Metrics over time

• The swap frequency has seen an increase in the recent times, however the swap volume has seen a decrease in recent times.
  • April 2022 was the highest swap volume for thorchain due to Terra joining the thorchain.
• The swap fees has gone up with the swap volume going up but it is nowhere near the block reward emission which also peaked in Apr 2022.
• One thing to note is that even though the swap fee has not been keeping up with the block rewards emission, however still the ratio has been going down slowly.

Current Swap Frequency and Volume vs Needed

• The current swap frequency is around 500K whereas the needed frequency is more around 2.5M swaps.
• In terms of Swap Volume, the current volume is more around 1.5B $USD, where as the needed is around 5B $USD.

Conclusion

• The swap volume need to increase by about 5.97 times as per the current rate to offset Block reward emissions.
• The swap fees has gone up with the swap volume going up but it is nowhere near the block reward emission which also peaked in Apr 2022.
• One thing to note is that even though the swap fee has not been keeping up with the block rewards emission, however still the ratio has been going down slowly.

Methodology

• We look at the block rewards emitted from flipside_prod_db.thorchain.block_rewards table.
• We then look at the swap fees from the swaps from the flipside_prod_db.thorchain.swaps table.
• Once we have this information we derive the RUNE price from the flipside_prod_db.thorchain.prices table and convert the block rewards emitted into $USD.
• Then we calculate the ratio over time for block rewards / swap fee, that is defined as the amount of times the swap volume need to increase to offset emissions.

What are block rewards on THORChain?

• THORChain has a maximum supply of 500m native RUNE, and 44% (or 220m) of this supply was set aside and allocated for Block Rewards. Block Rewards are that portion of the reserve designated to pay out to Node Operators (NO) and Liquidity Pool (LP) depositors for their participation in and securing of the network. NO’s receive two-thirds of the Block Rewards; LP’s receive one-third.
• The Block Rewards are set via an emission curve over a ten year span, which can be tweaked (via consensus among the NO), and is designed to slowly reduce towards a constant value in the far future. At the time of writing, Block Rewards are targeted to provide around 30% APY to both NO and LP, and will target 2% after these ten years, after which the majority of revenue will be paid in fees. This is partly because Reserves are also being constantly topped-up via system income (e.g. part of outbound fees charged, internal network fees, node bond slashing penalties, etc.).[1]

How much does the Swap Volume need to increase ?

• The swap volume need to increase by about 5.97 times as per the current rate to offset Block reward emissions.