Investing In THORChain (RUNE) – Everything You Need to Know
Securities.io is committed to rigorous editorial standards. We may receive compensation when you click on links to products we review. Please view our affiliate disclosure. Trading involves risk which may result in the loss of capital.
Table Of Contents
THORChain (RUNE) is an independent blockchain, cryptocurrency, and cross-chain decentralized exchange (DEX). The platform combines a variety of proprietary protocols to accomplish these functions. Notably, ThorChain's development team created the platform with the goal to power the next generation of cross-chain decentralized exchanges.
What Problems Does THORChain (RUNE) Solve?
THORChain attempts to tackle one of the biggest problems currently facing crypto investors, compartmentalization. There are so many independent blockchains in operation today. Sadly, these networks operate like islands in that most have no way to communicate data or value between networks.
THORChain operates an independent blockchain that has the capabilities to bridge these external networks with the goal to facilitate cross-chain transfers. As such, users can trade different types of cryptocurrencies without the use of a centralized exchange using the platform. Eliminating the need for exchanges helps to improve efficiency and reduce costs for traders.
THORChain helps alleviate some of the technical roadblocks encountered by new DEX users. When a new investor comes from centralized exchanges such as Coinbase, over to a DEX, it can be confusing at first. There are fewer features and more steps required to trade on DEXs.
For example, most DEXs require you to hold the native blockchain coin to even conduct basic transactions. All of these added requirements combined with the fact that DEXs offer fewer features work against adoption. These technical requirements can turn CEX investors away.
THORCHain’s development team focused on removing these barriers. For example, you don’t need any web extensions like MetaMask to utilize ThorSwap, the network's DEX. The platform offers a built-in non-custodial wallet feature for new users directly on the homepage. This wallet allows you to interact with the THORChain ecosystem safely while retaining custody of your coins.
Benefits of THORChain (RUNE)
THORChain introduces a host of benefits that have helped it gain popularity. The network enables users to instantly swap cryptocurrencies between blockchains in a transparent manner. Notably, this transparency is a core focus of the project. All THORChain users can monitor developments via updates published on the network’s Medium channel weekly.
Unlike most DEXs, THORChain eliminates the use of oracles. Oracles are off-chain sensors. They can monitor communication and monitor data flow such as stocks, weather, or payment balances. They are often centralized, making them a weak link in many decentralized networks.
In the THORChain network, arbitrage traders are used to keep pricing accurate instead of oracles. If a coin is too low in value, these traders will buy it up and resell it on other DEXs. If the coin is valued too high, they will buy from other exchanges and bring the token to THORChain’s DEX. These actions balance the market out automatically without sacrificing decentralization. Arbitrage traders are incentivized to ensure the ratio of RUNE and the other cryptocurrencies in the pool remains accurate.
The structure of THORChain helps avoid LP dilution issues. Dilution issues occur when there are too many trading pools for a certain coin. Since every pool is paired with RUNE within the DEX, there are far fewer pools needed. This strategy is ideal for investors because it helps concentrate liquidity.
THORChain users enjoy a low fee structure that is a fraction of Ethereum's current rate. The network charges a fixed Outbound Fee and a dynamic Liquidity Fee to users. A percentage of these fees get redistributed as rewards to Validators and LP providers.
There is also a Slip-Based Fee. This fee is designed to help prevent whale manipulation. The Slip-Based Fee is based on how much your investment alters the value of the LP token. Notably, these fees are used to pay LP providers in the form of rewards.
THORChain is very scalable. For example, it only takes around five seconds to complete your average THORChain swap. This responsiveness helps investors stay ahead of the trends. It also provides developers with more options.
How Does THORChain (RUNE) Work
THORChain was built using the Cosmos SDK. Cosmos SDK allows developers to compose custom blockchain applications using a mix of prebuilt modules and custom modules. The system also allows Devs to increase adoption and liquidity by connecting their networks via IBC to the Cosmos Network. Most notably, the Binance Smart Chain was built using Cosmos SDK.
The THORSwap exchange functions as a decentralized automated market maker (AMM). This structure enables traders to move between different asset pools conveniently. Other top AMMs include Uniswap and SushiSwap. Uniquely, THORChain leverages anonymous nodes to keep the network valid.
THORChain (RUNE) Consensus
THORChain introduces a Tendermint BFT (Byzantine Fault Tolerance) Proof-of-Stake (PoS) variant as its consensus mechanism. This system relies on Validators to secure the network and execute smart contracts. For their efforts, they receive rewards in the form of RUNE tokens. These rewards are paid from the transaction fees.
To become a Validator you will need to stake a minimum of 1 million RUNE. Notably, the validator nodes rotate every three days to enhance the security of the network. In total, THORChain is set up to support 360 validator nodes.
Validators also host THORChain Vaults. THORChain vaults are smart contracts that automatically release crypto to facilitate trading. ThorChain vaults require the consensus of two-thirds of all active validate and nodes to issue their coins. These smart contracts play a critical role in the network's cross-chain processes.
