THORChain’s RUNE Surges 37% After DeFi Synthetic Assets Goes Live

Cross-chain protocol THORChain went live with synthetic assets trading on its platform earlier Thursday morning, causing prices of its native token RUNE to jump as much as 37% from Wednesday's lows of $4.05 to Thursday's peak of $5.56.

• Synthetic assets – or blockchain-based representations of another asset, such as crypto – are backed by half the value of their underlying asset and half in RUNE. This allows users to hold and trade a representative of a layer 1, or base, blockchain asset faster and at a lower cost.
• THORChain allows trustless trading and token swaps for several cryptocurrencies, from bitcoin BTC$89,420.24 to ether ETH$3,034.61, via RUNE. Using RUNE as an intermediary allows for the trading of assets from one network to be traded for another in a decentralized manner without using smart contract-based “bridges.”
• Trustless trading is a system where participants need not know the identity of other participants.
• Synthetics will increase network usage, network total value locked (TVL), pool depth, thus cheaper swap fees, and generate greater income for liquidity providers, as per a developer note. The update was activated by a two-thirds majority of distributed node operators.
• Synthetics increases the demand for RUNE within the network, which in turn increases their appeal among liquidity providers who provide the underlying tokens in return for a fee reward.
• This allows all synthetic assets to be redeemed on a 1:1 basis with the underlying asset – meaning a synthetic bitcoin on THORChain will readily and easily be redeemable for one bitcoin.
• The first synthetic was created minutes after the protocol went live. Some 0.00054906 worth of bitcoin was staked for a bitcoin synthetic, blockchain data show.
• RUNE surged over 37% in the past 24 hours as the synthetic update went live to weekly highs of $5.56 in early Asian hours. It since dropped 60 cents as traders took profits amid a broader market downturn. Prices are up 40% in the past two weeks but are down 76% from lifetime highs of $20.87, as per CoinGecko.
• Tokens prices of THORSwap, a decentralized exchange (DEX) based on the THORChain protocol, were up 11% in the past 24 hours. The DEX allows users to earn yields and provide liquidity within the THORChain ecosystem.
• Thursday's release comes months after THORChain was exploited for $8 million in July 2021. A hacker deployed a custom contract that was able to trick its Bifrost Protocol into receiving a deposit of fake assets, the team told CoinDesk at the time.