Inscribing & Etching: Is Still Worth Participating in the Trendy Rune Projects?

With the official Bitcoin halving yesterday, the Rune Protocol was officially launched, and many people were excited about it. As a result, the gas fee of the Bitcoin network was increased. In the first 60 blocks after the halving, transaction fees alone brought miners a new all-time high of $54 million.

So why do so many people participate in Runes despite high GAS? Maybe it was mainly driven by the sudden wealth effect of BRC-20.

Give a simple example:

Bob opened a fishing farm. It is said that he has developed a kind of mermaid. You only need to pay a few yuan to go fishing. However, only a few people went to the fishery after it opened. It was not until later that the mermaids from this fishery were sold in the market. After paying a high price, more and more people paid attention to it, the business in the fishery became increasingly popular, and the trading speculation in various fish markets was also very lively.

Later, Bob decided to open a new fishery, planned to launch an improved mermaid species, and announced his first business hours in advance. So many people were gearing up to be the first to fish. To enhance their advantages, some people bought wooden boats, some bought motorboats, some simply bought aircraft carriers, and some planned to fly fishing… After the new fishing ground was officially opened, everyone rushed to the fishing ground. However, because the number of mermaids was limited, everyone rushed to fight and hyped the ticket price. In the end, the first group of people catches mermaids with each costing $200. For those who come in later, the cost per fish may be $400. Of course, some unlucky people spend money but don’t catch any fish.

Finally, most people excitedly brought their fish to the trading market, only to realize upon arrival that everyone there was fishing and there were no buyers in sight. So, in unison, they shouted the slogan “Fishermen don’t take orders from each other,” and everyone squatted in place, waiting for buyers to enter.

Of course, the fact that such a result has emerged does not mean that these mermaids have no value. Their speculative value still exists, but this market needs to calm down. So, if you want to participate in runes, there’s no need to rush. Perhaps wait a little longer, like half a month, to pay attention to some new opportunities or selectively participate.

Furthermore, because minting runes does not occupy orders, if you fail, GAS will not be refunded. It means whoever has a higher GAS and gets confirmed in the block first can successfully mint the rune, so rushing in at the beginning can be chaotic. For those with a large quantity of runes, there’s no need to hurry to mint them now. You can wait until the GAS on the chain is low before minting.

Currently, there are many tutorials and articles online about minting runes, most of which teach you how to operate but don’t explain why. So, next, we will introduce some basic knowledge of some issues related to runes, which can also be considered an extension of the previous discussion on runes.

1. Why should UTXO be split?

UTXO (Unspent Transaction Output) is a technical term. We have also introduced the specific concept in our previous article. Simply put, it refers to the small amount of tokens remaining after a crypto-asset transaction. For example: say 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 a UTXO is equivalent to the “balance” in your wallet that contains your Bitcoins if you have a UTXO that contains all your Bitcoins, it’s better to split them up so that you can trade at the same time more frequently. To understand it in plain language, you divide the BTC in your wallet into several parts, so that you can quickly mint a few more runes.

To give a simple example, if Alice has 1 UTXO worth 1,000 US dollars, and John has 10 UTXOs worth 100 US dollars, the wallet balance of both people is 1,000 US dollars. If Alice and John mint an NFT worth $100 at the same time, after submitting the casting, they need to wait for on-chain confirmation. Before complete confirmation on the chain, Alice’s wallet shows a balance of $900 but cannot continue to spend because the UTXO is in an occupied state (the last transaction is being confirmed on the chain), and because John still has 9 UTXOs worth $100, he can continue to mint more NFTs.

Currently, many tools can provide UTXO splitting, such as Ordinals Wallet, WizzCash, Luminex, Magisat and other tool platforms. 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 on the avatar in the upper right corner and you will see the asset page. There are several corresponding display items on this page:

The FROZEN BALANCE number represents frozen Bitcoins because they contain inscriptions that prevent users from spending them as regular Bitcoins.

The UTXOS number displayed represents the number of UTXO available in the address. Click on the corresponding number to see the number of UTXO available in the wallet and the number of BTC contained in each UTXO. These UTXOs automatically exclude those parts of UTXOs that contain inscriptions, so they can be split with confidence.

The INSCRIPTIONS number represents the number of inscriptions currently held in the wallet address.

If you need to split, click on UTXOS at the bottom of the asset page and then click on Manage UTXOs and follow the prompts (supports one-to-multiple, multiple-to-multiple, and all-in-one splitting operations). When splitting, you must also consider the current GAS fee of the Bitcoin network. Do not split it into too many pieces. Otherwise, UTXO will be pieced together for payment during transactions, which will increase your GAS cost.

2. Why is it prompted to release UTXO?

The carriers of Inscription and Rune are both UTXO. Their difference mainly lies in the implementation of technology. Inscription is inscribed in the Segregated Witness data, while Rune is etched in OP_RETURN. In plain English, inscriptions and runes are stored in UTXO. Each UTXO not only contains a certain number of Bitcoins, owner information and availability status but also has a certain inscription or rune added, similar to a special check.

