1.
Day 3/30 of @THORChain threads
Today : Value capture. Why utility and tokens price don't always go hand in hand and why this benefits $rune
TDRL : We have no comparables for tokens that capture value as a core feature of their mechanism like $luna and $rune
Day 3/30 of @THORChain threads
Today : Value capture. Why utility and tokens price don't always go hand in hand and why this benefits $rune
TDRL : We have no comparables for tokens that capture value as a core feature of their mechanism like $luna and $rune
2.
I will randomly give away a @ThorGuards NFT from my vaults among everyone who retweet the first part of the thread.
(This is a random one, one given might be different)
I will randomly give away a @ThorGuards NFT from my vaults among everyone who retweet the first part of the thread.
(This is a random one, one given might be different)
3.
In real free market capitalism, the most efficient industry has an economic profit that equals zero.
DEFI is the most efficient free market I have witnessed. Almost everything is open source and can be forked almost immediately. This pushes competition and innovation.
In real free market capitalism, the most efficient industry has an economic profit that equals zero.
DEFI is the most efficient free market I have witnessed. Almost everything is open source and can be forked almost immediately. This pushes competition and innovation.
4.
There is no patents to protect you, everything is fair game. If you charge too much fees, you will be forked or copied very quickly.
This creates an environment where the only way you can capture value is that your products directly benefits from it.
There is no patents to protect you, everything is fair game. If you charge too much fees, you will be forked or copied very quickly.
This creates an environment where the only way you can capture value is that your products directly benefits from it.
5.
A high utility doesn't always mean you can charge high fees. $link is the perfect example. They are one of the most important innovations but competition exists.
There are rare occasions where value capture can be beneficial to the users of the protocol.
A high utility doesn't always mean you can charge high fees. $link is the perfect example. They are one of the most important innovations but competition exists.
There are rare occasions where value capture can be beneficial to the users of the protocol.
6.
This is one of the main part of my investment thesis.
I have 4 ranks for value capture, from worst to best.
#4 : Useless governance token
#3 : Application layer (fee generating protocols)
#2 : Layer 1s
#1 : DEFI 3.0 protocols
This is one of the main part of my investment thesis.
I have 4 ranks for value capture, from worst to best.
#4 : Useless governance token
#3 : Application layer (fee generating protocols)
#2 : Layer 1s
#1 : DEFI 3.0 protocols
7.
#4 : Useless governance tokens.
Theses will loose most of their value in the next bear market and never recover. They're purely speculative.
#4 : Useless governance tokens.
Theses will loose most of their value in the next bear market and never recover. They're purely speculative.
8.
- #3 : Application Layer
Generally tokens rely on charging fees directly to the users. That adds friction.. Value capture for all of theses will eventually trend towards zero.
- #3 : Application Layer
Generally tokens rely on charging fees directly to the users. That adds friction.. Value capture for all of theses will eventually trend towards zero.
9.
- #2 : L1 blockchains
There is a reason why most of the top 50 are L1s.
The token is used as currency within the ecosystem. It pays gas fees and is bought, paired & locked in liquidity pools. Every successful application protocol adds more value is capture to the L1.
- #2 : L1 blockchains
There is a reason why most of the top 50 are L1s.
The token is used as currency within the ecosystem. It pays gas fees and is bought, paired & locked in liquidity pools. Every successful application protocol adds more value is capture to the L1.
10.
#1 : DEFI 3.0 tokens
Chains where value capture is part of the utility
The only two tokens I have seen where value capture is a feature and adds more utility is $luna and $rune.
There is no telling where theses new generations of tokens will end up in 5 years.
#1 : DEFI 3.0 tokens
Chains where value capture is part of the utility
The only two tokens I have seen where value capture is a feature and adds more utility is $luna and $rune.
There is no telling where theses new generations of tokens will end up in 5 years.
11.
IMO this is a new paradigm, we psychologically anchor them with $BTC and other legacy tech.
What happens when there is two trillions $ in algo stables out there ?
$luna's mint and burn mechanism creates demand and reduces supply. $luna benefits from all of the L1 capture.
IMO this is a new paradigm, we psychologically anchor them with $BTC and other legacy tech.
