While the process of burning successfully removes $RUNE from circulation, its impact completely ends at that stage. Protocol-Owned Liquidity accomplishes the exact same reduction in circulating supply while ensuring the asset continues to work productively for the ecosystem.
The underlying mechanics function continuously. With every new block, 20% of the system income generated by THORChain is deposited directly into the specific liquidity pool that yielded the highest fees relative to its depth over the previous 3 days. Arbitrageurs subsequently match the RUNE with the corresponding token on the opposite side of the trade. As a result, the protocol acquires a combined position of RUNE alongside $ZEC, $TRX, or whatever alternative assets swappers are currently demanding the most.
Holding this active position provides three significant benefits that are impossible to achieve with a burned token. First, it consistently accumulates swap fees. Second, it increases the overall depth of the pool, which directly allows traders to enjoy much better pricing on their swaps. Finally, the setup automatically buys the dip. Whenever $RUNE drops in value against its paired token, the position seamlessly trades a fraction of that alternative asset to purchase even more RUNE.
The underlying mechanics function continuously. With every new block, 20% of the system income generated by THORChain is deposited directly into the specific liquidity pool that yielded the highest fees relative to its depth over the previous 3 days. Arbitrageurs subsequently match the RUNE with the corresponding token on the opposite side of the trade. As a result, the protocol acquires a combined position of RUNE alongside $ZEC, $TRX, or whatever alternative assets swappers are currently demanding the most.
Holding this active position provides three significant benefits that are impossible to achieve with a burned token. First, it consistently accumulates swap fees. Second, it increases the overall depth of the pool, which directly allows traders to enjoy much better pricing on their swaps. Finally, the setup automatically buys the dip. Whenever $RUNE drops in value against its paired token, the position seamlessly trades a fraction of that alternative asset to purchase even more RUNE.