THORChain is a decentralized cross-chain automated market maker (AMM) exchange that allows users to trade spot tokens across blockchains. It enables traders to swap tokens across various Layer 1 blockchains without taking on counterparty or custody risk.
It is a decentralized cross-chain liquidity protocol based on Tendermint and Cosmos-SDK and utilizing Threshold Signature Schemes (TSS). It doesn't peg or wrap assets, it merely determines how to move them in response to user actions.
THORChain's key objective is to be resistant to centralization and capture whilst facilitating cross-chain liquidity. THORChain solely secures the assets in its vaults and has economic guarantees that those assets are safe.
According to a THORChain official representative, the platform has no CEO, founder, or directors. Instead, GitLab organizes the platform’s future development. Furthermore, people currently working on the project remain mainly anonymous. Again, a THORChain official argues that this is to “defend the project and make sure that it can decentralize.”
THORChain started as a small project at the Binance hackathon in 2018. They declared their first go-to-market product – BEPSwap – in July 2019. The main goal of BEPSwap was to enable BEP2 asset swaps and was limited to Binance Chain.
The IDO resulted in $1.5 million raised, which was sufficient to enable further development of the project. The team continued their work on the protocol, which resulted in the restricted main net release, referred to as the multichain chaos network or MCCN, in April 2021.
Major reasons -
●Counterparty Risk
●Speed
●Regulatory Risk
●Theft Risk
●Cost
One-Way State Pegs
THORChain’s nodes connect to varied chains through one-way state pegs by creating addresses across these chains that are controlled by the THORChain nodes. THORChain nodes use advanced multi-party computation (MPC) technologies like distributed key generation (DKG) and Threshold Signature Schemes (TSS) to ensure that no single THORChain node has control over the users’ assets.
Witness Transactions
When a node sees a transaction on a connected network it records this in what is called a "witness transaction". A witness transaction is basically a message from a node saying "This is what I saw happen". So it would be "I saw somebody send one BTC into THORChain". Nodes are all sending witness transactions into the system all the time.
Transaction consensus
The network needs to process them and choose which are correct. Nodes could make mistakes or disagree regarding what's happening in the external networks. In order to reach an agreement about a transaction ID, the network looks at all the witness transactions that relate to it. When the network sees sixty-seven nodes agree on a transaction, it's approved and considered correct.
Continuous Liquidity Pools (CLPs)
THORChain keeps pools of assets. Pools contain external assets and runes. This suggests that all external assets are linked via RUNE. This makes it possible for the network to understand the price of any external information. And it makes it possible for users to move directly from one external plus to a different one. For instance, from Bitcoin to Ether or Binance Coin to Monero.
THORChain use cases-
●Liquidity
●Security
●Governance
●From Incentives
●Max supply of 500 million rune tokens
●44.1% for protocol reserves (paying node operators and liquidity providers)
●5.2% to early seed investors
●10% to support the team building THORChain
●10.4% to the community
●10.5 to operational reserve for staff incentives
●19.8% for circulating supply.
| Date | News and Events | Impact |
| 9-March-2022 | Synthetic asset trading launch | +31 Increase |
| 28-May-2021 | Tumbled in digital-asset markets | -24 Decrease |
After the long-awaited multichain chaos network release, the Thorchain team specializes in growing the Thorchain ecosystem while the system works as expected. We should see companies that specialize in applications and wallet integration with Thorchain in the future. Thorchain clearly looks like an interesting protocol and a missing piece in the DeFi ecosystem that may allow people to swap between native assets without using centralized exchanges.
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