What Is Alkanes?

Alkanes is a “metaprotocol” built on top of Bitcoin, designed to give developers the tools to launch functional smart contracts and programmable tokens — without the constraints of the network’s inherent limitations. The project is developed by Oyl Corp., the team behind the Oyl Wallet. 

Essentially, Alkanes introduces an additional rule-set embedded directly in Bitcoin mainnet transactions — much like how Ordinals and Runes operate.

Alkanes borrows key ideas from both predecessors. From Ordinals, it adopts the method of embedding data into the metadata of Bitcoin transactions via the witness field — commonly referred to as “inscriptions.” From Runes, it takes the Runestone structure for token creation, but with significant modifications aimed at improving flexibility and scalability.

The project launched in 2023 under the name Protorunes (programmable runes) and quickly attracted attention amid the growing interest in Bitcoin-based NFTs and later Bitcoin-native tokens. In early 2025, the Oyl team officially rebranded the initiative as Alkanes, describing it as a meta-protocol that brings smart contracts to Bitcoin through the UTXO model.

How Alkanes Works — and What It Enables

Bitcoin’s scripting system is limited, making it unsuitable for complex on-chain decentralized applications. While DeFi flourished on Turing-complete platforms like Ethereum, Bitcoin remained largely positioned as “digital gold.” Over the years, many projects attempted to expand Bitcoin’s capabilities, but few gained significant traction or widespread adoption.

The landscape began to shift with the emergence of the Ordinals protocol in 2023. Next came the BRC-20 standard. In 2024 Casey Rodarmor unveiled the Runes protocol, which introduced a more refined Runestone structure. Alkanes represents the next evolution of this vision.

The protocol enables developers to embed smart contracts as WebAssembly modules (.wasm.gz) directly into the metadata of Bitcoin transactions. Here’s how it works:

1. Developers write smart contracts in a high-level language such as Rust.
2. Then, it is compiled into WASM, and the resulting file is inscribed into a Bitcoin transaction.
3. An external indexer called Metasrew reads this metadata and “executes” the contract off-chain on a deterministic WASM engine, with the results recorded back on-chain through Bitcoin transactions.

Crucially, Alkanes is fully compatible with the Runes ecosystem. Both Rune and Alkanes tokens can coexist and even be transferred within the same transaction — without disrupting the functionality of their respective indexers. Additionally, already issued Rune tokens can be integrated into Alkanes smart contracts, making them usable in this new programmable Bitcoin ecosystem. 

alkanes is how we make runes programmable. pic.twitter.com/bnUEDWELiq

— Oyl | Building Alkanes (@ViolationHelpX) February 10, 2025

It’s important to note that every smart contract on Alkanes simultaneously functions as a token — meaning it is created following a unified template. According to the developers, this approach was proposed by Andr? Cronier and ensures full compatibility. Whenever assets are transferred to a contract, its code executes automatically, enabling complex action chains within a single Bitcoin transaction.

Alkanes smart contracts can maintain internal state, read token balances, and call each other. Additionally, a contract can access data from its own transaction and block — for example, retrieving the current block miner’s ID or analyzing output scripts — opening the door to implementing more sophisticated spending rules.

In simple terms, Alkanes makes Bitcoin programmable without altering its core rules, because all “smart” functionality is handled at the data-interpretation layer. As of April 2025:

• The protocol is live on Bitcoin mainnet. Alkanes repositories are open to the community, and developer documentation is available. At the time of writing, the protocol runs on the Bitcoin mainnet supporting Taproot inputs for inscriptions, with the Oyl Sandshrew indexer in place.
• The first tokens and contracts have been created. To demonstrate the protocol’s capabilities, several native assets have been launched. The first token, DIESEL, began issuing from block #880000. Later, METHANE was released via public minting. Enthusiasts have also launched other hydrocarbon-themed tokens (Butane, Hexane), although their market capitalization remains modest.
• A native wallet is available. The Oyl Wallet app is currently in beta and accessible to users — it supports Ordinals, Runes, and Alkanes. Through Oyl, users can create and send Alkanes transactions, mint tokens, and manage assets.
• The first marketplace integration is in place. Tokens created with the Alkanes protocol can be tracked and traded on the iDclub platform, which also supports Ordinals assets.