THORChain (RUNE) Liquidity Providers
LP liquidity providers earn a portion of pre-mined block rewards. Additionally, they are paid trading fees for the pairs they provide liquidity on. Interestingly, the DEX leverages a protocol known as the Incentive Pendulum. This system guarantees a 2:1 ratio of staked RUNE by Validators to LPs.
Continuous Liquidity Pools (CLP)
Continuous Liquidity Pools (CLPs) reward users for contributing to the liquidity in each pool. They improve upon the traditional LP concept in that they reduce slippage. These pools function within the AMM which enables traders to access liquidity without needing to search out buyers or sellers directly.
The Bifröst Protocol operates as the cross-chain bridge system. It is vital to network operations. The system functions as an interoperable cross-chain bridge enabling compatibility with nearly all major unspent transaction outputs (UXTOs) and account-based assets, including code-forks and tokens. It's the system that enables ThorChain to connect networks in a seamless manner.
ThorSwap – THORChain (RUNE)
THORSwap is the first multi-chain DEX powered by THORChain. The DEX currently has over $65.68 million in liquidity. Users can find RUNE and a variety of other top projects using this DEX. The DEX features an interactive vibrant interface that shows vital data.
The ThorSwap web interface is how users interact with the network. There are also some third-party DEX interfaces that add functionality and a fresh look to the network. The Asgardex web interface and the Asgardex desktop dapp provide a clean and concise trading experience for users eeking more features.
RUNE – THORChain (RUNE)
The native token of the THORChain ecosystem is RUNE. You can send this cryptocurrency globally with ease. It plays multiple roles within the network. All pools are paired with RUNE and all rewards are paid in the token. RUNE is a BEP-20 token that is interoperable within the Binance Smart Chain (BSC) network.
History of THORChain (RUNE)
THORChain officially entered the market in 2018. Interestingly, the protocol was created and maintained by a group of eighteen pseudonymous self-organized developers. Notably, the concept for the project emerged as part of the Binance Hackathon in 2018.
Investors were immediately interested in the project. The network secured +2 million during private and seed funding rounds. Additionally, the platform Initial Exchange Offering (IEO) netted another $250,000.
These fees went towards the launch of the Chaosnet in the summer of 2020. This protocol was built to function as the back end for the BepSwap DEX. BepSwap was unique in the market for many reasons. For one, it was the first decentralized application to launch on the Binance Smart Chain. Today, the platform enables the trading of an excellent selection of cryptocurrencies. This task was accomplished through the integration of wrapped BEP2 versions of the coins.
Cross-Chain Concerns Still Cause Headaches for Investors
THORChain had excellent foresight when it realized that there was a growing demand for cross-chain exchanges. Today, this demand is at its all-time highest. Investors are suffering due to the complex process and confusing nature of trading assets across blockchains. THORChain can help reduce these problems.
The internet is full of disgruntled traders who have sent their holdings to crypto oblivion attempting to navigate the current myriad of blockchain assets in the DEX sector. THORChain can provide much-needed clarity and simplicity to these actions.
How to Buy THORChain (RUNE)
THORChain (RUNE) is available on the following exchanges:
Kraken – Founded in 2011, Kraken is one of the most trusted names in the industry with over 9,000,000 users, and over $207 billion in quarterly trading volume.
The Kraken exchange offers trading access to over 190 countries including Australia, Canada, Europe, and is our most recommend exchange for USA residents. (Excluding New York & Washington state)
Uphold – This is one of the top exchanges for United States & UK residents that offers a wide range of cryptocurrencies. Germany & Netherlands are prohibited.
Binance – Best for Australia, Canada, Singapore, UK and most of the world. USA residents are prohibited from buying THORChain (RUNE). Use Discount Code: EE59L0QP for 10% cashback off all trading fees.
KuCoin – This exchange currently offers cryptocurrency trading of over 300 other popular tokens. It is often the first to offer buying opportunities for new tokens. This exchange currently accepts International & United States residents.
WazirX – This exchange is part of the Binance Group, which ensures a high standard of quality. It is the best exchange for residents of India.
Uphold Disclaimer: Assets available on Uphold are subject to region. All investments and trading are risky and may result in the loss of capital. Cryptoassets are largely unregulated and are therefore not subject to protection.
THORChain – Perfect Positioning
The rise of Ethereum competitors such as the BSC has helped to fuel more interest in cross-chain systems such as THORChain. The platform offers features that users desire when accessing a decentralized network. This strategy helps with new investor onboarding. Consequently, you can expect to hear more from this network as users continue to join the THORChain ecosystem.
David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com
You may like
How to Buy THORChain | Buy RUNE in 4 Steps (June 2023)
Investing In Render Token (RNDR) – Everything You Need to Know
Investing in Hedera Hashgraph (HBAR) – Everything You Need to Know
Investing In Helium (HNT) – Everything You Need to Know
Investing In Solana (SOL) – Everything You Need to Know
Investing In Avalanche (AVAX) – Everything You Need to Know