Thread by @matrix_qzx

25/ How a bank run can occurs (correct me if I am wrong) when the price of $RUNE falls greatly, THOR.USD holders may be afraid of depeg risk and hence redeem RUNE with THOR.USD, the dilution of RUNE’s supply will hence lead to a further price drop which causes a death spiral.

26/ As stated before, RUNE-USD pool guarantees that THOR.USD is the most attractive stablecoin to use due to it having the most liquidity.

Also, as THOR.USD is used to buy up $RUNE as it dips to maintain the liquidity, the risk of a death spiral is mitigated.

27/ Another thing to take note of is that when loaning THOR.USD, one is essentially short USD and long crypto. Loaning THOR.USD would make sense if you were afraid of a depeg.

If THOR.USD goes to 0, you would have gained free money if you converted it into other assets.

28/ During an extended bear market, one might also fear that collateral for lending might be withdrawn out which leads to a huge loss in yields for THORSavings. In such a situation, as collateral value is lower than debt value, it is not likely for the borrower to repay the loan

29/ As there are no liquidations, the collateral remains as LP units and yield is still constantly being generated for THORSavings even in a bear market.

30/ Another assumption of this model is that there would be a great demand in borrowing on #THORChain.

I personally agree.

If people are bearish about this model, they can short THOR.USD by borrowing.

31/ If people are bullish about this model, they will also proceed to borrow from #THORChain.

In crypto where leverage is everywhere, who would not want to borrow money when interest rates are 0% and liquidation risk is 0%?

32/ If borrow demand were to be lacklustre, the lending model will shift to self-repaying loans where yields from collateralised LP units are paid to the lender instead of THORSavings.

Block rewards from #THORChain’s network will also be used to subsidise the THOR.USD vault.

33/ #THORChain is also onboarding new assets from different chains such as $LUNA. This can also attract users from other ecosystems to try out THORChain and indirectly increase demand for THOR.USD. It is looking like THORChain might just be the one-stop multi-chain DeFi centre.

34/ TLDR: #THORFi offers interest and liquidation free loans and THORSavings that give reliable yield regardless of market condition.

All of which are powered by an algorithmic stablecoin backed by $RUNE.

35/ To end off, #THORFi still does sound too good to be true and personally I'm still a bit skeptical.

In crypto, we do see supposedly world-changing narratives almost every day. It is very hard to say if THORFi will be as foolproof as it claims to be.

36/ I advise everyone to exercise caution if they were to try it out when it is released, perhaps with a smaller portion of your portfolio and then judge the situation accordingly. Take note of the issues that may arise and see how #THORChain deals with them.

Here's the link to the full draft for #THORFi, I'll update if there are changes in the final whitepaper.

gitlab.com/thorchain/thor…

With that, I would like to thank @CBarraford @ChadThoreau @THORmaximalist @THORChain for all the info that has been put out. I'm sure there's many more THORChads I have missed out as I'm still new to this community.

Also feel free to correct me if I got anything wrong.

If you want to hear more about the hottest things happening in #THORChain and $LUNA, follow @matrix_qzx. I'm still very new to writing threads so shoot me with whatever feedback you have!

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