), and you can put the minting orders into the memory pool with the lowest fee, where they can wait for a few days before being confirmed.
- Before participating, you should carefully understand the casting mechanism of the corresponding runes, whether it is limited in time but unlimited in quantity, or limited in quantity but unlimited in time, and you can customize different strategies according to different rules. For example, I went to play NCOMMON•GOODS runes yesterday, and I felt that I was a bit of a sucker.
- Because the rune creator can pre-mine the runes he issues, the pre-mine ratio can basically be directly regarded as the amount that will be sold to the market after the casting is completed (selling pressure). Therefore, you can try to choose projects that do not have pre-mine behavior, or projects with relatively small pre-mines. In general, I think it is reasonable to pre-mine 5%-10%. Of course, you also need to consider whether the pre-mine of the project party has more uses that are more conducive to growth or users.
- Make a basic estimate. If a rune requires 1,000,000 castings to complete, and the cost of a single casting is $100, then you should ask yourself at this time whether you are willing to participate in this project with a basic market value of $100 million in DEX.
And so on...In short, you should summarize more when participating in the rune process.
In addition to the top 10 rune projects mentioned above, 3,686 rune projects have been created in less than two days since the Runes Protocol was officially launched (April 20), as shown in the figure below.
As for which other runes are worth participating in, it depends on your own interests. As mentioned at the beginning of this article: runes still have a relatively large hype value. If you want to participate in runes, you don’t have to rush. You might as well wait a little longer, for example, half a month later to pay attention to some new opportunities or selectively participate. In addition, during this period, you can also use some tools to learn more about and study different rune projects and related knowledge.
In addition, the runes we listed above are only runes based on the Runes protocol, and there are various NFT projects in the rune concept (such as Runestone, Prometheans, etc.), as shown in the figure below. In the future, there should be various rune project coins (tokens issued by rune-related projects). If you are interested, you can also go to further understand and study these.
Therefore, how to conveniently select and research rune items has become a new topic. Here we may need to use some necessary tools. In the past two days, I have also simply compiled a "Rune Tool Encyclopedia" for everyone. The list is as follows:
Actually, it’s still early for Runes now, and we are all still learning.
Okay, we will share the content of this issue here for now. This is the 444th article updated by Huali Huawai. We will continue to bring you more related sharing in the future. Interested friends can check and learn more content through Huali Huawai.
Note: The above content is only a personal point of view and analysis, and is only for popular science learning and communication purposes. All projects mentioned in the title or text have no interest relationship with Hualihuawai, and do not constitute any investment advice. The crypto market is an extremely high-risk area, please treat it rationally, improve risk prevention awareness, and abide by the relevant laws and regulations of the country and region where you are located!
