What Is THORChain (RUNE)?
THORChain (RUNE) is a decentralizedliquiditynetwork that seeks to facilitate cross-chain liquidity pools with no pegged or wrapped tokens. THORChain aims to exchange assets across disparate blockchains in a non-custodial manner and be the backend for many user interfaces. A pegged cryptocurrency is a digital medium of exchange whose value is tied to another medium of exchange, such as gold or other currency. A wrapped token is a cryptocurrency token pegged to the value of another cryptocurrency.
THORChain seeks incoming user deposits to vaults, executes business logic by either swapping or adding/removing liquidity, and processes outbound transactions. THORChain aims to ensure that every process stage is Byzantine-fault-tolerant (BFT). The platform uses Tendermint, which is a BFT algorithm. BFT is a computer system's ability to continue operating even if some nodes fail or act maliciously. Tendermint is a consistent proof-of-stake BFT consensus algorithm that can tolerate up to 1/3 faulty nodes. THORChain is based on Cosmos SDK and utilizes Threshold Signature Schemes (TSS). The Cosmos SDK is a framework for building blockchain applications. Threshold signatures are digital signatures where signers can establish groups such that only certain subsets of the group can produce signatures on behalf of the group.
According to the THORChain whitepaper, current digital asset exchanges suffer from centralization, trust issues, and inefficiency. Further, these digital asset exchanges operate as traditional financial exchanges, being custodial and competitive. This results in problems with liquidity. THORChain aims to decentralize the liquidity of cryptocurrency via a network of public THORNodes. THORNodes service the THORChain network. Each THORNode comprises various independent servers in a cluster. All THORNodes operate and communicate in cooperation to create a cross-chain swapping network. Further, THORChain aims to have a high churn (new nodes join/leave the network) schedule, kicking out nodes continuously. This high-churn network resists centralization, makes it censorship-resistant, and evades capture.
THORChain's native asset (RUNE) is pooled against all supported assets and couples liquidity with security. RUNE works as a settlement asset for all pools, wherein a 1:1 ratio of RUNE: asset is required for pooling. The platform achieves liquidity by bonding each supported asset to the RUNE in pools, where the asset's purchasing power is measured by the depth ratio of both the assets. This makes the network aware of the prices of each asset at any time. On the platform, assets can be exchanged by placing an asset into its pool and specifying the desired asset to exchange, even if it is located in another pool.
RUNE is the utility currency of the THORChain and is used by the owners to participate in the network and pay for the swap/gas fees for RUNE pairs. RUNE has four key roles in the ecosystem:
Settlement Asset: All assets have a 50% pairing with RUNE within a pool, regardless of how assets are withdrawn or added.
Network Security: The RUNE works as a Sybil-resistant mechanism, and the node operators are economically rewarded for working within the network's best interest.
Governance: With their liquidity, users can vote for the pools they want to be active, wherein the RUNE:asset is symmetrically added. The pools with the most liquidity become active.
Incentives: RUNE is consumed as transaction fees on the THORChain. All swaps attract a fixed network fee and a dynamic slip-based (proportional to liquidity) fee.
History of THORChain (RUNE)
THORChain is a decentralized project with no company, no CEO, and no founders. The network aims to be open-source, transparent, and auditable with a fluid team. The maximum total supply of RUNE is 500 million RUNE.
How To Stake THORChain (RUNE)
THORChain involves a staking rate of 33% and a bonding rate of 67%. The bonded capital equals staked capital, staking rewards are zero, and staking rewards are maximum when staked capital is zero. Bonding each supported asset to the RUNE in pools offers liquidity to the platform.
