THORChain 101: The ultimate multi-chain DEX ⚡️
THORChain is an Immutable, Cross-chain DEX. It’s like a multi-chain version of Uniswap. THORChain allows anyone in the world to trade one digital asset on one chain with another digital asset on another chain. There are no custodians, and these trades are accomplished without wrapping.
THORChain is revolutionary. There are many DEXs and some like Uniswap have achieved impressive scale. But most DEX trading is only possible between Ethereum and ERC-20 assets (tokens that exist on the Ethereum blockchain). DEXs on other platforms like Solana and BSC have seen traction but these do not support cross-chain trades.
It hasn’t been possible to trade real bitcoin at scale in a decentralized way. The closest we’ve seen so far are “atomic swaps” but these haven’t scaled and “wrapped” BTC trading. But wrapped BTC is not the same as real BTC. THORChain is the first to direct transfers of native tokens on the native chains. THORChain brings new possibilities to the world of cross-chain trading. Suddenly it’s possible to trade Bitcoin for ETH in a decentralized manner.
Most blockchains have two main user groups. These are liquidity providers and traders. Liquidity providers deposit assets (like native Bitcoin or Ethereum) into liquidity pools. In return for depositing their assets, they earn yield (from the trading fees of Group B). Traders exchange one asset for another.
To work across chains, however, THORChain adds a third user group, ThorChain Nodes. This is the main difference between THORChain and other DEXs like Uniswap. Node Operators run THORnodes, which comprise the THORChain Node (Tendermint/Cosmos SDK), and a node for each supported chain. A node operator will thus be running a Bitcoin node, Ethereum node, etc.
The RUNE token is baked into both the liquidity and provisioning of the protocol. It underpins the economic security model that allows the system to function. For each $1 of non-RUNE assets tied up in pools, $3 of RUNE will be bonded alongside it. RUNE is the asset to which LPs must pair every deposit. It is recommended that an LP depositing $100k in BTC also deposit $100k in RUNE at the same time. If they don’t, half of their assets will be swapped for RUNE under the hood. The rest of the RUNE is deposited by THORnodes.
THORChain’s model is extremely secure. It relies on proof-of-bond. By posting bond, it keeps validating THORChain Nodes honest. THORnodes are penalized harshly for misbehavior. THORnodes are strongly incentivized to post an amount of RUNE as bond that approaches 2x the value of all native assets in the liquidity pools.
The THORChain ecosystem is growing rapidly. There are some great Dapps available on THORChain already:
- @xdefi_wallet is the browser extension wallet of the future. It’s multi-chain, with integrated swaps and staking functionality.
- @BrokkrFinance introduces THORassets or synths.
- @thorswap is a Cross-Chain DEX aggregator
- @thorstarter democratizies access to uncapped upside. It’s a multichain IDO (initial dex offering) platform.
THORChain has so much potential. It’s built around the functionality of swapping assets across L1s, but THORChain is capable of so much more. @Jatinkkalra wrote a great thread on THORChain’s potential:
THORChain provides users a ton of value. It’s changing the way we think about L1s and allows so many more uses for assets like BTC.