ThorChain (RUNE) Rallies on Record Trading Volumes
An asset that was largely forgotten and displaced in the past few months, ThorChain (RUNE) is now among the most active altcoins. RUNE rose by more than 47% in a week, to trade at $5.35, with expectations of more to come.
RUNE is now expected to repeat its highs above $20, and possibly reach valuations to compete with the likes of Solana (SOL) and Terra (LUNA). In the past day, trading volumes for RUNE rose to above $348M, a record in all of the asset’s trading history.
ThorChain lagged for some time, as it was one of the lesser known networks. RUNE has nothing to do with VeThor (VTHO), an asset belonging to VeChain (VET), an older network dealing with the Internet of Things. ThorChain has goals to break into into DeFi and build up its collateral value.
ThorChain Bridges Build DeFi Value
ThorChain has already built up a protocol for cross-chain liquidity, bridging between several widely used blockchains, including Bitcoin (BTC). The bridging works as a form of decentralized trading.
ThorChain had temporary problems with its cross-chain smart contracts, as hackers attacked some of the assets and took away as much as $8M in ETH. However, the protocol recovered and looks like it’s making a comeback.
ThorChain still has around $186M in value locked, lagging behind the biggest concentrations of DeFi collaterals. One of the drawbacks of ThorChain is that it hosts bridges for assets like Bitcoin Cash (BCH) and Litecoin (LTC) which are more rarely used for DeFi.
ThorChain also does not carry any specific DEX or other collateralized projects. Instead, the protocol itself works to aggregate deposits and perform swaps between its small selection of assets.
Terra Integration Set Off RUNE Rally
The chief source of hype for RUNE is the upcoming integration of the Terra ecosystem and the Terra USD (UST) stablecoin. A similar effect of adding UST worked to lift NEAR Protocol to a higher price tier.
UST is one of the fast-growing stablecoins, specifically used and distributed among DeFi protocols and games. ThorChain will thus carry both LUNA and UST.
In addition to integrating Terra, ThorChain will also add the Cosmos (ATOM) ecosystem, bringing together new sources of collaterals and DeFi activity. The additions arrived some time before the planned tests and a new mainnet launch for ThorChain.
Mainnet Date Not Set Yet
For ThorChain, the event of a full mainnet launch may take some time. There is no set date, but the project will go through a series of testing milestones. The mainnet launch and expansion of the ecosystem is seen as a source of bullish news, possibly lifting RUNE to a much higher tier.
For now, ThorChain RUNE tokens exist on Ethereum and
, with a potential token swap in the future. The most optimistic predictions see the mainnet launch in a month. More realistic time frames see the mainnet launch in the second half of 2022, possibly toward the end of the year.
The news of the Terra integration were still slow to spread, potentially extending the bullish streak for RUNE. The slow reaction follows a period of significant losses and stagnation, as the project reeled from attacks against some of its smart contracts.
ThorChain Network Grows Node Count
ThorChain has aimed to increase community engagement and network security, by encouraging the running of nodes. The falling prices of RUNE have encouraged some node buyers to join the network, with visible inflows over the past year.
Nodes are only one source of ThorChain passive earnings. The blockchain also tries to attract liquidity providers for decentralized trading. Demand for assets like DAI and soon, UST and other coins and tokens, has lifted yields for liquidity providers.
Locking in tokens and coins this way may be riskier, but annualized gains are also high, with around 30% in passive income for some assets. The Binance USD pool (BUSD) offers the highest yield at 54% annualized.
With the addition of the Terra and Cosmos ecosystems, additional liquidity injected into ThorChain may also lift up the price of RUNE. ThorChain has a significant potential upside to attract more liquidity providers.
About 60% of RUNE is locked in some form, with incentives to lock up as much as 80% of tokens in circulation. In that case, liquidity mechanisms will value RUNE based on other assets locked in the protocol. Based on ThorChain swap values, the total value of RUNE when 80% is locked will be three times the value of other assets within the protocol.
However, the short-term rally for RUNE is largely due to trading on Binance, KuCoin and the FTX Exchange, while node operators and liquidity providers still have limited direct effect on RUNE valuations.
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