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[THORChain's](https://leofinance.io/@crypto-guides/what-is-thorchain-rune) transformative approach to lending is a game changer in the [decentralized finance (DeFi)](https://leofinance.io/@leoglossary/leoglossary-decentralized-finance-defi) landscape. The inherent mechanism of opening and closing loans directly influences the [tokenomics](https://leofinance.io/@leoglossary/leoglossary-tokenomics) of $RUNE, with a noteworthy emphasis on its burning and minting processes. 

For seasoned users of the THORChain ecosystem, understanding these dynamics is important in understanding the evolving trajectory of DeFi lending in this space. Let’s dive in. 

# [Burn and Mint](https://leofinance.io/@leoglossary/leoglossary-burning): A Balancing Act
The essence of THORChain’s lending protocol is encapsulated in its burn-and-mint dynamics. When a loan is originated, it results in the burning of $RUNE, reducing the circulating supply and potentially increasing scarcity. 

Conversely, closing a loan triggers the minting of $RUNE, reintroducing tokens into the supply. This intricate dance between burning and minting is a constant theme and holds substantial ramifications for the valuation of $RUNE.

# A Snapshot of the Current Landscape 
The present state of affairs reveals interesting  patterns. Out of 437 initiated loans, only 9 have reached closure, with repayments totaling $14k  against a cumulative borrowed sum of $1.07M USD. 

This implies that a staggering 98% of loans, and their associated amounts, are persistently active, fueling the sustained burning of $RUNE and influencing its market dynamics.

# Trend and Projections


!https://images.hive.blog/DQmTGfoj9rqeh4GR19Aj2CwUxEfrYCZSP3ttqkjxfPyt7i6/61D17E0D-95EC-40CF-B04D-411DA4BFE6E8.jpeg

The net effect of these activities has resulted in 965.2k $RUNE being burned, a figure derived from 974.8k $RUNE burned offset by 9.6k $RUNE minted. 

This scenario paints a picture of a consistent and prevailing trend favoring the burning of $RUNE, a pattern that is vital for stakeholders to monitor and comprehend in the context of market movements and valuation trajectories.



# What’s coming? Streaming Loans
The ecosystem is poised for a substantial shift with the upcoming launch of streaming loans, a development that is predicted to hasten the utilization of the lending cap. 

This enhancement will afford users the capability to initiate larger loans with lower slippage, optimizing the lending experience, especially for high-value participants. 

With 19.5% of the lending cap currently utilized, the advent of streaming loans is expected to redefine the lending cap dynamics significantly.

# Unrivaled Lending Propositions
The distinctive allure of THORChain’s lending mechanism is further increased by its unmatched  offerings: 0% interest, absence of liquidations, and non-expiration of loans for $BTC and $ETH. 

This unparalleled proposition seems to be a primary driver behind the observed lack of urgency among borrowers regarding loan repayments, a factor contributing to the continual burning of $RUNE. 

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# Implications and Market Resonance
These unique features not only elevate THORChain’s standing in the DeFi space but also act as catalysts in shaping market behaviors and expectations. 

The ongoing burning of $RUNE, coupled with the relaxed approach to loan repayments, highlights the perceived value and appeal of the platform’s lending features, people can take out loan for as long as they want or not even pay back, not paying back is even good for the platform, I know, it sounds too good to be true, don’t worry you’re not the only one raising eyebrows, but if you are, do yourself a favor and go through the docs. 

 I don’t know about you but Runes fundamentals have never been so strong, and the market is yet to price all this in as the price of RUNE is still along $2, plus we are still in a bear market. 

However in all sincerity even I in all my bullishness have one major concern. With the supply of Rune and the rate of burning as highlighted above, if the price of RUNE goes too high will it be sustainable for the ecosystem? I guess this is a good problem to have. 




# Conclusion
THORChain is at the forefront of innovation in the DeFi sector, with its lending mechanism serving as a testament to its revolutionary approach. 

The constant interplay between $RUNE’s burning and minting processes is shaping the token’s market dynamics and valuation, an aspect that all stakeholders should closely monitor and be aware of. With THORChain the future of DeFi secured and exciting. We look forward to the coming developments and challenges as we scale the future of our finance. 

Thanks for reading. 


Posted Using [LeoFinance Alpha](https://leofinance.io/@mistakili/impact-of-thorchains-unique-lending-mechanism-on-rune)