Swap/economics:

How much swap volume does THORChain need to offset emissions? (maybe a tool?)

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Approach

Considering the fact that Thorchain Network needs swap fees to compensate the block rewards,looking at the daily and weekly swap fees and block rewards, we notice that in the most cases , the swap fees are less than block rewards. the ratio here is the total rewards / total fees , so when its over 1, the network needs more swaps to compensate the rewards based on the ratio mentioned above.

the X column in the second table, is a coefficient by which the swap value must be multiplied to obtain the corresponding value for offset emissions. this coefficient is presented foe every single months on 2022. the highest coefficient is related to Feb 2022 with 14.9 and the least one is belong to May and June 2022 with around 3.

the coefficient related to whole 2022 is 5.01

1. The graphs above show the Thorchain's daily swap volume and LP rewards over time (in USD).

2. Both weekly swap volume and LP rewards peaked shortly on April 4th 2022.

3. A positive relationship appears to exist between daily swap volume and LP rewards.

4. It is reasonable that swap volume and LP rewards are positively correlated. This is due to the fact that LP rewards are made up of swap fees (derived from swap volume) and block rewards (from Thorchain treasury).

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1. The area chart shows the total block rewards and swap fee over time.

2. We noticed that the block rewards of Thorchain peacked in late March. #Why is weekly block rewards decreasing over time ?

3. The block reward formula is as follows: Block Rewards = (Reserves / Emission Curve) / Blocks per Year

4. As the Thorchain reserve decreases over time due to emission, the block rewards decrease as well. For example, on the week of January 10th, the block reward was around 291K RUNE per week, and on week of April 18th, block rewards were around 270K RUNE per week. #Does decrease in block rewards translate to lower LP rewards?

5. However, a decrease in block rewards over time does not always imply a decrease in APY for node operators and liquidity providers because the decrease in block rewards can be offset by an increase in swap fees on Thorchain.

6. As Thorchain matures and integrates more chains, it will be able to reverse the decrease in block rewards by increasing swap volume and swap fees.