thorchain review

Cross-chain and interoperability are the future for blockchains. Projects and their users must be able to move their assets freely around. THORChain offers this. They originate from the Cosmos ecosystem, but connect to other chains.

So, let’s have a look at what Thorchain is all about.

What Is THORChain?

Based on Cosmos, THORChain offers swaps between blockchain networks. They are a DeFi protocol, and you can swap assets there. This way, you don’t need a CEX or other middlemen. For example, you can perform cross-chain swap with assets like Bitcoin and Ethereum, and, at the same time, generate yield.

In April 2021, they released the multichain chaos net. This allowed them to start the cross-chain operations. However, they suffered a couple of hacks in July 2021. They lost over $13 million and had to regroup and restart. 

They managed to do this by fixing all the bugs and improving network security. Furthermore, the code was fine-tuned, and the devs were able to restore some networks. This came about in October 2021. Since that moment, they have offered cross-chain options with the following chains.

  • Bitcoin
  • Ethereum
  • Litecoin
  • Avalanche
  • Atom
  • BNB
  • BCH
  • Dogecoin

THORChain also has its own token, the RUNE token. They use this token to pair every asset in their pools. In other words, each pool has RUNE plus another asset. This increases both the value and utility of the RUNE token. It also allows you to trade with native tokens. See the picture below.


Source: Thorchain website

Can You Stake in THORChain?

Yes, you can stake in THORChain. We actually wrote an in-depth staking guide about this topic. In short, you stake your assets by providing liquidity to pools on THORChain. Your reward comes from swap fees. Proportional to the amount you stake in a pool, you receive rewards. 

For example, if you add 1,000 tokens as liquidity in a 10,000 token pool, you own 10% of that pool. Your reward is also 10% of each transaction. For instance, there’s a $10,000 swap and the transaction fee is 0.2%. You receive 10% of the 0.2% fee, which is $2. In other words, you collect fees from trades.

This is different compared to staking on a PoS blockchain. In this scenario, you lock your assets for a fixed or flexible period. Your reward is now the yield for helping to secure the chain. In this set up, your yield doesn’t come from trading fees, but rather from block rewards. The picture below shows the current average APY.


Source: Thorchain website

Who Created THORChain?

A group of anonymous people created THORChain in 2018. This was a team of devs that took part in a Binance Dexathon. However, they publish everything they do on Github. They are also known as the Project Custodians. They were part of the project launch.  On the other hand, we also have the community members. These contributed to the project during the past 18 months.

However, both these roles are starting to overlap, and the aim is to have a 100% community lead project. As a result, THORChain is fully decentralized and doesn’t have a CEO or founders. The project is open source and transparent. It’s the community that decides the direction of the project. They decide by governance over all key decisions.

Who Secures The THORChain Network?

The THORChain network secures itself with the Tendermint consensus mechanism on Cosmos. They also use the Cosmos SDK for this purpose. THORChain is a permissionless DEX.

Tendermint uses the Byzantine Fault Tolerant protocol in a new way.  The network needs to validate each operation. For this, two-thirds of nodes need to agree. Furthermore, there’s also a Threshold Signature Scheme (TSS). This secures the leaderless asset vaults.

To clarify, no asset can leave or enter the principal TSS vault, without a two-third majority. This majority makes it more expensive to attack the network, than the rewards it would bring.

To run a node, you need to bond RUNE. This amount varies with the value of all assets in the respective pools. The main reason is that it prevents node operators from acting harmfully. As a bonus, there’s also higher demand for RUNE.

This is Part 1 about THORChain. Here you can read the second part.

The current price of RUNE is $1.19. This is up by 16.6% in the last 14 days. However, over the last year, RUNE is down 88.8%, like many other tokens. The max supply is 500 million tokens, out of which 300 million already circulate. The market cap is $356 million.

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