1/ The best metric to value $RUNE - its baseline price - is derived from RUNE’s deterministic value. It measures how much RUNE’s current price is a consequence of the value of the non-RUNE tokens locked in Thorchain’s LPs and how much the price is a speculative premium.

2/ RUNE’s deterministic value is simply three times the non-RUNE value in the network. Why three? Because for every $1 of non-RUNE value in the network, $1 of RUNE is in the LP and at least $2 of RUNE must be bonded by the nodes. For example ..

3/ Today’s $80M of non-RUNE TVL requires $240M RUNE - the network’s deterministic value. With roughly 200M RUNE outstanding, the deterministic value per RUNE is $1.20. This simple measure misses one critical, highly determinative factor. Not all RUNE is in the network.

4/ In fact, a decent amount of RUNE may never end up in the network. It might be forever frozen on the Binance Chain. It might remain as ERC20 token never able to bridge back to the mother network.

5/ RUNE outside the network acts as a form of leverage and the calculation of its baseline price accounts for this leverage.

Let me show the effect of in-network out-of-network leverage by example ..

6/ Consider this network: 29k BTC in an LP with 166M RUNE managed by nodes that bonded 334M RUNE. The BTC is work $1,666M. The deterministic value is 3 times the BTC value or $5B, and the baseline price (deterministic value divided by in-network RUNE) is $10 per RUNE.

7/ What if 84M RUNE is removed from the LP, and 1 RUNE was listed on an exchange for $11, 1 RUNE for $12 etc. An arb bot buys the $11 RUNE and swap for BTC. It buys the $12 RUNE, etc. What price do the arb bot stop buying RUNE?

8/ Bots stop when the RUNE in the LP has value equal to the value of the BTC in the LP. What price is that?

The BTC is worth $1,666M so when the 82M RUNE in the LP is worth the same, the arb bot stops. $1,666M / 82M = $20 per RUNE.

9/ By removing half the LP RUNE, the deterministic quality of this network determines that the value of RUNE doubles. But what about the nodes?

10/ After RUNE doubles, the nodes are two-times overbonded. In this simple scenario, the nodes remove half the bonded RUNE and put it in cold storage. The total in-network RUNE is reduced to 250M, and the determined price of RUNE is $5B / 250M or $20 per RUNE.

11/ As this example shows, the moment of measuring RUNE’s value, the divisor is the number of RUNE in the network, not the number currently outstanding and not the maximum number issued. I can already hear the “But! But! But!” cries.

12/ Valuing RUNE at a moment in time is exactly that - an at-this-moment measure. It does not account for the possibility that more RUNE may flow into the network shifting the in-network out-of-network leverage factor. But RUNE may be removed too.

13/ Also, non-RUNE value may flow in. Or out. All that is speculation, and we can measure that too.

Today, RUNE is $10 per token. It’s current baseline price is $240M deterministic value divided by 40M RUNE in-network, or $6 per RUNE. What should we call the difference?

14/ The different between the market price and the baseline price - $10 minus $6 or $4 per RUNE - is the speculative premium. Investors are will to pay $4 more than the baseline price in the hope the baseline price grows. Is this a large or small premium?

15/ Certainly, RUNE can flow into the network, diluting the baseline price. With the launch of MCCN, a torrent of BTC and other more trivial tokens could flow into the network. What will it be? Forecast away.

My forecast: RUNE is the cheapest it’s ever been.

16/ Today’s investor is paying $4 to buy a token who’s baseline price could be $15 to $25 when non-RUNE TVL equals $1B. A BTC AMM LP is a BFD. Sure, I bought RUNE at $0.10 but then it was 100% speculative without a working product. RUNE is far cheaper today.

17/ The ability and method to value RUNE is one of the most unique among all tokens. It’s the most direct and simple. Investors can quickly calculate what are its baseline price and its speculative premium.

18/ Because the valuing of RUNE is so simple, I believe over time, there will be a second order effect - a valuation premium.

If Uniswap has $10B in TVL and Thorchain has $10B in non-RUNE TVL, the total market cap of RUNE will be much higher than Uniswap’s.

19/ Thorchain’s model drives value for its token - $RUNE -in a far more direct, easy to understand manner. It will be much more comfortable for institutions to own and explain their investment. It will get a significant premium - a Thor-worthy premium.