Taproot Efficiency Ratio™
Industry-first metric: ratio of P2TR supply share to P2TR output count share. When < 1, Taproot is predominantly used for dust/protocol activity. When > 1, Taproot carries disproportionate economic weight. 7-day EMA smoothed to filter inscription bursts.
What is it?
The Taproot Efficiency Ratio™ is an industry-first synthetic metric that condenses the 'Taproot Economic Gap' into a single number. It divides P2TR supply share (% of total BTC in P2TR UTXOs) by P2TR output count share (% of daily outputs that are P2TR). A ratio < 1 means Taproot concentrates proportionally less value than activity → dust/protocol dominance. A ratio > 1 would mean Taproot carries disproportionate economic weight (not yet observed). The 7-day EMA filters Ordinals/Runes inscription bursts that distort the daily reading.
How to read
A single line oscillating around (and well below) 1.0. The 1.0 line is the equilibrium threshold: above, Taproot is 'economically efficient'. Below, it's 'protocol-saturated'. In the post-Ordinals regime, the ratio typically evolves in a sub-0.10 range (supply share at sub-1% order of magnitude / output share ~5-15%), meaning P2TR outputs are on average an order of magnitude less value-loaded than non-P2TR outputs. Overlaid BTC price allows correlating market phases with efficiency.
Key zones
Ratio < 0.1: extreme protocol saturation - Taproot is a dust vehicle. Ratio 0.1 - 0.5: emerging economic adoption. Ratio 0.5 - 1.0: transition to maturity. Ratio ≥ 1.0: Taproot has reached economic parity (hypothetical). Brief spikes > 0.1 may mark exchange migrations.
What to observe
The underlying trend is more informative than the absolute level. A ratio moving from 0.02 to 0.05 in 6 months = significant improvement in economic efficiency. Ratio troughs coincide with Ordinals inscription peaks (denominator explodes). Post-trough rebounds show the resilience of P2TR's economic 'base'.
Historical context
The concept of economic efficiency by script type did not exist before this metric. On-chain analysts traditionally aggregate by temporal cohort (HODL Waves) or spatial cohort (whale/shrimp), not by script type. Trinity is the first to systematically exploit the 'script type × economic value' dimension.
Expert notes
Formula: EMA_7d(p2tr_supply / total_supply) / EMA_7d(p2tr_count / total_count). The EMA is applied BEFORE division to avoid zero-division on very low activity days. 7-day EMA was chosen as a compromise after analysis: 3d too noisy (spike captures), 30d too smooth (loses information on rapid migrations). For academic analysis, the median filter would be superior but less visually intuitive.
Common mistakes to avoid
A very low ratio (~0.03) is NOT a negative judgment on Taproot. Lightning Network, Bitcoin's most promising payment layer, heavily uses P2TR for anchor outputs - these are functional micro-UTXOs, not 'spam'. The ratio measures usage composition, not quality. And Ordinals inscriptions have value not captured by satoshis (value is in the inscribed image/text, not the BTC amount).
Programmatic access
REST API
curl -sS \
'https://api.trinityinsights.io/api/v1/onchain/metrics/taproot-efficiency-ratio/data?timeframe=90d' \
-H 'X-API-Key: $TRINITY_API_KEY'MCP server
{
"tool": "get_chart_value",
"metric_id": "taproot-efficiency-ratio",
"timeframe": "1y"
}Required tier: performance. See the pricing grid for the tier list and the MCP documentation for multi-client configuration.
Related metrics
Institutional disclaimer
Trinity Insights is an educational and analytical tool. The metric above does not constitute investment advice. Trinity Insights is not a Crypto-Asset Service Provider (CASP) registered under MiCA Regulation (EU) 2023/1114. See the full disclaimer.