THORChain (RUNE) is a decentralised cross-chain liquidity protocol that allows users to swap assets between blockchain networks.
Thorchain is secured by its native token, RUNE, which deterministically accrues value as more assets are deposited into the network.
Background Behind THORChain (RUNE)
Thorchain was designed by a team of developers at the Binance Dexathon in 2018. Because the founders and developers have mostly remained anonymous, the Thorchain community drives much of the company’s public-facing image.
The project raised $1.5 million in an initial DEX offering (IDO) in July 2019. That same month, the Thorchain team established BEPSwap as their first market product. BEPSwap is a DEX that authorises swaps between BEP-2 tokens on the BNB Chain.
Thorchain announced the multichain chaosnet (MCCN) in April 2021, authorised for cross-chain swaps between Bitcoin, Ethereum, Litecoin and other assets. However, in July 2021 the network endured back to back hacks resulting in more than $13 million lost.
Developers worked to fix bugs, clarify the code and enhance network security, eventually restoring 4 of 5 networks assisted by the Thorchain protocol by October 2021. strengthen the project’s renewal, a private token sale that same month brought in $3.75 million, led by IDEO CoLab Ventures.
THORChain (RUNE) Basics
RUNE is the asset which powers the Thorchain ecosystem and issues the economic incentives required to secure the network. RUNE has four key roles which are described below.
Liquidity; as an agreement asset, Security; as a sybil-resistant mechanism, and a means for driving economic actions, Governance; signalling priority on-chain and Incentives; paying out rewards, charging fees and subsidising gas.
Liquidity
Since RUNE is pooled 50:50 alongside outside assets in its pools, when the value of those assets increase/decrease, the RUNE pooled will also increase/decrease by being arbed out or in. The RUNE unit value may not change, but the aggregate of RUNE in the pool does. This means the system is always aware of the value of the assets it is trying to secure; it’s simply the aggregate of RUNE in all its pools.
Once it is aware of the worth of the assets it is securing, it can use incentives to ensure security of those assets.
Sybil-resistance is the capability to prevent someone from impersonating as many identities to overcome a network. Bitcoin uses Proof-of-Work (one-CPU-one-) to prevent a network takeover. Ethereum 2.0 will use Proof-of-Stake (32-eth-one-vote) to prevent a network takeover.
Governance
Signalling Priority for Assets: While Thorchain attempts to be governance-minimal, some parts of the protocol apply capital to signal priority. This is the case for the asset listing process, where every few days a new asset can be listed as a pool. In a queue of standby assets, the one with the significant commitment of RUNE is the one that is listed first.
Signalling Priority for Chains: if a connected chain is no longer economically valuable, then all liquidity suppliers in that chain can leave. If a pool is empty, it will be delisted, and this will cause the network to immediately sever ties with that chain in a process called a “Ragnarok”. One-Node-One-Vote. Thorchain Nodes each occupy one of the 100 slots in the system and can vote on changing network parameters using a mechanism called node-Mimir.
Incentive
RUNE is the native currency of Thorchain and is absorbed as transaction fees on the network. Subsidising Gas
The network frequently consumes gas as it makes outgoing transactions (as well as internal transactions). Gas on networks such as Bitcoin and Ethereum becomes convoluted fast, so Thorchain doesn’t try to track every minutia of gas absorbed.
THORChain (RUNE) Staking
THORChain also distributes staking rewards as RUNE (the network’s native token) to any node that adds tokens to a liquidity pool. At the same time, token owners can stake their assets and earn the fees assembled from other users accessing the pool.
THORChain (RUNE) Mining
You can’t mine RUNE, but you can stake the native token in liquidity pools on the protocol and earn a yield on the deposited funds.
THORChain transactions fee and Speed
Thorchain speed can go up to 5000 transactions per second and consumed as transaction fees on the network, all swaps are charged both a fixed network fee, as well as a dynamic slip-based fee, This averts various attacks. But these transactions are rarely seen, the highest number of swaps in a day was 100k swaps.
THORChain (RUNE) Supply
At first, there was a maximum supply of 1 billion RUNE tokens, but the supply was reduced to 500 million in 2019. After this token burn, 44.09% of tokens were allocated to service nodes, 10.4% for operational costs, 10% to the community and 10% to the team and advisors. The remaining tokens were retained for project funding.
THORChain Security and Safety
Sybil-resistance refers to the ability to avert someone masquerading as many identities in order to overcome a network.
Thorchain is a Proof of Bond network instead. Thorchain nodes commit a bond in order to be agitated in. However, this bond isn’t just used to identify a node (give them a voting slot), it is used to underwrite the assets in the pools. If the node attempts to steal assets, then their bond is deducted to the amount of the assets they stole, and the pools are made whole. Moreover, if nodes misbehave their bond is slashed, ensuring reliable service.
THORChain Volatility
Thorchain allows assets to be mixed in liquidity pools to receive commission, instantly exchange assets at Its average intraday volatility was 8.2%.
Review and Final Thoughts on THORChain (RUNE)
Thorchain’s chaosnet is a latest addition to the crypto space, so it hasn’t yet seen the full range of riskiness that the crypto market has to offer. It has already encountered several troubling problems, which will only increase as more blockchains are racially mixed into the protocol.
The architecture of Thorchain’s exceptionally well-thought-out performance is simply outstanding. I believe that RUNE will make its place in the top 5 DeFi Coin if it keeps showing impressive performances. The RUNE has really changed the game as it has no withdrawal delaying, restricts third parties from intervening.