What happens when there is two trillions $ in algo stables out there ?
$luna's mint and burn mechanism creates demand and reduces supply. $luna benefits from all of the L1 capture.
12.
That brings us to $rune.
$rune is the pound for pound king of value capture.
It has 6 mechanisms to capture value :
#1 : Nodes collateral
#2 : Liquidity pools
#3 : Synths
#4 : Loan collateral
#5 : Mint & Burn for stables
#6 : TX fees & slippage
#7 : Speculative multiplier
That brings us to $rune.
$rune is the pound for pound king of value capture.
It has 6 mechanisms to capture value :
#1 : Nodes collateral
#2 : Liquidity pools
#3 : Synths
#4 : Loan collateral
#5 : Mint & Burn for stables
#6 : TX fees & slippage
#7 : Speculative multiplier
13.
@THORChain has a unique security design. The goal is to ensure that nodes have no financial incentives to steal liquidity, even when colluding.
#1 : Nodes collateral : The security design of the decentralized DEX forces a high percentage of tokens to be bought and locked.
@THORChain has a unique security design. The goal is to ensure that nodes have no financial incentives to steal liquidity, even when colluding.
#1 : Nodes collateral : The security design of the decentralized DEX forces a high percentage of tokens to be bought and locked.
14.
For $1 of non $rune TVL, nodes must have $2 in bonds.
Once we reach a certain percentage of circulating supply locked in no, this creates a new paradigm : deterministic pricing reflexivity.
Will get to that later and also write a full thread on it.
For $1 of non $rune TVL, nodes must have $2 in bonds.
Once we reach a certain percentage of circulating supply locked in no, this creates a new paradigm : deterministic pricing reflexivity.
Will get to that later and also write a full thread on it.
15.
#2 : Liquidity pools
$rune is needed in liquidity pairs. It's the asset that secures the network.
Every time $1 of non $rune liquidity is deposited in an LP, it buys $0.50 of $rune, sending the asset price up.
#2 : Liquidity pools
$rune is needed in liquidity pairs. It's the asset that secures the network.
Every time $1 of non $rune liquidity is deposited in an LP, it buys $0.50 of $rune, sending the asset price up.
16.
This creates $1.50 of new $rune market cap + speculative multiplier. Once enough $rune is bonded in nodes, this will allow for unlimited security budget as the value of the nodes collateral go up along with the liquidity pools TVL.
This creates $1.50 of new $rune market cap + speculative multiplier. Once enough $rune is bonded in nodes, this will allow for unlimited security budget as the value of the nodes collateral go up along with the liquidity pools TVL.
17.
#3 : Synths custody
There are over $12 B of wrapped bitcoins used by centralized custodians. Having theses in form of synths would bring up the $rune market cap by $18B because of 3X TVL.
There will be a thread going over synth's unique design.
#3 : Synths custody
There are over $12 B of wrapped bitcoins used by centralized custodians. Having theses in form of synths would bring up the $rune market cap by $18B because of 3X TVL.
There will be a thread going over synth's unique design.
18.
#4 : Loan collateral
The ThorFI design will accept yield bearing collateral in LPs and allow you to borrow a stablecoin against it, at no interest. In effect this will create self repaying loans.
#4 : Loan collateral
The ThorFI design will accept yield bearing collateral in LPs and allow you to borrow a stablecoin against it, at no interest. In effect this will create self repaying loans.
19.
There are over $100B in collateral deposited among various lenders like BlockFi, Celcius, Aave, Compound, Anchor and others.
Capturing that liquidity could create an upward pressure of $150B on $rune's deterministic pricing.
There are over $100B in collateral deposited among various lenders like BlockFi, Celcius, Aave, Compound, Anchor and others.
Capturing that liquidity could create an upward pressure of $150B on $rune's deterministic pricing.
20.
Theses loans will be yield generating and interest free. They will have a $mim style design with no liquidations. They will add utility to the protocol by creating deeper liquidity pools and removing slippage.
Theses loans will be yield generating and interest free. They will have a $mim style design with no liquidations. They will add utility to the protocol by creating deeper liquidity pools and removing slippage.
21.
