Thorchain is an independent blockchain network that seeks to make all cryptocurrencies liquid. Built on the Cosmos protocol, it aims to enable easy trading of non-native crypto assets. While it operates similarly to centralized exchanges such as Coinbase and Binance, it seeks to do away with third parties taking control of people’s funds.
How it works
The independent blockchain platform simply builds bridges that enable crypto enthusiasts to move digital assets securely, easily, and cheaply between various blockchains. Unlike other cross-chain compatibility systems, Thorchain allows the movement of various assets on their native chains. Acting as a liquidity protocol, Thorchain connects all blockchain assets in a liquidity marketplace with the help of cross-chain bridges.
There are two groups of people on the Thorchain ecosystem; Users leverage the network cross-chain services to exchange tokens easily. The exchanges that take place on the network are carried between liquidity pools. On the network, users can trade different types of cryptocurrencies without having to rely on any external or centralized exchange.
|Total supply||500,000,000 Rune|
|Circulating supply||224,410,215 Rune|
|Consensus mechanism||Proof of Stake|
|All Time High||$21|
The users are required to pay a slip fee used to cover gas fees and exchange execution. The fees are paid in Rune, which is the native currency that powers the network. By eliminating the need for crypto exchanges, Thorchain improves efficiency and reduces costs for traders.
Liquidity providers are the second bunch of participants on the network tasked with adding liquidity to the various pools, thus enabling the exchange capability. Liquidity levels are bound by the RUNE coin and kept in separate vaults.
Having its own liquidity pools, Thorchain avoids the need for external price feeds. In return, liquidity providers earn rewards in the form of Rune coins which are essentially the slip fees that users are charged for using the network to exchange their tokens.
Thorchain Consensus Mechanism
Thorchain operates under the Proof-of-Stake consensus. In this case, the system depends on validators to secure the network and execute smart contracts. In return, the validators who are essentially liquidity providers receive rewards in the form of Rune Tokens.
A person can become a Thorchain validator on staking a minimum of 1 million Rune Coins. To enhance the security of the network, the validator nodes are rotated every three days. Currently, the Thorchain network is supported by 360 nodes.
Rune is the native token that powers the Thorchain network. Its primary role is to power liquidity pools and act as an intermediary asset across all pools. Additionally, it acts as an incentive and penalty mechanism. It also helps ensure that nodes on the network are honest and play their role in reporting transactions at different levels.
The total number of Rune tokens that will ever be in supply is capped at 500 million tokens. Currently, the supply has reached over 160 million. In addition, 150 million tokens were reserved for the developers, while 220 million tokens were kept as a reserve at inception.
In a crowded field of decentralized exchanges, Rune stands out partly because it offers unique opportunities for Decentralized finance. Its ability to enable cross-chain transactions in a decentralized way means it is positioned to be a big player in De-Fi as an alternative to centralized exchanges.
Its network also serves a number of issues that have clobbered the blockchain space, from liquidity issues to security as well as governance. This might explain why it is growing in popularity to the extent of its native coin appreciating by more than 500% in 2021.