$RUNE is the currency which powers the THORChain ecosystem and provides the economic incentives required to secure the network. $RUNE has four key roles which are described below.
$RUNE is the native currency of THORChain and is consumed as transaction fees on the network. Transactions include both user initiated transactions, pool settlements (double swaps), governance proposals etc. All transaction fees on THORChain will be burned to ensure the total supply of $RUNE never reaches the theoretical 1 billion.
THORChain is a Proof of Stake (PoS) blockchain based on Tendermint BFT consensus engine and uses economically incentivised validators to secure the network.
Validators are required to stake and bond $RUNE in order to be accepted into the current validator set. Malicious validators can be penalised for bad behaviour by having their $RUNE stake slashed.
Block rewards are paid to validators and ensure that value is transferred to those securing the network without diluting the value of those who demand security from the network.
$RUNE is used for governance and enables token holders to vote on subjective issues in the ecosystem, such as adding new bridges, dealing with side-chain forks and other events. Proposals require $RUNE to be put forward and votes similarly require $RUNE.
$RUNE is the base currency and is required to be staked along side every asset in pools. This avoids value being diluted across many pools which has been observed in other implementations. Without a native settlement currency, each asset would need to be pooled with every other asset, which would eventually result in hundreds of new pools to be created for just one new asset, diluting liquidity. Using the formula below we can calculate the network requirements for various scenarios.
No. of Assets
(eg. BTC, ETH)
No. of Pools
No. of Pools
Based on the above, you may now understand the total liquidity requirement for $RUNE is directly proportional to the combined liquidity of other assets. A rule of thumb is for every $1m in main-chain assets staked in liquidity pools, $1m of $RUNE is required to be staked along side. This has a positive effect on the monetary base of RUNE.