⚡️ THORChain Emission Schedule → Source

There are a maximum of 500M RUNE. All 100% was created at genesis and distributed via different mechanisms:

• In return for capital: 5% (SEED) and 16% (IDO) was sold for capital to start the network and give it value. They took on risk to support the network.
• In return for time and effort: 10% was allocated to a group of developers who worked since 2018. They took on risk to deliver the network.
• In return for bootstrap participation: 24% was given to users who participated in the bootstrapping of the network.
• In return for through-life participation: 44% has been placed in the Protocol to pay out to Nodes and LPs for the next 10+ years

> ⚠️ The Reserve also backstops Impermanent Loss Protection, and is used to underwrite debt. The Reserve is depleted by block rewards and continually topped up by system income.

🏷️ Block Rewards

Block rewards are calculated as such:

BlockRewards = ((reserve ) / (EmissionCurve)) / BlockPerYear

So if the reserve has 180M RUNE, a single block will emit ~4.28 RUNE from the reserve, which means 2/3rds of that is awarded to the node operators. The rest is paid to Liquidity providers.

The emission curve is designed to start at around 30% APR and target 2% after 10 years. At that point, the majority of the revenue will come from fees.

🏷️ System Income

The Reserve is continually topped up by income, such as transfer fees and outbound fees. Other sources of revenue include THORName fees and excess liquidation fees on collateral.

✍️ Description of Work

In this dashboard, we want to see how much swap volume does THORChain need to offset emissions? that is, we want to see how many times the volume of swaps increases so that the current block emissions can be offset by the additional fees generated from the swaps? so we will consider the following:

• Weekly Swap Volume and Swap Fee In USD
• Weekly Rewards in RUNE
• Weekly Additional Swaps Required to Offset Emissions

🧠 Methodology

To deal with this bounty, we use thorchain schema and block_rewards and swaps tables. Before dealing with the calculation method, we need to state some definitions:

Definitions:

Block Rewards: According to the definition we had in the first part, Block Rewards is calculated according to the following formula:

BlockRewards = ((reserve ) / (EmissionCurve)) / BlockPerYear

The amount of EmissionCurve will reach from 30% APR to 2% APR within 10 years, so the amount of Block Rewards is decreasing, so the revenue must be compensated through Fees.

Liquidity Fee: The amount of fee obtained from Swaps → Liquidity Providers Fees

Total Earnings: ==Block Rewards + Liquidity Fee = Total Earnings==

Node Earnings: A part of the earned income is given to the nodes

Liquidity Provider Earnings: Part of the earned income is given to Liquidity providers

After getting familiar with these definitions, we want to explain how to calculate these parameters. The amount of Liquidity Fee (Swap Fee) can be obtained as a whole, daily, weekly, etc. through the daily_pool_stats table by summing up the total_swap_fees_usd field, but after checking the block_rewards table, we realized that the liquidity_fee field is the sum total of total_swap_fees_usd on a daily basis. Also, the amount of Block Rewards can be obtained in general, daily, weekly, etc. through the total_block_rewards table by summing up the rune_amount field, but after checking the block_rewards table, we realized that the block_rewards field is the sum of the total rune_amounts of the total_block_rewards table on a daily basis. So, for a better understanding, we do all the calculations through the block_rewards table.

We first check the total Volume of Swaps and Rewards, then we use the following formula to calculate Additional Swaps Volume Required Ratio:

Additional Swaps Volume Required Ratio = sum(Liquidity Provider Earnings) / sum(Liquidity Fee) -> Ratio

And finally, the amount of Additional Swaps Volume Required to Offset Emissions is obtained through the following formula:

Additional Swaps Volume Required to Offset Emissions = Additional Swaps Ratio * Swap Volume

⚠️ Note

For a better comparison, we check the data from ==2022-01-03== to ==2022-10-02== on a ==Weekly== basis (39 complete weeks).

1 → Analysis of Swaps from ==2022-01-03== to ==2022-10-02

✅ Observations

You can see that the highest volume of swaps is related to the months of April and May, after which the highest amount of generated fee is related to these two months and after the month of May, the volume of swaps has decreased significantly.

2 → Analysis of Rewards from ==2022-01-03== to ==2022-10-02

✅ Observations

• The Average Weekly Liquidity Fee is approximately 63.2K RUNE and the Average Weekly Block Rewards is approximately 265K RUNE.
• From the total Earnings obtained on a weekly basis, 183K RUNE is allocated to Liquidity Providers and 145.1K RUNE is allocated to Nodes.
• You can see that from Feb 21, 2022 onwards in all weeks Liquidity Provider Earnings is more than Node Earnings and this shows the importance of Liquidity Fees for Liquidity Providers to provide Earnings.

Liquidity Provider Earnings > Node Earnings → Liquidity Fees (Swap Fees) are important

• You can also see in the Block Rewards (Green Line) that has a decreasing trend, and it is Liquidity Fees ==(Swap Fee) that provide the Earnings, and with the increase of Liquidity Fees, the total amount of Earnings obtained increases and vice versa.

So, this is the reason why we pay attention to ==Liquidity Provider Earnings== and ==Liquidity Fees== to calculate our Additional Swaps Volume, because these two parameters are effective in providing Earnings. → Additional Swaps Volume Ratio = Sum(Liquidity Provider Earnings) / Sum(Liquidity Fees)

3 → Additional Swaps Required ==Ratio== to Offset Emissions from ==2022-01-03== to ==2022-10-02

✅ Observations

• You can see that the Average Additional Swaps Required ==Ratio is equal to 3.61, which means that the volume of swaps should be 3.61x on average so that the current block emissions can be offset by the additional fees generated from the swaps
• You can see that the weekly chart of Additional Swaps Required Ratio has an inverse relationship with the chart of the Volume of Swaps, that is, the times when the volume of swaps has increased, the Additional Swaps Required Ratio has a downward trend and vice versa.

4 → Additional Swaps Volume (USD) and Ratio Required to Offset Emissions from ==2022-01-03== to ==2022-10-02

✅ Observations

• You can see that the average volume of swaps is 252M USD, and in order for the block emissions to be offset by the additional fees generated from the swaps, the volume of swaps must reach 0.805B USD on average, which means it will be almost 3.2 times
• You can also see that Currently Additional Swaps Ratio (last week) is equal to 7.56

✔️ Final Conclusion

After checking the Volume of Swaps, Rewards and calculating the values of Additional Swaps Ratio and Additional Swaps Volume (from ==2022-01-03== to ==2022-10-02==), we reached the following results

> * Highest volume of swaps is related to the months of April and May. > * After the month of May, the volume of swaps has decreased significantly. > * The Average Weekly Liquidity Fee is approximately 63.2K RUNE. > * The Average Weekly Block Rewards is approximately 265K RUNE==. > * From Feb 21, 2022 onwards in all weeks Liquidity Provider Earnings is more than Node Earnings and this shows the importance of Liquidity Fees for Liquidity Providers to provide Earnings > * Block Rewards has a decreasing trend, and it is Liquidity Fees ==(Swap Fee) that provide the Earnings. > * Average Additional Swaps Required ==Ratio is equal to 3.61 > * The average volume of swaps is 252M USD, and in order for the block emissions to be offset by the additional fees generated from the swaps, the volume of swaps must reach 0.805B USD on average, which means it will be almost 3.2 times > * Currently Additional Swaps Ratio (last week) is equal to 7.56