The Thorchain Protocol and Technology
This module talks about the technical foundation of Thorchain, including its use of the Cosmos SDK and Tendermint consensus. It also covers the multifunctional role of the RUNE token in the ecosystem, emphasizing its importance in liquidity provision and network security.
Born out of a hackathon event hosted by Binance in 2018, Thorchain was an answer to the complex challenge of creating a decentralized, cross-chain liquidity network. The primary mission of Thorchain is to enable the exchange of different cryptocurrencies without the need for centralized intermediaries, thus preserving the ethos of blockchain’s decentralized nature.
Thorchain utilizes the Cosmos SDK, a framework for building blockchain applications, and the Tendermint consensus algorithm, known for its speed and efficiency. The Threshold Signature Schemes (TSS) technique is crucial for Thorchain’s secure handling of transactions. It allows multiple parties (nodes) to jointly produce a single digital signature, a fundamental part of Thorchain’s secure, decentralized operation.
Swappers exchange assets. Liquidity Providers contribute assets to liquidity pools, and Node Operators secure the network and ensure its operational integrity. Thorchain’s ecosystem is designed to incentivize participants through rewards, ensuring the continuous provision of liquidity and network security.
A standout feature of Thorchain is its ability to swap assets across different blockchains without needing to ‘wrap’ them. This preserves the native properties of the assets being traded. Swapping on Thorchain involves converting one cryptocurrency into RUNE and then into the desired cryptocurrency, ensuring liquidity and minimizing slippage.
The RUNE token is integral to the Thorchain ecosystem. It’s used as a settlement asset, a security mechanism, a governance tool, and as a reward for participation in the ecosystem. RUNE’s value and utility are deeply interwoven with Thorchain’s liquidity pools, ensuring that the system remains balanced and economically viable.
Arbitrage opportunities in Thorchain help in regulating market prices, thus maintaining a balance between supply and demand in the liquidity pools. Thorchain’s design principles emphasize decentralization and security, from its node operation to the anonymity of its developers.
RUNE can be acquired on various cryptocurrency exchanges, broadening its accessibility and increasing its potential utility for users worldwide. Thorchain is a pioneering project that addresses the challenges of liquidity and cross-chain transactions in the DeFi space. Its continued development and evolution could significantly impact how cryptocurrencies are traded and interact across different blockchains.
Thorchain essentially represents a blend of innovation, security, and decentralization in the blockchain world. Its unique approach to cross-chain liquidity, combined with the utility and flexibility of the RUNE token, positions it as a significant player in the DeFi landscape.
Bifröst Protocol and 1-way State Pegs
Thorchain incorporates a component known as the Bifröst service within each node. This service is vital for connecting to various blockchains. The nodes synchronize and monitor vault addresses on their respective blockchains. Upon detecting an inbound transaction, these nodes create a Thorchain witness transaction, which is essential for processing across different blockchains.
Thorchain’s State Machine
The State Machine is a core part of Thorchain’s infrastructure, designed to finalize transactions. It orders transactions, computes state changes, and allocates them to appropriate outbound vaults. The State Machine then creates a ‘txOut’ item, which contains details such as the chain, destination address, originating vault, and transaction specifics. This is stored in a Key-Value database for transaction management.
Signer (Bifröst) Functionality
Post transaction finalization, the Signer component in Thorchain retrieves the transaction and prepares it for the destination chain. It employs the respective chain client for this purpose.
The transaction undergoes a distributed threshold key-signing process using the TSS (Threshold Signature Scheme) module, ensuring security and integrity before it’s broadcast on the destination chain.
THORChain Vaults
Thorchain utilizes two types of vaults: Asgard TSS Vaults (inbound) and Yggdrasil Vaults (outbound). The former are large committee-based vaults, while the latter are smaller and faster, designed for outgoing transactions. The Yggdrasil Vaults, although previously a part of Thorchain’s architecture, are being phased out. New nodes now operate without these Yggdrasil Vaults.
Sharded Asgard Vaults and Yggdrasil Funding Management
To scale beyond 40 nodes, Thorchain implements a sharding approach for Asgard vaults. As the node count increases, the Asgard vaults are split to manage the scale effectively.
Yggdrasil vaults receive limited funding, tied to a percentage of the node’s bonded value. This funding management ensures the efficient distribution and security of assets within the network.
Network Churn and Migrating Vaults
Thorchain’s network churn involves creating new public keys and transferring funds to new vaults. This process is critical for maintaining security and operational efficiency in the network. During a churn, older vaults are retired, and the assets are moved to the new vaults. This process is complex and involves several transactions to ensure seamless asset migration.
