RUNE is the native token of THORChain, carrying important economic and security functions. This article will start from the token economics of RUNE, analyze the factors affecting its price changes, and explain how it drives market demand through network liquidity, node collateral, and reward mechanisms. It is suitable for cryptocurrency beginners to quickly understand the value and market prospects of RUNE.

What is RUNE?

RUNE is the native token of THORChain, which is a decentralized cross-chain trading protocol that allows users to directly exchange native assets from different blockchains. In this protocol, RUNE not only serves as the settlement asset for trades but also plays a role in network security and incentive mechanisms. Unlike other decentralized exchanges, THORChain enables seamless exchange of various cryptocurrencies through RUNE as a common liquidity base.

RUNE’s unique value proposition

The innovation of THORChain lies in its reliance on decentralized liquidity pools to maintain asset pricing, rather than traditional oracle or price feed mechanisms. The demand for RUNE is directly related to the network’s usage. According to the design of THORChain, for every non-RUNE asset worth 1 US dollar in the network, 3 US dollars of RUNE need to be locked as liquidity and security collateral, ensuring the long-term demand for RUNE.

Specifically, THORChain supports trading of native assets on the following mainstream blockchains:

• Bitcoin (BTC)
• Ethereum (ETH)
• Binance Chain (BNB)
• Dogecoin (DOGE)
• Bitcoin Cash (BCH)
• Litecoin (LTC)
• Cosmos Hub (ATOM)
• Avalanche C-Chain（AVAX）

By providing liquidity between these blockchains, RUNE makes cross-chain transactions possible, greatly enhancing asset liquidity and interchangeability.

RUNE’s price drivers

The price of RUNE is mainly driven by two factors:

1. Network liquidity: The price of RUNE is directly linked to the value of the liquidity assets locked in the THORChain network. For every $1 of non-RUNE assets locked, the network incentives the locking of $3 of RUNE. This mechanism ensures that the growth of RUNE is synchronized with the assets in the network, thereby driving its price up.
2. Market premium: In addition to the basic liquidity guarantee, the market will also give a premium to RUNE based on its future growth potential. This premium is based on the potential value of newly added assets in the network and the expected appreciation of existing assets. For example, the current market premium for RUNE is approximately 3.8 times, which means the market price is roughly 3.8 times the base price.

The core role of RUNE

The role of RUNE in THORChain is multifaceted and mainly includes:

1. Security: RUNE serves as the security collateral for the network. When each node becomes a validator, it must provide a certain amount of RUNE as a guarantee to ensure the security of the network. These collateral funds will serve as the node’s “deposit” to prevent malicious behavior and ensure asset security.
2. Liquidity: As a settlement asset, RUNE pairs various native assets with RUNE through liquidity pools, allowing users to exchange assets on THORChain seamlessly. All transactions are settled in RUNE, greatly concentrating liquidity, improving trading efficiency and execution.
3. Incentive Mechanism: RUNE is also used to reward participants, including nodes and liquidity providers. Through block rewards and transaction fee distribution, RUNE provides continuous economic incentives for network participants.

The supply and distribution of RUNE

The total supply of RUNE is 500 million, and all RUNE tokens were fully generated at the network’s creation. The network continuously rewards liquidity providers and nodes through a ‘reserve fund’ mechanism, but over time, these rewards will gradually decrease. The current reward distribution mechanism is expected to gradually shift towards transaction fees as the network’s trading volume increases, rather than relying on reserve fund distribution.

Locked: 28,831,474 RUNE (5.7%)

Pooled: 30,811,077 RUNE (6.1%)

Bonded: 76,314,685 RUNE (15.1%)

Reserves: 167,966,238 RUNE (33.2%)

Free-Floating: 202,610,627 RUNE (40%)

The market performance and price fluctuations of RUNE

The price of RUNE has experienced multiple fluctuations in the past period. Although the overall trend of the market is on the rise, the price of RUNE is still affected by multiple factors such as market sentiment, the size of liquidity pools, and network usage. According to the design of THORChain, as more assets and transactions are present in the network, the demand for RUNE will naturally increase, thereby driving its price up.

However, the price of RUNE is also affected by market sentiment fluctuations, especially in the case of overall instability in the cryptocurrency market. For example, fluctuations in the prices of Bitcoin or Ethereum in the market may directly impact the market value of RUNE, as the liquidity of these mainstream assets holds significant importance in the THORChain’s trading pools.

Image:Official documentation

Comparison between RUNE and competitors

Compared to centralized exchanges, THORChain’s decentralized features give it significant advantages in security, transparency, and user control. Centralized exchanges typically require users to deposit funds into the platform, while THORChain does not require any user registration or asset deposit. All transactions are publicly transparent, and users have complete control over their assets.

In addition, compared to traditional decentralized exchanges, the advantage of THORChain is that it supports cross-chain asset trading, while many decentralized exchanges only support asset exchange on a single chain. THORChain’s design does not rely on bridging technology, avoiding potential security issues and liquidity fragmentation when bridging assets.

Future Outlook: The potential of RUNE

With more and more blockchains being supported by THORChain, the market demand for RUNE is expected to continue growing. Especially with the rise of decentralized finance (DeFi) and cross-chain transaction demand, RUNE is poised to become an important medium for value transfer between blockchains. Additionally, the THORChain team continues to optimize network performance and add more native assets, which will provide more upward momentum for the price of RUNE. In summary, as the core token of the THORChain network, RUNE carries important economic functions. Its price is influenced by multiple factors, including the depth of liquidity pools, the number of node guarantees, and market expectations for the network’s future growth.

RUNE is currently priced around $1.3, with a market cap of around $4.5 billion (as of February 28, 2025). The token has recently experienced a significant decline, so please trade cautiously, be aware of the risks, click to trade:https://www.gate.io/trade/RUNE_USDT