ADR 023: $RUNE Supply Restructure

Changelog

  • 2025: Initial proposal

Status

Accepted

Context

$RUNE's tokenomics have accumulated artifacts over time, resulting in confusing distinctions between Maximum Supply (500M), Total Supply (~425M), and Circulating Supply (~351M).

Problem 1: Maximum Supply is Meaningless

With the removal of ThorFi/Lending, the minting function no longer exists, making Maximum Supply functionally equivalent to Total Supply. The 500M cap served as a circuit breaker for lending-related minting, but since that feature has been discontinued, the cap is now obsolete.

Problem 2: Reserve Causes Confusion

The Reserve wallet currently holds ~74.21M tokens. These tokens were created ex nihilo and never circulated — they represent a claim against everyone who holds circulating $RUNE. Despite serving necessary protocol functions (operations and exploit coverage), the Reserve causes confusion and routine calls to "spend" it, which would dilute holders.

Problem 3: Complex Supply Structure Discourages Investors

The nuanced distinctions between Maximum, Total, and Circulating Supply are not intuitive to potential investors, creating unnecessary friction.

Problem 4: Burn Effectiveness is Diluted

When burns are calculated against a larger supply figure, their optical and mathematical impact is diminished.

Decision

Proposal 1: Burn ~87% of the Reserve

Burn approximately 64.9M $RUNE from the Reserve, leaving only 9.3M for protocol operations and exploit coverage buffer.

This:

  • Reduces Market Cap vs FDV gap
  • Discourages calls to spend the Reserve (which dilutes holders)
  • Retains sufficient buffer for protocol operations and potential exploit coverage

Proposal 2: Reduce Maximum Supply to 360M

After the Reserve burn, reduce the max supply cap from 500M to 360M to match the new total supply.

This:

  • Removes complexity in $RUNE supply structure
  • Reduces the potential impact of an infinite mint hack/bug
  • The max supply can be revised lower as the burn continues

Implementation

The changes are implemented as a consensus migration (version 13 to 14):

  1. During the migration, the Reserve module balance is reduced to 9.3M RUNE by burning the excess.
  2. The MaxRuneSupply constant and Mimir value are set to 360M (360,000,000 RUNE).
  3. A BurnSupplyType event is emitted for the reserve burn to maintain accurate supply tracking.

Consequences

Positive

  • Simplified supply structure improves investor clarity
  • Reduced FDV/Market Cap gap
  • Smaller max supply limits potential damage from mint exploits
  • Burns become more impactful against smaller supply

Negative

  • If a future exploit or need arises requiring more $RUNE than the remaining Reserve, a new ADR and node vote would be required to mint the shortfall

Neutral

  • These are largely optics changes that do not materially affect protocol functioning
  • The ongoing system income burn (ADR-017) continues to reduce supply over time