THORChain (RUNE), the King of Unwrapped Swaps

In 2021, THORChain (RUNE) went through some rough times. In July, they were the target of three hacks. Although one hack was a white hack, they found themselves back in a rough spot. The price of the RUNE token plunged. However, the project kept the faith and kept going.

Currently, they are enjoying their time as the comeback kid. That same RUNE token is soaring and saw a 100% price increase during March 2022. Therefore, in this article, you will discover more about THORChain.

What is THORChain?

The one thing that makes this cross-chain layer 1 unique is its ability to swap unwrapped tokens. No other chain is capable of doing this. However, it took them four years to get this far and get it right. Nonetheless, this is an amazing feat, and we will have a look at Thorchain (RUNE) and how they manage this.

THORChain is currently the only way to swap layer1 unwrapped ETH for layer1 unwrapped BTC.

Sounds so simple. It took 4 years to solve it. But now that is out of the way, let’s get into layer1 unwrapped DeFi. $RUNE

— THORChain (@THORChain) March 21, 2022

THORChain is a decentralized, cross-chain liquidity network. Think of it as a DEX (decentralized exchange) with an AMM that works differently compared to other DEXs. They built their layer 1 chain on Cosmos SDK and Tendermint. They are unique because they swap crypto between chains and don’t wrap them. To clarify, no other blockchain can do this.

So, interoperability is one of the keywords in 2022 for blockchains. Many blockchains offer this, each in its own way. THORChain does things differently. Some of the features they managed to offer include:

• No more slippage. 
• Reduce chances of losing your liquidity. Neutralize impermanent loss.
• These are impressive features for a DEX.

Furthermore, you can stake the native RUNE token in one of their pools. The average APY bounces between 30% to 40%. However, some APYs go over 100% (138% AVE Bep2 on BNB Chain) or even up to 290% for TWT (BEP2) on BNB. See the yellow arrows on the picture below. To clarify, always first check the APY rates yourself, since they tend to fluctuate.

Source: ThorSwap app

How Does THORChain Work?

Foremost, THORCHain doesn’t work in mysterious ways. Therefore, I will explain this in an easy-to-understand way. You can compare THORChain to a trustless bridging solution. Furthermore, this bridge is:

• Decentralized 
• Autonomous 
• Oracle-free

In turn, this leads to an unprecedented and new technology. As a result, each liquidity pool always has the RUNE token as one of the paired assets in a 1:1 ratio. In addition, the network designed the pools in a comprehensive way. Both node operators and liquidity providers can earn high yields.

Source: Docs.Thorchain.org

The Secret Behind THORChain

THORChain uses continuous lending pool (CLP) tokens. These are smart tokens that allow the bridging of the various blockchains. The protocol deposits all non-native crypto in a liquidity pool. Of course, only crypto is supported by THORChain. However, the other pair is always the RUNE token.

So, what happens if you want to swap non-native tokens between chains? THORChain swaps these non-native tokens into RUNE. At both sides of Bifröst. In other words, a double swap happens with a non-custodial approach. On top of this, liquidity providers receive CLP as rewards. Furthermore, Bifröst also uses:

• 1-way State Pegs-They help with the details of connecting to various chains.
• State Machine-Helps in processing the finalized transaction.

An excellent tool to do all this is the THORWallet. This is a non-custodial wallet that allows for cross-chain token swaps. You can also earn passive income with this mobile DEX.

To sum up, a simple but genius way to solve the problem of having to wrap tokens. Was it easy to do? Probably not! It took them four years to get here. But it seems to work, and the RUNE token is currently soaring as a result. The protocol has also various other tools getting ready to hit the streets. ThorFi is such a project:

• On March 10th, it launched synthetic asset trading.
• It will add lending and borrowing to the THORChain services.

THORChain project roadmap:

* More chains (LUNA, Privacy, L2's)
* More wallets (all the big ones)
* More integrations (Dex aggregators)
* More Features: Synths, THORFi (lending, saving), THORNames

Not stopping until decentralised liquidity 10x bigger than centralised. $RUNE

— THORChain (@THORChain) March 6, 2022

Therefore, it is well worth keeping an eye out on the future DeFi developments of THORCHain.

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Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. This article has been sponsored by THORWallet. Copyright Altcoin Buzz Pte Ltd.