Everything You Need to Know About THORChain
What is THORChain (RUNE)?
Thorchain is a protocol that connects to different networks. You can use it to trade coins from one network with coins from another network. This means that people who hold tokens on one network can trade them for tokens on other networks.
Crypto traders and investors use a decentralized exchange for trading their coins. For example, if they have Bitcoin, they can trade it with Ethereum. A network cannot do this. THORChain is a protocol that lets people trade different coins with each other. They can do this without ever leaving the protocol and without any intermediaries.
The target of this project is to bring more liquidity to all cryptocurrencies, not just one type. For instance, if someone wants to trade a different cryptocurrency with someone else, then they can do that without a central authority.
THORChain makes it easy for people to earn money from the THORChain decentralized exchange. People can put their cryptocurrency in a pool, borrow other people’s cryptocurrency, and then return it.
THORChain is a blockchain. It can also be used as a cross-chain network. When people have different kinds of coins, they can automatically trade them for other coins that they want.
Like some other regular exchanges, THORChain makes use of an automated market maker (AMM) trading model. Unlike the peer-to-peer model, this one provides liquidity to the exchange it operates by automating digital asset trading without the need for authorization.
THORChain is like Uniswap or Bancor. But unlike these other exchanges, they don’t use a custodial service. This means that liquidity providers can lock up two different assets.
Furthermore, THORChain provides a better experience for traders because it is not like other exchanges. You do not need KYC information to use it.
The RUNE Token
RUNE is the power for Thorchain. It makes sure that everything is safe. Without it, you would not have enough money to make sure things are ok.
All pools of money in the system have a native token and another token. For example, if I want to change from Bitcoin to Ether, I need the BTC-RUNE and ETH-RUNE pools. In this prototype, each asset has to be paired with RUNE. This results in a few pools but not as many as in systems that can create a pool out of any two assets like Uniswap.
Besides this, Thorchain nodes need to meet the staking criteria by bonding a particular amount of RUNE. This bond is used to secure the system, and it guarantees that assets in the pools will be safe. If a node tries to steal the funds on the protocol, it will be punished. They will have to pay back twice as much as they stole ($3), and then it is like that never happened. Sometimes nodes are not good at their job, but if that happens, they might lose their bond of $6.
The Thorchain protocol makes sure that node operators always have the right amount of RUNE. This is done by a system called The Incentive Pendulum.
The Incentive Pendulum aims to keep the system in the best state. This is when 67% of all the RUNE are bonded, and 33% are pooled in pools.
If there are too numerous people who want to trade money, the network allows more rewards for people who finance their money in the system. This means that people who have lots of money will get more rewards than if they traded it. The system is trying to make things better for people who provide more liquidity and not as good for people who provide less.
In the best state, there would be twice as much money for every million dollars worth of assets in the pool.
On top of the fact that RUNE helps send outbound transactions, it also helps pay transaction fees. It subsidizes gas needed for sending outbound transactions to different networks and participates in the Thorchain governance where users can signal which chains and assets the network should add next.
RUNE is THORchain’s native token. It has a role in managing liquidity, security, governance, and incentives. The TUNE token is the money that people use for the THORChain system. The RUNE token has a set maximum supply of 500,000,000 tokens. It is used for a variety of functions.
How Does THORChain Work?
To trade with other types of tokens, THORChain has a system that is like the one used by the Bancor DEX. These are called continuous lending pools. All types of tokens that are not from THORChain are put in a pool together with RUNE, the native token of THORChain.
When someone starts an exchange, the system will swap one token for RUNE. Then it swaps RUNE for the other token. Basically, two swaps happen with instant execution, which enables non-custodial exchanges on the THORChain protocol.
Users can deposit money into a pool where other users can borrow from. The person who deposits the money will get a share of the profit. There are pools of money for people to buy and sell things in the market. Operators in THORChain create this pool, and they also check if people want to swap items. They get to do this because they have tokens that can be staked. Proof of stake is a type of system that relies on tokens too.
There are 100 to 300 spots for people to become validators. Validators need at least 1 million RUNE (other coins can be exchanged too). They’re hosted on an extra layer with more security.
