Thread by @familiarcow

One thing that LUNAtics need to know about @THORChain is how it can protect the $UST peg. 🧵👇 (1/13)

THORChain does not actually know the prices of any asset nor does it use an oracle for a price feed. Prices are all derived natively on chain using a special mechanism (2/13)

THORChain is comprised entirely of pools that contain 50% $RUNE and 50% AssetX which can be anything including native #Bitcoin, $ETH, $BNB, $Doge, etc. Or it could include a stablecoin like $USDT, $USDC, or $BUSD (3/13)

Stablecoin pools have a special property. The deepest stablecoin pool on the network is automatically pegged at $1. This is necessary since without an assumption on a price, THORChain would never know the price of $BTC, only the # of Rune equal to an amount of $BTC (4/13)

Because of this, the prices for all coins on THORChain can be given a price using these ratios of Rune and AssetX in the pools. Arbitrageurs can then use these prices and possible discrepancies to correct pool prices and take a tidy profit for themselves (5/13)

Right now, the deepest stablecoin pool on THORChain is $BUSD because of its trivial gas fees. There is $11.7M in the $BUSD pool which gives it power as the “deepest stablecoin” which sets the price of $rune (6/13)

As everyone knows, $luna and $UST will be added imminently to the network (this month).

If $UST becomes the deepest stablecoin pool, two major things will happen: (7/13)

1. The ratio of $UST to $RUNE in the liquidity pool will SET THE PRICE OF RUNE by default.

Essentially, $rune will be priced in terms of $UST (8/13)

2. $UST will be pegged on the THORChain network at $1 by default unless it loses its place as the top stablecoin

It also means that essentially everything on the network will be priced in terms of $UST which includes native #bitcoin (9/13)

Do I think this will happen?

Yes. There is huge demand for a decentralized way to trade precious #bitcoin for decentralized $ust. No one is filling this gap expect for a select few exchanges. Growth and subsequent explosion of decentralized trading will make APYs huge (10/13)

Huge APYs will drive more LPs to participate in the pools and earn a hefty yield on their $UST and $RUNE.

APYs for $BUSD is currently about 29%.

Demand for $UST is much greater than that for centralized $BUSD (11/13)

@THORChain integration on dApps Terra users already know and love will drive mainstream adoption.

Imagine Terra Station having access to native #bitcoin liquidity. And that’s not even the half of what is offered on THORChain. (12/13)

Tag a dApp that should be using @THORChain and share with a #LUNATic who needs to be educated. THORChain adoption is huge and drives us away from the tyranny of CEXs and custodians.

For a decentralized future ⚡️👏
(13/13)