Imagine a platform enabling a seamless exchange of crypto assets in different blockchain networks! Welcome to ThorChain.
What is ThorChain?
ThorChain defines itself as a revolutionary decentralized network born with the ambition to connect different blockchain ecosystems. The platform allows users to exchange different assets.
The platform acts as a universal translator, allowing seamless exchange of assets between blockchain networks like Bitcoin, Ethereum, BNB Chain, Avalanche, Cosmos Hub, Dogecoin, Bitcoin Cash, and Litecoin.
In other words, this network functions as a simple Automated Market Maker. However, it brings its twist: universal interoperability. The platform is not confined to a single blockchain network. Instead, through the power of the Cosmos Software development Kit, Thorchain can facilitate transfers in even non-interoperable blockchains.
The most fundamental reason for its creation was to provide a platform where users deposit funds to pools, enabling P2P swaps. At its core, the platform works to eliminate the need for intermediaries in crypto asset swaps. Like in other DEXes, providers of liquidity for ThorChain earn some rewards.
Who Created ThorChain?
The developers of the network have remained anonymous since the actual birth of this platform. No public records or details about the foundation, development team, or CEO exist.
However, reports indicate that the network’s development occurs publicly on Github, where new updates are uploaded.
However, a platform called Webisoft claims responsibility for completing the development tasks of the network. Webisoft can audit smart contract developments, wallet integrations, and much more.
What are the Objectives of Thorchain?
Some may ask, why was it launched? What are the primary goals or objectives of the Thorchain network? Well, here are a few;
- Cross-chain liquidity – the most fundamental idea of the launch of Thorchain was to provide liquidity across separate blockchain networks.
- Permissionless access – Anyone can join the network without seeking approval.
- Decentralization of trading – Basically, trades are highly decentralized.
- Top network security – This system implants a large number of security protocols in a bid to protect the network.
How Does It Work?
By its native design, this ecosystem integrates various blockchain networks, as it targets to achieve its primary mission of a seamless swapping solution for different cryptos.
For cross-chain asset exchanges for assets not native to ThorChain, the network leverages continuous lending pools. These non-native tokens are deposited to Liquidity pools and paired with RUNE. Notice that RUNE pairs each pair in ThorSwap. As such, any asset swaps require the movement of assets across different liquidity pools.
Once a user starts a trade, ThorChain’s native systems swap the asset for RUNE, then RUNE for the other token. For instance, trader A (Paul) wants to purchase Bitcoin using Litecoin. Neither of these assets is native to Thorchain.
In a traditional swap system, users would need to exchange (wrapped) Litecoin for RUNE, then later exchange RUNE for wrapped Bitcoin.
However, ThorChain’s state-of-the-art machine changes things slightly.
Once the trader initiates their trade, Thorchain’s system immediately swaps Litecoin for RUNE and converts RUNE to Bitcoin. This process is called double swapping, which ensures transaction finality is instant. The users can get Bitcoin without even holding the RUNE.
Key Players and Features of Thorchain
The operational system of the Thorchain network relies primarily on several key players of the platforms. Among them include:
- Liquidity providers — Thorchain also has two types of liquidity provision systems. Single-sided liquidity provision allows anyone to provide only one type of asset. The double-sided LPs are traditional. Here, LPs provide liquidity in pairs of assets.
- Node Operators — Many node operators running full nodes are at the heart of the Thorchain platform. This helps validate cross-chain asset migration, guaranteeing the integrity of transactions.
- Swappers – Of course, the system can not be complete without the people swapping different assets. Swappers are the most original user base of the entire Thorchain ecosystem.
- Traders – The traders within this network seek arbitrage opportunities. Their presence helps rebalance the liquidity pools by selling or buying assets across multiple exchange networks.
- Multi-Party Computation Protocol (MPC) — Native within the Thorchain network is an MPC protocol, an advanced system for managing liquidity pools across chains. This ensures that assets can move between the pools securely.
What is the Technology of Thorchain?
To function at 100% efficiency, this platform combines a wide array of unique technologies. Among these top-tier technologies include:
- Cosmos SDK — The Software Development Kit in Cosmos allows developers to create many blockchains that are interoperable with each other.
- Bifrost protocol enhances communication between Thorchain and other chains like Ethereum and Bitcoin.
- AMMs – This is essentially a decentralized tool designed to keep track of all trades across chains.
- Synthetic assets – Instead of wrapping assets like in other systems, Thorchain synthesizes them. In essence, synthesized assets have faster settlements than wrapped ones.
- Streaming swaps – Thorchain dawned the capacity to break large swaps into smaller ones using its streaming swaps. This splitting of the swaps means less liquidity fees.
- Tendermint consensus – at the heart of the Cosmos ecosystem is Tendermint’s proof of stake system. In essence, nodes work to secure the network.
Thorchain’s RUNE Token
Installed at the heart of the Thorchain ecosystem is the native token RUNE. The token that has made waves in the crypto universe plays a critical role within Thorchain. So, what is the role of RUNE?