Урок 1:Introduction to Thorchain
Урок 2: The Thorchain Protocol and Technology
Урок 3:RUNE Token and Thorchain's Ecosystem
Урок 4:Security, Governance, and Non-Custodial Transactions
Урок 5:Using Thorchain for Swapping, Borrowing, and Earning
Урок 6:Thorchain in the DeFi Landscape
Урок 7:Real-World Applications, Case Studies and Conclusion
The Thorchain Protocol and Technology
This module talks about the technical foundation of Thorchain, including its use of the Cosmos SDK and Tendermint consensus. It also covers the multifunctional role of the RUNE token in the ecosystem, emphasizing its importance in liquidity provision and network security.
Born out of a hackathon event hosted by Binance in 2018, Thorchain was an answer to the complex challenge of creating a decentralized, cross-chain liquidity network. The primary mission of Thorchain is to enable the exchange of different cryptocurrencies without the need for centralized intermediaries, thus preserving the ethos of blockchain’s decentralized nature.
Thorchain utilizes the Cosmos SDK, a framework for building blockchain applications, and the Tendermint consensus algorithm, known for its speed and efficiency. The Threshold Signature Schemes (TSS) technique is crucial for Thorchain’s secure handling of transactions. It allows multiple parties (nodes) to jointly produce a single digital signature, a fundamental part of Thorchain’s secure, decentralized operation.
Swappers exchange assets. Liquidity Providers contribute assets to liquidity pools, and Node Operators secure the network and ensure its operational integrity. Thorchain’s ecosystem is designed to incentivize participants through rewards, ensuring the continuous provision of liquidity and network security.
A standout feature of Thorchain is its ability to swap assets across different blockchains without needing to ‘wrap’ them. This preserves the native properties of the assets being traded. Swapping on Thorchain involves converting one cryptocurrency into RUNE and then into the desired cryptocurrency, ensuring liquidity and minimizing slippage.
The RUNE token is integral to the Thorchain ecosystem. It’s used as a settlement asset, a security mechanism, a governance tool, and as a reward for participation in the ecosystem. RUNE’s value and utility are deeply interwoven with Thorchain’s liquidity pools, ensuring that the system remains balanced and economically viable.
Arbitrage opportunities in Thorchain help in regulating market prices, thus maintaining a balance between supply and demand in the liquidity pools. Thorchain’s design principles emphasize decentralization and security, from its node operation to the anonymity of its developers.
RUNE can be acquired on various cryptocurrency exchanges, broadening its accessibility and increasing its potential utility for users worldwide. Thorchain is a pioneering project that addresses the challenges of liquidity and cross-chain transactions in the DeFi space. Its continued development and evolution could significantly impact how cryptocurrencies are traded and interact across different blockchains.
Thorchain essentially represents a blend of innovation, security, and decentralization in the blockchain world. Its unique approach to cross-chain liquidity, combined with the utility and flexibility of the RUNE token, positions it as a significant player in the DeFi landscape.
Bifröst Protocol and 1-way State Pegs
Thorchain incorporates a component known as the Bifröst service within each node. This service is vital for connecting to various blockchains. The nodes synchronize and monitor vault addresses on their respective blockchains. Upon detecting an inbound transaction, these nodes create a Thorchain witness transaction, which is essential for processing across different blockchains.
Thorchain’s State Machine
The State Machine is a core part of Thorchain’s infrastructure, designed to finalize transactions. It orders transactions, computes state changes, and allocates them to appropriate outbound vaults. The State Machine then creates a ‘txOut’ item, which contains details such as the chain, destination address, originating vault, and transaction specifics. This is stored in a Key-Value database for transaction management.
Signer (Bifröst) Functionality
Post transaction finalization, the Signer component in Thorchain retrieves the transaction and prepares it for the destination chain. It employs the respective chain client for this purpose.
The transaction undergoes a distributed threshold key-signing process using the TSS (Threshold Signature Scheme) module, ensuring security and integrity before it’s broadcast on the destination chain.
THORChain Vaults
Thorchain utilizes two types of vaults: Asgard TSS Vaults (inbound) and Yggdrasil Vaults (outbound). The former are large committee-based vaults, while the latter are smaller and faster, designed for outgoing transactions. The Yggdrasil Vaults, although previously a part of Thorchain’s architecture, are being phased out. New nodes now operate without these Yggdrasil Vaults.
Sharded Asgard Vaults and Yggdrasil Funding Management
To scale beyond 40 nodes, Thorchain implements a sharding approach for Asgard vaults. As the node count increases, the Asgard vaults are split to manage the scale effectively.
Yggdrasil vaults receive limited funding, tied to a percentage of the node’s bonded value. This funding management ensures the efficient distribution and security of assets within the network.
Network Churn and Migrating Vaults
Thorchain’s network churn involves creating new public keys and transferring funds to new vaults. This process is critical for maintaining security and operational efficiency in the network. During a churn, older vaults are retired, and the assets are moved to the new vaults. This process is complex and involves several transactions to ensure seamless asset migration.