Following the activation of synthetic assets on the network, the price of the native asset for cross-chain decentralized exchange Thorchain (RUNE) increased by 34% in one day.
Crypto synthetics, often known as synths, are digital asset derivative tokens tied to the value of the underlying collateralized asset, such as Bitcoin (BTC) or Ether (ETH) (ETH). Thorchain has chosen to back its synths with 50 percent of the underlying asset and 50 percent in RUNE in its variant. Synthetics like sBTC and sETH can now be exchanged on the network after the activation went live earlier today.
In a March 9th blog post, THORSwap Finance highlighted the benefits of synthetic assets, saying;
“Synths have great utility for traders and arbitrageurs, as they can be transacted nearly instantly and at a fraction of the cost compared to native L1 swaps.”
What’s pushing Thorchain?
The highly anticipated mainnet debut on Thorchain, which is growing closer to reality but still lacks a firm launch date, will be another subject of intrigue. RUNE’s recent jump, which has seen it rise more than 48.4% in the last 14 days, could be linked to the full integration of Terra (LUNA) into the Thorchain protocol at the beginning of this month.
On Twitter, on the 9th of March, Thorchian core developer Chad Barraford underlined the importance of newly announced synths, implying that transaction volume on the network could soon spike, stating;
He stated;
“Trading with synthetics on THORChain has half the swap fees, making swaps cheaper, cheap gas fees, and faster for traders. You can do near-instant trades at a high volume.”
Synthetics will boost network traffic, network total value locked (TVL), pool depth, and hence lower swap fees, as well as produce more cash for liquidity providers. A 2/3 majority of distributed node operators approved the change.
Synthetics raise RUNE’s demand inside the network, which boosts their appeal among liquidity providers who deliver the underlying tokens in exchange for a fee. This allows all synthetic assets to be redeemed 1:1 for the real asset – for example, a synthetic bitcoin on THORChain may be redeemed for one bitcoin quickly and effortlessly.
The team announced its plans earlier this week, promising to make “decentralized liquidity 10X” greater than centralized liquidity. Following the completion of the instruments on the list, other key future landmarks include decentralized finance (DeFi) – termed THORFi in this case – and lending and saving services.