THORChain is like any other decentralized exchange. You can compare it to exchanges such as Uniswap or SushiSwap. However, THORChain is different from a regular DEX. Unlike most AMM-based DEXs that only allow users to swap tokens that live within the same blockchain, THORChain is designed for swapping or exchanging cryptocurrencies that live on different blockchain networks.
The THORChain experience is made possible by the Cosmos SDK and Tendermint protocols. The Cosmos is an open-source ecosystem of blockchains. And Tendermint provides developers with building blocks for creating decentralized ledgers that have their own consensus protocol independent of the main network.
If you are an inaugurator, then it is easy to create a decentralized application. You can do this because developers don’t have to build from scratch. Developers should use Tendermint, which means that the networks they create can still work even if one-third of the nodes fail or malfunction. This makes it easy to create apps that use blockchain technology. They will not lose any functionality or security.
A functional and secure consensus protocol that cuts across all the blockchains built on top of THORChain is important because you need to make sure that you can agree on the validity of transactions coming from different blockchains. On the THORChain network, users can use multiple blockchains. This is good for people who want to use different currencies. You can send tokens to wallets that you have on this network.
There are people who work on developing tools for THORChain. They are called the THORChain Core team. There are also people in the community that help develop other things such as front-end user interfaces and other integrations that make it possible to use THORChain.
Key Features of THORChain
THORChain is one of the topmost 100 cryptocurrency projects in the world. RUNE, its local token, is one of the most well-liked cryptocurrencies in the industry, with the following features and takeaways:
- THORChain is a network with no one in charge. It has been developed by people who have no names. This way, it is fully decentralized, and there are no “leaders,” so nobody can harm the project.
- The main purpose of THORChain is to help you use the technologies that are given to you. When people use this protocol, they will get coins without the team taking any percentage.
- THORChain uses many advanced technologies. These include the TSS protocol, Bifröst Signer Module, advanced state pegs, and more.
- The things that are used on THORChain are available, but they are hidden. People will not be discouraged if they know these things exist.
- THORChain is a service that prevents losses. They take care of liquidity providers. The people who put money in, if they lose it, THORChain takes care of them.
- RUNE is available on a variety of blockchains. These include Ethereum and Binance Chain, which are two different types of tokens.
- Users can participate in a platform that helps other people sell their homes. They can do this by running a node where they provide liquidity. There are several other functions too, and they get rewarded for it.
- RUNE is a token that can be used as a security token and governance token. If you desire to participate in the consensus mechanism of THORChain, you need one million RUBE tokens.
What Makes THORChain Unique?
THORChain has a unique approach to liquidity. The fee stops slippage and makes it easier for you not to lose liquidity. It also reduces the risk of temporary or impermanent loss. Another thing that makes THORChain different is the easy-to-use interface. This is made viable by a new technology that means people can easily trade their money for other kinds of money, like dollars or euros.
THORChain is a non-profit company, and its team doesn’t keep any money. The team pays this money to people who use THORChain. THORChain also lets you trade different tokens from other companies like Ethereum, Bitcoin, Binance Smart Chain, Litecoin, and more.
THORChain (RUNE) Pros and Cons
- First, they use RUNE as a liquidity pool for all of the tokens from other blockchain networks that are linked to THORChain. Liquidity providers don’t have to list pairs as they do with most DEXs.
- A DEX is a place where you can trade tokens. The liquidity provider provides two tokens at a ratio of 1:1 to the smart contract enabled liquidity pool. This mechanism is used in decentralized exchanges. But it has risks, like the risk of losing money and not being able to trade your money.
- RUNE is used to keep THORChain secure. The tokens are also being used in the network to validate transactions. They have a protocol that says you have to commit 1 million RUNE tokens for security purposes, and this is called Proof of Bond. If a node becomes malicious to the network, then it will be deducted from the bond proportionally to the amount of damage that it has caused. This means that nodes are more likely to behave well when they know that they will lose their bond if they don’t.
