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Thorchain, a well-known decentralized layer-1 liquidity protocol, has recently announced an exclusive development. As per the company, it has burned 60M RUNE (its native token) from its Standby Reserve to increase the caps concerning the Lending Protocol. Thus, the Lending Protocol can currently onboard an extra amount of up to 20M RUNE in terms of collateral.
60m $RUNE was burned from the Standby Reserve, creating 20m RUNE ($140m) in space for lending collateral.
— THORChain (@THORChain) March 8, 2024
There is now room for ~2000 #Bitcoin or 36k ETH in THORChain lending. No liquidations, no interest.
Details on Medium: https://t.co/yLCdz13oyL pic.twitter.com/aNePxXpvLV
Thorchain Burns 60M RUNE Tokens from Standby Reserve
The company announced this development on its official X account. In addition to this, a blog post on Medium provided more details. According to the firm, RUNE’s current maximum supply stands at almost 500M. Hence, the burn denotes a nearly twelve percent decrease in its supply. On the other hand, at the start of the network, it allocated a supply of forty-four percent to the Standby Reserve and Reserve. Rune is already showing bullish sentiment and it will likely skyrocket after this news as many Rune price prediction articles suggest it may reach a double figure soon. Currently, it is trading around $7.44 with an 18% increase in the last 24 hours.
The Reserve provides rewards for LPs and node operators along with outbound gas charges. It distributes RUNE tokens among the participants systematically with an emission curve analogous to Bitcoin. The community requested the network to include 90M RUNE in its Standby Reserve. At present, the burning of Standby Reserve deals with creating room for ETH and collateral in Thorchain’s Lending Protocol.
Lending Lever of Thorchain’s Lending Protocol Stands at 3333 RUNE out of Total Supply
Lending Lever dictates Lending Protocol to place caps. It regulates the value to be deemed as collateral in line with the cumulative burned RUNE. The burning removes the respective amount of RUNE from the token’s total supply. At the moment, the lending lever stands at 3333 bps. This means that approximately 1/3 of RUNE burned out of the full supply can play the role of collateral dealing with lending.
The purpose of the lending lever is to offer a safety mechanism to develop a generous threshold regarding RUNE’s underperformance. 13.9M RUNE that the network burned because of un-upgraded RUNE tokens created initial lending caps through the killswitch. This created a 4.6M RUNE for collateral in the first place.