Bitcoin Ecosystem Sees Another 10x Growth, What Is the New Asset Protocol Alkanes?

「Methane」 is the hottest term in the recent Bitcoin ecosystem. As the first fairly minted token of the Bitcoin ecosystem's new protocol Alkanes, 「Methane」

The market value of METHANE has exceeded 6 million U.S. dollars, which means each METHANE is worth over 60 U.S. dollars. The author inquired with some Bitcoin ecosystem players who participated in the minting process, and there is a significant difference in minting costs. Taking a $5 per token minting cost as a reference point, minting METHANE has generated returns over 10 times.

In the long-standing quietness of the Bitcoin ecosystem, how did this new asset protocol Alkanes emerge?

Protocol Background

The predecessor of the Alkanes protocol was called Protorunes, meaning "programmable runes," and it was founded by the same person. This project briefly drew attention in the Bitcoin ecosystem last year, and runes were popular at the time.

The protocol's founder @judoflexchop is the Chief Technology Officer of the Bitcoin wallet Oyl Wallet. This wallet may not have a large user base in the Bitcoin ecosystem, but it is well-known. Just looking at its funding situation explains why:

On March 8, 2024, the Bitcoin infrastructure company Oyl completed a $3 million Pre-Seed funding round, led by Arca, with participation from Foresight Ventures, Arthur Hayes Family Office Maelstrom, Domo, UTXO Management, Taproot Wizards CEO Udi Wertheimer, Kanosei, and FlamingoDAO.

Due to Arthur Hayes's involvement, the visibility of this wallet in the Bitcoin ecosystem increased rapidly. In the middle of last year, Oyl launched a Bitcoin NFT project called "Airheads," which sparked controversy due to its relatively high minting price. From the NFT's price performance, it was considered a "failure," but recently, it surged nearly 3 times due to the hype around the Alkanes protocol.

Although they are all wallets, in the Bitcoin ecosystem, the major wallets are basically not just wallets. Wallets like OKX, UniSat, Magic Eden, including the main character of this article, Oyl, have many other Bitcoin ecosystem businesses outside of their wallets, with only Xverse's business scope being more "focused." Going back to Oyl, apart from the wallet, they have also created a Bitcoin RPC called "Sandshrew" and the Alkanes protocol.

Now Oyl is fully promoting this protocol, and the official promotion has also included Alkanes:

Reasons for Its Popularity

Alkanes is a new Bitcoin asset protocol. In general, it draws on the "Runestone" structure of the Rune protocol, but with greater scalability and support for smart contracts. As mentioned earlier, the predecessor of this protocol was Protorunes. At first glance, Protorunes may seem like a "modified version of Rune," but it is not. Simply put, the Rune protocol and the "Runestone" structure are like a closed iOS system, while Protorunes and Alkanes are like an open-source Android system.

Protorunes is equivalent to the "Runestone" of the Rune protocol. Here, "Runestone" is not the early Rune extremely lucrative NFT, but rather the "transaction data encapsulation" of Rune, in simple terms, it is a piece of information embedded in a Bitcoin transaction, serving as the basis for determining if a transaction contains Rune operations.

If an indexer scanning the OP_RETURN of each transaction finds the "RUNES" identifier, it will parse the data following the identifier, such as etching, minting, transferring, and so on. "Runestone" is like an instruction manual, and the indexer uses this manual to derive indexing results.

"Runestone" is an instruction manual exclusive to the Rune protocol, and it corresponds one-to-one with the Rune protocol, while Protorunes is different. In more direct terms, we cannot directly instruct the indexer of the Rune protocol to perform such actions, "I am a sub-asset protocol based on Runestone, please index me together," but Protorunes can. Everyone can customize their own new asset protocol based on the data format of Protorunes, and these protocols will be assigned a "Protocol ID" for indexers to read in order to determine which protocol's specifications to parse according to.

There are some modular chain-building projects like Ethereum that make things simpler. For developers, they just need to use the tools provided by Oyl and don't need to build their own indexer.

On the smart contract implementation level, before the revival of OP_CAT, it was basically limited to the approach of storing contract data in transactions and executing off-chain indexes, and the deviation was not too far.

Beyond the technical aspects, there are two main reasons why this protocol could gain momentum. Firstly, it has received strong support from the Chinese inscription player community. Undoubtedly, the most financially capable group in the Bitcoin ecosystem is the Chinese inscription player community. This group is quite special, as the PvP aspect of Solana meme coins is redundant in the Bitcoin ecosystem, but gaining the recognition of the Chinese inscription player community is not easy. Once the inscription gains momentum, the spread speed within WeChat groups will be rapid and influential.

Searching for the keyword "Alkanes" on Twitter, most of the content is from Chinese users, and the protocol's founder has also posted Chinese tweets thanking the Chinese community for their support. The early Bitcoin ecosystem minting tool, iDclub, created a transaction marketplace for the Alkanes protocol, also coming from Chinese hands.

The second reason is that the project behind this protocol is reputable, and according to their disclosed plans, they are not just releasing an asset protocol to "redirect" users to their wallet. They also plan to develop an AMM, BTC staking, stablecoins, MEV tools, and a trustless ZK bridge, essentially creating a BTCFi ecosystem around this protocol.

The entire narrative logic is coherent: an asset protocol supporting smart contracts develops applications around this asset protocol. Without the background of the project team coming out to explain, this narrative would be hard to believe. After all, in the Bitcoin ecosystem, players still feel the pain of Atomicals' decline, and there is too much uncertainty when major initiatives are not undertaken by mature teams.

Protocol Leaders

- METHANE, the first fairly minted token of the Alkanes protocol, currently valued at around $6 million. The Chinese meaning of Alkanes itself is "alkane," while the Chinese meaning of METHANE is "methane," so BUTANE "butane" and HEXANE "hexane" are also mentioned by players. However, these two tokens currently only have a market value of around $250,000 each.

- DIESEL, originating from the official team, is also the first token deployed by the Alkanes protocol, currently valued at approximately $12.6 million. This coin has a unique mechanism, with a total supply of only 1,562,500 tokens, 28% reserved for the team, and 72% being gradually produced with each Bitcoin block, following Bitcoin's halving schedule. In each block, the highest fee-paying DIESEL minting transaction will ultimately receive the DIESEL output of that block. In summary, one DIESEL is minted per block, and only one person (the miner with the highest fee-paying minting transaction) can mine DIESEL per block. Ordinary players are basically unable to mint anymore, and scientists will automatically monitor and increase the miner fees.

Since METHANE is fairly launched, the holder base/token distribution is definitely healthier compared to DIESEL, and it is fully circulating. Therefore, currently on social media platforms, the volume of METHANE is much higher than DIESEL. Looking at volume alone, one might feel that METHANE is the leader. As for DIESEL's future empowerment, the official team has not disclosed more information. So, at the community level, METHANE is far superior, while DIESEL excels in official background and potential future empowerment expectations.

Conclusion

This protocol is still in its early stages, and various wallets have not caught up with supporting the protocol's assets yet. Therefore, it is advisable to use the Oyl Wallet to interact with the protocol's assets to ensure asset security.

The success of this protocol basically brings together the key elements of success for a new Bitcoin ecosystem asset protocol — "Mainnet Asset," "Fair Launch," and "Community Support," combined with "Smart Contracts" and narrative at the ecosystem level. In a situation where the Bitcoin ecosystem has been quiet for a long time, it has still managed to break through. Hopefully, the ecosystem can be further developed and go even further in the future.