Let’s take a simple example to understand: If the face value of your check (i.e. UTXO) is US$100, when you need to use the check to buy something, normally you just need to sign the check and give it to others. Then more refunds and less compensation will be made based on the actual value of the goods. But if your check is not an ordinary check, but has Jay Chou’s autograph (similar to an inscription or rune), then the 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 accidentally spent by you, mainstream wallets such as Unisat, OKX Web3, Ordinals Wallet, etc. have also launched protection mechanisms, which will display the checks in your account into categories: the checks with etched runes will be occupied to prevent you from accidentally spending them.

This is why some people have a question: Although there is still enough BTC balance in their wallet, why does it prompt that the balance is insufficient when making a transaction?

Therefore, you will be given an option to release it at this time. Here is the OKX Web3 wallet as an example:

Click on the BTC balance in the wallet BTC network and click on “UTXO” to see the specific amount of occupied UTXO. Continue to click on a UTXO to see the details of the occupied assets. If you are sure that the Ordinals inside are useless, you can cancel the operation.

Of course, OKX Web3 will also automatically help you identify those worthless inscription runes, and you can directly cancel the operation with one click. As shown below.

After it is released, your corresponding check will become an ordinary check again, and then you can spend it as you like. And if you accidentally cancel it by mistake, you can resume the occupation operation on the “Unoccupy” page before making any transactions.

But here we still need to remind you that before it is unoccupied, you must confirm that the inscriptions and runes contained in your corresponding UTXO are useless and worthless assets. Otherwise, once this part of UTXO is transferred or used as a balance, the corresponding inscriptions will be lost. Rune assets are either sent directly to the receiving address, or are directly spent as Gas (along with the Gas fee sent to the miners), and you are basically unable to get them back.

3. What is the difference between Inscribing and Etching?

Yesterday, when I was reviewing comments, I found an interesting question asked by a friend: why do people talk about inscriptions when minting inscriptions, but now runes are referred to as etching? What’s the difference between inscribing and etching?

Inscriptions = Inscribing, meaning they utilize segregated witness and Taproot technology to “inscribe” content on the Bitcoin network, binding it to specific sats (satoshis), enabling transfer and transaction. Essentially, inscribing treats BTC as storage space. For example, in the case of BRC-20, the transfer process relies on off-chain indexers. To ensure the legitimacy of transactions, the transfer must first pass through inscribing to make the corresponding tokens transferable, then complete the transfer through a second transaction to move the UTXO after inscribing (requiring two steps).

Runes = Etching, meaning a balance of Runes is bound to a UTXO, with data on the balance amount, token symbol, etc., recorded in the OP-RETURN of the transaction. OP-RETURN can be seen as the memo of the transaction (maximum of 80 bytes), and the data contained identifies how many Runes tokens are represented by the UTXO under that BTC transaction. Recognizing these tokens requires a Runes indexer.

From a technical standpoint, runes are superior to inscriptions because, compared to BRC-20 tokens inscribed on sats (satoshis) (which can cause congestion on the Bitcoin network), Runes are more efficient and better suited to the architecture of the Bitcoin network.

However, overall, inscriptions and runes each have their advantages and disadvantages:

The main advantage of inscription is that it’s almost unlimited in size and can have various uses, such as time locks, proof of work, etc. However, its drawback is that the transaction process requires two on-chain operations, and the commint’s duration is relatively long, putting significant pressure on the memepool of full nodes.

The main advantage of etching is its simple and intuitive logic, relatively low transaction costs, and the ability to not occupy the mempool of full nodes. However, it also has drawbacks, such as the very limited data size that OP_RETURN can store (as mentioned above, limited to 80 bytes), requiring highly compressed data encoding, but it is more than enough for issuing coins.

So, in simple terms, the different terms for inscribing and etching are mainly to distinguish the different positions where inscription and rune are inscribed and etched.

4. Is it Still Worth Participating in the Rune Project?

Casey, the developer of the Rune protocol, only hard coded the first Rune (Genesis Rune), so most of the Runes numbered from 1 to 1,000 are minted by some miners or projects. After the launch yesterday, the price of the first 10 Runes skyrocketed directly to a new high.

The names of Runes consist of uppercase letters and dots (·). If two Runes have the same name except for the dots, they represent the same Rune, meaning names without dots cannot be duplicated. Additionally, when the Runes protocol first went online, all token names were 12 characters or more in length. Token lengths of up to 13 characters were gradually released afterward, allowing projects in need to pay (burn) to have shorter token tickers. This was also a design consideration by Casey when developing the protocol, as he hoped to balance the issuance pace of Runes and prevent short-name Runes from being occupied in the early stages. For the first four months after the launch of the Runes protocol, the minimum token name length was required to be at least 13 characters. Afterward, approximately every four months, the minimum name length would decrease by 1 character until the next halving event, at which point Runes containing only a single character could be created.

Next, let’s take a look at the situation of the first 10 Runes individually:

Rune 0: UNCOMMON•GOODS (Genesis Rune)

This Rune belongs to the limited-time unlimited type, deployed by Casey, the founder of the Rune protocol (also the founder of the Ordinals protocol). It takes four years to mine completely, meaning there is selling pressure with each block, and issuance doubles every year. After yesterday’s launch, the gas cost remained mostly above $200. So, if you didn’t manage to get it, there’s no rush to participate now. Participating hastily now is like giving away money. It’s better to wait until gas is low to participate later.

