THORChain — A Short Overview by Cryp2Gem
A Decentralised Liquidity Network
THORChain is a lightning-fast decentralized exchange protocol with cross-chain bridges and support for a layer 2 payment network providing staking and swapping for users.
The main target of the THORChain team is providing liquidity and interoperability to the DeFi space which has enormous growth. The Total Value Locked in DeFi hit an all-time high at 4.44 million ETH.
They are the first to provide staking opportunities for Binance Chain BEP2 token holders as well as providing liquidity. Actually, BEPSwap, which is powered by THORChain technology, is Binance Chain’s first DeFi DApp allowing BEP2 token holders to swap their assets, or stake them to provide liquidity to the market.
Decentralized management, development and governance policy is one the core ideology that DeFi space is built on. All of that is very present in THORChain and they have a vision on how to achieve true decentralization. The nodes must be anonymous, staking must be driven only by incentives and developers temporary. They have described the system they want to use: “Developers work for the Nodes, by shipping code that makes the system more valuable. Nodes work for the Stakers, by securing assets and being online. Stakers bring capital, placed on-market for the Swappers. Swappers pay fees, bringing economic activity.”
THORChain has no usual business leadership and hierarchy. There are no directors and founders, only some temporary leads.
THORChain is actually a digital asset ecosystem comprised the following cornerstones:
· THORChain Protocol
· Aesir Protocol
· Yggdrasil Protocol
· Bifröst Protocol
· Flash Network
· Asgardex liquidity user interface
THORChain protocol is composed of the main Merklechain and multiple side Tokenchains representing different digital assets. Each such asset can be staked and swapped by any other asset integrated in the THORChain network. The main problem in such a system would be the lack of liquidity which is an issue of most current decentralized exchanges. THORchain solved this by providing a built-in Continuous Liquidity pool present in every Tokenchain. Such liquidity pool holding both Rune and the full supply of the created tokens as locked liquidity. So you have liquidity but what about interoperability and fungibility? How can all those assets be connected and swapped between each other? This is what the main protocol called Bifröst solves.
The Bifröst Protocol builds an economic layer on top of the bridging protocol between THORChain and other blockchains, such that the economic incentives ensure that nodes will always lose more than they gain when attacking. These economic incentives allow for a robust and resilient bridging protocol, that is permissionless but safe. This is a very strong solution that combines interoperability without compromising the security of the network. All the different minted Tokenchain tokens have fungibility with original assets and with each other and all the bridges between them are trustless which is why Continuous Liquidity Pools were added to each side chain.
Each liquidity pool uses the network’s native currency RUNE which powers the THORChain Network. RUNE is used for staking, swapping and trading. One can stake his assets in any of the pools and earn a commission on each trade. There are currently 11 BEPSwap Launch partners.
All aspects of supporting external chains such as their selection and support, hard forks, finality thresholds, multi-sig addresses, bridge number, and thresholds as well as proxy and token creation contracts can be administered using on-chain governance, the Aesir Protocol.
THORChain also introduced innovative scalability solution, not just another one in the series of many self-proclaimed scalability solutions.
THORChain is a highly-optimized multi-chain with an efficient consensus algorithm called Yggdrasil protocol which introduces a new vertically sharded mechanism with incredible throughput. It is based on practical Byzantine Fault Tolerance (pBFT) in order to provide higher transaction throughput while achieving mutual scalability and decentralization.
Another essential feature is the Flash Network, a Layer 2 payment channel network on THORChain which allows instant trades across all tokens and liquidity pools. Flash Network bridges with other Layer 2 networks such as Lightning, Raiden, and Bolt.
ASGARDEX is the first decentralized exchange that will be built on THORChain. It will have all the benefits and advantages that THORChain offers — permissionless access, on-chain incentivized liquidity, and cross-chain compatibility.
This is what they plan to do in the next year and a half with reaching Asgard in Q2 2021 with the launch of the THORPayment ecosystem.
“THORChain will first deploy a liquid and easy-to-use interface for Binance Chain and BEP2 assets — called BEPSWAP. This allows all the key technologies of THORChain to be refined and improved with real assets.
THORChain will then deploy ASGARDEX — which will be connected to Bitcoin, Ethereum and Monero, allowing permissionless asset swaps and staking.
THORChain will then launch the Flash Network, anchored to the Layer 1 trustless price feeds, and with cross-network liquidity hubs for instant and reliable asset exchange across any network.
In the final phase THORChain will launch the THORPayments ecosystem; a suite of end-user tools and hardware, enabling self-sovereign and trustless payments between customers and merchants globally.”
Check the current staking situation on Rune Vault.
THORChain is providing unique solutions to current critical blockchain and cryptocurrency exchanges issues of low liquidity, interoperability, and safety. With Yggdrasil Protocol, they also proposed a very interesting scalability solution with vertical sharding which has a throughput of 100k transactions per second with less 10k nodes and 1 million transactions per second with less than 80k nodes.
I can see the amazing potential that THORChain has, with adopting, technology, and usability.
Staking and earning incentives will be fun and easy!
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See you on the other side!
Samo from Cryp2Gem