I added $500 in real Bitcoin to the new THORChain Savers Vault which will earn around 5% per year in real yield

By n1ce | DeFi Adventures | 27 Dec 2022

This article was first published on medium

When I first heard about what the Savers Vaults can do I thought: Okay, let’s be honest. This feature sounds to good to be true.

  • I keep the keys to my Bitcoin
  • I earn 5% per year from trading fees
  • I can withdraw my Bitcoin at any point

But let’s start from the beginning! What is Thorchain? What is Thorchain Savers Vault?

Introducing THORChain

THORChain is a decentralised crosschain protocol which allows to trade native currencies for each other, even though they are on their own chain — like Bitcoin or Ether.

I will try to give a very simple example, it might not be 100 percent correct technically.

Let’s say you want to sell your Bitcoin for Ether. Normally you would have to go through a centralised exchange and trust them with your Bitcoin. THORChain developed a way to do this in a decentralised, trustless way.

THORChain allows you to send for example 1 BTC together with your ETH address and you will receive the equivalent amount in ETH to your ETH wallet. This is done through pools of THORChain’s native asset RUNE. So there is a pool of BTC + RUNE and a pool of ETH + RUNE.

How are these pools created an maintained? Short answer: through people providing liquidity, adding Bitcoin or Ether or RUNE or both. Why would someone do that? Liquidity providers earn a part of the swap fees that occur when swaps are done on THORChain. The other part of the swap fees goes to Nodes, who decentrally power the network.

THORChain Savers Vaults

There are some difficulties attracting liquidity for the pools:

Adding liquidity to the pools is a bit complex and technical, you need to be careful if the prices of the assets move in different directions for example (impermanent loss) and you are invested into RUNE, which might not be suitable for everyone.

Savers Vaults offer a very simple solution to this. People can just add the native Asset like Bitcoin or Ether. They will earn a bit less than if they provided both RUNE & the asset but gain the benefits of price stability and no exposure to RUNE. The RUNE asset has potential for their own series of blogs, let me know if you are interested.

The THORChain ecosystem profits because more liquidity means less slippage for swaps which results in a more efficient system.

In summary, the Savers Vaults make it simple to provide liquidity for THORChain for endusers.

How to add Bitcoin to Savers Vaults

This will be an overview guide how to get started with the Savers feature. You will need:

  • Your Bitcoin in your own wallet (I am using a Ledger Nano X and the XDEFI Wallet)

There are different interfaces to interact with THORChain, I am using THORSwap:  

Connect your Wallet to THORSwap. For Bitcoin XDEFI, Ledger and Keystore are supported.

I used XDEFI which is connected to my Ledger Hardwarewallet. I know this might be confusing but essentially you could skip the XDEFI can connect straight from your Ledger to THORSwap.

Navigate to Earn > BTC > Click “Deposit”.

Now you can enter an amount of Bitcoin you would like to add to Savers. After you click on “Deposit” (Notice in the screenshot above my wallet is not yet connected. After connecting it, the button will say “Deposit”.) you will see a confirmation screen:

See your fees, slippage (price difference) and your deposit amount in the confirmation overview.

Here you see the Network Fee you have to pay for the transaction on the Bitcoin Network. You can also double-check the exact amount you are about to enter into Savers.

After clicking “Confirm”, you will see a popup of XDEFI wallet where your transaction has to be confirmed, and confirmed again on your Ledger Device before it goes into pending status. In pending it will take a few minutes before the transaction is finished.

This process will be very familiar for anyone that has interacted with a smart contract with a hardware wallet before. In this case however you are sending a transaction on the Bitcoin Blockchain.

In the transaction overview you can see the status of your transaction. Give it some time to complete.

After the transaction is finished, you can go to “Withdraw” to see your balance that is currently in Savers. You can withdraw it anytime but please note that due to the network fee and possible slippage for both deposit and withdrawal, it might take some time before you break even. This of course depends on the APR that you can earn in the Vault.

In a followup article I will show the stats for my added Bitcoin to see how long it took me to be in profit.

I hope this article was helpful if you are looking for an introduction to THORChain Savers Vaults and a guide how to add your first Bitcoin.

Necessary disclaimer of course: Non of this info is financial advice. THORChain Savers is a risky product and can lead to you losing all your Bitcoin you sent there. Please only add whatever you are willing to lose in the worst case.

With that said, please tell me about your experience with the product which I think is truly groundbreaking. Real Yield on your Bitcoin in your own custody. Are you using it to earn yield? Is it too risky for you? Leave a comment here or connect on Twitter.

Have a great day!


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