1/ Let’s look at Thorchain / $RUNE and the opportunity to stake into the BTC:RUNE LP from the point of view of a BTC OG with sizable bags. Our BTC OG is curious, willing to learn-by-doing, and stakes 2 BTC into the LP. Why?
2/ As outlined here -
https://twitter.com/SlawTeh/status/1376600296319778817- the LP rewards could generate a significant economics (as in more BTC). And what BTC OG doesn’t want more BTC? The BTC:RUNE LP will literally buy the OG more BTC.
3/ So what happens when 2 BTC is staked? Two BTC go into the pool in exchange for an allocation of pool shares. The pool is balanced 50% BTC and 50% RUNE, so it’s as if the OG sold 1 BTC for the equivalent amount of $RUNE - a token. A nfw jfc token! Insert scream emoji here.
4/ Token PTSD is understandable. But to our OG, it was only 2 BTC, and this is a learn-by-doing experiment. Now he has Pools Shares, access to the LP economics, and exposure to RUNE.
What is this POS RUNE token that the OG will have to live with?
What is this POS RUNE token that the OG will have to live with?
5/ The first aspect of RUNE is that its value simply mirrors all the non-RUNE tokens in the network. See here for more detail -
Since BTC will dominate the non-RUNE LP value, RUNE price action has to fundamentally mirror BTC.
https://twitter.com/SlawTeh/status/1375931372255252480
Since BTC will dominate the non-RUNE LP value, RUNE price action has to fundamentally mirror BTC.
6/ The OG’s LP exposure is 50% pure BTC and probably 35% mirrored BTC. Trading into the LP may only dilute the exposure to pure BTC by 15 percentage points. Not much of a gamble.
And what is gained for such a gamble?
And what is gained for such a gamble?
7/ The other significant aspect of RUNE is exposure to growth of non-RUNE TVL. For example, a conservative estimate of RUNE’s price if non-RUNE TVL grows to $1B is that RUNE has $20 of baseline value and at least $10 of a speculative premium (details at thread's end).
8/ Thirty dolla RUNE - maybe that’s something to be exposed to!
Some obscure DeFi projects get this much TVL in their first month. When the training wheels come off of Thorchain, there will be many weeks where it gains more than $1B.
Some obscure DeFi projects get this much TVL in their first month. When the training wheels come off of Thorchain, there will be many weeks where it gains more than $1B.
9/ If RUNE races from $7.50 to $30 while BTC’s price remains unchanged. The BTC OG’s LP value doubled, and is now worth the initial 2 BTC and an equivalent value of RUNE. The whole position could be sold for 4 BTC. The RUNE in the LP functionally bought more BTC. More BTC FTW!
10/ So, BTC OGs should experiment. They will look like apes to the rest of us. They got here first. We should respect their bags.
They should stake into the BTC:RUNE pool and literally watch it buy them more and more and more BTC.
They should stake into the BTC:RUNE pool and literally watch it buy them more and more and more BTC.
11/ Maybe the OG could conclude RUNE FTW and set aside the early, less flattering abbreviations. And who doesn’t love more BTC? As a RUNE OG, I know I do.
12/ Footnote on $1B non-RUNE TLV = $20 RUN baseline value: $1B * 3 = $3B of determined network value. Estimate that 150M RUNE are in the Thorchain network.
13/ $3B / 150M RUNE = $20 per RUNE of baseline value. Speculative premiums are likely to be multiples not fractions of the baseline value. So the $10 speculative premium is simply silly.
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