60m RUNE Burned; Lending Caps Increased

2024-03-08 — 4 min read

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Summary

Pursuant to ADR-0012 as agreed upon by a consensus of validators, the network has burned 60 million RUNE from the Standby Reserve. This RUNE was burned to raise the caps for the Lending Protocol, which can now onboard an additional 20m RUNE worth of collateral. The maximum supply of RUNE is 500m, so the burn represents a 12% reduction in supply, although the Standby Reserve was not circulating.

What is (was) the Standby Reserve?

When the network was created, 44% of the supply (220m RUNE) was allocated to the Reserve and the Standby Reserve. The Reserve pays block rewards to node operators and LPs, outbound gas fees, and churn costs. The Reserve serves the network by distributing RUNE to its participants over time with a similar emission curve to Bitcoin.

Not all of the funds allocated for the Reserve were immediately added. 90m RUNE was added to the Standby Reserve earmarked to be added to the Reserve at the request of the community. The Standby Reserve topped up the Reserve one time in its history in October 2021 with 30m RUNE, leaving behind 60m RUNE to be deployed.

With ADR-0012, the nodes enacted a vote to burn the standby reserve (60m RUNE), removing it from the total supply.

Relevant PRs: !3429

Why was the Standby Reserve burned? What is the relationship with Lending?

The Standby Reserve was burned to create room for BTC & ETH collateral in the Lending protocol.

The Lending protocol has caps in place, dictated by the Lending Lever. The lending lever throttles the value that can be added as collateral, based on the total amount of rune burned from the total supply of 500m. The lending lever is currently set at 3333 bps meaning that 1/3 of the total value of RUNE burned from the maximum supply can be used as collateral for lending. The lending lever is a safety mechanism that creates a generous threshold for RUNE to underperform the collateral assets before it becomes net-inflationary to the RUNE asset upon repayment.

The original lending caps were created by the 13.9m RUNE that was burned due to un-upgraded RUNE through the killswitch, creating ~4.6m RUNE in space for initial collateral.

With the current lending lever, the 60m RUNE burn of the Standby Reserve immediately created room for 20m RUNE worth of BTC & ETH collateral.

Where can I open or manage a THORChain Loan?

You can open or manage a THORChain Loan at any of the below interfaces:

THORSwap
ShapeShift
Lends
THORWallet Mobile App

For technical support, please contact the respective support channels of the interface you are using.

Where can I get more information on THORChain Lending?

Integrations

Wallets, protocols, and interfaces are welcome to build interfaces for lending and offer THORChain’s lending functionality to their users. Affiliate fees Reach out to THORChain on X for dev support. Affiliate fee support for Lending will be available soon for interfaces to monetize.

Other FAQs:

What is the total RUNE supply? Here (divide by 1e8)
How much RUNE is in the liquidity pools? Here
How much RUNE is bonded by validators? Here
How much RUNE is remaining in the Reserve? Here
Is there any other uncirculating RUNE? The only uncirculating RUNE is in the Reserve, slated to be emitted to LPs and Validators in the years ahead
Are there any upcoming RUNE unlocks by early investors? All RUNE is 100% unlocked — there is no vesting remaining