The Bifrost of Blockchains: Explaining THORChain in Cryptocurrency

THORChain takes its name from the hammer-wielding Norse god Thor, but it’s more interested in bringing blockchains together than “smashing” digital assets. The driving force behind this innovative crypto project is to provide traders with an intermediary-free platform to safely and seamlessly swap their virtual assets across multiple chains. 

No matter what pair of digital currencies a trader wants to exchange, THORChain aims to offer a fast, secure, and pseudonymous peer-to-peer (P2P) trading experience. Discover how this Marvel-themed multi-chain protocol works and why it’s “electrifying” the web3 community.

THORChain’s history

THORChain’s origin dates back to 2018, when a group of developers at the Binance Dexathon began exploring the possibility of a multi-chain decentralized exchange (DEX). A few months later, this anonymous team published a whitepaper detailing their goals and the technical infrastructure to build a DEX with cross-chain swaps within the Cosmos (ATOM) ecosystem. 

One year later, the THORChain community launched their RUNE cryptocurrency in an initial DEX offering (IDO), raising roughly $1.5 million from traders. By 2021, THORChain launched its first operational—but limited—mainnet called the “Multi-Chain ChaosNet” (MCCN) in Cosmos with spot trading between five blockchains, including Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). Today, the THORChain team continues to partner with other crypto projects—including the DEX ShapeShift—and work on upgrading its decentralized finance (DeFi) offerings, particularly its permissionless cross-chain DEX THORSwap. 

How does THORChain work? 

THORChain is a blockchain built using a Proof-of-Stake (PoS) consensus algorithm in the Cosmos Network. Similar to other PoS blockchains, computers (or “nodes”) secure THORChain’s consensus model by locking (aka staking) the native RUNE cryptocurrency onchain and receiving crypto rewards for their contributions. 

For its signature cross-chain swapping feature, THORChain uses an automated market maker (AMM) model; users deposit a 50/50 split of two cryptocurrencies into virtual vaults called “liquidity pools” for traders to use for P2P swaps. These liquidity providers receive compensation through trading fees paid in RUNE for as long as they keep their cryptocurrency locked on THORChain. 

The distinguishing feature of THORChain’s “continuous liquidity pool” (CLP) model is that RUNE always comprises half of each pool’s trading pair. When traders want to swap between blockchains (e.g., from Ethereum to Bitcoin), THORChain’s algorithmic system swaps the first cryptocurrency for RUNE, transfers the RUNE to the second cryptocurrency, and deposits the target crypto asset to the trader’s wallet. 

Like other AMM DEXs, all trades on THORChain are permissionless and occur between a user’s self-custodial crypto wallet and the protocol.

THORChain FAQs

What is the RUNE cryptocurrency? 

RUNE is THORChain’s native cryptocurrency and serves multiple functions throughout its ecosystem. In addition to swapping between cryptocurrencies on different blockchains, RUNE secures the blockchain through a staking mechanism and rewards validator nodes and liquidity providers. RUNE also grants holders voting rights on proposals through THORChain’s decentralized governance protocols. 

As a fungible cryptocurrency, the market price per THORChain coin has a transparent 1:1 value. THORChain’s increasing popularity makes it easier to find the THORChain price using a real-time THORChain price chart on crypto price aggregators and exchanges. 

Do traders need RUNE to use THORChain? 

RUNE plays a significant role behind the scenes when making cross-chain swaps, but traders don’t need to use RUNE when exchanging cryptocurrencies. THORChain accepts any supported networks on its THORSwap app, and traders pay gas fees with the cryptocurrency they initially send. 

What makes THORChain different? 

THORChain’s value proposition is it offers crypto traders complete decentralization when trading coins and tokens across multiple blockchains. For the first time in DeFi, there’s one protocol to exchange native cryptocurrencies across disparate networks without resorting to secondary tools like synthetic tokenization or bridges. 

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