- Transaction fees for THORChain are paid in RUNE. Trading fees for swaps are paid in RUNE too. RUNE is the network’s governance token because each one is equal to a vote.
- This will make it easier to trade with other people.
- Interoperability means that you can use it in many different places. It’s available on many different chains.
- Fuels the cross-chain decentralized exchanges on THORChain.
- Incentivizes liquidity provision
- Non-custodial and yield generating token
- Many people are worried about the team behind RUNE. The fact that they are not known worries many people, but there are also some positive sides to this. There has been plenty of interest in RUNE from institutions because it is very good technology.
- The project is based on a new agreement. It might be risky to the network in the future.
- Founded by an anonymous team
- In the past, THORChain has been hacked.
Where Can I Buy the THORChain (RUNE) Token?
If you desire to buy, sell or trade THORNChain (RUNE), then you can do that on exchanges like these:
- Crypto.com Exchange
This is a paper that talks about Bitcoin. It was written by the person who made it and posted on the internet in January 2009. The person’s name is Satoshi Nakamoto, and he made Bitcoin like an online currency. There are no physical bitcoins. There are only numbers on a computer, like money in an account.
Although bitcoin is not the first online currency, it was the most successful. This might be because it was first. It also came to be known as a predecessor of all other currencies that were made after this for ten years.
Over the years, few people have trusted that it would be a good idea to have a currency that any one person or government did not control. More and more people agree with this idea. Although cryptocurrency is not an officially recognized form of payment, it has managed to form its own niche. People use it even though they know that people are looking at them and talking about them because the financial system made space for them to exist.
Blockchain technology may be utilized to create non-digital money-related applications. Ether is an open-ended software platform with blockchain technology that is the largest and most well-known.
Ethereum is a new platform that allows developers to create apps in a completely different way than they have before. It’s like the internet, but instead of websites, you may build apps with it. An app is comprised of code written in Ethereum’s own programming language, which runs on a blockchain that is untamable and unhackable. This ensures that the program constantly operates even when there isn’t access to the Internet.
Ethereum is software that runs on computers and programs. It can perform a variety of tasks. Ether, the currency of Ethereum, is used in the program. In 2014, people bought ether from Ethereum for money and were delighted with the result. Ether is the currency used to pay for things on Ethereum’s platform. Users of app development services use ether to do so.
The primary purpose of Ethereum is to be a digital currency that can be traded on exchanges. It’s also utilized for applications running on the Ethereum Network, much like other cryptocurrencies. Ethereum is used by people all over the world. It’s used for financial transactions, savings accounts, and as a guarantee.
Ripple is a company that helps people to send money. They have a system for this that works with different types of money, like dollars and euros and yen, and also with cryptocurrencies like litecoin or bitcoin. Ripple has customers in all parts of the world, including lots of banks and financial service companies.
When two people want to send money to each other, they can use Ripple. The people on either end of the transaction use their own trusted third-party company to receive the money. This is like hawala, which is an informal way of transferring money between countries without any physical cash moving.
The Ripple network does not work like bitcoin. Bitcoin has proof-of-work, and Nxt has proof-of-stake. Ripple’s system is different because it uses a consensus protocol to validate account balances and transactions on the system. The consensus helps to improve the integrity of the system by preventing double-spending.
If someone is using the Ripple system and they send $100 to two gateways but accidentally send it twice, then all but one of the transactions will be deleted. The decision about which transaction was made first is decided by consensus on a decentralized network. The confirmations on Ripple are instant and take five seconds. There is no authority who can say who can set up a node. That means the platform is decentralized.
Ripple keeps track of the IOUs that people owe each other. When someone pays someone else, it is recorded on the Ripple website. People can go online and see what IOUs they owe to others. But even though the financial transaction history is recorded and made available on a blockchain, it is not linked to any individual or business. However, this information can be de-anonymized because the public records are all on the blockchain.
THORChain is a blockchain infrastructure company that has developed an exchange protocol for cross-chain swaps. This suite of protocols will reduce the time, cost and risk involved in trading between different blockchains. With a strong team behind it and much more still coming down the pipeline, this project could be worth paying attention to as we move into the future.