Part 3 of my deep dive research series will be on THORChain.
Can $RUNE be the cornerstone of a decentralised future??
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Can $RUNE be the cornerstone of a decentralised future??
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The purpose of this deep dive series is to analyse a number of popular projects and rank them against a set framework. I outline my DYOR framework below.
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As I complete each project, I will update and track scores on my google sheet. You can view for free below.
docs.google.com
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docs.google.com
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Letβs dive inβ¦..
As of 29 Dec 2022
β’ $RUNE
β’ Price = $1.32
β’ Market cap = $398m β Rank 79
β’ Proof of Bond
β’ THORChain (Built on Tendermint & Cosmos-SDK)
β’ All time high = $20.87 (-94%)
β’ All time low= $0.0085 (+15,497%)
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As of 29 Dec 2022
β’ $RUNE
β’ Price = $1.32
β’ Market cap = $398m β Rank 79
β’ Proof of Bond
β’ THORChain (Built on Tendermint & Cosmos-SDK)
β’ All time high = $20.87 (-94%)
β’ All time low= $0.0085 (+15,497%)
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THORChain is a decentralised liquidity network that allows cross-chain swaps. Meaning that you can swap native Bitcoin to native Ethereum without having to bridge assets or use a centralised exchange. This is an extremely important value proposition for a couple of reasons..
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β’ Brings $BTC into Defi
β’ Reduces bridging risk
β’ Reduces custody & counterparty risks
β’ Alternative to CEXs
THORChainβs importance has become even more prevalent after a year of
β’ CEX failures
β’ Bridge Hacks
β’ Ever increasing no. of chains
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β’ Reduces bridging risk
β’ Reduces custody & counterparty risks
β’ Alternative to CEXs
THORChainβs importance has become even more prevalent after a year of
β’ CEX failures
β’ Bridge Hacks
β’ Ever increasing no. of chains
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1. Revenue
There are 2 ways to accrue rewards if you are a Liq Provider or Node Operator.
β’ Block Rewards
β’ Swap fees
All swaps are charged both a fixed network fee, as well as a dynamic slip-based fee in order to prevent denial-of-service attacks or sandwich attacks.
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There are 2 ways to accrue rewards if you are a Liq Provider or Node Operator.
β’ Block Rewards
β’ Swap fees
All swaps are charged both a fixed network fee, as well as a dynamic slip-based fee in order to prevent denial-of-service attacks or sandwich attacks.
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After fees are charged and gas is subsidised, then THORChain computes the block reward and then pays out to Bonders and Liquidity providers.
Over the past year, rewards have been consistently around the 40-50k Rune per day ~ $50k USD
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Over the past year, rewards have been consistently around the 40-50k Rune per day ~ $50k USD
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Trading fees on their own range between 10-15k RUNE per day ~ $20k USD.
Which would put in the top 25 protocols if it had data on token terminal.
8 for Revenue.
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Which would put in the top 25 protocols if it had data on token terminal.
8 for Revenue.
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2. Treasury
From what I could find, the below is the current holdings of the various treasury wallets
β’ RUNE Wallets = 6.27m RUNE = $8.65m USD
β’ Non-RUNE Wallets = $7.88m USD (BTC, ETH, USDT, USDC)
β’ LP Wallets = $18.37m USD (Various LPs)
β’ TOTAL = $34.9m USD
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From what I could find, the below is the current holdings of the various treasury wallets
β’ RUNE Wallets = 6.27m RUNE = $8.65m USD
β’ Non-RUNE Wallets = $7.88m USD (BTC, ETH, USDT, USDC)
β’ LP Wallets = $18.37m USD (Various LPs)
β’ TOTAL = $34.9m USD
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The protocol also has 60m RUNE in standby reserves and ~ 100m RUNE in deployed reserves. Approx. $220m USD.
According to a blog post from earlier in the year, THORChain planned to decentralise the treasury after July 2022 and after some key milestones were met...
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According to a blog post from earlier in the year, THORChain planned to decentralise the treasury after July 2022 and after some key milestones were met...
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β’ Mainnet launched
β’ 100+ nodes
β’ THORFi rolled out
At that point, Treasury plans to hand over full control of the protocol, github, socials and its treasury to mitigate risks posed by centralisation.
medium.com
8 for Treasury.
