Thread by @KyleKrason

Could #RUNE @THORChain reach $46.80 per coin in the next bull run?

That’s a very specific number for a reason 😀

In this thread I’m going to make the case for it.
(Not financial advice)

Let’s go.

🧵 1/20

Upward price pressure is going to happen because of AT LEAST 3 reasons. In no particular order:

1. Swap volume
2. Nodes bonding to secure the network
3. Single-sided staking

Let’s tackle each of these.

Reason #1: Swap Volume

The whole point of THORChain is to become a multi-chain liquidity resource for all of DeFi, ESPECIALLY for native L1 assets.

Think swapping BTC to AVAX directly, without a bridge and without wrapping any assets.

Non-KYC, and pure heaven.😇

As swap volume increases this will drive up the fees in the Liquidity Pools.

Imagine that the BTC pool starts to earn 25%. That’ll attract more people to join the pools.

Deeper liquidity, less slippage, more trading = deeper liquidity… and the flywheel continues. 🕳

It may not seem obvious now, but this will be important here in a bit.

Stick with me.

Reason #2: Nodes buy RUNE to secure the network

For every $1 of non-RUNE assets in the pools, nodes have to bond 2X the value to secure the network.

For example if there is $20k worth of BTC in the BTC pool, nodes have to bond $40k worth of RUNE.

Keep in mind HALF of the pool is already RUNE as well.

Maths:

Pool with $20k BTC has $20k RUNE in it
PLUS the $40k RUNE needed for nodes to bond.

That means for every $1 of non-RUNE assets in THORChain pools there is $3 worth of RUNE in the system. 👀

That last point was MASSIVE.

If we go back to Reason #1 (swap volume), you can now see why more swap volume leading to deeper pools creates upward price pressure on RUNE.

As more non-RUNE assets are added to pools, the nodes have to buy more RUNE to secure the network!
➡️

Reason #3: Single-sided staking

This should be released by the end of the year.

Currently, for a person to earn yield on their BTC they would need to go into the BTC/RUNE pool and have exposure to RUNE itself...

Or use WBTC on Ethereum... gross.

Some people don’t want Impermanent Loss exposure (understandably) by adding to a pool.

However it’s worth mentioning that after 100 days, impermanent loss is 100% protected. 👇

https://twitter.com/KyleKrason/status/1549393761792409601

Single-sided staking will work something like this:

- You want to add BTC to the pool with no RUNE exposure
- I want to add RUNE without BTC exposure

THORChain becomes "Tinder for liquidity pairs" 😘 and matches us up so that the assets are still productive and we both get what we want:
Single-sided yields

Imagine the amount of BTC liquidity this would attract... 🤯

Not to mention liquidity for other coins as well.

Where else can you earn single-sided yields on your Native BTC? Nowhere!

Pop Quiz:
What happens as more liquidity is added to THORChain?

Nodes buy more RUNE! (number go up)

Now what you’ve been waiting for. Let’s solve the equation for this $46.80 RUNE price...

There is currently about $65m worth of non-RUNE assets on THORChain

(man this bear market is really taking the wind out of some sails)

Let’s assume a few things that could lead to a 20x from the $65m non-RUNE TVL currently in THORChain:

- Addition of more chains for volume (AVAX, HAVEN, BSC)
- Single-sided staking (attracts liq.)
- 5x average increase in non-RUNE asset prices
- DEX aggregation increasing volume

A 20X would mean our $65m would increase to $1.3bn worth of non-RUNE assets in the pools.

Due to the system design we just covered, that means there would be 3X that amount of RUNE in the system: roughly $3.9bn

Let’s be hella conservative and say that all 500m RUNE tokens are in circulation (it’s currently around the 320m mark).

$3,900,000,000 / 500,000,000 = $7.80

This becomes the FLOOR PRICE for RUNE (or what’s also called the “deterministic value”)

$7.80 is still a 4X from current price at the time I'm writing this, but we aren’t done yet.

RUNE is never trading at the floor price. It’s always trading at a “speculative multiplier” above that.

Oct 2021 it was 9, and right now it's 3… so let’s go ahead and call it a 6.

RUNE Price based on all the assumptions?

6 x $7.80 = $46.80

Of course this is just a model based on my own assumptions and to ME, it's a conservative model.

*Not financial advice, DYOR

I’m just a regular idiot and have no crystal ball, but RUNE appears to be a strong bet with a real use case.

Hopefully aside from “wen moon?” excitement you learned a little bit more about THORChain from the thread

✌️

If you like RUNE I recommend giving these folks a follow:

@ChadThoreau
@THORmaximalist
@Asian0xV
@iceman00008
@familiarcow