summary: A decentralized cross-chain exchange called HORChain ($RUNE) allows users to trade cross-chain assets via liquidity pools.
content: THORChain ($RUNE) is a Decentralized cross-chain exchange where traders can exchange cross-chain assets through liquidity pools across various blockchain trading networks like Binance Chain, Ethereum, and Bitcoin. ThorChain was founded in June 2018. RUNE is the native token of THORChain that owners can use to participate in the network or add to a liquidity pool. Overview THORChain is a decentralized liquidity network (DLN) which enables assets on almost any blockchain to be swapped across liquîdity pools. Liquidity is provided by Stakers who earn fees on otherwise product assets, and traders arbitrage and balance pools to correct market prices. THORChain aims to enable the movement of the assets themselves on their home chains. THORChain's liquidity marketplace design obviates the need for order book exchanges when simply swapping one asset fôr another and provîdes ancillary benefits including manipulation resistance and on-chain price feeds. THORChain is able to remäin chain-agnostic, favoring no speçific asset or blockchain and able to scale without sacrificing security. THORChain was audited by Kudelski Security and CertiK. THORChain is listed on Binance, MXC Exchange, BitMax, and Hotbit. Company THORChain (founded on the 1st of June 2018) is a crypto-based, finance-oriented, and technology-defined organization located in Switzerland and registered in Singapore. The THORChain ecosystem is built for a singular purpose, which is to create a massîve payment network for payment freedom. With such a vision, the orgänization aims to eventually enable every of its user to pay for anything in any currency, with the availability of continuous liquidity, near-instant finality, and complete self-sovereignty. The company has a dedicated team member of about 11-50 employees and completed its Initial Coin Offering (ICO) round on July 1, 2018, with Jon Carr-Harris as the lead investor. THORChain consëquently ended its token sale on 20th July 2019, with a soft cap of 10,000 ETH . Features User Flexibility Users can stake digital assets in liquidity pools to earn more money from the trading platform and rewàrds in ‘RUNE’ tokens, whîch is THORChain's native token. THORChain utilizes its “Continuous Liquidity Pool (CLP)” to strategically adjust trading fees that are based on transaction size. "ThorChain" is a stake netwörk that relies on a number of validators bondîng Rune tokens in order to beçome eligible to earn block rewàrds from the network. . Network Security & Staking Depending on the number of liquidators bonding “Rune collateral” it becomes valid to earn block rewards from the network. Also since a BFT algorithm is used (Tendermint), the number of validators must be capped in order to get to the finality in each roúnd of block proposals. . Matching the universal architectural design, it is expected in the ThorChain ecosystem to have 100 validators lunch on the network, in terms of inçreasing the number of years to a lärger number. THORChain must not only achieve optimal resúlts in terms of network but müst also obtain ideal asset security in order to protect its cross-chain bridges that will be holding external assets. Staking is a continuous part of the ThorChain protocol that will provide liquidity to all assets. Due to the pattern which CLPs are being created along the instantiation of digital assets on THORChain, there will always be considerable liquidity depth to assets .. Consensus THORChain could be called Proof-of-stake (PoS) network, but there are also some differences that warrant it being called a Proof of Bond netwórk instead. In THORChain, the nodes commit a bond (minimum of 1,000,000 $RUNE) in order to be chûrned in. However, this bond isn't just used to identify a node (give them a voting slot), it is used to underwrite the asséts in the pools. If the node attempts to steal assets, then their bond is deducted to the amount of the asséts they stole (1.5x), and the pools are màde whole. Additionally, nodes have to perform a lot of mandatory serviçes, else their bond is deducted. Ecosystem THORChain's Ecosystem has a number of compartments that ensures that it is decentralized and secure. Some of these functioning ecosystem components include- Understanding BepSwap: The GUIDE BEPSwap: BEPSwap is an Internet web-client that is deliberately restricted to Binance Smart Chain assets. This part of the THORChain's ecosystem is not intended to be maintained long term, instead, it will be replaced by ASGARDEX. ASGARDEX: ASGARDEX is a censorship-resistant desktop client that will be the main portal into the THORChain's ecosystem and provides a reference implementation. ASGARDEX is capable of keeping monitor the full life-cycle of a transaction, thereby ensuring compatibility