RUNE is the native token of ThorChain, a blockchain protocol for swapping crypto assets across networks. Call it "decentralized liquidity protocol," or "a cross-chain decentralized exchange (DEX)."
It's a unique protocol born of the Cosmos Software Development Kit (SDK), a popular framework for building application-specific blockchains.
In ThorChain's case, that's to serve as an automated market maker (AMM) for swapping assets across disparate chains with RUNE as the baseline pairing peg or settlement asset.
Founded in 2018 at a time when centralized exchanges were viewed as problematic for a host of reasons, security and governance among them, while their decentralized counterparts were seen as simply too illiquid. So ThorChain created an independent blockchain to bridge cross-chain transfers, using Continuous Liquidity Pools (CLPs) aimed at providing market participants liquidity automatically.
Designed to be most liquid in its own ecosystem, RUNE can be utilized several ways with the end result being creating value for the network.
To add liquidity to ThorChain, users can buy RUNE; it's also used for governance and as a way to reward liquidity providers. Additionally, it can be staked to earn fees supporting the CLPs which have their own on-chain and trustless (non-custodial, no third party) "basket" of liquidity.
Participants are incentivized to fill the basket, drawn by the fees earned staking RUNE, upending the centuries-old central exchange market model which requires buyers and sellers to match up. The ratio of RUNE to whatever asset in the CLP that is being paired with it gets tracked by Bifrost, a multi-chain bridge protocol for developers who use multiple blockchain protocols. As an SDK-based, Cosmos-run chain, THORChain is powered by the "Tendermint BFT" consensus mechanism. It also uses Proof-of-Stake (PoS) for defending against "Sybil" attacks, where one bad actor tries to take over a network by creating multiple nodes as fast as you can create a phony Twitter handle.
That PoS element involves a "validators" process (running nodes, confirming transactions) via staked RUNE tokens. THORChain allows token holders to delegate to validators.
The current price of RUNE
As of late September 2021, RUNE was roughly $8 or some 2,000% higher than it was 12 months earlier. It's still 60% off of its all-time high reached in May of 2021.
RUNE's market capitalization is roughly $2 billion, making it the 67th-largest crypto asset, as ranked by CoinGecko.
RUNE began 2021 trading just above $1.24. After going all the way to its ATH ($21.32), RUNE fell fast over four days back down to $6. By July, it was $3. Despite some headline-grabbing security breaches around that time, RUNE began to rally. And between July and late August, it tripled.
How the price of RUNE is determined
Circulating supply: 260 Million RUNE coins; total supply: 500 Million.
The network allows coin holders to participate in staking which generate rewards, these incentives push users to "bond" roughly twice the amount of RUNE provided in liquidity pools, Decrypt explained, and because RUNE is also held in each pool, RUNE’s price increases “deterministically,” naturally increasing as an extension of liquidity growth. The more liquidity deposited into ThorChain liquidity pools, in theory, the more valuable RUNE gets.
What the bulls are saying
* The asset’s price hasn’t been performing so well, but there could be an opportunity to buy the dip and get on the ground of something that’s about to shoot up, said Jimmy Aki, TradingView.
*The attraction of ThorChain is that its chain-agnostic feature allows it to actually swap assets not just synthetic facsimiles as with wrapped tokens. So what ThorChain is really doing is bringing Bitcoin into DeFi, CoinGecko said.
What the bears are saying
In July, ThorChain was hacked twice in one week. The fact that the network functions on such advanced technology makes it vulnerable to exploitation, The Market Periodical said.
This article is for informational purposes only and takes no account of particular personal or market circumstances, and should not be relied upon as investment, tax, or legal advice. For investment, tax, or legal advice and before taking any action you should consult your own advisors. Note that digital assets such as cryptocurrencies present unique risks for investors. Please see our disclaimer regarding risks specific to holding digital assets before investing.
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This content is correct as of September 2021
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