https://i.imgur.com/575fDDF.png 

I know that several LEO holders already know about this project and perhaps even have investments made in them.
Because of this I decided to do a small analysis of it.

# What is THORchain?

Decentralized finance (DeFi) platform that allows the direct exchange of digital assets (the famous swaps) between different blockchains without the need for intermediaries. THORChain seeks to create an environment in which users can exchange assets efficiently and securely on a decentralized network.

The main utility of THORChain's native token, called RUNE, includes:

1. Liquidity and Staking: $RUNE holders can provide liquidity to the THORChain network by locking their tokens as collateral, allowing the network to execute asset swap operations. In return, these liquidity providers earn rewards such as swap fees and part of network fees;
2. Governance: $RUNE holders often have the right to participate in network governance decisions. This includes voting on protocol update proposals, changes to network rules, and other important decisions related to the functioning of the ecosystem;
3. Payment of Fees: The $RUNE token is used to pay transaction fees on the THORChain network. This creates organic demand for the token, as participants using the network to exchange assets need to hold RUNE to cover the associated fees;
4. Cross-Chain Swaps: One of THORChain's most distinctive features is its ability to facilitate swaps between different blockchains without the need for a centralized entity. This means that users can exchange assets from blockchains such as Ethereum, Binance Smart Chain and others directly on the THORChain network, taking advantage of the interoperability offered;

 https://i.imgur.com/IfFQMQ3.png 

Is $RUNE at US$100 impossible?

In this analysis, we will use the Design 3x TVL method
Here, we will explain how the 3x TVL mechanism adds value to $RUNE and provide some scenarios to estimate the future price of the token.

## What is the 3x TVL mechanism?

This method explains how the minimum price of RUNE is a function of the value of non-RUNE assets deposited in THORchain liquidity pools.

### RUNE in liquidity pools

Each liquidity pool on THORchain consists of 50% RUNE and 50% any other token. Therefore, anyone who wants to provide liquidity to earn revenue, for every $1 deposit of a non-RUNE token (e.g. "X token"), $1 of RUNE must be deposited - Users can also simply deposit "X token" and let the protocol automatically rebalance your position by selling half of it for $RUNE. 

This creates a dynamic in which the market cap of $RUNE is at least equal to the value of non-RUNE assets in the liquidity pools. If it falls below this, there is an arbitrage opportunity until parity is restored.

Okay, but where does the 3x come from?

### RUNE in Node Bonds

The protocol and its liquidity pools are protected by a network of nodes that must lock $RUNE into a “bond”. The cumulative USD value of the nodes' locked $RUNE must be greater than the cumulative USD value of the non-$RUNE assets in the liquidity pools.

This ensures that nodes will not conspire to defraud or steal funds, as if they do so they will lose more than they have to gain, as they would lose their "title" to $RUNE. The network aims to have $2 worth of RUNE tied up by node operators for every $1 of non-RUNE liquidity in the pools. If pegged $RUNE falls below this target, nodes will be incentivized to buy and lock more $RUNE, receiving a larger share of trading fees and block rewards, until parity is restored. Therefore, for every US$1 of non-$RUNE liquidity in THORchain's liquidity pools, US$3 of $RUNE is needed, with US$1 in the liquidity pool and US$2 in node bonds, resulting in 3x the TVL.

### Deterministic Price (Minimum)

This creates a scenario where $RUNE has a minimum calculable price, the so-called deterministic price. For every $1 of non-$RUNE TVL in the pools, $3 of $RUNE market cap is required.


> For example: if THORchain has $100 million in TVL in non-$RUNE tokens, the market cap of $RUNE must be at least $300 million. By dividing the market value by the circulating supply (335 million), you get the minimum price per RUNE.

Therefore:

**(3 x non-RUNE TVL) / circulating supply $RUNE = Deterministic Price.**

### Speculative Multiplier

You can also hear THORchain fans called Thorchads talking about a speculative multiplier.

The speculative multiplier is how much the market price of $RUNE is greater than the deterministic price. If the deterministic price is $1 and $RUNE is $4, then the speculative multiplier is 4x.

This speculative multiplier is currently around 3.5x, while the lowest it has ever reached was close to 2.3x.

During the peak of THORchain hype in 2021 it was over 20x, and while we don't expect it to reach that high again, we believe it should increase once more as we enter the bull run and the majority's enthusiasm of investors return.

### Estimating the future price of $RUNE

By modeling the future value of the non-$RUNE TVL in the protocol, we can calculate a deterministic value for $RUNE.

To do this we must:
1. Estimate the prices of pool tokens;
2. Estimate the number of tokens in THORchain's liquidity pools.

We can then add a speculative multiplier to the deterministic values to model the price of $RUNE.

**1- Pool token prices**

According to the table below, we divide the current non-RUNE TVL into: $BTC, $ETH, stablecoins and other tokens. We then estimate their future prices and calculate an increased weighted average price increase of 172%.

Here $BTC was estimated at US$100k, $ETH at US$8k and the other tokens ($BNB, $ATOM, $AVAX, etc) at a 3x increase. This is a 45% increase from $BTC's previous ATH and a 63% increase from $ETH's, which seem like reasonable targets for the next ATH.

 https://i.imgur.com/FW82Hk3.png 

If the above price estimates are met, THORchain will have a non-RUNE TVL of $408.3 million without any increase in the amount of tokens in the pools. We will use this base case for the following $RUNE price estimates:

A non-$RUNE TVL of $408.3 million gives $RUNE a deterministic price of:

<div align="center">(408.3m * 3) / 335m = $3.66</div>

As you can see below, speculative multipliers of 2x to 8x were applied to estimate the price of $RUNE. Based on these assumptions, the $RUNE token could reach more than $14/unit just from the appreciation of assets in the pools, using the current speculative multiplier

 https://i.imgur.com/c1mibgK.png 

But what would happen to the price of $RUNE if the number of tokens in the pools also increases?

**2- Number of tokens in pools**

Below we demonstrate 4 different scenarios. They model the potential price of $RUNE based on increasing liquidity pools (in hypothetical terms) increasing the number of tokens by 50%, 100%, 200% and 250%.

To contextualize these scenarios, let's take a look at the increases (in token quantity, not in US$) of the 5 most used pools in the last 4 months:
- $BTC: liquidity increased by 104%
- $ETH: liquidity increased by 220%
- $USDT: liquidity increased by 1142%
- $USDC: liquidity increased by 650%
-  $THOR: liquidity increased by 60%

Although THORchain has experienced enormous growth recently, it is not a stretch to expect token quantities to increase another 100% or even 200% until the next bull run peaks (if volume remains high enough to offer APYs attractions).

We will not delve into which of the scenarios below we consider most likely, as we cannot say for sure and it would only be an assumption. This is just a series of scenarios that we believe could be within reasonable limits of probability.

 https://i.imgur.com/0KGGPGZ.png 

 https://i.imgur.com/vUCFKVk.png 

**So, is $RUNE at $100 a possibility?**

Based on this modeling, yes, $RUNE to $100 $RUNE is possible! But that doesn't mean it will.

For this to happen:
- Price targets would need to be correct;
- THORchain would need 3.5x more tokens in liquidity pools;
- The speculative multiplier would need to reach 8x.

 https://i.imgur.com/0rNMHDY.png 

 https://i.imgur.com/GrHSA6S.png 
**
Again: this is not investment advice. Do whatever you prefer with this information and always... ALWAYS DO YOUR OWN RESEARCH!**

Posted Using [InLeo Alpha](https://inleo.io/@cryptosimplify/thorchain)