Hey guys :) I’m back with another comprehensive Q&A piece, this time for an innovative DeFi protocol that facilitates decentralized liquidity networks – THORChain (RUNE).
THORChain is a DeFi protocol that facilitates cross-chain liquidity pools with no pegged or wrapped tokens. In doing this, THORChain aims to create a marketplace of liquidity for digital assets to be traded in a trustless, permissionless & non-custodial manner.
Now, before we dive in, the following piece is similar to my latest articles on bZx Protocol (BZRX), Ampleforth (AMPL), and Balancer (BAL), so if you haven’t already seen those, be sure to check them out as well.
Hope you enjoy!
The list of Q&A is kind of long so first comes the list of questions that I have prepared the answers to:
- What is THORChain?
- Who and When Created THORChain?
- What is $RUNE Token Used for?
- Does THORChain have its own Blockchain?
- What are some notable products powered by ThorChain?
- What are THORChain Nodes?
- Can You Earn $RUNE?
- Where to Store $RUNE Token?
- Where to Buy & Sell $RUNE?
1. What is THORChain?
THORChain website homepage
THORChain is a novel DeFi liquidity protocol that’s based on Tendermint & Cosmos-SDK rather than Ethereum, like most DeFi protocols.
THORChain is unique as it facilitates a decentralized cross-chain liquidity network that allows users to swap assets instantly at manipulation-resistant market prices. It enables a decentralized marketplace for trading digital assets and is designed to remain chain-agnostic, favoring no specific asset or blockchain.
Like other DeFi protocols, the THORChain network obtains liquidity from stakers who earn fees on token swaps, turning their idle crypto assets into passive income-producing assets in a non-custodial manner.
Key THORChain Features:
Swap Cross-Chain Assets
THORChain’s decentralized liquidity network enables users to swap between any connected asset in a non-custodial manner directly from your wallet. Token swaps are completed immediately for a small and transparent fee.
THORChain users can stake their idle crypto assets to add liquidity and earn fees and block rewards for doing so. THORChain’s liquidity is always on-chain and never “pegged” or “wrapped”.
Bond as a Node
THORChain users can host nodes to earn 2/3rds of the system’s income for their role in securing it. Nodes are churned every 3 days to ensure liveness, reliability, and to prevent capture.
2. Who and When Created THORChain?
THORChain was created by an anonymous team of developers and entrepreneurs who believe that figureheads, personalities, and founders undermine a project’s ability to decentralize.
That said, THORChain’s anonymous founders began to actively research the project in June 2018 and they launched their first testnet in Q4 2018. Following the testnet, the team actively researched and developed for a number of months before launching the first bridge in Q2 2019 and the mainnet in Q1 2020.
As for the THORChain’s native cryptocurrency, RUNE, the token was launched on Binance Chain in June 2019 with the issuance of 500,000,000 RUNE tokens. Along with the launch of RUNE, the token was listed on Binance DEX and distributed for free to users who participated in a number of activities that rewarded them tokens.
As of July 28, 2020, THORChain’s circulating supply is 158,432,088 RUNE and tokens will be continuously distributed to THORChain stakers, node operators, and community members for various tasks and activities over the next 5 years.
3. What is $RUNE Token Used for?
RUNE token logo
THORChain’s RUNE token is essential to the entire THORChain ecosystem. From token rewards to network security, the RUNE token serves numerous security and cryptoeconomic functions.
$RUNE Token Use Cases:
- Validators Stake RUNE
- Transaction Fees are paid for in RUNE
- Liquidity is backed by RUNE
- Block Rewards are paid in RUNE
- RUNE is required to Launch New TokenChains
Validators Stake RUNE
Validator nodes secure the THORChain Network by staking (locking up) RUNE tokens for a bonded period of time to prevent nothing-at-stake attacks. These Validators are required to stake RUNE to be part of the Validator Sets and they are rewarded with RUNE for securing the network.
Transaction Fees are paid for in RUNE
All THORChain Network transaction fees (gas) are paid for in RUNE. These fees may include transaction fees, trading fees, bridge fees, and liquidity fees.
Liquidity is backed by RUNE
Liquidity is always backed by RUNE on a value:value basis in the Continuous Liquidity Pools. Therefore, RUNE functions as an ecosystem settlement currency.
Block Rewards are paid in RUNE
Block Rewards for Layer 1 Validator Nodes and Layer 2 Liquidity Nodes are paid for in RUNE.
RUNE is required to Launch New TokenChains
While RUNE is the first token on THORChain, other TokenChains will be created to trade different assets at the protocol level. To create a new TokenChain, RUNE will be required to kickstart the initial transaction and to provide initial liquidity for the new asset.
4. Does THORChain have its own Blockchain?
Binance Chain logo
No, THORChain does not have its own blockchain, as it currently resides on top of Binance Chain.
THORChain launched on Binance Chain as a BEP2 token to help bootstrap its network, build common tooling, and enhance the benefits to the ecosystem.
Both THORChain and Binance Chain share a common codebase being powered by the Cosmos SDK with Tendermint consensus. This commonality makes them compatible and blockchain agnostic with each other and others.
