How does $1B of BTC ape into Thorchain / Chaosnet if there is only $1.2B $RUNE outstanding (200M RUNE tokens @ $6)? Remember, $1B of BTC in the network requires at least $3B of RUNE to be locked into the network.
How can there be $3B inside when there is only $1.2B total outstanding?
Let’s start with an example BTC:RUNE LP with 10 BTC and 90,000 RUNE. Someone apes 1 BTC into the pool, and now the ratio changes to 11 BTC and 90,000 RUNE (ignoring fees). Now what?
Let’s start with an example BTC:RUNE LP with 10 BTC and 90,000 RUNE. Someone apes 1 BTC into the pool, and now the ratio changes to 11 BTC and 90,000 RUNE (ignoring fees). Now what?
Now 90,000 RUNE is worth 11 BTC up from 10. This change only happened in the LP, and not across all markets.
There is an opportunity to buy cheap BTC from the LP book a quick profit. How does some one / bot get the BTC out of the LP?
There is an opportunity to buy cheap BTC from the LP book a quick profit. How does some one / bot get the BTC out of the LP?
They buy RUNE off an exchange, swap it for the LP BTC and sell the BTC elsewhere. Profits.
To balance out the example pool after the 1 BTC staking, a bot would buy 4,285 RUNE, swap it at a rate of 11/90,000 and receive 0.5237 BTC (ignoring fees).
To balance out the example pool after the 1 BTC staking, a bot would buy 4,285 RUNE, swap it at a rate of 11/90,000 and receive 0.5237 BTC (ignoring fees).
The new pool would have 10.4763 BTC and 94,285 RUNE, bring the LPs valuation of BTC back to where it started.
Every time someone asymmetrically apes into a Thorchain LP, some quick arb bot buys unstaked or unbounded RUNE from an exchange and shoves it into the Thorchain network.
This persistent buying continues until the price*quantity of the RUNE in the LPs exactly equals the value of all non-RUNE tokens in the LP.
To the extent there is a ‘shortage’ of available RUNE outside the Thorchain network, the price of RUNE rises quickly.
To the extent there is a ‘shortage’ of available RUNE outside the Thorchain network, the price of RUNE rises quickly.
Aping and bot-buying. Now imagine 1% of all BTC - $12B - is LPed? Where does RUNE go?
Answer: $12B * 3 = $36B / 200M RUNE outstanding = $180 / RUNE. And in practice, it will end up a lot higher than that. We are going to need big bots - $RUNE Ape Bots FTW
Answer: $12B * 3 = $36B / 200M RUNE outstanding = $180 / RUNE. And in practice, it will end up a lot higher than that. We are going to need big bots - $RUNE Ape Bots FTW
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