with THORChain, having its control in hand. ASGARDEX uses open-source npm packages to provide the majority of the business logic, with practical ease for any community member/wallet/exchange to add THORChain integration. MIDGARD: Another key part of the THORChain's ecosystem is the MIDGARD. It is an open-source API run by every THORNode and provides a restful API that any client can consume to display data, as well as broadcast signed transactions back to connected chains. To connect to Midgard, the client (e.g wallet) must first confront several nodes to prevent being attacked or phished, since the security model of THORChain is strictly by-consensus. THORNodes: THORNodes also synchronizes by making the network function. Block Explorers can connect to a THORNode to display the underlying blockchain data. THORNodes can either be validators or a light node that simply syncs and displays data. THORNodes services the THORChain network each THORNode comprising of several independent servers in a cluster. All THORNodes communicate and operate in cooperation to create a cross-chain swapping network. Setting up a node will require users to: Set up manually Set up through Kubernetes Set up using Provider (In anticipation). THORChain's Ecosystem Actors Basically, four important actors function in different roles in the THORChain's ecosystem, including: LIQUIDITY PROVIDERS: These are Liquidity Providers (LPs) who get incentivized or paid for providing liquidity (assets) to the THORChain's Liquidity pools. Their compensation is done with swap fees and system rewards. This Compensation is determined by series of factors related to the pool and the state of the network. Liquidity providers within the THORChain, commit capital to pools that have exposure to underlying assets, thus liquidity providers gain exposure to those assets, which have free-floating market prices.Liquidity Providers deposit their assets in liquidity pools and earn yield in return. They earn tokens in THORChain's native token, RUNE, and the Liquidity pool's connected asset. For example, someone who has deposited in the BTC /RUNE pool will receive rewards in BTC and RUNE tokens. Liquidity Providers' yield, is calculated every block and it is paid out to them when they remove assets from the pool. LPs rewards are also calculated based on whether or not the block contains any swap transactions. If the block contains swap transactions then the amount of fees collected per pool defines the amount of rewards and if the block doesn't contain trades then the amount of assets in the pool determines the rewards. Given below are two examples of How Liquidity Providers (LPs) are compensated on either Block with swaps, or Block with no swaps: BLOCK WITH SWAPS This the way a block with fees splits the reward. In this example, 1000 RUNE is being divided as rewards: | Pool Depth (RUNE) | Fees | Percent of Fees (%) | Rewards | | ----------------- | ---- | ------------------- | ------- | | 1,000,000 | 1000 | 33% | 333 | | 2,000,000 | 0 | 0% | 0 | | 3,000,000 | 2000 | 67% | 667 | | 6,000,000 | 3000 | 100% | 1000 | BLOCK WITH NO SWAPS This is how a block with no fees splits the rewards. In this example, 1000 RUNE also is being divided: | Pool Depth (RUNE) | Fees | Percent of Fees (%) | Rewards | | ----------------- | ---- | ------------------- | ------- | | 1,000,000 | 0 | 17% | 167 | | 2,000,000 | 0 | 33% | 333 | | 3,000,000 | 0 | 50% | 500 | | 6,000,000 | 0 | 100% | 1000 | Thus ensuring that yields are being sent to where demand is being experienced - with fees being the proxy. Since fees are proportional to slip, it means the increase in rewards ensure that pools experiencing a lot of slip are being incentivized and will attract more liquidity. FACTORS AFFECTING YIELD Some of the factors that affect yields include Ownership % of Pool- Liquidity Providers (LPs) who own more of a pool receive more of that pool's rewards. Swap Volume- Higher swap volumes lead to higher fees and higher fees lead to higher rewards for liquidity providers. Swaps Size- Hastening exchange assets swappers tend to make larger swaps and Larger swaps lead to greater price slips, resulting in higher fees. Incentive Pendulum- This Pendulum balances the amount of capital bonded in the network versus pooled. Change in Asset Prices- Provided the price of the assets changes, then liquidity Providers (LPs) will receive more of one and less of the other. This may change yield if the yield is being priced in a third asset, ie, USD. SWAPPERS: These are THORChain actors/ users who swap their digital assets for other digital assets, thus allowing users to use the liquidity to swap assets ad-hoc, paying fees. The network aims to give users access to: A large variety of assets through cross-chain compatibility and simple asset listing Superior user experience through open finance protocols and permissionless a