In the blockchain ecosystem, the token issuance plan and economic model are important factors that affect its value and the stability of the ecosystem. As the core of THORChain, RUNE token has a unique issuance plan and operating mechanism. This article will take an in-depth look at the RUNE token issuance plan, reward mechanism, and its impact on the ecosystem.
Release plan
The total amount of RUNE tokens is capped at 500 million, and all tokens have been created at creation and distributed through different mechanisms. These mechanisms mainly include:
Capital Return: 5% (SEED) and 16% (IDO) are sold to obtain capital, which is required to launch the network and give it value. These early investors took on risks to support the growth of the network.
Reward for time and effort: 10% of tokens are allocated to the team that has been developing since 2018 and has also taken risks to deliver the network.
Rewards for launch participation: 24% of tokens are allocated to users who participated in the launch of the network and were critical to the success of the network in the early stages.
Rewards for ongoing participation: 44% of tokens are placed in the protocol for payment to node operators and liquidity providers (LPs) over the next 10+ years. This part of the tokens will be used to incentivize participants and promote the continued development of the ecosystem.
All token distributions have been completed, laying the foundation for the stability of the RUNE token.
Reward mechanism
The reward mechanism of RUNE tokens is mainly reflected in block rewards. The calculation formula of block reward is as follows:
[ blockReward = \frac{ \frac{reserve}{emissionCurve}}{blocksPerYear} ]
Based on current data, if there are 180 million RUNE in the reserve, a reward of approximately 4.28 RUNE will be issued per block. Half of this will be awarded to node operators and the other half will be paid to liquidity providers. This reward distribution is controlled by an incentive pendulum to ensure that the interests of all parties in the ecosystem are balanced.
Issuance Curve: The issuance curve of the RUNE token is designed to provide an annualized rate of return (APR) of approximately 30% initially, and targets to drop to 2% after 10 years. This means that over time, RUNE token rewards will gradually decrease, and the ecosystem’s main source of revenue will shift to fees.
System Income: The reserve of RUNE tokens not only relies on block rewards, but will also be replenished through various revenue sources. These revenues include:
Transfer fee: The fee paid by users when making transfers. This income will further enhance the reserve.
External handling fees: handling fees incurred by interacting with other platforms or protocols.
THORName Fee: The fee used to register and manage names in the THORChain network.
Excess liquidation fees: additional liquidation fees incurred when the value of the collateral exceeds the required security ratio.
These revenues will not only continue to replenish reserves, but also provide stable returns to RUNE token holders.
in conclusion
The issuance plan and economic model of RUNE tokens provide a solid foundation for the development of the THORChain ecosystem. Through reasonable token distribution, reward mechanism and diverse income sources, RUNE tokens can not only attract the attention of investors, but also promote user participation and support. With the continuous advancement of blockchain technology, the future of RUNE tokens is full of infinite possibilities and is worthy of the expectations of all followers.
In future development, THORChain will continue to optimize its economic model, ensure the stable growth of the value of RUNE tokens, and provide users with better services and experiences.