What is Thorchain?

The project was founded by Eric Voorhees in 2018, initially launched on the Binance network, and supports multiple blockchain networks.

Thorchain’s story starts in 2018 at the Binance Dexathon, a hackathon that fosters innovation in decentralized exchange (DEX) technologies. A team of anonymous developers emerged with a revolutionary concept: a truly decentralized cross-chain liquidity protocol. This marked the birth of Thorchain.

Fueled by the vision of a permissionless and interoperable DeFi ecosystem, the Thorchain team built their protocol on the Cosmos SDK, leveraging the Tendermint consensus engine and GG20 Threshold Signature Scheme (TSS) for security. They aimed to create a Layer 1 DEX that could facilitate seamless swapping of native assets across different blockchains, eliminating the need for wrapped or pegged assets.

In July 2019, Thorchain conducted an Initial DEX Offering (IDO) where they raised $1.5 million to support the project’s development. This fundraising marked a significant milestone, but the journey wasn’t without its challenges.

Since its inception, Thorchain has prioritized the following aspects:

• Decentralization: Maintaining a community-driven and permissionless network has been a core principle. This is reflected in the anonymous development team and the reliance on RUNE token holders for network governance.
• Cross-Chain Functionality: Thorchain aimed to break down barriers between blockchains, allowing users to swap native assets directly without relying on centralized intermediaries.
• Security: Thorchain’s design incorporates innovative security measures like Capped Proof of Bond for validator selection and asynchronous network upgrades to ensure a robust and reliable network.

While Thorchain has achieved significant progress, it’s still under development. The team is constantly working on improving network security, liquidity, trading volume, and user experience. Their focus on developer integration allows for the creation of innovative wallets, exchanges, and other services that build upon Thorchain’s core functionalities.

Thorchain represents a novel approach in the cryptocurrency world, functioning as a decentralized cross-chain liquidity protocol. This protocol, unique in its design and application, leverages the Tendermint consensus engine, Cosmos-SDK state machine, and GG20 Threshold Signature Scheme (TSS) to operate as an independent Layer 1 cross-chain decentralized exchange (DEX) built on the Cosmos SDK.

At the heart of Thorchain’s functionality is the ability for users to swap native assets across multiple blockchains seamlessly, without the need for wrapped or pegged assets. This system ensures that the pricing of assets is transparent and fair, without dependency on centralized third parties. Thorchain’s technology utilizes continuous liquidity pools to maximize efficiency. In essence, it can be likened to a cross-chain automated market maker (AMM), similar in some respects to Uniswap but with its distinct cross-chain features.

Decentralization and Cross-Chain Swaps

The protocol allows for the exchange of Layer 1, or native, assets across multiple chains, such as swapping native BTC for ETH. This process requires no user registration - users simply send a transaction, and Thorchain executes it without the need for wrapped assets.

Thorchain Finance

Thorchain extends its functionalities to encompass three financial primitives: Swapping between assets on different chains, savings with native assets, and lending native assets to borrow others.

Developer Opportunities

Thorchain encourages developers to create innovative products that integrate with its system. These can include wallets, exchanges, and various services, with developers earning up to 10% in affiliate fees for swaps and liquidity additions.

Innovative Protocol Design

Some notable innovations include a Capped Proof Of Bond validator selection, 3-Day Validator Churning for network dynamism, asynchronous network upgrades, the chain-agnostic Bifrost Protocol, and the Incentive Pendulum which balances rewards between Validators and Liquidity Providers.

Security, Liquidity, and Volume as Core Pillars

Thorchain’s development focuses on enhancing network security, liquidity (Total Value Locked and user experience), and trading volume through improved swap UX and wallet integrations.

Thorchain’s Native Token - RUNE

RUNE plays multiple roles within the Thorchain ecosystem, acting as a settlement asset, providing network security, participating in governance, and serving as an incentive mechanism.

THORNodes

These service the Thorchain network, ensuring that it remains permissionless, anonymous yet secure, and resistant to censorship and centralization. The platform offers a suite of decentralized and permissionless services including cross-chain swapping, savings with native assets, lending out native assets, and liquidity pools for depositing native assets.

Interacting with RUNE Token

RUNE, Thorchain’s native token, is essential for interacting with various network functionalities. Users can hold RUNE, deposit into liquidity pools, or bond into nodes. Thorchain, with its distinctive blend of decentralization, cross-chain functionality, and innovative financial primitives, represents a significant step forward in the world of decentralized finance (DeFi). It offers users and developers alike a unique platform for engaging with digital assets across various blockchains.