THORChain (RUNE) Tokenomika

THORChain is a Layer-1 blockchain designed as a cross-chain, permissionless decentralized exchange (DEX) utilizing the Automated Market Maker (AMM) model. Its native asset, RUNE, is central to the network's security, liquidity, and governance mechanisms. The token economics are structured around a unique security model known as Proof of Bond, enforced by an Incentive Pendulum that dynamically balances rewards between network validators (THORNodes) and liquidity providers (LPs).

Issuance Mechanism

The total token supply for RUNE is capped at 500 million tokens. The issuance mechanism is based on an emission schedule that distributes RUNE as rewards to network participants.

The circulating supply has shown a gradual increase over time. For instance, the circulating supply grew from approximately 335.5 million RUNE in Q1 2024 to 351.7 million RUNE in Q1 2025.

Allocation Mechanism

The initial token allocation was structured to support community incentives, development, and early investors. The total supply is capped at 500 million RUNE.

Note: This allocation breakdown is based on data as of June 10, 2022, for the THOR token supply.

In terms of current holdings (as of February 14, 2024), a significant portion of the circulating supply is held within network modules essential for operation and security:

• Bond Module: Approximately 105.30 million RUNE (~21.06% of total supply)
• Reserve Module: Approximately 82.45 million RUNE (~16.49% of total supply)
• Standby Reserve: 60.00 million RUNE (~12.00% of total supply)
• Pool Module: Approximately 30.97 million RUNE (~6.19% of total supply)

Usage and Incentive Mechanism

RUNE serves three primary functions: Liquidity, Security, and Governance. The core incentive mechanism, the Incentive Pendulum, dynamically adjusts emission rewards to maintain the optimal balance between bonded RUNE (security) and pooled RUNE (liquidity).

1. Security and Bonding (Proof of Bond)

RUNE is used as a bond in the Proof of Bond system to secure the network against malicious activity.

• THORNodes (Validators): Node operators must bond RUNE to participate in network consensus. This bond acts as an economic guarantee, ensuring the cost of malfeasance exceeds any potential illicit gains.
• Bonding Requirement: Node operators must bond RUNE equivalent to at least twice the value of non-RUNE assets in the liquidity pools. This results in a deterministic price mechanism where the RUNE market cap is always a minimum of three times the Total Value Locked (TVL) of non-RUNE assets.
• Slashing: Misconduct by a node, such as asset theft, results in the bond being slashed by 1.5 times the value of the compromised assets.
• Optimal State: The Incentive Pendulum aims for an optimal state where 67% of the RUNE supply is bonded by node operators and 33% is pooled for liquidity.
• Node Rewards: Under stable conditions, THORNodes receive approximately 66.67% of the system's rewards (transaction fees and emission rewards). If the network is under-bonded, the Incentive Pendulum increases the rewards allocated to bonders to encourage more RUNE to be bonded.

2. Liquidity Provisioning

RUNE is the base asset for all liquidity pools, facilitating efficient cross-chain swaps.

• Liquidity Pools: RUNE must be staked in a 50:50 ratio with other assets in the liquidity pools.
• LP Rewards: Liquidity providers (LPs) earn compensation from transaction fees (network and slip-based fees) and emission rewards. The Incentive Pendulum aims to allocate approximately 33.33% of system rewards to LPs in the optimal state.
• Impermanent Loss Protection (ILP): THORChain offers ILP, which ensures LPs either profit or break even after a minimum period of 100 days. This protection is applied symmetrically via RUNE subsidies and increases linearly over the 100-day period.

3. Transaction Costs and Fees

RUNE is used to settle transaction fees, which are composed of a fixed network fee and a dynamic slip-based fee. These fees are distributed among liquidity providers, node operators, and the network reserve. The protocol also reimburses nodes in RUNE for the gas costs incurred on external blockchains, effectively doubling the gas costs.

4. Governance

RUNE holders participate in governance:

• Node Mimir: Active THORNodes (the top 100 by ranking) vote on specific network parameters, requiring a two-thirds majority consensus to enact changes.
• Asset Listings: LPs can influence the order of asset listings by staking RUNE in liquidity pools, with priority given based on the amount staked.

Locking Mechanism and Unlocking Time

Locking Mechanism

RUNE tokens are primarily locked through two mechanisms:

1. Bonding: RUNE is locked as collateral by THORNodes to secure the network. This is a continuous lock required for node operation and network security.
2. Liquidity Provisioning: RUNE is locked in liquidity pools (in a 50:50 ratio with external assets) by LPs to facilitate swaps.

Unlocking Time

• Liquidity Provision: LPs can generally withdraw their positions to native assets at any time, as the system is permissionless for deposits and withdrawals. However, to receive full Impermanent Loss Protection, assets must remain in the pool for a minimum of 100 days.
• Node Bonding: The terms of the bond require RUNE to be bonded to nodes. Historically, early investor tokens were required to be bonded for 12 months or until mainnet launch, whichever came first. For current node operation, the bond is required to maintain the node's eligibility and security guarantee.

Information regarding a detailed, forward-looking schedule for token unlocks (e.g., for team or private investor allocations) was not available. However, the allocation for "Team/Advisors" (50 million RUNE, or 10.00% of the total supply) was reported to have fully vested as of February 14, 2024.