What is Thorchain?
Thorchain is a protocol that attempts to fulfill the need for cross-network liquidity by allowing fully decentralized crypto asset trade across several blockchains.
It facilitates non-custodial cross-chain token exchanges. It enables users to exchange tokens between different Layer 1 blockchains, and does not peg or wrap assets.
ThorChain allows traders to go from bitcoin to ethereum, to Polkadot, and more smoothly by just trading without the need to register or go through KYC like with CEXs. Consequently, custody and counterparty risks are minimized for consumers.
How Does Thorchain Work?
Swapping assets between blockchains require the use of intermediaries like exchanges like Coinbase or Binance—or tokenized representations of assets like Wrapped Bitcoin.
While crypto markets mature, new financial products are developed, and users are added, most crypto assets remain stranded on their original networks. This implies that assets created on one crypto network, such as Ethereum, cannot be utilized or directly exchanged on another, such as the Bitcoin blockchain or Binance Smart Chain.
While localized blockchain ecosystems may be liquid, indicating an active market of buyers and sellers, crypto marketplaces as a whole are fragmented and therefore illiquid.
Thorchain protocol is built on top of the Cosmos Network (also dubbed the “Internet of blockchains”) that seeks to allow all cryptocurrencies to flow freely.
It aims to do this by providing a decentralized method of exchanging non-native cryptocurrencies, such as exchanging Bitcoin for Ethereum. Essentially, it’s a direct competitor to Coinbase and Binance; however, the money is never in the hands of a third party.
Another important project is Thorswap, which is a decentralized exchange (DEX) built on top of the Thorchain protocol. The Thorswap DEX offers anybody who wants to trade or lend their cryptocurrency an opportunity to participate in a community asset pool while earning a return (or “yield”) on those assets.
Thorchain incorporates Bancor’s ongoing lending pools as a component of their own DEX. There are no account balances in these transactions; everything is held in a common pool of liquidity shared with Thorchain’s native token, RUNE.
At the time of its debut, Thorchain supported a wide range of digital assets, including Bitcoin, Ethereum, Binance Smart Chain, Litecoin, and a number of other currencies. More coins and assets are being supported all the time.
What is the History of Thorchain?
The Thorchain network was created by a team that operated largely anonymously. The network’s multi-chain “chaosnet”, which was conceived in 2018 at a hackathon, was eventually released in April 2021 after the initial development was done on a few testnets.
By the end of 2022, Thorchain’s team even intends to give over management of the network to the community.
How Do I Hold RUNE?