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THORChain (RUNE), one of the most innovative liquidity protocols available in the market, allows users to freely exchange various crypto assets, while maintaining the maximum custody of their funds.
What is THORChain?
To maintain the maximum level of liquidity, users are interested in utilizing services that provide the reliable functionality for swapping one asset for another. THORChain enables users to complete such operations in a permissionless setting, thus eliminating the need for order books. The existing pool of crypto assets contributes to the formation of specific ratios that determine the exchange rates in a decentralized manner. One of the major innovations of THORChain is the reliance on a slip-based fee that minimizes the risks of “impermanent losses”. The platform also enables facilitating cross-chain operations and swaps by utilizing a TSS protocol, the Bifröst Signer Module, and on-way state pegs. Moreover, THORChain does not aim to generate any profits as all fees are redistributed among its users.
RUNE is THORChain’s token used for enabling transactions and swaps. Its current market price is $7.88 with the circulating supply of 330.69 million tokens. Its current market capitalization is $2.6 billion, making it the 49th largest cryptocurrency by market capitalization. RUNE reached the peak price in the middle of May of 2021 (above $20) with another local peak being observed in November of 2021 (around $16.5). The local bottoms were reached in July of 2021 and February of 2021 (around $3.5). At the present moment, RUNE demonstrates a potential for a steady price increase due to the growing demand for its services. THORChain’s founders actively use DEX offerings and multi-chain upgrades for promoting the project and increasing its target audience.
Figure 1. THORChain’s System; Data source – ZephyrNet
Reasonability of Investing in RUNE
THORChain remains one of the most popular and well-established instruments for liquidity provision in the market. From a long-term perspective, the demand for its services may continue to increase for the following reasons: the growing number of crypto assets available in the market; higher demand for liquidity; and the permissionless system offered by the platform. At the same time, RUNE’s short-term price dynamics remains more uncertain. The major causes of uncertainty price fluctuations refer to the macroeconomic conditions in the world and invetsors’ expectations.
Figure 2. RUNE/USD Price Dynamics (1-Year); Data source – CoinMarketCap
The key support level is at the price of $3.5 that was tested several times by RUNE within the past few months. At the present moment, the token continues to appreciate, thus approaching the first major resistance level of $9. In case RUNE successfully exceeds it, the price may continue to rise up until the major resistance level of $16.5. Otherwise, the local declining trend may be formed with the token’s depreciation to the present level or even $4-$5. RUNE remains highly dependent on the overall dynamics of the crypto market, including BTC, ETH, and other major cryptocurrencies. Additional innovations may be required to increase its independence from other crypto assets. From an investor perspective, long positions should be opened only after exceeding the resistance level of $9, thus indicating the accumulation of additional reserves for the token’s appreciation.