RUNEPool on THORChain

2024-07-31 — 4 min read

RUNEPool has been launched on THORChain, creating a new way to provide liquidity with RUNE. Earn a RUNE yield by providing liquidity onchain with a diverse group of bluechip asset pools.

What is RUNEPool?

RUNEPool is a feature of THORChain designed to optimize the liquidity of RUNE by depositing it into every Protocol Owned Liquidity (POL)-enabled liquidity pool in the network.

By distributing RUNEPool deposits across all major pools on the network, RUNEPool participants will earn yield from all enabled pools. The impact of impermanent loss is also dampened, since there is exposure to multiple assets.

RUNEPool can only be entered with RUNE on the THORChain network, but this product provides exposure to liquidity pools with bluechip assets such as:

Bitcoin, Ethereum, USDC, USDT, BNB, Bitcoin Cash, Litecoin, Dogecoin, Avalanche, ATOM, and any other major gas asset added to THORChain

RUNEPool Dashboards

RUNEPool Interfaces

What does RUNEPool accomplish for THORChain?

RUNEPool increases the liquidity of the RUNE asset, increasing the onchain liquidity of the asset. It’s important for RUNE liquidity to exist primarily on the network itself, rather than centralized exchanges. RUNEPool creates an easy experience for users to provide liquidity and earn in-kind yield on RUNE with lessened risk of Impermanent Loss.

RUNEPool will also be a vehicle for large RUNE holders to take advantage of the incentive pendulum, which attempts to balance the amount of RUNE used for security and liquidity. If bonding yields drop too low, nodes can easily switch to a RUNEPool position to take advantage of the higher liquidity yields, bringing balance to the network’s economic state.

How does RUNEPool work?

RUNEPool works alongside Protocol Owned Liquidity (POL). When you enter RUNEPool, you buy liquidity from POL. Buying liquidity from POL creates additional space for POL to deposit. POL is deployed across multiple pools, so your position is exposed to the price fluctuations of many assets across multiple pools, rather than a traditional LP in only one pool.

Are there RUNEPool caps?

RUNEPool is capped by the amount of Protocol Owned Liquidity deposited on the network. Users can always deposit, even if there is no POL available, but any extra RUNE is held as “pending” (non-active) until there is a matching amount of POL to acquire.

As RUNE Poolers enter and buy liquidity from POL, additional space is created for POL to enter new positions as Savers enter, or as synth utilization increases.

Does RUNEPool affect any other network participants?

RUNEPool is simply a normal Dual LP deposit with positions in multiple different pools. RUNEPool does not affect Dual Liquidity providers or Savers in any new way.

Protocol Owned Liquidity Changes

A change will be made to Protocol Owned Liquidity to create more capacity for RUNEPool, since capacity is limited by POL. When new Savers join, POL matches the Savers deposit with RUNE. This does not affect the current behavior of POL depositing when synthetic asset utilization grows beyond a certain percentage of the pool (currently 50%). This Savers matching function will be enabled shortly in a future update.

Is it possible to withdraw less RUNE than deposited?

Yes, your position will still experience Impermanent Loss (IL) as prices fluctuate — but less than a position in an individual pool with high IL, since a RUNEPool position is diversified. The claimable RUNE balance is variable with the prices on the network. Claimable RUNE amounts will change as prices change on the network.

Although you can lose (or gain) RUNE to to IL, you will always earn yield from swaps that touch any pool RUNEPool is active in, which may offset impermanent loss over time.

Is there a minimum RUNEPool LP duration?

There is a minimum RUNEPool duration based on the user’s last deposit. To start, the minimum deposit period is 90 days which can be changed by nodes through mimir “RUNEPoolDepositMaturityBlocks”.