#5: Mint and burn for stablecoins
Like $luna, you will be able to burn $rune to mint an algo stable. The algo stable will be collateralized by the whole network and the exogenous collateral in liquidity pools. This creates buying pressure and a higher speculative multiplier
#5: Mint and burn for stablecoins
Like $luna, you will be able to burn $rune to mint an algo stable. The algo stable will be collateralized by the whole network and the exogenous collateral in liquidity pools. This creates buying pressure and a higher speculative multiplier
22.
#6 : Transactions fees and slippage :
Thorchain has a unique design when it comes to slippage, it will be covered in a later thread. Transactions fees and slippage is locked into the liquidity pools and nodes collateral. Every TX puts $rune buy pressure.
#6 : Transactions fees and slippage :
Thorchain has a unique design when it comes to slippage, it will be covered in a later thread. Transactions fees and slippage is locked into the liquidity pools and nodes collateral. Every TX puts $rune buy pressure.
23.
#7 : Speculative multiplier
Any asset has a high percentage of speculation, it's especially true for crypto. The minimum deterministic pricing is the absolute bottom $rune could be worth, everything else on top of a speculative multiplier.
#7 : Speculative multiplier
Any asset has a high percentage of speculation, it's especially true for crypto. The minimum deterministic pricing is the absolute bottom $rune could be worth, everything else on top of a speculative multiplier.
24.
In case of $rune, this rarely goes under 4x the minimum deterministic pricing.
For $1 of non $rune TVL, $1.5B of $rune value is captured.
A 1 billions dollar $btc in liquidity pools could send up $rune's market cap by 6+ billions.
In case of $rune, this rarely goes under 4x the minimum deterministic pricing.
For $1 of non $rune TVL, $1.5B of $rune value is captured.
A 1 billions dollar $btc in liquidity pools could send up $rune's market cap by 6+ billions.
25.
I expect the speculative multiplier to eventually grow once vision of the network is executed and $rune is shown to be the alpha asset in DEFI.
As the first DEFI 3.0 vertically integrated design, $rune's TAM the highest of any protocols.
I expect the speculative multiplier to eventually grow once vision of the network is executed and $rune is shown to be the alpha asset in DEFI.
As the first DEFI 3.0 vertically integrated design, $rune's TAM the highest of any protocols.
26.
I glanced over the L1s section but there are various levels of capture among them, $eth being the highest.
It's used for TX fees, financial transactions, liquidity pairs and is the even the base LP token in its L2.
$atom or $dot act more like layer 0s and capture less.
I glanced over the L1s section but there are various levels of capture among them, $eth being the highest.
It's used for TX fees, financial transactions, liquidity pairs and is the even the base LP token in its L2.
$atom or $dot act more like layer 0s and capture less.
27.
There is a small tool to visualize deterministic pricing : thorchain.org/fr/getting-sta…
If @THORChain accomplishes the vision there will be a few % of any chain's tokens locked into the liquidity pools. I suggest you play with it.
There is a small tool to visualize deterministic pricing : thorchain.org/fr/getting-sta…
If @THORChain accomplishes the vision there will be a few % of any chain's tokens locked into the liquidity pools. I suggest you play with it.
@THORChain 28.
This thread will self destruct in 30 days, as do all my tweets. Share it and spread the knowledge, save it if you need to get back to it.
You can use any content you see here as your own.
This thread will self destruct in 30 days, as do all my tweets. Share it and spread the knowledge, save it if you need to get back to it.
You can use any content you see here as your own.
@THORChain 29.
If you have any questions, feel free to ask them I will try to answer all of them.
If you like my content, please delegate to my 0 fees $luna node :)
If you have any questions, feel free to ask them I will try to answer all of them.
If you like my content, please delegate to my 0 fees $luna node :)
@THORChain 30.
Some interesting thought : In this case the speculative multiplier could be compared to a P&E ratio.
The P&E ratio is likely to go up once we reach a certain growth curve and market adoption.
Right now it's at 5.58, I've seen it up to 14x.
Some interesting thought : In this case the speculative multiplier could be compared to a P&E ratio.
The P&E ratio is likely to go up once we reach a certain growth curve and market adoption.
Right now it's at 5.58, I've seen it up to 14x.
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