Thorchain

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Discover Thorchain's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is Thorchain?

THORChain is a decentralized cross-chain liquidity protocol that enables the direct exchange of native assets between various blockchain networks, such as Ethereum, Binance Smart Chain, and Polkadot, without the need for wrapped or pegged assets. It uses the Cosmos-Tendermint BFT consensus mechanism and relies on its native token, RUNE, for staking, governance, and liquidity provision.

How is Thorchain used?

Thorchain (RUNE) is used in several key roles within the THORChain network:

  1. Settlement Asset: RUNE serves as the settlement currency between all supported assets, ensuring that any two assets can be swapped directly. For example, a BTC -> ETH transaction involves swapping BTC for RUNE and then RUNE for ETH.

  2. Network Security: Node operators must bond RUNE to ensure the network’s economic security. The 2:1 bond:pool ratio ensures that the value of RUNE needed in the network is three times the value of the non-RUNE assets in the liquidity pools.

  3. Governance: Users can vote with their liquidity (RUNE:ASSET symmetrically added) for the pools they want to be active. The pools with the most liquidity become active.

  1. Incentives: Block rewards are paid to Liquidity Providers and Node Operators on a set emission schedule, in addition to swap fees.

  2. Liquidity Pools: Each asset is paired with RUNE as a settlement asset to maximize liquidity and efficiency, capturing value for RUNE.

  3. Staking: The Proof of Stake consensus mechanism requires the staking of native RUNE tokens. Nodes need to bond at least 1 million RUNE to earn a validator spot.

  1. Gas Fees: RUNE is used to pay for swap/gas fees for RUNE pairs.

These roles ensure that RUNE is a vital part of the THORChain network, facilitating cross-chain swaps and maintaining the network's security and liquidity.

How do I store Thorchain?

To store Thorchain (RUNE) tokens securely, you can use a Ledger hardware wallet. Here are the steps to follow:

  1. Connect Your Ledger Device:

    • Connect your Ledger device to your computer.
    • Open Ledger Live and navigate to the Manager section.
    • Search for the Thorchain app in the App Catalog and install it.
  2. Access Thorchain:

    • Go to app.thorswap.finance/swap and click "Connect Wallet."
    • Select "Connect Ledger" and ensure your Ledger device is unlocked.
    • Choose the Thorchain app on your Ledger device and click "Connect".
  3. Create a Wallet Address:

  • Once connected, you will see a "Wallet" button. Click on it to view your wallet address.
  • This address can be used to receive RUNE tokens and can be viewed on a block explorer.
  1. Manage Your RUNE:
    • You can manage your RUNE tokens using the Ledger Live app, which allows you to check your balance, track transactions, and more.

By following these steps, you can securely store and manage your Thorchain (RUNE) tokens using a Ledger hardware wallet.

How to buy Thorchain?

To buy Thorchain (RUNE) tokens, you can follow these steps:

  1. Choose a Cryptocurrency Exchange:

    • Binance: Create a free account on the Binance website or app, verify your identification, and then select THORChain and USD from the dropdown menu. You can use a credit card, debit card, or bank deposit to purchase RUNE.
    • Kriptomat: Sign up with Google, Apple, or enter your name and email, then verify your email, phone number, and identity. Add funds using a bank deposit or credit card, and then select THORChain from the list of cryptocurrencies to buy RUNE.
    • Uphold: Create a free account on the Uphold website or app, verify your identity, and then choose your payment method. You can use a credit or debit card, bank account, or external crypto wallet to buy RUNE.
  2. Verify Your Account:

    • Binance: Verify your email and mobile number, and then complete the identification verification process.
    • Kriptomat: Verify your email, phone number, and identity to unlock the full potential of the Kriptomat platform.
    • Uphold: Verify your identity as part of the account creation process.
  3. Add Funds:

  • Binance: Use a credit card, debit card, or bank deposit to add funds to your Binance account.
  • Kriptomat: Add funds using a bank deposit or credit card.
  • Uphold: Connect your Uphold wallet to your debit/credit card, bank account, or external crypto wallet to add funds.
  1. Buy THORChain (RUNE):

    • Binance: Select THORChain from the dropdown menu and confirm your order.
    • Kriptomat: Click on the Kriptomat icon, select "Buy," choose THORChain, enter the amount, preview the transaction, and confirm your purchase.
    • Uphold: Choose the amount you want to transact, select "To" and choose RUNE, preview the deposit, and confirm the transaction.
  2. Store or Use Your RUNE:

    • Binance: Store your RUNE in your personal crypto wallet or hold it in your Binance account. You can also trade for other crypto or stake it on Binance Earn for passive income.
    • Kriptomat: You now own THORChain and can use it as desired.
    • Uphold: Store your RUNE on the secure Uphold wallet or trade it for other assets like crypto, stablecoins, and metals right from your Uphold wallet.

Remember to carefully consider your investment experience, financial situation, investment objectives, and risk tolerance before making any investment decisions. Cryptocurrency prices are subject to high market risk and price volatility.

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History of Thorchain

THORChain, a decentralized cross-chain liquidity protocol, officially entered the market in 2018. The protocol was created and maintained by a group of eighteen pseudonymous self-organized developers. The concept for the project emerged as part of the Binance Hackathon in 2018. The network secured over $2 million during private and seed funding rounds, and its Initial Exchange Offering (IEO) netted another $250,000. These funds were used to launch the Chaosnet in the summer of 2020, which functions as the backend for the BepSwap DEX. BepSwap was the first decentralized application to launch on the Binance Smart Chain, enabling the trading of various cryptocurrencies through the integration of wrapped BEP2 versions of the coins.