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β’ 100+ nodes
β’ THORFi rolled out
At that point, Treasury plans to hand over full control of the protocol, github, socials and its treasury to mitigate risks posed by centralisation.
medium.com
8 for Treasury.
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3. Tokenomics
According to coingecko, these are the current supply stats
β’ Circulating supply = 300.7m
β’ Total supply = 500m
β’ Market cap = $398m
β’ FDV = $662m
β’ Market cap/ FDV = 0.6
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According to coingecko, these are the current supply stats
β’ Circulating supply = 300.7m
β’ Total supply = 500m
β’ Market cap = $398m
β’ FDV = $662m
β’ Market cap/ FDV = 0.6
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Initial pre-minted supply was 1b RUNE tokens, distributed through sales, rewards for supplying liquidity, and direct allocations to early contributors.
In Oct. 2019, THORChain opted to burn all of the "unused" reserve RUNE- approx. 50% of supply (500m tokens).
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In Oct. 2019, THORChain opted to burn all of the "unused" reserve RUNE- approx. 50% of supply (500m tokens).
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Overall, the price of RUNE is determined by 2 main factors
1. Deterministic value based on the liquidity within the network
2. Speculative premium
For every $1 of non-RUNE assets on the network, the network incentivizes $3 of RUNE to be locked.
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1. Deterministic value based on the liquidity within the network
2. Speculative premium
For every $1 of non-RUNE assets on the network, the network incentivizes $3 of RUNE to be locked.
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2:1 bond:stake ratio + the 1:1 pool ratio = 3:1 min deterministic value of RUNE.
If you had $1m of non-RUNE tokens staked on THORChain, then the min market cap of RUNE would be $3m.
8.5 for tokenomics.
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If you had $1m of non-RUNE tokens staked on THORChain, then the min market cap of RUNE would be $3m.
8.5 for tokenomics.
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4. Locked up funds
As of early 2022, all tokens have been unlocked for investors, team and operational reserves.
The remaining emissions (~40% supply) is for liquidity incentives and THORNode rewards.
RUNEVault issues 2m tokens per month for staking rewards.
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As of early 2022, all tokens have been unlocked for investors, team and operational reserves.
The remaining emissions (~40% supply) is for liquidity incentives and THORNode rewards.
RUNEVault issues 2m tokens per month for staking rewards.
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Service nodes and liquidity provisioners will receive monthly distributions equal to the below block rewards calculation.
β’ 2/3 block reward goes to service nodes (validators)
β’ 1/3 goes to liquidity incentives
8 for locked up funds.
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β’ 2/3 block reward goes to service nodes (validators)
β’ 1/3 goes to liquidity incentives
8 for locked up funds.
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5. Use case
THORChainβs key value proposition is decentralisation
β’ The ability to swap native assets cross-chain
β’ No user-registration or KYC
β’ No wrapped assets
β’ No reliance on 3rd parties for pricing- transparent, fair
β’ Continuous Liquidity Pools for efficiency
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THORChainβs key value proposition is decentralisation
β’ The ability to swap native assets cross-chain
β’ No user-registration or KYC
β’ No wrapped assets
β’ No reliance on 3rd parties for pricing- transparent, fair
β’ Continuous Liquidity Pools for efficiency
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The native currency, RUNE has specific utility within the THORChain ecosystem, as it fills four key roles:
β’ Settlement Asset
β’ Network Security
β’ Governance
β’ Incentives
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β’ Settlement Asset
β’ Network Security
β’ Governance
β’ Incentives
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Demand for Rune is driven by TVL. Currently this sits at $97m (excl staking)- down from it's high of $500m in April 2022.
2022 has sharply highlighted the need for decentralised exchanges. This will drive more volume to THORChain during the next bull cycle.
9 for Use case.
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2022 has sharply highlighted the need for decentralised exchanges. This will drive more volume to THORChain during the next bull cycle.
9 for Use case.
