Bitcoin Eco Goes 10x Again, What Is the New Asset Protocol Alkanes?

「Methane」 is the most popular term in the recent Bitcoin ecosystem, serving as the first fairly minted token of the new Alkanes protocol in the Bitcoin ecosystem. 「Methane」

The market value of METHANE has exceeded 6 million USD, which means each METHANE is worth over 60 USD. The author inquired with some Bitcoin ecosystem players who participated in the minting process, and there is a significant difference in minting costs. If we take 5 USD per token as the minting cost benchmark, then the profit from minting METHANE has already exceeded 10 times.

In the long stagnant situation of the Bitcoin ecosystem, how did this new asset protocol Alkanes emerge?

Protocol Background

The predecessor of the Alkanes protocol was called Protorunes, which means 「programmable runes,」 and it has the same founder. This thing also briefly caught the attention of the Bitcoin ecosystem last year, and runes were quite popular at that time.

The protocol's founder @judoflexchop is the Chief Technology Officer of the Bitcoin wallet Oyl Wallet. Although the number of users of this wallet in the Bitcoin ecosystem may not be very high, it is still well-known. Just look at its funding situation to understand why:

On March 8, 2024, the Bitcoin infrastructure company Oyl completed a 3 million USD Pre-Seed round of financing, led by Arca, with participation from Foresight Ventures, Arthur Hayes's family office Maelstrom, Domo, UTXO Management, Taproot Wizards CEO Udi Werthheimer, Kanosei, and FlamingoDAO, among others.

With Arthur Hayes's involvement, this wallet quickly gained prominence in the Bitcoin ecosystem. In the middle of last year, Oyl launched a Bitcoin NFT project called 「Airheads,」 which sparked controversy due to the relatively high minting price. In terms of the NFT's price performance, it was considered a 「failure」 project, but recently it has surged nearly three times in value due to the popularity of the Alkanes protocol.

Although they are all wallets, in the Bitcoin ecosystem, most major wallets are not just wallets. For example, OKX, UniSat, Magic Eden, and the main character of this article, Oyl, have various other Bitcoin ecosystem businesses outside of their wallets, with only Xverse having a more "focused" business scope. Returning to Oyl, in addition to the wallet, they have also developed a Bitcoin RPC called "Sandshrew" and the Alkanes protocol.

Currently, Oyl is fully focused on promoting this protocol, and the official promotion has also adopted the name Alkanes:

Reasons for Its Popularity

Alkanes is a new Bitcoin asset protocol. Overall, 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 "customized version of Rune," but it is not. In simple terms, the Rune protocol and the "Runestone" structure are like a closed iOS system, while Protorunes and Alkanes are like open-source Android.

Protorunes corresponds to the "Runestone" of the Rune protocol. Here, "Runestone" is not the highly valuable early NFT of the Rune system but rather a "transaction data encapsulation," in short, a piece of information embedded in a Bitcoin transaction that serves as an index to determine if there is any Rune operation in the transaction.

If the indexer discovers the "RUNES" identifier while scanning the OP_RETURN of each transaction, it interprets the data following the identifier, such as etching, minting, transferring, and so on. The "Runestone" acts as an operational guide, and the indexer derives indexing results based on this guide.

The "Runestone" is exclusively for the Rune protocol's operational guide, directly corresponding to the Rune protocol, unlike Protorunes. Simply put, we cannot instruct the indexer of the Rune protocol to perform such actions directly, saying, "I am a sub-asset protocol based on Runestone; please index me together." However, Protorunes can. Everyone can customize their new asset protocol based on the Protorunes data format, and these protocols will be assigned a "Protocol ID." The indexer will read the "Protocol ID" to determine which protocol's specifications to parse.

There are some modular blockchain launch frameworks like Ethereum's, which make things simpler. For developers, they can just use the tools provided by Oyl instead of having to build their own indexer.

On the smart contract implementation front, before OP_CAT's revival, it was basically limited to storing contract data in transactions and executing off-chain indexes, not deviating too much from that approach.

On a technical level, apart from technology, 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 currently is the Chinese inscription player community. This group is quite unique, as the PvP aspect of Solana meme coins is redundant in the Bitcoin ecosystem, but gaining approval from the Chinese inscription player community is also quite challenging. Once the inscription gains momentum, the spread speed within WeChat groups will be rapid and influential.

Searching for the keyword "Alkanes" on Twitter, one will find that most of the content comes 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 market for the Alkanes protocol, also coming from Chinese hands.

The second reason is that the project team behind this protocol has a background, and according to their disclosed plans, they don't just intend to launch an asset protocol to "funnel" into their own wallet. They also plan to develop 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—a smart contract-supported asset protocol used to build applications around it. Without the backing of the project team to explain this narrative, it's hard to convince people. After all, in the Bitcoin ecosystem, players still feel some pain from Atomicals' decline, and there is too much uncertainty when big things are not done by a mature team.

Protocol Leaders

- METHANE, the first fairly minted token of the Alkanes protocol, currently with a market cap of about $6 million. The Chinese meaning of Alkanes is "alkanes," while the Chinese meaning of METHANE is indeed "methane," so players also mention BUTANE "butane" and HEXANE "hexane," but these two tokens currently have market capitalizations of only around $250,000 each.

- DIESEL, from the official team and also the first token deployed by the Alkanes protocol, currently valued at around $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 produced block by block along with each Bitcoin block, with production halving following Bitcoin's halving schedule. In each block, the miner who submits the highest fee for a DIESEL minting transaction will ultimately receive the block's DIESEL output. In summary, a DIESEL is minted per block, and only one person (the miner whose fee for the minting transaction was the highest) can mine DIESEL in each block. Ordinary players can hardly mint anymore, and scientists will automatically monitor and increase the miner fee continuously.

Since METHANE is fairly launched, the holder base/chip 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 that of DIESEL. Purely based on volume rather than market value, it would feel like METHANE is leading the pack. There is no information available from the official sources about DIESEL's future empowerment. Thus, in terms of community engagement, METHANE is far superior, while DIESEL excels in official background and potential future empowerment expectations.

Conclusion

This protocol is still in its very early stages. Various wallets have not caught up with support for assets of this protocol yet, so it is best to use Oyl Wallet for interacting with assets of this protocol to ensure asset security.

Essentially, the success of this protocol has ticked off all the key success factors of a new asset protocol in the Bitcoin ecosystem — "Mainnet Asset," "Fair Launch," and "Community Support." Additionally, it has "Smart Contracts" and a narrative on the ecosystem layer. In the long-standing quietness of the Bitcoin ecosystem, it has still managed to stand out. Hopefully, the ecosystem can be further developed and progress even further in the future.