THORChain, The Future Of Decentralized Multi-chain Exchanges
— By Ibrahim Quabboua
No one can argue that blockchain technology revolutionized the financial system, leaving the centralized entities with the small hope that bitcoin might one day go to zero.
I had a problem with opening a Binance account because my nationality doesn’t allow me to do so, here comes the power of decentralized finance, and how I can navigate a whole ecosystem, and all you can see is x231nx66w goofing around at 3 am searching for the dogecoin that will lead him to the moon.
But a problem was always present in my navigation, I can search an entire ecosystem, all its DEXs, and lending protocols, but If I decided to jump on another blockchain I need another wallet to do, and if a decided that Solana is going interstellar and all I have is the ERC20 shita, sorry, Shiba. I found myself stuck with this swap operation, and I found myself forced to go through a centralized exchange. Here comes the need for a bridge of connections between different ecosystems, a DEX that can help me, the unwelcomed person in the centralized exchanges, to swap freely using DeFi.
Welcome the community-driven network ‘’ THORchain’’
THOR chain is a decentralized liquidity protocol that allows cross-chain swapping of native assets.
In my search, I recognized that the team was formed of some shadowy super coders and the project was initially founded in a Binance hackathon (yes things will get more interesting).
The protocol is a network of 70 validator nodes and its main technology allows the network to reach consensus even if up to a third of all nodes start failing.
Its main idea is by creating what is called ‘’ vault public addresses’’ for each blockchain, and the addresses are controlled by the main network. so we the shrimps can do our cross-chain swapping using the Bifrost technology which acts as a connective layer between the mighty THORchain network and other networks like Ethereum.
One of its main responsibilities is to watch the vault addresses in order to find inbound transactions that are converted later into THORchain witness transactions.
At this stage, the swapper sent its tokens to the vault address, and this transaction is recorded as pending until the majority of nodes agree on its state, that it moves to the finalized state, and once it’s finalized the protocol initiates the swap and record it on its blockchain.
At the moment of writing this article, 300 000 RUNE tokens are required to run a fully functioning THORchain node. what I like about the protocol is that it forces the nodes to stake worth of 1.5 more than the TVL to avoid any cheating, serving the true purpose of the decentralized exchanges
So for me and you, the 100$ get rich quick gang, where should we ape in and why?
RUNE powers the THORchain ecosystem and provides the economic incentives to secure the network.
To see the importance of their token, all the liquidity pools in the system consist of X / RUNE.
And the swap between a token X to Y has to go indirectly by the RUNE pair, a great way to avoid both minimizing the number of pools and to create an independent network without an oracle service (not so bad for a bunch of geeky dudes right ?)
As for fees, yes you have to pay for both blockchains transactions which maybe limit the usability to the more comfy people.
Thorchain clearly looks like an interesting protocol and a missing piece in the DeFi ecosystem that would allow people to swap between native assets without using centralized exchanges. And I heard also about a wallet on the blockchain that will serve as a cross-chain wallet, and I will be watching closely its ecosystem because such things are essential in a multi layer1 future ecosystem.
Oh, what good times are we living in. am I right?