Rune No. 1 Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z

This rune is deployed by FehuLayer (a Bitcoin Rollup project team), with a total amount of 111,111,111, 1 for each share. The project team is 99% pre-mined, and the number of shares to be minted publicly is 1,111,111 (only 1% has been minted ).

FehuLayer spent 6.732 BTC to deploy when they grabbed Rune No. 1, but they directly reserved 99% for themselves when setting up the deployment. Users can only disclose 1% of Mint chips. As shown below. It is not recommended to participate in this kind of thing at the moment, unless the project can launch a fairer airdrop or other gameplay in the future.

Rune No. 2 DECENTRALIZED

The rune was deployed by CyberKongz (an NFT project team), with a total amount of 21 billion. The project team is 100% pre-mined, and it is said that it will be fully reserved and distributed to Prometheans NFT holders.

Rune No. 3 DOG•GO•TO•THE•MOON

The rune was deployed by Leonidas (the founder of Runestone), with a total amount of 100 billion. The project is 100% pre-mined. It is said that it will be fully reserved and distributed to Runestone NFT holders. Each NFT holder can get 889,806 airdrops.

Rune No. 4 THE•RUNIX•TOKEN

The runes are deployed by BVMnetwork (a Bitcoin L2 project) with a total amount of 21 billion. The project is 100% pre-mined and is said to be fully reserved and distributed to 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, 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 has reserved 20% for itself. Users can disclose the remaining 80% of Mint’s 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 Rune No. 6, the project has also reserved 20% for itself, and the remaining 80% has been minted by users.

Rune No. 8 RSIC•GENESIS•RUNE

This rune is deployed by Runecoin (RSIC). The total amount is 21 billion, 100% pre-mined by the project, and it is said that it will be fully reserved and distributed to RSIC NFT holders.

Rune No. 9 LOBO•THE•WOLF•PUP

This rune is deployed by Buoyant Capital. The total amount is 21 billion, 100% pre-mined by the project, and it is said that it will be fully reserved and distributed to Rune doors NFT holders.

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 deployer (you only need to pay 1 GAS fee when deploying). It is not recommended to participate in such projects in the short term, as you may face relatively large selling pressure. If you join, you will basically be a taker. One is 99% pre-mined. It is recommended to wait and see first.

In comparison, it seems that runes No. 6 and No. 7 are relatively fair. One is named Satoshi Nakamoto and the other is MEME. They also seem to be more friendly to the people. However, because the information of the two current deployers is temporarily unknown, and it is not known what kind of people the deployers will be, as for which one you want to participate, you can decide by yourself. The total issuance of both is the same. The main differences are: The SATOSHI is 100 pieces per sheet, and the MEME is 1,000 pieces per sheet. SATOSHI supports decimal places (8 digits, and there are decimals to facilitate splitting and selling of runes), while MEME does not support decimal places.

Moreover, while you are participating, it is recommended that you also consider the current number of holders. If the number of holders of a rune project is relatively small, it means that a community consensus has not yet been formed. For such projects, it is also recommended to wait and see first (or invest in a small amount).

In addition, participating in runes can actually lead to more ideas, such as:

• For the runes that will not be minted quickly, you can choose to participate when the Bitcoin network fee is lower (it is said that at weekends and in late-night hours in North America fees are usually lower), and you can use the lowest fee to place the minting order into a mempool where these orders can wait for a few days before being confirmed.

• Before participating, please carefully understand the casting mechanism of the corresponding runes. Is it time-limited and quantity-unlimited, or quantity-limited and time-unlimited? You can customize different strategies according to different rules. For example, I went to play NCOMMON•GOODS runes yesterday, and I felt like I was being taken advantage of.

• Because the person who created the runes can pre-mine the runes they issued, the proportion of pre-mining can 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-mining behavior or projects with relatively small pre-mining. Generally speaking, I think 5%-10% of pre-mining is more reasonable. Of course, we must also consider whether there are any uses behind the pre-mined part of the project 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 whether you are willing to spend $100 million basic market value to participate in this project in DEX at this time.

Wait… In short, you need to summarize more during the process of participating in runes.

In addition to the first 10 rune projects we mentioned above, in less than two days from the official launch of the Runes protocol (April 20), 3,686 rune projects have been born. As shown 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. And if you want to participate in runes, there is no need to rush now. You might as well wait. For example, it is not too late to pay attention to some new opportunities or selectively participate after half a month. And during this recent period, you can also use some tools to learn more about and study different rune projects and related knowledge.

In addition, the ones 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. Next, there should be various rune project coins (tokens issued by rune-related projects). If you are interested in these, you can further understand and study them.

Therefore, how to conveniently select and research rune items has become a new topic. Here we may need to use some additional necessary tools. In the past two days, I have simply compiled a “Rune Tool Encyclopedia” for you. The list is as follows:

It is still early for us to participate in runes because we are all learning about it.

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