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6. Roadmap
2022 has been a big year with the following key milestones
β’ Mainnet launch
β’ AVAX & ATOM Integration
β’ Trust wallet integration
β’ Savers Vaults
Savers vaults allows you to earn yield on your native assets through single sided staking. Deposit BTC, earn BTC
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2022 has been a big year with the following key milestones
β’ Mainnet launch
β’ AVAX & ATOM Integration
β’ Trust wallet integration
β’ Savers Vaults
Savers vaults allows you to earn yield on your native assets through single sided staking. Deposit BTC, earn BTC
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In development for 2023 include
β’ Order Books
β’ THORFi (Saving, Lending)
β’ BSC Integration
β’ XHV Integration
8 for Roadmap.
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β’ Order Books
β’ THORFi (Saving, Lending)
β’ BSC Integration
β’ XHV Integration
8 for Roadmap.
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7. Team/ funding
Keeping with THORChains ethos of decentralisation, the majority of the team and community that contribute to the project is largely anonymous- an army of βTHORChadsβ.
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Keeping with THORChains ethos of decentralisation, the majority of the team and community that contribute to the project is largely anonymous- an army of βTHORChadsβ.
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Recently, the transition to mainnet in June 2022 marked the official handover of Thorchain to its community and node operators. The idea of this planned obsolescence was to reduce the risk of a central point of failure.
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Some significant contributors and supporters of the project include
β’ Chad Barraford- technical lead and core dev.
β’ Erik Voorhees- Supporter/ spokesperson
β’ Nine Realms- Supporting the THORChain ecosystem
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β’ Chad Barraford- technical lead and core dev.
β’ Erik Voorhees- Supporter/ spokesperson
β’ Nine Realms- Supporting the THORChain ecosystem
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There were four main funding rounds between 2018-2019 for the project.
Investors involved include Delphi Digital, Multicoin Capital, X21 Capital and Zee Prime Capital.
8.5 for Team/funding.
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Investors involved include Delphi Digital, Multicoin Capital, X21 Capital and Zee Prime Capital.
8.5 for Team/funding.
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8. Summary
TLDR for each category's score out of 10.
8 Revenue β Down from ATHs but consistent fees
8 Treasuryβ Diversified, transitioning to decentralised- clarity needed
8.5 Tokenomics β Fixed supply, reliant on TVL
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TLDR for each category's score out of 10.
8 Revenue β Down from ATHs but consistent fees
8 Treasuryβ Diversified, transitioning to decentralised- clarity needed
8.5 Tokenomics β Fixed supply, reliant on TVL
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8 Locked up funds β 60% in circulation, investor tokens all unlocked
9 Use case β DeFi leader, unique value prop
8 Road map β Mainnet launched, community driven
8.5 Team/ funding β Mostly anon team, focused on decentralised
TOTAL- 8.4 weighted avg score.
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9 Use case β DeFi leader, unique value prop
8 Road map β Mainnet launched, community driven
8.5 Team/ funding β Mostly anon team, focused on decentralised
TOTAL- 8.4 weighted avg score.
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Overall, I am really impressed with the project and their continued focus on decentralisation. They have a very unique value proposition in allowing users to swap native tokens cross-chain without bridging or using a CEX.
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My only concerns are around how the project will run as a DAO and still maintain drive and momentum to capture increased TVL.
I'd like more info around how they plan to transition control of the treasury and protocol to the community.
RUNE is on my watchlist for 2023.
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I'd like more info around how they plan to transition control of the treasury and protocol to the community.
RUNE is on my watchlist for 2023.
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The purpose of this thread is for education and research, not investment or financial advice.
The current macro conditions are still very choppy with the risk of recession in 2023 and a tightening Fed so please be cautious out there frens.
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The current macro conditions are still very choppy with the risk of recession in 2023 and a tightening Fed so please be cautious out there frens.
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If you enjoyed this thread, please follow these accounts for more about the project.
@THORChain
@ninerealms_cap
@CBarraford
@ErikVoorhees
@ChadThoreau
@TheRuneRanger
@THORSwap
@crypto_linn
@Dynamo_Patrick
@cryptoismyjam
@bluecollarchain
@drakeondigital
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@THORChain
@ninerealms_cap
@CBarraford
@ErikVoorhees
@ChadThoreau
@TheRuneRanger
@THORSwap
@crypto_linn
@Dynamo_Patrick
@cryptoismyjam
@bluecollarchain
@drakeondigital
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That's a wrap!
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