Some people fold them so that both edges are showing--the underneath one by only about 1/4-1/2". Some people fold them so that the underneath edge is covered. Some people cut them in half so that they can make two blocks from one hankie. Fold them in half so that they make a triangle. Then fold that triangle in half. Start about 3/4" from the top of the fold that will form the body and sew a basting stitch down to the corner but at a angle so that when you end you're now about 3" from the fold. Press that open and you've formed your butterfly. You can now applique it onto a block and embroider the antenna on. Some people also embroider on a "head".
Since your first seam was a large basting stitch you can take it out and adjust the measurements to suit your own tastes.
If you need hankies you can find them at auctions, estate sales, antique stores or new ones in Amish stores.