Functional smart contracts and DeFi applications are already in development on Alkanes. The community eagerly anticipates the launch of the first decentralized exchange, Oyl Swap, which is referenced in the project’s technical documentation.

Alkanes, Oyl, and Arthur Hayes

In March 2024, the startup Oyl raised $3 million in a funding round led by Arca. Notable participants included Maelstrom, the family office of Arthur Hayes, and Domo — the creator of the BRC-20 standard.

The Oyl team initially announced plans to use the funding to launch a wallet supporting Ordinals, complete with built-in exchange features. However, it soon became clear that the project’s ambitions were growing — alongside developing the user interface, the team launched their own RPC node called Sandshrew and later began work on a smart contract protocol.

1/8 last year we raised money as a wallet co. but not just to ‘be a wallet’ — we raised to grow the entire bitcoin pie. past mint & transfer. past PVP wars & fragmented metas. we’re building protocols, infra, & communities that work together, not fight each other. pic.twitter.com/EmhocGDf39

— Oyl | Building Alkanes (@ViolationHelpX) December 16, 2024

By December 2024, Hayes noted in one of his essays that thanks to Maelstrom’s investment, he gained early access to a presentation of a “breakthrough smart contract technology for Bitcoin.” Moreover, the investor expressed his hopes that Alkanes would spark a new ICO boom within the Bitcoin ecosystem.

Towards the end of 2024, the project’s account was rebranded from H to Oyl | Building Alkanes, clearly signaling that the wallet and the protocol form a unified ecosystem. Oyl’s role in this partnership is to provide users with seamless interaction with assets and contracts created via Alkanes.

However, early Oyl initiatives received mixed reactions from the community. In August 2024, the team launched the Airheads collection of “Bitcoin NFTs.” After trading began, the asset’s price plummeted sharply from 0.34 BTC to 0.0043 BTC and remained in this range until April 2025.

In recent weeks these NFTs have recovered, with the floor rising to about 0.0064 BTC at the time of writing.

Potential and Prospects of the Project

Although Alkanes is not a radical revolution for Bitcoin, it is the first time developers can deploy complex smart contracts without relying on third-party networks like RGB. Investor expectations are based on the fact that the project:

• Lays the foundation for building all key financial applications on Bitcoin — from decentralized exchanges to lending platforms and stablecoins;
• Supports quite sophisticated contract logic, opening the door to flexible tokenomics configurations and the implementation of other DeFi primitives. The team demonstrated this with their DIESEL token;
• Has already gained strong momentum thanks to community interest, particularly from Asian players in the Ordinals market. The founder of Alkanes even expressed gratitude to Chinese users in their native language. Additionally, METHANE — the project’s first token launched via public mint — attracted notable trader attention;
• Boasts a strong team rapidly scaling the initial project, backed by funds like Arca and Maelstrom, as well as angel investors such as Domo and Udi Werthheimer. This support provides not only financing but also expertise and media presence;

Moreover, Oyl is clearly focused on long-term development: the roadmap includes not just releasing the protocol but also building an ecosystem of applications around it — with mentions of Oyl Swap, MEV tools, bridges, and even Bitcoin staking.

That said, the project is still in its early stages and faces the test of time. The team also needs to convince more wallets and services to support the new standard and attract developers to build decentralized applications within this young ecosystem.

Will Alkanes take off as spectacularly as Runes or Ordinals once did, and kickstart the “ICO boom on Bitcoin” Hayes described? It’s still too early to tell. However, one thing is clear: Alkanes aims to create more than just another wallet for the first cryptocurrency and its ecosystem.