THORChain (RUNE) is the leading liquidity protocol for native cross-chain swaps

One of the major drawbacks of most blockchain ecosystems is that they are closed or, in other words, isolated. If you are using ETH in the Ethereum network or BTC in Bitcoin, there is no problem. However, difficulties may arise if you want to transfer BTC from the original Ethereum network or vice versa. THORChain is designed to overcome these difficulties.

What is THORChain?

THORChain is an ecosystem of decentralized cross-chain solutions connecting blockchains such as Bitcoin, Ethereum, BNB Chain, Avalanche, Cosmos HUB, Dogecoin, Bitcoin Cash and Litecoin. The THORChain blockchain network is based on Cosmos Hub, like many other solutions that focus on interoperability, which is also referred to as interoperability.

THORChain is also called a liquidity protocol. Eric Voorhees, founder of the ShapeShift crypto platform, defined the protocol as "THORChain is like Uniswap, only multichain". THOChain introduced and implemented an innovative concept of exchanges on the blockchain called "native cross-chain swaps". To clarify, these are exchanges of the original cryptocurrency between networks in unchanged form. The protocol has even created a local "oasis" in the decentralized finance (DeFi) sector — THORFi.

THORChain's speciality

The protocol stands out not only because it allows you to exchange native coins and tokens in different networks but also to earn income from them. Any user can become a liquidity provider for a decentralized exchange (DEX) or lending protocol by lending to other users in cryptocurrency. This way, holders can get additional benefits instead of just storing digital assets in their wallets.

THORChain is not a bridge in the usual sense — it is specifically a cross-chain solution. You don't transfer assets from one network to another but instead convert the cryptocurrency of one network to a coin or token in another. Let's say you want to transfer an asset to another blockchain; then you can go two ways:

1. Exchange one original asset for another, for example, BTC in the Bitcoin network for ETH in Ethereum or DOGE in Dogechain, respectively;
2. Transfer the same asset to another network, i.e. convert it into a wrapped token. So, if you need to transfer BTC to the Ethereum network, you can exchange the original coins for ERC-20 Wrapped Bitcoin tokens (WBTC).

Note that wrapped tokens are unrelated to the original assets and are a separate unit whose rate is tied to the underlying cryptocurrency. Wrapped tokens are less secure: their protocol can be hacked or shut down, leaving holders at risk of losing their funds.

However, wrapped tokens extend the capabilities of regular coins and allow you to use their equivalents on other networks, opening up the full functionality of decentralized finance (DeFi). For example, you can add WBTC to liquidity pools and generate revenue from farming.

One of the most essential features of THORChain is the so-called Continuous Liquidity Pools (CLPs). These facilitate the transfer of assets between networks and ensure transparency in exchange price formation, as they are determined by swap activity rather than external price oracles. THORChain also provides tools for the "hidden" integration of other decentralized exchanges. For example, Uniswap doesn't even know it uses THORChain's liquidity pools.

Ecosystem

The THORChain ecosystem includes 45 applications and services, such as wallets, decentralized exchanges, NFT marketplaces and. THORChain ranks 27th on DeFi Llama's list regarding the number of assets blocked in the protocol (TVL), which exceeds $100 million. We will not list all the ecosystem projects but will consider only the most important ones.

THORWallet

THORChain's official mobile multi-currency wallet was available on iOS and Android devices. THORWallet supports cryptocurrency exchange (swaps), buying crypto from a bank card, and access to liquidity pools for Yield Farming income.

By the way, THORWallet has its token, TGT, which users can stake and earn income in the wallet app.

THORSwap

A decentralized exchange that is at the heart of the THORChain ecosystem. It is through it that all cross-chain exchanges take place. In addition to swaps, users can add their digital assets to liquidity pools, as well as borrow cryptocurrency against collateral.

For example, in the THORSwap liquidity pool, you can deposit USDC at 12.9%, BNB at 15.2% or ATOM at 29% APR — this is an analogue of deposits and a good opportunity for holders to earn additional income. Unlike staking, which is subject to a lock-in period, assets from liquidity pools can be withdrawn at any time.

However, it is essential to consider the risks of a protocol hack, which could result in attackers withdrawing assets from the pools. Large protocols like THORSwap can compensate for losses in case of such incidents, but the risks remain.

By the way, THORChain was hacked in the summer of 2021: attackers managed to withdraw assets worth $7.6 million from liquidity pools. The team compensated the losses to the affected liquidity providers and restored the normal operation of the protocol, thus confirming the reputation of a reliable platform.

RUNE cryptocurrency

RUNE is the native cryptocurrency of the THORChain platform. It is used by validators to lock in the protocol and qualify for block validation, maintaining the integrity and security of the blockchain.

The RUNE cryptocurrency is contained in each decentralized exchange's liquidity pool. Unlike most other DEX platforms, no pairs without RUNE on THORSwap, such as BTC-USDT or ETH-USDC. In this way, a stable demand for the cryptocurrency is maintained.

The price of RUNE has more than doubled since the beginning of 2023, rising from $1.27 to $3.32 at the time of writing. The cryptocurrency's absolute price high was recorded in May 2021 at $19.27. However, since listing, the rate has risen by almost 20,000%.

Like almost all altcoins, the price of RUNE fell during a long period of bear market, lasting until the end of 2022. A protocol hack also complicated the situation, but the team restored normal operations, and since then, demand for THORChain has only grown.

The market capitalization of RUNE exceeds $1.1 billion, and according to this indicator, the cryptocurrency is among the top 50 assets, according to the monitoring service CoinMarketCap.

RUNE cryptocurrency is also used in swaps and other transactions. Liquidity providers receive income in RUNE coins from commissions paid by traders. The protocol provides favourable exchange prices, which supports high demand for trading. By the way, according to CoinMarketCap statistics, THORChain ranked 17th among all cryptocurrencies by trading volume at the beginning of November 2023.

The maximum supply of RUNE is 500 million, of which just over 330 million are already circulating on the market.

The RUNE cryptocurrency, in addition to the official THORWallert wallet, is also supported by Trust Wallet, Ledger, Edge and the gaining popularity of XDEFI clients.

THORChain outlook

Since 2022, the project team has not released significant updates or updated the protocol roadmap. In June, the largest cryptocurrency exchange, Vinapse, announced the integration of THORChain with the BNB Chain ecosystem (BNB Smart Chain and BNB Beacon Chain). The integration could attract a large flow of liquidity into the protocol.

For now, demand for THORChain continues to grow, and new partnerships and protocol updates could accelerate the ecosystem's growth.