1/ A new class of users will emerge in the THORChain ecosystem. The network will have network products, and network users. And those new users will be massive. To see this development, let’s unroll the story of developers, node operator and LP depositors first.
2/ Developers are building towards Mainnet. The current beta version is Multi-chain Chaosnet. Expect chaos as it gets battle hardened. Bugs which couldn’t have been found in a testnet environment are showing up. They are getting fixed.
May 5, 2021 • 11 tweets • 3 min read
1/ Thorchain raised its cap on it’s Multi-Chain Chaosnet (MCCN) LPs from 750k to 1.5M RUNE. Within several hours, the LPs quickly hit the new cap.
2/ Here’s a before / after breakdown of the impact:
This one directly refutes then notion that circulating supply of RUNE important to a valuation framework. Sorry to those who insists it does.
2/ The idea that circulating supply matters is a TradFi idea - we value companies / stocks based on fully diluted shares outstanding.
Apr 23, 2021 • 16 tweets • 3 min read
1/ Volumes on global derivative markets are some large multiple of global spot markets - maybe 20X by my SWAG reckoning. Crypto futures are wildly successful products. The options side is developing. Also, there is the whole push to DeFi.
So what about Derivative DeFi?
2/ Sounds like a reasonable investment thesis. I have bought several projects in this space and see them working hard to develop out product offerings that attract volume as scale.
Apr 18, 2021 • 13 tweets • 2 min read
1/ One easily overlooked quality about Thorchain’s network of LPs is that they themselves are agents in the market place (as facilitated by swappers and arb bots). The way that agency expresses itself during a market sell-off is rather interesting.
2/ Perhaps we just saw a great example in the past 48 hours.
A generic scenario: BTC sells off, and alts, because they are less liquid sell off worse. Imagine on the initial downward impulse, RUNE sell off the worst of all the significant Thorchain LP tokens.
Apr 16, 2021 • 6 tweets • 2 min read
1/ Getting many questions, even accusations, about the usefulness of baseline price when valuing $RUNE. Here is a link to a more comprehensive breakdown:
It is a calculation derived from first principals.
2/ Baseline price is not an opinion or point of view. If RUNE’s market price below a certain level, arb bots buy RUNE? Why?
As important, a what price do the arb bots stop buying RUNE? Answer: the baseline price.
Apr 10, 2021 • 31 tweets • 6 min read
1/ This long thread is an exploration on the notion that when you LP into an AMM, you are selling convexity. At the end of a longish abstract thread, I point out some of the ways that Thorchain and its native token $RUNE attenuation this risk.
2/ In finance, convexity is a notion of acceleration. Think of like the arc of ball thrown off the roof of a building. It drops at an accelerating rate. Imagine that ball was an investment, dropping at an accelerating rate. Putting assets into an AMM LP can kinda be like that.
Apr 8, 2021 • 19 tweets • 4 min read
1/ The best metric to value $RUNE - its baseline price - is derived from RUNE’s deterministic value. It measures how much RUNE’s current price is a consequence of the value of the non-RUNE tokens locked in Thorchain’s LPs and how much the price is a speculative premium.
2/ RUNE’s deterministic value is simply three times the non-RUNE value in the network. Why three? Because for every $1 of non-RUNE value in the network, $1 of RUNE is in the LP and at least $2 of RUNE must be bonded by the nodes. For example ..
Mar 31, 2021 • 13 tweets • 3 min read
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 -
- 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.
Mar 29, 2021 • 10 tweets • 3 min read
1/ Staking coins into a RUNE LP captures two types of value - cashflow, and RUNE appreciation. Cashflow has two parts - transaction fees and block rewards. Transaction fees are self-explanatory. Block rewards will create an explosive flywheel effect of value accrual.
2/ Currently, there are 200M RUNE in circulation, and a max total of 500M.
Mar 27, 2021 • 16 tweets • 3 min read
1/ $RUNE - Thorchain’s token - acts like a crypto index fund with network effects, with at the moment, a huge speculative premium. And the speculative premium is deserved because RUNE acts a crypto index fund with network effects. So for some perspective ..
2/ $BTC is off-shored, hard money with network effects. This money with network effects has done pretty well. BTC is also a very narrow purpose enterprise - it secures both the money and the ledger of the money.
Mar 26, 2021 • 9 tweets • 2 min read
There are three aspects to the valuation stack of $RUNE - the determined value, the baseline value, and the speculative premium.
Thorchain requires system nodes bond an amount of RUNE greater in value than the value staked in the LPs. This requirement creates recourse for misdeeds or malfeasance.
Mar 26, 2021 • 8 tweets • 2 min read
How does $1B of BTC ape into Thorchain / Chaosnet if there is only $1.2B $RUNE outstanding (200M RUNE tokens @ $6)? Remember, $1B of BTC in the network requires at least $3B of RUNE to be locked into the network.
How can there be $3B inside when there is only $1.2B total outstanding?
Let’s start with an example BTC:RUNE LP with 10 BTC and 90,000 RUNE. Someone apes 1 BTC into the pool, and now the ratio changes to 11 BTC and 90,000 RUNE (ignoring fees). Now what?
