Project Surtr — RUNE Burn Program
Announcing Project Surtr — Use-or-burn $RUNE reserves over the next 5 years.
The $RUNE token
The $RUNE token fulfills three purposes:
Liquidity
RUNE is used as the Settlement Currency of BEPSwap and THORChain, solving the O(n²) problem and reducing liquidity pairs to a problem of complexity O(n). This prevents dilution and allows all assets to be linked together.
Security
Of course, any asset can be used as a settlement currency, but using RUNE instead allows sybil-resistant properties of the network to be fostered from the start. This is primarily a function of distribution — ensuring that the RUNE asset is as widely distributed over many aligned individuals as possible.
Governance
Wide distribution over many aligned individuals is even more important when considering that THORChain will be dealing with subjective decision-making. This refers to decisions that cannot be made based on empirical evidence, and instead requires subjectivity — such as hard-forks and loss of fungibility on bridges. This requires balanced input from a distributed group of actors that in collective far exceed Dunbar’s number, so collusion is unlikely and an ecosystem-safe decision can be made.
RUNE Allocations
To achieve the properties desirable of the network, there are multiple initiatives to distribute the token in the best way for the maximum benefit of the ecosystem. They are as follows:
Initial Sales
By selling the token, the team can raise funds to build the early network, as well as establishing a market for the token and price.
Thus 150m RUNE (15%) was allocated through private and public sales, and around 137m was sold over the course of 12 months. 13m unsold RUNE was burnt on 20 July 2019.
Operational Reserves
By having an allocation to pay for the time and efforts of actors involved in building the ecosystem, RUNE can be distributed in yet another way that ensures that aligned actors can be part of the supply.
Thus 130m RUNE (13%) is allocated to pay for the time and effort from anyone who contributes to the project. This will be released over 40 months (3 years). Further OTC sales to strategic partners can also be entertained through this allocation. Note: the team will never perform on-market sales of tokens.
Community Allocation
By allocating tokens to non-sale methods, RUNE can be distributed to incentivising participation in the network by value-adding actors, rather than simply an exchange in capital.
Thus 120m RUNE (12%) was allocated to initiatives such as airdrops, hard-spoons and other incentivisation strategies. This will be released over 60 months (5 years).
Seed Investors and Team
All projects begin being seeded by a small group of people (including Bitcoin), and spreading from there. The first 12–18 months are critical part of bootstrapping any project to ensure survivability so the early team are incentivised with a small allocation.
Thus 100m RUNE (10%) was allocated to early seed investors and team members from MNV, Swishlabs and Chainfuel, and their board of advisors, to be released over 15 months.
Liquidity Emission
When the network launches, validators and bridge nodes will be paid for their resources with a release schedule coded into the protocol. This will be paid from a final allocation of 500m (50%) of the supply. Over 10 years the emission will approach zero to be a fixed supply asset.
This was detailed in the original proposal:
Preventing Supply Shocks
In the case that the team are unable to distribute enough tokens in accordance with the above plan, then it is not acceptable that tokens be left to accumulate in the wallets. This will cause problems later on if large amounts of tokens are left over. It is also not acceptable to simply release them, because this will cause supply shocks to the RUNE market. Because the RUNE token is a settlement currency, it is imperative that it is not volatile.
USE-OR-BURN
The solution is to use-or-burn the RUNE in accordance with the release plan above. On the 20th of every month for the next 5 years, the team with input from the community, will burn all RUNE that was not able to be allocated through publicly declared methods above in the month preceding.
TRANSPARENCY
To support this, the two wallets will undergo the following standards of accounting:
- On or around the 20th of each month, the current month’s emission that was not distributed or allocated will be burnt, and a report on the previous month’s activities will be released.
- The next month’s emission will be unlocked from the host wallet.
- During the month, the community will be canvassed regularly for the best way to distribute the tokens that meet the objectives described here.
The two wallets are:
Community: bnb1axqc2gan462z6npw3c33srp4950mr5x28uc6wu
Operational: bnb13a7gyv5zl57c0rzeu0henx6d0tzspvrrakxxtv
Additional Details
- The Community wallet began with 1m RUNE already allocated to airdrops and community initiatives. To have an even number of months, the first month (August 2019) the community drop will be a lower 1m (instead of 2m).
- As RUNE is burnt, the final total supply will also be reduced. This will also reduce the final total supply of the THORChain mainnet, so the total cap of 1bn is likely to be reduced in time.
- The final liquidity emission of 500m (50%) is also likely to be reduced so that on the mainnet launch, the inflation schedule is targeted to be less than 10%. Final numbers will be made with community input.
- The team are under no imperative that the RUNE must be distributed that month, thus the general expectation should be that there will be a burning of some RUNE each month.
Project Surtr
Since the project leans heavily on Norse cosmology, the team have elected to call this initiative Project Surtr, after the Giant of Fire from the land of Muspelheim that Thor battles.
Community
To keep up to date and to provide input for the community’s monthly RUNE emission, join the discussion:
- Twitter: https://twitter.com/thorchain_org
- Telegram Community: https://t.me/thorchain_org
- Telegram Announcements: https://t.me/thorchain
- Reddit: https://reddit.com/r/thorchain
- Github: https://github.com/thorchain
- Medium: https://medium.com/thorchain
