Upgrading to Native RUNE

2022-02-03 — 4 min read

Summary

IOU Tokens (BNB.RUNE and ETH.RUNE) will be deprecated after mainnet. Nodes will activate a “killswitch”, which will slowly reduce the redemption rate from 1.0 to 0.0 over the course of a year. After a year the upgrade code will be entirely removed and IOU tokens will no longer be supported. Upgrade your IOU tokens now.

How to Upgrade

If you hold your tokens on a centralised exchange, the exchange will switch your tokens for you to Native RUNE.

If you hold your tokens in a wallet:

Create a THORChain wallet using any of the options: https://thorchain.org/ecosystem/interfaces-links

Find the “UPGRADE” button and upgrade your asset (note: you will need gas on your wallet, eg BNB for BNB.RUNE or ETH for ETH.RUNE)

Several guides have been created:

How to switch to Native RUNE using Ledger (2 ways) — THORNoob
How to Switch Binance $RUNE to Native $RUNE (2 Ways: Arbitrage, Upgrade) — THORSwap
How to: Upgrade to Native RUNE (THOR.RUNE) Using ThorSwap DEX — LP University.

Why IOU tokens?

THORChain is a proof-of-bond network, run autonomously by anon operators. If the network was launched with no prior distribution phase, the THORChain treasury could dictate the genesis node operators, eroding the decentralised qualities of the network.

Instead, IOU RUNE on two networks, Binance Chain and Ethereum, was circulated for permissionless acquisition for 18 months prior to multichain chaosnet launch. As such, anyone could have acquired enough RUNE to run a THORNode.

Many of the large THORNode influencers such as TheRuneRanger and THORMaximallist, who the THORChain treasury has had no relation with ever, likely acquired their RUNE in this manner.

Removing Third Party Dependencies

THORChain is extremely strict in having no 3rd party dependencies, preferring to manage everything in-house. There are no oracles, no off-shored security, and no reliance on external liquidity.

However, BNB.RUNE and ETH.RUNE has privileged access to the state machine’s “mint” function. Anyone presenting these tokens can mint fresh RUNE, as well as making THORChain’s state dependent on these two networks.

Indeed, 6 months ago, a white-hat found a critical vulnerability, that was *almost* exploited but swiftly prevented, around this mint functionality on Binance Chain. https://gist.github.com/HildisviniOttar/5b86859eab0705646c23820dc072e69e

ETH.RUNE also has unfavourable characteristics for long-term holders, being the transferTo() function which makes it easy for users to be phished. ETH.RUNE is designed to be redeemed to THOR.RUNE without delay.

Thus is it important to:

Deprecate support for minting fresh RUNE

Remove dependencies on BNB.RUNE and ETH.RUNE

Remove dependencies on Binance Chain and Ethereum networks

Pushing Adoption of THOR.RUNE

In addition, several large exchanges who have listed BNB.RUNE have not yet made the switch. This has created two separate markets for RUNE and one that is both unnecessary, and problematic, since it slows adoption of the network. These exchanges have not yet been given an imperative to switch to native RUNE.

KillSwitch

The plan will be to code support for a “killswitch”. The Kill Switch once activated will slowly reduce the redemption rate of 1:1 to 1:0 over 12 months.

Example: 1.0 BNB.RUNE presented after 6 months of the KillSwitch can only be redeemed for 0.5 THOR.RUNE. After 12 months, it will be redeemed for 0.0 THOR.RUNE, effectively entirely deprecated.

The KillSwitch will be activated by node-mimir since it will affect the monetary policy of the network.

The timeline will likely be:

Mainnet: release support for ETH.RUNE killswitch, activated by node-mimir fully-killed after 12 months.

Mainnet + 6 months: release support for BNB.RUNE killswitch, activated by node-mimir fully-killed after 12 months.