THORChain Tokenomics — What is RUNE?

Nine Realms
Published in
9 min readAug 10, 2022


THORChain is the leading decentralized protocol used to swap native crypto assets.

THORChain uses its native token RUNE as a settlement asset which eliminates the need for a high number of currency pairs, concentrates liquidity, and provides economic security to the decentralized network.

The core token economics of THORChain are simple and designed to provide security for the network. The demand for RUNE is directly related to use of the network: for every $1 of non-RUNE assets on the network, the network incentivizes $3 of RUNE to be locked¹. The ratio of locked RUNE to other assets makes the value of locked RUNE and the demand for RUNE responsive to the price movement of the cryptocurrencies it secures.

THORChain’s Unique Value Proposition

THORChain uses RUNE to enable native asset trading with eight unique blockchains including:

  • Bitcoin — BTC
  • Ethereum — ETH
  • Binance Beacon Chain — BNB
  • Dogecoin — DOGE
  • Bitcoin Cash — BCH
  • Litecoin — LTC
  • Cosmos Hub — ATOM
  • Avalanche C-Chain — AVAX
  • THORChain — RUNE

RUNE Value

As native assets are added to THORChain’s pools, RUNE’s baseline value increases.

RUNE price is driven by two factors:

  1. Deterministic value based on liquidity in the network
  2. Multiple or premium of that deterministic value

The protocol uses incentives to ensure that $3 of RUNE is locked for every $1 of non-RUNE assets on the network. This $3 is broken down:

  • Liquidity Pools: $1 of RUNE for every $1 of non-RUNE assets
  • Node Bond: $2 of RUNE for every $1 of non-RUNE assets in the liquidity pools

This 3:1 ratio is the baseline or deterministic value of RUNE¹.

RUNE Deterministic Price Breakdown

On top of this baseline value, the market adds a premium or multiple based on the potential future value of assets on the network. If the multiple is 4x the baseline, the market is assigning a premium of 4X the deterministic price for the future growth in the value of assets on the network coming: from appreciation of existing assets and/or the addition of assets.

The multiple has been 3–5x on average and has reached as high as 20x. Currently, the multiple is 3.8x.

RUNE Deterministic Price, Market Price, and Multiple Charts (data Nov 2021 — July 2022)

RUNE’s key roles:

1. Security (as a means for driving economic behavior and governance)

2. Liquidity (as a settlement asset)

3. Incentives (for rewards, fees, and gas)


Node Bond

Nodes must post collateral — known as a bond — to become validators of new blocks on the network. THORChain uses a Proof-of-Stake consensus mechanism. There are currently around 90 active nodes which collectively stake over 70m RUNE as a security deposit to the network. A node must stake hundreds of thousands of RUNE to become an active validator.

This node bond is used to secure the assets in the liquidity pools and acts as a deterrent against theft of assets by node operators acting as a security deposit. To ensure sufficient value for the security incentive, the total RUNE bond of all nodes on the network is targeted by the incentive pendulum to be 2x the value of the non-RUNE assets in the liquidity pools.

Active THORChain Validator Nodes²


Each THORNode receives one vote which can be used to change network parameters through a mechanism called node-mimir. A supermajority (67%) of nodes must come to consensus on a network parameter to change the current status quo. Active nodes and their bonded RUNE amounts are visible on Thornode Network.

An example node-mimir vote to change the Maximum Synth Utilization Rate

Liquidity Pools

There is a liquidity pool for each asset on THORChain — paired with RUNE.

THORChain does not rely on an oracle or price feed — it relies on arbitrage to price assets³. As the value of the assets in liquidity pools change, arbitrageurs buy and sell RUNE and other assets for a profit until prices on THORChain align with external markets. As a result, THORChain’s pools should always be competitively priced.

Every asset on THORChain is priced in RUNE, but the dollar value of every asset can be calculated using the ratios of assets in the liquidity pools

Solution for Crypto Liquidity Fragmentation

Concentrated liquidity leads to deep, productive pools.

THORChain uses RUNE as a native settlement currency to concentrate liquidity for every asset. Without a native settlement currency, dozens of shallow pools would be required for each asset, fragmenting liquidity as is the case on most centralized and decentralized exchanges. Using RUNE as the base pair creates a single pool for each asset, paired with RUNE, allowing any asset to be swapped easily between any other asset⁴. With deep, concentrated liquidity, pricing on swaps can be tighter, driving swap volume.

Deep, concentrated liquidity pools provide better efficiency and swap execution compared to fragmented pools with low liquidity

Asset Contribution

Anyone can deposit liquidity and earn rewards from trading fees.

Holders of assets such as BTC can contribute their asset to a liquidity pool and earn a return in the native coin of their asset based on the trading volume/fees of that pool. This return is generated from block rewards and trading fees. There is no more transparent and sustainable protocol for holders of native assets looking for yield.

Visualization of how liquidity providers earn rewards

Network Incentives


RUNE is the native currency of THORChain and is consumed through fees on the network. All swaps are charged both a fixed network fee as well as a dynamic slip-based fee. Slippage fees are based on the trade size as a percentage of the total pool size.

Smaller swaps pay less swap fees, larger swaps pay more fees (relative to pool depth)

As the pools increase in size, the cost of trades decline, and at scale, fees will be far lower on THORChain than other exchanges⁵. With this fee model, there is no lower bound to trading fees on THORChain.

Current Asset Depths — $22m BTC, $15m ETH (as of 8/5/2022)⁶

Subsidizing Gas

The network continually consumes gas as it makes outgoing transactions. Nodes use base assets such as BTC, ETH, or BNB to pay for gas directly from the vaults. After THORChain observes outgoing transactions and reports on the gas used, the network pays back the liquidity providers in those pools with twice the amount of gas used in RUNE.

