What is Thorchain?
Thorchain is a decentralized liquidity protocol that allows users to swap assets across different blockchains in a non-custodial manner. Unlike traditional bridges that require wrapping tokens, Thorchain enables direct cross-chain swaps through its innovative network of liquidity pools.
True Cross-Chain Swaps
Swap native assets between blockchains without wrapping tokens or relying on centralized custodians.
Decentralized Network
Operated by node operators who bond RUNE to secure the network and process transactions.
Non-Custodial
Users maintain control of their assets throughout the entire swap process.
Continuous Liquidity
Deep liquidity pools ensure minimal slippage even for large transactions.
Permissionless
Anyone can participate as a liquidity provider or node operator without approval.
Multi-Chain Support
Currently supports Bitcoin, Ethereum, Binance Chain, Bitcoin Cash, Litecoin, Dogecoin, and more.
Thorchain's architecture connecting multiple blockchain networks
How Thorchain Works
Thorchain's innovative protocol enables cross-chain swaps through a combination of threshold signature schemes (TSS), liquidity pools, and its native RUNE token. Here's a detailed breakdown of the process:
The Swap Process
- Initiation: User sends assets from Chain A to Thorchain's vault address
- Verification: Node operators verify the transaction using TSS technology
- Pricing: The protocol calculates the exchange rate based on pool liquidity
- Execution: Equivalent value in Chain B assets is sent to user's destination address
- Settlement: Transaction is recorded on both blockchains and Thorchain state
Key Components
- Vaults: Multi-signature wallets controlled by node operators that temporarily hold assets during swaps
- Liquidity Pools: 50/50 pools of RUNE and other assets that provide swap liquidity
- Node Operators: Network participants who bond RUNE to secure the network and process transactions
- TSS Technology: Enables decentralized control of vaults without single points of failure
- Bifröst Protocol: Handles communication between Thorchain and external blockchains
The complete lifecycle of a cross-chain swap on Thorchain
The RUNE Token: Powering the Thorchain Ecosystem
RUNE is the native token of the Thorchain network with multiple critical functions:
Utility Functions
- Network Security: Node operators must bond RUNE to participate in consensus
- Liquidity Pairing: All liquidity pools are 50% RUNE and 50% the paired asset
- Governance: RUNE holders can participate in network parameter decisions
- Fee Payment: Network fees are paid in RUNE and distributed to participants
- Incentive Alignment: RUNE's economic model ensures all participants are properly incentivized
Tokenomics
RUNE has a maximum supply of 500 million tokens with the following distribution:
- Seed Sale: 20%
- Private Sale: 20%
- Team & Development: 20%
- Node Bonding: 30%
- Reserve: 10%
Value Accrual
RUNE's value is directly tied to the usage of the Thorchain network:
- Increased swap volume leads to more fees collected in RUNE
- More liquidity pools require more RUNE to be locked in the system
- Network growth requires additional RUNE to be bonded by node operators
The multiple roles of RUNE within the Thorchain ecosystem
Thorchain Ecosystem and Integrations
Thorchain has developed a robust ecosystem of wallets, exchanges, and DeFi platforms that integrate with its protocol:
Supported Chains
Thorchain currently supports swaps between these major blockchains:
- Bitcoin (BTC)
- Ethereum (ETH and ERC-20 tokens)
- Binance Chain (BNB and BEP-2 tokens)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Dogecoin (DOGE)
- More chains being added regularly
Popular Interfaces
These platforms provide user-friendly access to Thorchain's functionality:
- Thorswap: The flagship interface for Thorchain swaps
- Asgardex: Desktop application for Thorchain access
- ShapeShift: Integrated Thorchain for cross-chain swaps
- Trust Wallet: Mobile access to Thorchain liquidity
- Ledger Live: Hardware wallet integration
Yield Opportunities
Users can earn yields through various Thorchain mechanisms:
- Liquidity Provision: Earn swap fees and RUNE incentives by adding to pools
- Node Bonding: Earn fees by running a node and bonding RUNE
- Arbitrage: Profit from price differences between chains
Frequently Asked Questions
Thorchain has implemented multiple security measures including threshold signature schemes, continuous security audits, and a robust economic security model. However, as with all DeFi protocols, users should understand the risks and only invest what they can afford to lose.
Thorchain charges three types of fees: swap fees (0.1-0.3%), outbound fees (to cover destination chain gas), and liquidity fees (when adding/removing liquidity). All fees are paid in RUNE and distributed to network participants.
Unlike most bridges that require wrapping tokens (creating synthetic versions), Thorchain enables direct swaps of native assets. It's also fully decentralized without centralized custodians, and uses a unique liquidity pool model rather than order books.
Swap times vary by chain but typically complete within 2-10 minutes. Bitcoin transactions take longer due to block times, while Ethereum transactions are usually faster. The protocol waits for sufficient confirmations before processing.
Yes, you can bond RUNE to become a node operator (requires technical knowledge) or provide liquidity to earn yields. Simple staking isn't available as RUNE must be actively working in the network to earn rewards.
If a swap cannot be completed (due to insufficient liquidity or other issues), the original assets will be refunded to the sender minus any network fees. The protocol includes multiple safeguards to prevent loss of funds.