Is THORchain set to become the DEX killer?
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An editor at Coincrop
13 Apr 2022 | 5 min read
HORchain does something that no other decentralised exchange has achieved. That is interoperability – the ability to swap tokens across difference blockchains without the need to wrap them. In this guide we look at the THORchain eco-system and how earn yield.
In this guide:
Disclaimer: All of the information written on Coincrop is without influence and based on our analysis. No guarantee is offered concerning the accuracy of this information and therefore, any individual following up on it does as such completely at their own risk. Rates are correct at time of publication.
What is THORChain?
THORChain is a cross-chain liquidity platform that facilitates communication across blockchains. The non-custodial nature of marketplace allows users to swap assets across multiple networks.
The cryptocurrency used on the exchange is known as $RUNE. At the time of writing, the price is $RUNE - $2.86.
The THORChain website describes the protocol as:
THORChain is a liquidity protocol designed to connect all blockchain assets in a marketplace of liquidity through cross-chain bridges and continuous liquidity pools secured by economically incentivised validators.
The unique aspect of THORChain is that assets held in the liquidity pools are not wrapped or pegged. i.e. the assets are native. THORChain has the functionality to move assets as a result of user actions.
Deposits are accepted into vaults where liquidity can be added or removed as necessary before processing the outbound transactions.
The key objective of THORChain is to enable cross-chain liquidity while avoiding centralisation by only maintaining native assets in the vaults.
$RUNE is the native token of the THORChain network. The token was funded in July 2019 through an initial DEX offering (IDO) on Binance. The maximum supply of the token is 500 million units.
The $RUNE token serves the purpose of securing the network and providing economic incentive for participants. The token performs the following functions:
- Securing the network through a sybil-resistant mechanism
- Liquidity as a settlement asset
- Incentives through network and reward fees
Liquidity pools in the THORChain network are comprised of both RUNE and the native asset.
For instance, #the Ethereum liquidity pool will be comprised of both $ETH and $RUNE
The $RUNE token acts as an intermediary token that permits anyone to swap between are two pooled assets. As has been stated, it’s possible to use the THORChain network of pools to swap native assets between blockchains without the need to wrap any of the assets.
Any cross chain asset will go through each of these liquidity pools and all this is made possible by the $RUNE token.
Below are the rates that can be earned by providing your assets into the liquidity pools:
|Deposit assets||Reward assets||APY Rate|
Binance USD (BUSD)
USD Coin (USDC)
Wrapped Bitcoin (WBTC)
The important of nodes
The role of nodes within the THORChain network is to secure the network. Additionally, they function as bridges to other chains in order that each transaction is correctly sent to the relevant external chain. The role of nodes can be summarised as follows:
- Creation of vaults
- Production of new blocks
- Bonding $RUNE
Each time a user requests a cross-chain transaction using a THORChain liquidity pool, a node will execute the on-chain transactions.
Additionally, as part of the proof-of-stake (PoS) functionality, a collection of validators enables the staking of $RUNE tokens in order to run these network nodes.