Introduced in 2018, THORChain is one of the older blockchains of the COSMOS system. The Cosmos Network, commonly known as the Cosmos ecosystem, is the Blockchain’s most scalable and interoperable ecosystem. It consists of a decentralized network of independent blockchains powered by Tendermint and other Byzantine fault-tolerant algorithms.
Despite its age-old history, there are people that are still not familiar with THORChain. So let’s find out: what is THORChain, and how does it work?
What is THORChain?
THORChain is a decentralized liquidity protocol that focuses on cross-chain connection, allowing traders to exchange tokens across networks. It is ‘permissionless’, which means that on it, all coins are free to shift or swap, without any permission from any companies or organizations.
How does THORChain work?
The primary issue that the project’s team is trying to solve is market liquidity and the possibility of big price movements. The price movement of cryptocurrencies is attractive to investors, but it is also a feature that prohibits the general public from using them. The cryptocurrency market’s lack of liquidity is also one of the reasons for its extreme volatility. While some investors may find this tempting, it is essentially more of a risk than an investing plan. Since then, assets like Bitcoin have struggled to become a widely traded currency due to low liquidity and significant volatility.
Below key points describe what is being built to tackle the above.
- THORChain: Instant decentralized liquidity protocol built on Layer 1.
- Yggdrasil Protocol: Fast and Secure Cross-chain Bridge.
- Flash Network: A Layer 2 network for the exchange of Crypto assets between cross-networks. In Layer 2 there are Liquidity Hubs.
- Bifrost Protocol: A cross-chain protocol.
- Asgardex: Fast and secure liquidity interface.
- ÆSIR Protocol: Set of management protocols.
THORChain can support any current digital assets by leveraging the chain-agnostic bridging protocol throughout the ecosystem. The chain-agnostic protocol provides for the solution of liquidity issues without the need of a third party such as centralized exchanges.
Unlike Uniswap or Bancor, which only support a certain type of chain, THORChain overcomes the market’s liquidity problem by allowing any existing currency to be swapped.
The ecosystem has three main components:
- Validators: The people that check the THORChain Blockchain for transactions. To complete tasks and earn token rewards, they must stake RUNE tokens.
- RUNE stakeholders: Holders of $RUNE who participate in liquidity pools and get token incentives.
- End users: End users who want to trade tokens pay a cost in RUNE.
What is $RUNE?
In the THORChain ecosystem, $RUNE is the official BRP-2 Utility Token. This utility coin acts as a channel for generating liquidity for the network’s Pools. RUNE is also the asset core for two separate pools, allowing for fast asset swapping.
- Staking: RUNE Token holders can participate in staking and become part of the Validator Set.
- Transaction Fee: Used to pay transaction fees in the THORChain network. In addition, the token is also used to pay liquidity fees, bridging fees, etc. when using THORChain’s services.
- Rewards: Tokens are used as rewards for Validators, incentivizing users to be active and stake more into the network.
- Governance: Token holders help maintain the operation and protect the security of the network.
THORChain, Binance, Gate.io, MEXC Global, FTX, KuCoin, CoinTiger, BitGlobal, HitBTC, Zipmex, and more exchanges now offer and support $RUNE for trading. Out of all exchanges, $RUNE is the most traded on Binance.
$RUNE is a BEP2 token. As a result, supported e-wallets such as THORChain wallet, Binance Chain Web wallet, Trust Wallet, Ledger Nano S, Guarda, Atomic Wallet, and others can safely store it.
The above is an explanation of THORChain and its ecosystem. THORChain aims to take an important role in the blockchain future. When THORChain works perfectly, effectively and applies by a large range, the effect would be the stabilization and balance of the cryptocurrencies’ price, which as a result is the acceptance for digital currency as an official payment method. In the future, THORChain hopes to establish a payment network that will allow users and service providers to exchange cryptocurrency.