Bitcoin Taproot Utilization Up As Tokens Like PEPE Explode
On-chain data shows that Bitcoin taproot utilization has increased sharply recently as BRC-20 tokens such as Pepe Coin have exploded in popularity.
Bitcoin Taproot usage has crossed the 43% mark recently
As pointed out by Rafael Schultze-Kraft, co-founder of on-chain analytics company glassnode, Currently, Taproot is being used in more BTC transactions than ever before. “Taproot” refers to a Bitcoin update that was released in November 2021 and introduced some changes to make transfers more efficient and faster.
The update initially saw little use, but over the last few months, it’s seen a lot more use. There are two different metrics available that aim to track the progress of Taproot being accepted: “adoption” and “usage”.
Adoption measures the total percentage of BTC transactions that contain at least one Taproot entry. This indicator, however, is not considered the most reliable, as it does not contain all the information about the effective adoption of the upgrade.
That’s because even if five out of five entries to a transfer use Taproot, that transaction’s adoption weight will still be the same as a transfer that has only one of five entries that use Taproot.
Glassnode created the utilization metric to address this issue, and this new indicator tells us how the update is in use, measuring the actual amount of spent exits involving Taproot.
Now, here is a graph that shows the trend in adoption and usage of this Bitcoin upgrade over the last year:
Looks like both these metrics have shot up recently | Source: Rafael Schultze-Kraft on Twitter
As shown in the chart above, these Bitcoin indicators were at relatively low levels until February of this year, when their values suddenly started to explode. The reason behind this increase in the Taproot utility was because of the emergence of Ordinals.
The Ordinals protocol uses Taproot and has found a variety of applications on the blockchain. Thanks to this protocol, a method of entering data such as images, texts, videos and other forms has been developed on the network in the form of Submissions.
Subscriptions quickly became popular on the blockchain, leading to an increase in the use of Taproot. Recently, though, adoption of the upgrade has gone up yet another notch, and all because of another application of Ordinals: BRC-20 tokens.
These tokens use the protocol to write text onto the string representing a fungible token. These coins work similarly to ERC-20 tokens on the Ethereum network, although they have much more limitations.
A large amount of BRC-20 tokens have been minted recently, many of which are meme coins. One of the most prominent examples is the Pepe Coin (PEPE), which has been the talk of the market thanks to its explosive price growth.
As a result of such BRC-20 meme coins becoming very popular recently, Bitcoin Taproot adoption and utilization increased sharply to 63% and 43% respectively.
At the time of writing, Bitcoin is trading around $27,900, down 2% over the past week.
BTC has gone down in the last 24 hours | Source: BTCUSD on TradingView
Featured Image from iStock.com, Charts from TradingView.com, Glassnode.com