Why ThorChain (RUNE) Expects New Price Range
ThorChain (RUNE) is the next altcoin to rally in the past weeks. RUNE rose to a monthly high above $6.51 after a highly active weekend, standing at a one-month high. RUNE also managed to bounce from recent lows around $3.20, showing significant strength while Bitcoin (BTC) struggled to keep the $40,000 level.
RUNE extended the rally into the new week, moving to a new monthly high above $6.95.
One of the reasons for the growth of RUNE is interest in the ThorChain network, especially in carrying DeFi tokens, especially synthetic or wrapped assets.
Synthetic assets, or a form of wrapped coins, have expanded to multiple networks, including Solana, Terra, Avalanche, BSC and others. They are a staple of DeFi transactions, saving on gas fees.
With regulatory pressures rising for proof-of-work assets, wrapped forms of the coins can make the case for a more environmentally friendly way of transfering value. The ThorChain project is also working on improved swapping interface for its V2 exchange.
The ThorChain ecosystem only holds around $280M equivalent, based on DeFi Llama statistics. With the inflow of collaterals, that valuation may grow rapidly. On the day of synthetic asset launch, the 24-hour trading volume jumped to $40M equivalent, and alternative TVL data show a peak above $480M equivalent.
The swaps through ThorChain still require no KYC and have no limitations on volumes, and are not tied to personal accounts beyond ThorChain and other blockchain addresses.
What is the Catch for ThorChain Assets
The synthetic assets on ThorChain are slightly different from wrapped coins and tokens on other networks. They are only 50% backed by the original asset, and the rest is backed by RUNE value.
Essentially, synthetic assets work more like a price-tracking index for a selection of leading coins and tokens. However, their advantage is fast and cheap, almost instant decentralized swapping.
RUNE will also have the advantage of a reserve token, with built-in scarcity and demand as collateral. The upgrade already led to a 35% growth week-on-week for RUNE.
ThorChain Partners with Haven, Terra Protocols
Another source of growth for ThorChain’s influence are recent decisions to partner with other prominent networks.
As DeFi grows, most blockchains strive to create hubs and bridges between their respective networks. This would allow the transfer of assets and easier liquidity flows between decentralized trading systems.
ThorChain is on track to get integrated with Haven Protocol, an anonymous transaction tool and another hotspot of DeFi activity.
But one of the biggest inflows into the ThorChain ecosystem is expected when the integration with Terra (LUNA) finally arrives. This will bring the high demand for LUNA and UST onto the ThorChain blockchain.
LUNA will be a central addition, but also only a milestone on the path of ThorChain becoming a multi-network swapping tool. So far, only Avalanche has completed a similar feat, though through carrying versions of multiple protocols. ThorChain may be the first fully decentralized tool to move between top blockchains.
The current price of RUNE does not yet reflect that value, and the asset has lagged behind other networks. RUNE was also hurt by last summer’s hacks against a bridge smart contract on ThorChain, with hopes of a more secure network with more ambitious DeFi volumes.
ThorChain Plans New Stablecoin
In addition to integrating Terra protocol and LUNA, ThorChain plans to build its own algorithmic stablecoin. The stablecoin issued will rely on a RUNE collateral, again possibly creating significant scarcity.
In case of using RUNE more actively as collateral, it could follow the patterns of LUNA, which has defied bear markets. ThorChain DeFi projects already offer high-yield returns on DAI, one of the first algorithmic stablecoins.
Terra USD (UST) is showing the success track, currently becoming the 14-th largest asset by market capitalization. UST gradually grew to more than 14B tokens, still lagging behind USDT and USDC. But algorithmic stablecoins are becoming more reliable and influential, especially those that have a multi-asset collateral model.
LUNA preserved most of its latest gains, standing above $90, after touching levels around $103. The Terra protocol keeps locking in more value compared to Binance Smart Chain.
The rise of RUNE follows a recent rally for Waves (WAVES), which traded briefly above $30 and retreated to around $26. WAVES is also an asset getting a boost from a new demand for collateral value.
Unlike BTC, more tokens and new altcoins are getting use cases to secure additional assets. Instead of holding and selling, those assets have an incentive for long-term passive gains. New blockchains also displace Ethereum (ETH), chiefly by lower transaction fees and greater speed. The falling ETH price is also causing uncertainties on the DeFi market, as collaterals lose value.
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