Liquidity Provider and Node Incentives

THORChain’s Protocol Reserve emits RUNE incentives, known as block rewards, to liquidity providers and nodes.

The distribution of block rewards and swap fees to liquidity providers and nodes is calculated by the incentive pendulum algorithm. The incentive pendulum changes reward distribution to incentivize an optimal network state where there is twice the amount of RUNE bonded as there is in liquidity pools. In an optimal state, block rewards and swap fees are distributed 50% to nodes and 50% to liquidity providers (who also supply the non-RUNE asset).

If the network is under-bonded in relation to total liquidity, more rewards will be given to nodes. If the network is over-bonded, less rewards are given to nodes and more is given to liquidity providers.

The incentive pendulum drives nodes to bond the optimal amount and pays liquidity providers for their contribution of liquidity.

The Incentive Pendulum distributes rewards to optimize security and liquidity distribution on THORChain

Incentives are paid directly into each pool. When swaps are executed, slippage fees are deposited into the pool, adding to each liquidity provider’s ownership. Block reward incentives are paid from the Protocol Reserve to liquidity providers. Of the yield that nodes and liquidity pools earn, currently, ~25% of yield is attributed to swap fees and ~75% comes from the Reserve.

THORChain Daily Reward Distribution to Liquidity Providers and Nodes⁷

The Reserve currently emits ~16% of its remaining balance every year, providing a declining but perpetual stream of RUNE. Over time, as trading volume grows, the vast majority of earnings will come from swap fees.

THORChain Daily Rewards Source — Trading fees and Block Rewards⁸

RUNE Supply

Maximum Supply: 500,000,000 RUNE

All 500,000,000 RUNE were created at the genesis of the network.

Reserve Emissions
The Reserve emits decreasing rewards every block (~5 seconds). The amount emitted every block depends on two parameters: The emission curve and amount of RUNE remaining in the Reserve. The emission curve is controlled by node-mimir and can be adjusted through consensus by the nodes.

With an emission curve of 8 (current) and a Reserve of 180m RUNE, the Reserve emits 4.28 RUNE per block⁹

RUNE Supply Distribution​

RUNE Supply Distribution (Data 13 July 2022)¹⁰


Centralized Exchanges

Centralized exchanges like Coinbase and Binance offer similar swap services to THORChain. These services require users to sign up for an account with their platform. The exchanges are custodial and require users to deposit funds from a self-custody wallet into a wallet controlled by the exchange. Centralized exchanges are opaque with no required transparency on their solvency. The companies that own and operate these exchanges are the primary market makers and collect revenue from doing so.

In comparison, THORChain is a non-custodial exchange that does not require a sign-up. Users provide the liquidity which is used for trades on the platform in exchange for trading fees. All transactions are conducted transparently on-chain and all network funds are verifiably solvent at all times.

Decentralized Exchanges

Most decentralized exchanges are similar in that they only support trading tokens on one blockchain or are restricted to a small compatible subset of blockchains like EVM. Because of this, exchange protocols can rely on the use of smart contracts and the underlying chain’s security to secure value on their network. THORChain’s design allows support for any blockchain including Bitcoin.

For cross-chain exchange, the most popular design is to use a bridge. A bridge is a service that serves as a custodian for assets from one chain and issues an IOU asset on another chain. Bridges are an opaque, centralized point of failure, and typically secured by a multisig wallet. If the collateral is stolen, there is nothing backing the value of the wrapped token. This also presents unnecessary issues by fracturing liquidity. For these reasons, THORChain does not resort to using a bridge or wrapped assets — it only supports native assets.


[1] THORChain requires a minimum of $2 in RUNE to be locked for every $1 of non-RUNE assets in the liquidity pools ($1 from nodes and $1 from liquidity providers). However, the incentive pendulum distributes optimal rewards when there is $3 of RUNE locked for every $1 in non-RUNE assets ($2 from nodes and $1 from liquidity providers). Therefore, the deterministic price of RUNE is frequently assumed to be 3x the value of non-RUNE in liquidity pools, but can be as low as 2x.

[2] Node Info and Bond Amount Data Source —

[3] Prices on THORChain — THORChain Docs

[4] RUNE as a settlement asset — THORChain Docs

[5] Slippage Fees — THORChain Docs

[6] Matrix assumes constant BTC/RUNE/ETH prices. Asset Depth Data Source — Midgard

[7] Daily Reward Distribution —

[8] Rewards Source —

[9] RUNE Emission Schedule — THORChain Docs

[10] Note: RUNE Supply includes current BEP-2 and ERC-20 RUNE supply , some of which is burned due to the Killswitch — maximum supply of native RUNE can never be over 500m tokens. Data source — Nine Realms

Deterministic Value Resources

Learn more about the deterministic value of RUNE and the effect on the value of RUNE with increasing Bitcoin, Ether, and other asset liquidity with the Deterministic Value Calculator, pictured below.

RUNE Deterministic Price Calculator

Users can monitor the live deterministic price of RUNE in the THORChain Alerts Telegram.

RUNE Price and RUNE Deterministic Price Chart — THORChain Alerts Telegram

THORChain Community

To keep up to date with THORChain, please monitor community channels, particularly Telegram, Discord, and Twitter:

Website | Documentation | Twitter | Telegram Community | Telegram Alerts | Community Discord | Developer Discord | Reddit | Github | Gitlab | Medium | Linktree



Nine Realms

Supporting the THORChain ecosystem through engineering, infrastructure, institutional liquidity, and integrations.