Bitcoin Transaction Fees Dive After Halving, Runes NFT Prices Tumble

Post-Bitcoin halving, network transaction fees have significantly decreased, stabilizing at $34.80, despite the initial surge to $128.45. However, the highly anticipated increase in fees due to the launch of the Runes NFT collection and protocol has not materialized, resulting in a notable drop in the floor prices of Runes NFTs. This indicates that the expected surge in transaction fees, which could have counteracted the halving-induced revenue reduction for Bitcoin miners, has not come to fruition.

Bitcoin Transaction Fees Plummet Post-Halving, Runes NFT Prices Tumble

In the aftermath of Bitcoin's fourth halving, transaction fees have witnessed a significant decline, contrary to earlier expectations. The average transaction fee has plummeted from a record high of $128.45 to $34.80.

Halving Impact on Transaction Fees

During the halving, the average transaction fee spiked due to increased network activity, reaching a record high on April 20, 2024. This surge was attributed to the launch of the Runes protocol, a new innovation on the Bitcoin blockchain.

However, following the initial surge, transaction fees have normalized. The significant reduction in fees suggests that the anticipated increase in transaction fees through Runes has not materialized as expected.

Industry Response to Runes

The launch of the Runes protocol was anticipated to stimulate increased on-chain activity, thereby generating increased transaction fees. However, the market response in the days following the halving has been underwhelming.

The floor prices for the Runestone NFT collection have plummeted by nearly 50% in the last 24 hours. In contrast, ordinal collections such as Bitcoin Pullets and NodeMonkes have experienced gains, indicating that Runes has not proven to be the robust revenue source many had hoped for.

Financial Health of Public Blockchains

The financial health of public blockchains can be evaluated using the following formula:

Net Profit = Transaction Fees – Security Costs

A blockchain that generates more transaction fees than its security costs operates at a financial surplus, indicating sustainability. Conversely, a deficit occurs when security costs exceed transaction fees, raising concerns about sustainability.

Transaction Fees Comparison

Ethereum (ETH): ETH transaction fees are based on "gas," which determines the computational resources required for transactions. The current fee model involves a base fee, which is burned, and a tip, which is paid to miners for priority processing.

Bitcoin Cash (BCH): BCH has a larger block size than Bitcoin, allowing it to process more transactions per block and maintain very low transaction fees, typically less than a penny.

Litecoin (LTC): LTC prioritizes transactions based on "coin days destroyed," allowing some transactions to be processed without fees. A nominal fee applies to transactions that do not meet the priority threshold.

Dogecoin (DOGE): DOGE has implemented a new fee structure to reduce transaction costs and encourage node operators to relay transactions with lower fees to miners.

Solana (SOL): SOL's fee system consists of a base fee and a per-signature fee. The base fee covers storage costs, while the per-signature fee is based on the number of signatures in a transaction.

Polygon (MATIC): Polygon's fee structure involves the StdTx model, which allows developers to build applications without incurring transaction fees for every operation, and the Bor Fee Model, which applies to certain types of transactions.

Conclusion

The post-halving decline in Bitcoin transaction fees and the underwhelming performance of Runes NFTs suggest that the anticipated revenue surge from the protocol has not materialized. This raises questions about the sustainability of blockchains that rely heavily on transaction fees for financial support.

As the cryptocurrency market evolves, it remains to be seen whether Runes and other innovative blockchain protocols can generate sufficient revenue streams to support their long-term viability.