Thesis

There is a big mis-pricing on Rune Puppets relative to the potential airdrop it may receive. We believe there is a good chance holding Rune Puppets may be much more profitable relative to buying ordinal PUPS and burning for 1:1 Rune PUPS.


Searching for MEME in a new ecosystem

We have new chains launching every week and new memes deploying every minute. However, it takes time for that one specific meme to become the leader and receive everyone’s mindshare. We have seen this playout in multiple coins in the past month from BONK, WIF, PEPE, BODEN, and many more.

Its really hard to pick the right one at the right time. However, a common factor across the main $1 B+ MEMEs are that they are cute (or cringe like PEPE or BODEN). It is easily likeable and that also plays a big factor in increasing community number and stickiness.


RUNES + PUPS (Rune Puppets)

As many of you already know, Runes is easier to understand as a new Bitcoin-based token standard that allows issuances of fungible assets based on UTXO and is much simpler and cheaper to transact (very similar to our current ERC-20 tokens on Ethereum).

https://twitter.com/SovrynBTC/article/1767807510734344638/media/1767806217924005888

Runes is supposed to launch along with the Bitcoin halvening - which is only 4 days away. Therefore, the launch is imminent and many have been front-running the Runes narrative.

There have been mainly three leading mindshare protocols such as Runestone, RSIC, and Rune Puppets. Many other protocols are also joining the meta of promising Rune-based airdrops if they hold the token or collections. Among these, Rune Pups have been a clear winner with the strongest relative strength in the past week.

The Rune Puppet Play

Ansem has already shilled PUPS so this is not a bullish post on the token itself, but a big mispricing that has been around for quite sometime in the past week. There are mainly 2 ways to farm or earn Rune PUPS.

https://twitter.com/PupsToken/status/1778945223101448624

Holding BRC20 PUPS, you will need to burn and receive a similar dollar amount. On the other hand, for Rune Puppets, you will get to keep the Rune Puppet and claim for 23% of the Rune PUPS supply.

No worries, we’ve done the calculations for you.

There are 10,777 Rune Puppets and there are two rarities:

• 10,000 Common Rune Puppets (airdropped to Bitcoin Puppets)

• 777 Rare Rune Puppets (airdropped to O.P.I.U.M)

https://twitter.com/PupsToken/status/1774925460637450417

Although we have no information on what the specific allocations are for each rarities, we can estimate off of the premium rare Rune Puppets are trading over common ones.

Rare Puppets have been trading at around 3-4x premium of common Puppets the past week based on our observation - and because allocations aren’t fixed, we assume a similar token distribution ratio may be a fair distribution plan made by the devs (as they don’t have to fix it until before the distribution).

With BTC at $65.2 K, each Puppets are worth as the following prices

For Rune Puppets, the TS is going to 1 billion tokens, therefore, there is going to a be a 1:100 ratio burn / claim mechanism for current PUPS to Rune PUPS. We can easily calculate the total MC of Rune PUPS through the current ratio of distribution to PUPS and estimate the potential MC distribution to Rune Puppets (~$156 M).

As you can see above, currently just simply multiplying the floor price of Rune Puppets by the supply the MC is around $103 M. However, keep in mind of the 777 Rare ones that are trading at 3.8x premium to common one and the adjust MC of Modified MC still trades at a discount of ~$32 M (~20% discount).

Taking into account the lack of liquidity and difficulty of interacting with Rune Puppets (it was very painful for us atleast), this discount is still quite big relative to PUPS (which is requires less management and interactions).

This is the calculation of potential distribution range for potential airdrop you may be receiving for holding Rune Puppets. As you can see below, based on the total MC that will be dedicated to Rune Puppets and calculating the potential multiple ratio, Rare Puppets may receive over Common Puppets, we are able to estimate how much Rune PUPS each Rune Puppets will receive.

One thing to take note is there is a good chance the Rune Puppets will still remain relatively valued from the community as they are already one of the leading NFTs in the Bitcoin space (and the ‘NFT’ ecosystem as a whole). Therefore, without having to burn your token to receive Rune PUPS, Rune Puppets are a two way bridge of finding exposure in both MEME token and NFT aspect in the Bitcoin ecosystem.

Although we expect heavy selling from speculative buyers and the illiquid nature of Ordinals, overtime there is a good chance Rune Puppets will still remain valuable. Additionally, the current ratio you receive over PUPS distribution is larger than the purchasing amount for Rune Puppets - therefore this is a big opportunity that is not well shared among retail community.

Conclusion

PUPS is the leading MEME in the Bitcoin ecosystem and Rune Puppets are the best way to maximize your allocation within the next 5 days (as long they trade at a relative discount). Although the ratio of distribution is not set in stones at the moment, there is a good chance that range will be within the scenarios we have shared above. Those that have bought Rune Puppets have been up from both the Rune Puppet FP price appreciation and the relative airdrop they receive as the FDV of PUPS increase over time.