This proposal follows the ARC template for Asset Onboarding laid out in the Aave Governance documentation.
We propose to list THORChain’s token RUNE as an asset on Aave.
RUNE has recently been growing its economic bandwidth on Ethereum. Myself and other community members have expressed a desire to be able to use the ERC-20 asset as collateral for lending. Aave is the premier credit facility in crypto, and so here is a listing proposal for the community’s review.
Listing RUNE benefits the Aave community in the following ways:
Unique Properties: RUNE has properties which makes it desirable as both a collateral and borrow asset (discussed in detail later).
First-Mover: RUNE has only recently been made available as an ERC-20 asset, and Aave would be the first venue to make RUNE borrowing available.
Community and New Users: The THORChain community is extremely strong, vocal and eager to support related projects. This listing would bring a strong influx of new users.
NB: At this moment, the majority of RUNE is based on Binance Chain as a BEP2 asset. This will soon migrate to a token native to the THORChain. There is also a significant portion of RUNE bridged to Ethereum as an ERC-20. For the sake of providing adequate context, I will provide data about the BEP2 asset as well as the asset in question, ERC-20 RUNE.
What is the link between the author of the AIP and the Asset?
Oaksprout is a long-term community member of THORChain and holder of RUNE. He has also spent a lot of time in the Aave community and holds AAVE.
Provide a brief high-level overview of the project and the token
THORChain is a decentralised network focused on bringing liquidity to cross-chain assets. It does this using a simple Uniswap-like automated market maker (AMM) design. Some have called it “Uniswap for the multichain world”.
THORChain has been live with mainnet assets since September 2020 and its flagship multichain network is scheduled to go to testnet imminently.
The project is built on tried-and-tested technical and economic primitives, including Tendermint BFT, Cosmos SDK, Gennaro and Goldfeder’s Threshold Signature Scheme (TSS) and a variant on Uniswap’s constant function market making formula.
Explain positioning of token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?
RUNE is a unique asset in that it is both a desirable collateral and borrow asset. This is due to 2 main elements of its novel design:
strong value accrual design and deterministic price floor – desirable collateral asset
RUNE price is tied to the deepest liquidity assets in crypto, and therefore market neutral – desirable borrow asset
Desirable Collateral Asset
THORChain provides competitive long-term yield for large cap assets, and efficiently converts that liquidity into RUNE market cap through a unique economic design. All this amounts to an asset with extremely high upside potential. This is desirable as collateral as it makes it easier and more efficient to manage collateral positions.
Additionally, THORChain’s economic model requires that $3 of RUNE is staked for every $1 of pooled asset, e.g. BTC. This means that with time, a deterministic price floor will emerge, i.e. collateral providers will always have a solid price floor to plan around.
Desirable Borrow Asset
RUNE is a desirable borrow asset because of its wide and deep market exposure. Given that RUNE is the settlement asset of the network, its price volatility is tied to the liquidity levels and prices of connected assets. THORChain optimises for sucking in liquidity from the largest cap assets. Given this, RUNE is likely to become market neutral to the entirety of the crypto market. For this reason, RUNE stands a good chance of becoming a desirable borrow asset given its relative stability to the rest of crypto, and to the assets on Aave.
For these reasons I believe RUNE represents unique benefits to the Aave ecosystem.
Provide a brief history of the project and how it overcame stressed conditions
THORChain was founded in 2018 by an anonymous group of developers. Note that anonymity is important design choice in securing the network.
THORChain’s single chain chaosnet, using mainnet assets, was released in late August, 2020. There were minor issues with this release, but the team responded quickly and decisively. What’s more, this release was a part of a “guarded launch” which intentionally aims to progressively increase capital at stake to battle test in a real-world environment.
The team recently released multichain testnet, again using the same pragmatic “guarded launch” approach.
How is the asset currently used?
ERC-20 RUNE is predominantly used as a source of liquidity on Sushiswap. There, RUNE is pooled with ~a dozen major DeFi assets including AAVE.
Recently 10m RUNE was bridged over to Ethereum by the THORChain team to meet demand. That is mostly still sitting in the deployer contract, waiting to be used on Ethereum.
See the breakdown below. Note that several of the largest uses of RUNE are on Sushiswap, but a significant part remains ununused.
BEP2 RUNE is roughly 30% deployed, on Binance Chain. See the breakdown below:
Source: Delphi Digital THORChain Dashboard
Current circulating supply of RUNE is 238,275,761. Total circulating supply will be 500 million.
Current circulating supply of RUNE in ERC-20 form is 10,075,916. Current maximum supply on Ethereum is 20 million. This number was recently doubled from 10 million.
Figures sourced from CoinGecko data on BEP2 RUNE and ERC-20 RUNE. See further details on THORChain’s ERC-20 version of RUNE.
THORChain rewards early behaviour by giving out RUNE to active participants. It gives out 1/6 of its reserve each year. THORChain aims to reach 2% annual inflation after 10 years.
Token permissions and upgradability
RUNE is a standard ERC-20 token.
- Market Cap: $39,024,796
- 24h Volume:$4,574,264
- Exchanges: Sushiswap, Uniswap
- Market Cap: $901,001,962
- 24h Volume: $50,452,370
- Exchanges: Binance, FTX, BitMax, Hotbit
More info on the relationship between ERC-20 and BEP-2 RUNE.
Social channels data (Size of communities, activity on Github)
Contracts date of deployments, number of transactions, number of holders for tokens
- Token contract deployed Jan-13-2021 04:17:27 AM +UTC – Transaction
- Total transactions at 15 Feb 10:26 UTC – 21,067
- Token Holders at 15 Feb 10:26 UTC – 1,955
Technical Specifications & Security Considerations
The RUNE token doesn’t have any specific behaviour (eg. rebasing, balance increasing) and doesn’t offer meta governance functionality. Therefore, the standard AToken contract and corresponding debt tokens, already used for the majority of assets listed in Aave, can be also used for RUNE. No auditing of the code is required.