Also, THORChain is building a suite of tools that will allow Cosmos powered chains, like Binance Chain or itself, to connect to any other chain in a trustless and secure way.
For example, THORChain is developing bridges that allow any Cosmos-powered chain to sync, connect and maintain secure two-way value-transfer bridges between blockchains such as Bitcoin, Ethereum, Ethereum based tokens (ie. ERC-20 tokens), as well as other types of blockchains like Monero, Tezos, and Facebook Libra.
That said, THORChain is completely blockchain agnostic but currently resides on top of Binance Chain.
5. What are some notable products powered by ThorChain?
BEPSwap product logo
As a powerful decentralized liquidity protocol for digital assets, THORChain has a variety of notable products in the realm of DeFi including:
- Flash Network
- Bifröst Protocol
BEPSwap is a layer-2 DeFi application for Binance Chain that allows any Binance Coin (BNB) or BEP2 token holder to swap BEP-2 tokens instantly from their wallets.
In other words, BEPSwap is like Uniswap but for tokens in Binance’s BEP-2 standard rather than Ethereum’s ERC-20 standard. Also, in addition to enabling BEP-2 token swaps, BEPSwap allows users to stake their assets in liquidity pools to earn trade commissions.
BEPSwap has yet to launch and will go live once the THORChain mainnet launches.
Flash Network is a Layer-2 network for instant asset exchange on THORChain. It allows for instant trades across all tokens and liquidity pools and can be bridged to other Layer-2 networks such as Lightning, Raiden, and Bolt to facilitate the instant exchange of any connected asset.
RUNEVault is a staking product that was built and released in preparation for the launch of BEPSwap. It’s a simple interface that allows RUNE holders to stake their tokens and earn more RUNE.
The RUNEVault product allows the THORChain team to observe and learn from user interactions and helps the team to refine the staking user experience (UX) for BEPSwap and eventually for THORChain.
The Bifröst Protocol is a fast and secure cross-chain protocol for THORChain that enables multi-chain connectivity by building a bridge between blockchains.
The protocol aims to solve the problem of interoperability between blockchains so that users can seamlessly perform cross-chain asset transfers and interact with whichever blockchain and whichever asset they choose.
6. What are THORChain Nodes?
THORChain Nodes are responsible for running the network software that keeps the THORChain Network going.
For instance, by running THORChain’s software Node Operators enable:
- The creation of vaults for storing assets
- The construction of the blockchain with new blocks
- The witnessing of transactions on connected blockchains
- The operation of the THORChain protocol
- Users to remove assets by signing outgoing transactions
In order to become a THORChain Node Operator, you need to run high performance IT infrastructure and hold a minimum of 1 million RUNE, which is $530,000 at today’s price of $0.53 per RUNE.
Though it’s very expensive to become a THORChain Node Operator, they are rewarded in RUNE for their services to the network. Node Operators receive what’s called ‘bond rewards’ for being active in the network and these rewards equate to 67% of the system income while Liquidity Rewards equate to 33%.
Moreover, while Node Operators can make money, they can also be penalized when they fail to uphold their responsibilities. If a Node operator fails to make Witness Transactions, complete Vault Creation, or complete Sending of Outgoing Transactions, they will be penalized.
7. Can You Earn $RUNE?
Yes, you can earn THORChain’s native cryptocurrency RUNE in a couple of different ways.
- Running a Validator Node
RUNE token holders can currently stake their idle RUNE tokens in RUNEVault to earn a share of 1 million RUNE that’s distributed to stakers weekly.
As of July 29, 2020, there are 2028 stakers with a total of 152,364,962 RUNE staked. These stakers currently have a weekly ROI of 0.656% or an annualized ROI of 34.11%. That said, RUNE staking with RUNEVault at the moment of writing is a pretty good deal.
Once THORChain’s BEPSwap product goes live, RUNE token holders will be able to stake their tokens there and earn commissions on trades.
2. Validator Node
Validator Nodes earn income from liquidity fees and block rewards, both of which are paid out in RUNE tokens. Validator Nodes earn 67% of THORChain’s System fees while Liquidity Providers earn 33%.
8. Where to Store $RUNE Token?
THORChain (RUNE) is based on the BEP-2 token standard and resides on top of the Binance Chain blockchain. That said, you can store RUNE in any BEP-2 token supported wallet.
Popular THORChain (RUNE) Wallets:
- Trust Wallet - (mobile/official Binance wallet)
- Ledger Nano S - (hardware)
- Guarda - (desktop, mobile, web)
- Atomic Wallet - (desktop)
- Binance Chain Web Wallet - (web)
In addition to the above-listed wallets, THORChain (RUNE) can be stored on a wide variety of other reputable wallets supporting Binance Chain BEP-2 assets.
9. Where to Buy & Sell $RUNE?
THORChain (RUNE) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade THORChain is through cryptocurrency exchanges.
You can buy RUNE with cryptocurrency at the following exchanges. In most cases, you will be able to buy RUNE with BNB.
- Binance - BTC, BNB, BUSD
- MXC - ETH, USDT
- BitMax - USDT
- Bilaxy - USDT
- FTX - USDT
In addition to the exchanges listed above, THORChain (RUNE) is also traded on a few other lesser-known exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.