- Transaction Settlement Asset — As mentioned earlier, RUNE is paired with all other assets within the Thorchain network. This is primarily because of its role in settlements of the cross-chain swaps.
- RUNE for Network Security – The Proof of Bond mechanism of the ThorChain network demands the locking of RUNE coins to bolster network security. Essentially, the total bonded RUNE must always be double the total RUNE locked across liquidity pools. This discourages malicious acts within the network.
- RUNE for Governance — Holders of the RUNE coin have governance rights, enabling them to vote on network constants changes. They can also use their RUNE to create and activate new liquidity pools.
- RUNE as Incentives — As the primary settlement asset, RUNE is also the primary asset for incentivizing Liquidity providers and node operators.
Where Can You Buy RUNE?
After reading the guide, you likely see RUNE as a great, good, or reasonable asset. However, some still need to determine where to purchase RUNE within the crypto space.
The crypto asset is available across all significant centralized crypto exchanges today. Among them are:
- Binance — This crypto exchange primarily supports the RUNE/USDT, RUNE/BTC, RUNE/FDUSD, RUNE/TUSD, RUNE/BNB, and RUNE/EUR trading pairs.
- Kucoin – Among the top crypto exchanges, Kucoin mainly supports the RUNE/USDT, RUNE/BTC and RUNE/USDC pairs.
- Bybit exchange mainly supports the RUNE/USDT pair.
- Gate.io also mainly supports the RUNE/USDT pair.
- Kraken is the first exchange providing the most extensive support for the RUNE/USD pair, directly pairing RUNE with USD.
The most significant trading pairs are mainly connected to the USDT, still the largest stablecoin in 2024.
How Does RUNE Get Its Value?
Another question investors need answers to is the value mechanism for RUNE. As the heart of the ThorChain ecosystem, RUNE broadly gained value from its use cases.
Earlier, the guide mentioned several uses of RUNE, including settlement, governance, rewards and security. As such, the demand for RUNE within the ThorChain network will remain high as the network’s usage increases.
Through providing robust swap services for assets across the chains, ThorChain’s service attains high demand. This demand will increase the need for RUNE, bolstering prices even in future.
When writing this report, the circulating supply of RUNE was about 300.7 million, and the market cap stood at $1.37 billion. The price of the asset also stood at $4.58. Its most considerable resistance was at $7.2. Any successful attempt to break out from the resistance will send RUNE high. With the bull season approaching, this could be the best time to buy RUNE.
How Can You Use ThorChain?
With the network primarily centred around Swaps, you can use the platform to exchange assets in different blockchains. Imagine getting a simple, straightforward, and faster way of exchanging Ethereum for Bitcoin or Litecoin.
However, aside from just swapping, users can participate in the network by staking RUNE into liquidity pools. Moreover, you can stake RUNE to be a validator. Finally, you can borrow or lend within the ThorChain network.
Community Projects in ThorChain
With a large community, ThorChain saw a growth in the number of projects by its community. These projects not only bolster the use cases of ThorChain but also help strengthen the price of RUNE.
Per their documentation, the projects include exchanges, wallets and many more crypto tools. Among them include;
- Lends – Where people borrow against their crypto
- Trust Wallet – The popular wallet is also listed among ThorChains community projects. On their site, Trustwallet has wallet options specifically for RUNE
- DecentralFi – an exchange network powered by Thorchain
- ShapeShift – The Original Multichain Exchange
- Rango Exchange – This is believed to be the first Multic-Chain DEX aggregator.
- ThorSwap – The first multichain DEX platform on top of Thorchain.
- Liquality – This is a browser extension Crypto Wallet with Built-In Swap
- THORWallet Dex – This is a cross-chain Wallet and decentralized exchange network
- XDeFi – Cross-chain Wallet & Dex, Browser Extension
Final Word
Thorchain thrives as a force in the DeFI realm, offering a secure, efficient, and user-friendly platform for cross-chain liquidity. The platform’s innovative approach to swapping using AMMs and liquidity pools addresses crypto liquidity providers’ challenges.
Furthermore, the team’s deep commitment to decentralization has enabled Thorchain to demonstrate the possibility of creating a blockchain-agnostic ecosystem that enhances the interoperability and fluidity of asset exchange.
This network will likely play a crucial role in the future of blockchain as the landscape keeps evolving.
Frequently Asked Questions
Who Founded Thorchain, and Who Leads its Operations Now?
Established in 2018, this network is a product of an anonymous group of developers, including Chad Barraford. Nine Realms manages the network’s current operations with Gavin McDermott.
How Can I Acquire RUNE?
Rune purchases are primarily available through Thorchain. You exchange it for any asset supported on Thorchain. You can also buy RUNE through other exchanges mentioned earlier.
What is The Current Status of The Thorchain Team?
Around eight core developers and nine developers from Nine Realms focus on progressing the protocol alongside roughly 40 additional devs and community contributors actively enhancing the ecosystem.
What is Unique About Thorchain?
The network separates itself from the platform Uniswap by providing cross-chain swaps that do not rely on wrapping. This network supports genuine cross-chain swaps.
