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THORChain - Issue #68
In this newsletter, we are profiling THORChain [RUNE]. In previous newsletters, we have profiled Bitcoin, Cardano, Stablecoins, Uniswap, and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
Coinmarketcap ranks RUNE #44, but some put it in their top 10 investments in their crypto portfolios. Even above ADA, LUNA and FTM. But should you wait a moment before adding it?
THORChain was launched in 2019. The platform has no official founders or directors, and even most of the developers choose to remain anonymous. It is a cross-chain ecosystem with a decentralized exchange, liquidity pool, and dynamically adjusted trading fees.
Their native utility token is called RUNE, with a maximum supply of 500 million. It is used as the base currency as well as for governance and consensus security. It currently exists as an ERC20 (Ethereum blockchain) and BEP20 (Binance blockchain) token. The current token emission curve is set to 30% APR, dropping to 2% in ten years. The completed version of the mainnet is said to be coming soon. The mainnet has been built using the Cosmos SDK and tendermint Proof-of-Stake consensus protocol. To take part in the rotating consensus protocol, node operators must stake a minimum of one million RUNE. Regular users can stake digital assets in liquidity pools to earn yield rewards in RUNE. All core smart contracts have been audited by several third-party security firms, as they have had issues with hackers in the past. It is believed that all bugs have been found and patched.
Users can currently swap cross-chain assets via liquidity pools across Binance Chain, Ethereum, and Bitcoin. Order books are not used, as liquidity is sourced via their automated market maker contract. Slip-based fees are added to help ensure liquidity stays in the pools where needed to prevent losses. Other unique technologies used are state pegs, a state machine, a Bifrost signer module, and TSS protocol. You can read more about these on their technology page. All this operates behind the scenes so as not to burden or confuse the user. The THORChain wallet app was released earlier this year and is available for both iOS and Android users.
As an alternative to centralized exchanges, platforms like THORChain offer important decentralized options. Unlike most other DEXs that support cross-chain transactions, THORChain has the unique advantage of being able to do so without requiring wrapping. Currently supported blockchains are Ethereum, Bitcoin, Binance, Litecoin, Dogecoin, and Bitcoin Cash, with Terra coming soon.
One worrying concern about this project is that it is run by entirely anonymous entities. They claim that the platform is not profit-oriented and that all fees generated go directly to the users. The anonymous team behind THORChain is wholly compensated by keeping nodes running and holding RUNE. Another concern is that their codebase is highly complex, and they could continue having security issues going forward if not enough outside parties are willing to audit the code.
An interesting new upcoming feature called “THORSavings” will allow a 20% interest rate on any supported coin/token. Also, after Terra integration is finished, the next blockchains to be supported will be Cosmos, Haven, Decred, Dash, ZCash, Binance Smart Chain, Avalanche, and Monero. This project is very promising, assuming they can avoid security concerns and can continue flying under the radar of governmental oversight. A fully decentralized system that requires absolutely no KYC is empowering but risky, something to keep in your sights.
RUNE/BTC chart has been in a sideways pattern since summer 2021; if this continues, what a great opportunity to sell RUNE short. But is this trend pattern already getting a tad old.
RUNE/USD is similar that it seems that it is hitting the top, and the resistance trend line is pushing it down. Either it is time to sell or take a short. Be careful with leverage 8x or higher on your short since another wick-up will liquidate your position. 2021 saw RUNE takeoff with 5800%+ returns. It was topping out at $21.28 and bottoming twice down to $3. Is RUNE ready to head back down to $3, or will we see it break out? It is currently trading at about $10.56
RUNE/USD on the 4-hour chart, it is still in the safe zone and could bounce off the support, but it sure seems like it could break. The saying goes that when we are at support, the bears come out ready for the break down, but when hitting resistance, the bulls are out and ready to see a break upwards. This is the same — where the bears are getting excited and are cheering for that chance to short this baby to the ground. Right now, it does seem the bears are holding the better cards.
The Other Trend Lines
BTCUSD, on the daily chart since early 2021, has found this line in the sand. It has been using it as support and resistance about 12 times. And once again, we are watching if this line will become support and shoot BTC to the moon. What if it doesn’t hold? Are we heading back to approx $30,000 or even lower?
If BTC bounces off this support line, watch others like RUNE turn around and head higher. Let BTC be your gauge. If BTC breaks below the support, it will pull many of the altcoins down with it.
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 323% since October 1st, 2020. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week, bitcoin has ranged between $44,200 and $48,096 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and was invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has had a gain of 80% since the start. The USD fund value is up 393% since the beginning. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is down -36% against BTC. ETH is up 174% against BTC since the start. ADA has a gain of 324% against BTC and 1053% to USD.
BLWX Fund started on February 22, 2021. They all are assets we have profiled, and we are interested in how they will perform in 2021 against BTC. BAT has a gain of 88% against BTC since the start; LINK is down -34%, WAVES is up 309%, and XMR is up 8%. Overall, against BTC, the fund is up 93% and 61% against USD.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some.
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Madbyte does have its own token called MADX on the Fantom and Ethereum networks and under the symbol Madbyte on the Waves network. The tokens are interchangeable on Madcapx.com.
Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.