What Is THORChain (RUNE)?
RUNE is the native token of THORChain, which is a decentralized network that enables users to quickly swap crypto between several chains without giving up complete control of their holdings. They can easily transfer tokens between different Layer-1 blockchains without wrapping or pegging their assets.
The seamless tokens swaps between various chains are ensured by employing such technologies as:
- A State Machine that delegates outgoing transactions and manages the logic behind asset exchange;
- One-way State Pegs that allow syncing state from external chains;
- The TSS protocol that enables distributed threshold key-signing;
- The Bifröst Signer Module that processes chain-specific transactions.
Apart from utilizing the platform for swapping tokens, users can also become liquidity providers (LPs) by supplying liquidity to various pools. Liquidity providers are rewarded with RUNE tokens from the Continuous Liquidity Pool (CLP). Besides, the THORChain crypto project employs a slip-based fee mechanism, which secures the liquidity provided by LPs in order to prevent impermanent losses.
If you're interested in the current THORChain price, check out the RUNE price chart above.
The Developers of THORChain
The development of the THORChain crypto project is unique in comparison to other similar projects. The network doesn't have any official founders, directors, CEOs, or other controlling entities. In fact, most of the people that are actively working on the project are anonymous. This is the case because the development of THORChain is managed using Gitlab, where nodes decide which codebase should be used.
As explained by THORChain's tweet, developers work for the nodes by releasing code that increases the value of the system. By protecting assets and being active, nodes support liquidity providers. Then, liquidity providers bring capital and place it on the market for swappers and arbitrageurs. Arbitrageurs and swappers stimulate the economy by paying fees.
Thus, the whole project is not profit-orientated, which means that the THORChain price value of all fees generated on the network is distributed among node operators and liquidity providers.
The project was officially launched in 2018. At the time, the RUNE price was around $0.01, and the asset was showing very low volatility. However, this changed in late 2020, when it started seeing more market activity.
The first significant market event occurred in the final days of December 2020. Then, the THORChain price surpassed $1 for the first time. In 2021, the asset peaked at $17.
How Does THORChain Function?
Cosmos SDK was used to develop THORChain. It is an open-source framework used to develop multi-asset public Proof-of-Stake (PoS) blockchains. Besides, THORChain uses Tendermint Byzantine Fault Tolerance (BFT) as its consensus mechanism to secure the network against Sybil attacks.
Tendermint provides THORChain with a novel BFT PoS consensus mechanism. How does it work? In essence, a large group of system validator nodes cooperates to propose and approve new transaction blocks. If you want to run a validator node, you must have high-performance hardware and software, in addition to staking at least 1,000,000 RUNE coins. However, if you're unable to do that, you can also delegate your THORChain tokens to validators, thus entitling them to share a portion of each block reward they get.
The Purpose of RUNE Coins
The RUNE token powers the whole THORChain crypto project. The following are the main functions of THORChain coins:
- Governance. Owners of RUNE tokens can select which asset or chain they want to prioritize. They vote by providing liquidity to the pools of the assets they want to prioritize.
- Security. Node operators must bond twice as many RUNE as they contributed to a pool in order to assure security. To guarantee that the node operators act in the network's best interests, the RUNE bonds are kept as collateral.
- Settlement asset. To enable swaps between different liquidity pools, the RUNE token acts as a settlement asset. This means that the value of a certain asset reserve held in a liquidity pool must be equal to the value of RUNE tokens.
- Incentives. Swap fees and block rewards are paid in RUNE coins.
- Payment for fees. RUNE coins can be used to pay for gas fees.
If you're considering buying RUNE tokens, bear in mind that the THORChain price is prone to fluctuation. This happens because the asset is affected by the overall fluctuation of the crypto market, often following the trends set by major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH).
Tokenomics of RUNE
The max supply of THORChain tokens is 500 million RUNE. The asset is deflationary, meaning that the RUNE price will gain more value as the available supply grows shorter.
In July 2019, THORChain held an initial DEX offering (IDO) on the Binance exchange, during which 20 million RUNE tokens were sold. However, before this IDO, there were some other funding rounds organized, which overall resulted in 130 million RUNE tokens being sold.