Thorchain is a cross-chain liquidity protocol that enables users to exchange assets between blockchain networks in an autonomous and non-custodial way. Thorchain's core mission is to decentralize cryptocurrency liquidity through a public "THORNodes" network and ecosystem products. Any user, product, or institution can access Thorchain native and cross-chain liquidity with privacy. Thorchain has its own blockchain that functions as a Layer 1 cross-chain decentralized exchange. Users in Thorchain can simply swap one asset for another in a trustless and decentralized way, eliminating the need to rely on order books for liquidity as centralized exchanges.
What are THORNodes?
THORNodes service and maintain the Thorchain network, these nodes keep the network running. Multiple independent servers make up each THORNode. To establish a network for cross-chain swapping, all THORNodes collaborate and communicate with one another. A node's operation is a serious task. There are risks, skills needed, and costs even though Node Operators are well paid for running a node. Node operators are paid 67% of the system revenue when the system is stable.
Thorchain Features
1. Interoperability
Thorchain supports interoperability, allowing users to exchange crypto tokens between blockchains. A user, for example, can convert ETH to BTC and vice versa. This is done in a non-custodial manner; centralized exchanges perform cross-chain trading, whereas most decentralized exchanges do not. Thorchain was created to address this shortcoming on DEX by addressing the issue of cross-chain trading.
2. User Privacy
Since Thorchain is a non-custodial exchange, no registration and KYC are required. A user can simply connect their decentralized wallet to Thorchain, send a transaction and Thorchain will execute it.
3. No Wrapped Asset
A wrapped token is a tokenized version of another cryptocurrency. A wrapped token is directly comparable to a stablecoin (USDT) pegged to the USD price. Wrapped token prices are collateralized and pegged to the original token prices on another blockchain. For example, BNB can exist on the Ethereum blockchain; the BNB would adhere to the ERC20 standard, but its value would be pegged to BNB, resulting in wBNB. When a user sends a token from a blockchain to another blockchain on a decentralized exchange, a wrapped token of the native token sent is issued to the user. In Thorchain, there’s no wrapped token, all tokens are native tokens after swapping across a blockchain.
4. Transparent Prices
As a centralized exchange, Thorchain has no centralized governance to ensure fair prices in cross-chain trading. Regardless, Thorchain ensures decentralized fair and transparent pricing in cross-chain trading.
5. Automated Market Maker Protocol (AMM)
Thorchain uses the Automated Market Maker Liquidity Protocol. Automated market makers, or AMMs, are decentralized exchanges that pool user liquidity and use algorithms to price the assets in the pool. AMMs provide as many users as possible with high liquidity, low transaction costs, and 100% uptime.
6. Continuous Liquidity Pools
Thorchain has the feature of a continuous liquidity pool, which increases the protocol's efficiency. The asset ratio in a pool maintains market prices in Thorchain.
7. Thorchain Liquidity Providers (LP)
Users of Thorchain can offer liquidity for simple and quick trading. These users, referred to as Liquidity Providers, are compensated for supplying liquidity. Liquidity Providers (LPs) are network participants that deposit their assets into pools known as Liquidity Pools. As long as they keep their assets in that pool, they acquire a share of that pool. As traders pay fees to swap a token, the fees are proportionately shared by the pool owners, liquidity providers receive rewards in exchange for contributing their assets to the pools.
What is RUNE?
RUNE is the native cryptocurrency of Thorchain. RUNE tokens are used by Thorchain users to participate in the network and to pay for the swap and transaction fees for RUNE pairs. RUNE has a wide range of utilities, some of which are listed below:
1. Network Governance
The native cryptocurrency of Thorchain, RUNE, is used to run the network and make decentralized decisions on the direction of Thorchain based on consensus. Stakeholders are those users of the network who have the power to influence decisions.
2. Network Security
Thorchain requires twice as many RUNE to form a bond by Node Operators as there are RUNE pooled to provide network security. This security feature makes Node operators financially motivated to act in the network's best interest.
3. Thorchain Incentives
RUNE tokens are distributed according to a predetermined emission schedule to Liquidity Providers and Node Operators. These RUNE tokens are known as Block rewards. These rewards are distinct from the APR rewards Liquidity Providers receive from liquidity pools.
4. Settlement Asset
All pools' settlement assets are RUNE, and Thorchain requires a 1:1 representation of RUNE and ASSET when pooling. For instance, a pool with $100 worth of BTC must also contain $100 worth of RUNE. Irrespective of how assets are added or removed, all assets within a pool will pair 50% with RUNE.
RUNE Tokenomics and Data
RUNE tokens can be bought and traded on famous centralized and decentralized cryptocurrency exchanges. Credible centralized exchanges like CoinEx. RUNE tokens can be traded or swapped on Thorchain as well.
Summary
In summary, Thorchain enables users to simply swap one asset for another in a trustless and decentralized way, eliminating the need to rely on order books for liquidity as centralized exchanges. Thorchain also solves the setback of interoperability on non-custodial wallets, Thorchain allows a user to swap tokens across blockchains. Thorchain has the feature of a continuous liquidity pool, which increases the protocol's efficiency. The asset ratio in a pool maintains market prices in Thorchain. Thorchain also allows Liquidity Providers to earn rewards for providing liquidity in liquidity pools. Another advantage of Thorchain is that there’s no wrapped token, all tokens are native tokens after swapping across a blockchain. Regardless of no third-party governance, Thorchain ensures fair and transparent pricing in cross-chain trading. Thorchain ensures user privacy as it operates as a non-custodial exchange, a user does not require registration and KYC to use Thorchain services.
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