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How Thorchain works

THORChain is a decentralized, cross-chain exchange (DEX) that allows users to swap native assets between different blockchain networks without the need for wrapped or pegged assets. Here's a detailed overview of how it works:

Key Components
  1. RUNE Token:

    • RUNE is the native token of THORChain, with a total supply of 500 million.
    • It plays a crucial role in the ecosystem, serving as a settlement asset, providing network security, facilitating governance, and offering incentives.
  2. Liquidity Pools:

    • These pools are virtual reservoirs where liquidity providers deposit their assets.
    • Each pool consists of a native asset paired with RUNE in a 1:1 ratio, ensuring that for every $1,000 worth of an asset, there is $1,000 worth of RUNE.
  3. Node Operators:

  • Node operators are responsible for securing the network and adding new blocks of transactions.
  • They must bond a minimum of 300,000 RUNE to participate, which serves as a monetary stake to ensure their integrity.
  1. Swapping Process:

    • When a user initiates a swap, the asset is sent into THORChain, and the corresponding asset is sent out from one of THORChain's vaults.
    • For example, a swap from Bitcoin to Ethereum involves two steps: Bitcoin is swapped for RUNE, and then RUNE is swapped for Ethereum.
  2. Incentives and Governance:

    • Liquidity providers earn rewards in the form of RUNE based on the liquidity they provide.
    • Node operators receive block rewards and a portion of the swapping fees.
    • Users can participate in governance by voting with their liquidity to determine which pools are active.
  3. Security Measures:

  • The network requires twice as many RUNE to be bonded by node operators as there is RUNE pooled, ensuring the security of the network.
  • If a node operator acts maliciously, their bonded RUNE is slashed as a penalty.
  1. Savers and Borrowers:
    • Savers deposit native assets to earn single-sided yield without experiencing impermanent loss.
    • Borrowers can deposit native assets as collateral and create debt denominated in USD, with no interest, liquidations, or expiration.
Network Functionality
  • THORChain operates as a Layer 1 blockchain, built using the Cosmos SDK.
  • It enables non-custodial, trust-minimized swaps across multiple chains, including Bitcoin, Ethereum, BNB Chain, Avalanche, Cosmos Hub, Dogecoin, Bitcoin Cash, and Litecoin.
  • The network is designed to minimize trust and ensure scalability and economic security.
Additional Features
  • THORChain offers features like streaming swaps, dual liquidity, savers' vaults, DEX aggregation, generic messaging, and lending.
  • The network is constantly evolving, with new features and primitives being researched and implemented through community governance processes.

In summary, THORChain is a decentralized cross-chain exchange that leverages the RUNE token to facilitate secure, trust-minimized swaps across multiple blockchain networks. Its unique architecture and incentives ensure a robust and scalable ecosystem for users.

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Thorchain's strengths

THORChain (RUNE) has several strengths that contribute to its popularity and effectiveness as a decentralized cross-chain liquidity protocol:

  1. Cross-Chain Swaps: THORChain enables users to instantly swap native crypto assets across different blockchains in a transparent manner, without the need for wrapped assets or user registration.

  2. Security: The network uses a Tendermint BFT (Byzantine Fault Tolerance) Proof-of-Stake (PoS) variant as its consensus mechanism, ensuring the security of the network through Validators and smart contracts.

  3. Liquidity: THORChain features Continuous Liquidity Pools (CLPs) that reduce slippage and improve liquidity, making it more efficient for traders to access liquidity without needing to search for buyers or sellers directly.

  1. Native Asset Support: The protocol supports the exchange of native assets, such as Bitcoin and Ethereum, across different blockchains, providing a seamless experience for users.

  2. Governance and Incentives: RUNE, the native token, plays multiple roles, including governance, network security, and incentives for Validators and Liquidity Providers, ensuring the network's stability and growth.

  3. Multi-Purpose Token: RUNE is a versatile token that supports all functions on the THORChain network, including staking, bonding for validator nodes, and trading.

These strengths have helped THORChain gain popularity and establish itself as a reliable and efficient decentralized exchange.

Thorchain's risks

Thorchain (RUNE) carries several risks, primarily related to its decentralized finance (DeFi) nature and the potential for protocol failure. Key risks include:

  1. General Protocol Risk: If Thorchain fails and loses all its assets, users' funds are at risk of being lost entirely.

  2. Smart Contract Hacks: Security issues and smart contract hacks are common in DeFi, and Thorchain is not immune to these risks. There is no insurance layer in place to protect users in such cases.

  3. RUNE's Value: The value of RUNE can significantly impact the liquidity pools. If RUNE were to drop to zero, the liquidity pools would be severely affected, putting users' assets at risk.

  1. Liquidity Provision Risks: Providing liquidity on Thorchain also comes with investment risks, as the value of assets can fluctuate.

  2. Dependence on Node Operators: The security of the network relies on Node Operators bonding twice as many RUNE as there is RUNE pooled. If Node Operators were to abandon the network, the security of Thorchain would be compromised.

These risks highlight the importance of caution when engaging with DeFi platforms like Thorchain.

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Thorchain’s team

  • Project Custodians: Individuals responsible for managing the treasury and orchestrating activities to achieve the project vision.
  • Community Members: Contributors who have become leaders and builders of various elements of THORChain, blurring the lines with Project Custodians.
  • Node Operators: Users who run THORnodes, comprising the THORChain Node (Tendermint/Cosmos SDK) and nodes for each supported chain, providing a bond and securing the system.
  • Liquidity Providers: Users who deposit assets into liquidity pools and earn yield in return.
  • Traders: Users who exchange one asset for another using the THORChain protocol.
  • Developers: Individuals and teams contributing to the project from an engineering perspective, driving THORChain's roadmap.

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