Protocol for inter-chain communication THORChain launched synthetic asset trading on its platform this morning, leading values of its native token RUNE to rise by up to 37% from Wednesday’s lows of $4.05 to Thursday’s high of $5.56.
Synthetic assets, or blockchain-based representations of other assets, such as cryptocurrency, are backed by half the value of the real asset and half in RUNE. This enables users to keep and trade a representation of a layer 1 or base asset more quickly and at a reduced cost.
Through RUNE, THORChain enables trustless trading and token swaps for a variety of cryptocurrencies, ranging from bitcoin to ether. Using RUNE as an intermediary allows assets from one network to be traded for assets from another in a decentralized way without the use of smart contract-based “bridges.”
A trustless trading system is one in which players do not need to know the identities of other participants.
According to a developer note, synthetics will boost network traffic, network total value locked (TVL), pool depth, resulting in lower swap costs, and create more cash for liquidity providers. The upgrade was approved by a two-thirds majority of distributed node operators.
Synthetics raises the demand for RUNE inside the network, which boosts their desirability among liquidity providers that offer the underlying tokens in exchange for a fee. This enables all synthetic assets to be exchanged on an uniform basis with the underlying asset — for example, a synthetic bitcoin on THORChain will be easily redeemable for one bitcoin.
The first synthetic was made within minutes after the process was activated. Blockchain records suggest that 0.00054906 bitcoin was staked for a bitcoin synthetic.
Price Movement – Rune
RUNE has gained more than 37% in the last 24 hours after the synthetic update went online, reaching weekly highs of $5.56 in early Asian hours. It has now fallen by 60 cents as speculators profited amid a broader market decline. According to CoinGecko, prices are up 40% in the last two weeks but down 76 percent from lifetime highs of $20.87.
Token prices on THORSwap, a decentralized exchange (DEX) based on the THORChain technology, have increased by 11% in the last 24 hours. Users can earn yields and offer liquidity inside the THORChain ecosystem by using the DEX.
The announcement on Thursday comes months after THORChain was abused for $8 million in July 2021. The company informed CoinDesk at the time that a hacker used a bespoke contract to mislead its Bifrost Protocol into accepting a deposit of fictitious assets.
