Table of Contents
Evaluation Report for THORChain (RUNE)
THORChain (RUNE) is a decentralized liquidity protocol enabling cross-chain asset swaps in a permissionless environment and one of the leading DeFi projects for cross-chain asset swaps.
Its native token, RUNE, serves as a settlement currency, security asset, governance tool, and incentive mechanism within the protocol and supports multiple blockchains like Bitcoin and Ethereum, facilitating direct asset swaps, with RUNE acting as a bridge.
Unique Features of THORChain (RUNE)
Here are some of the notable features:
- Non-Custodial Nature: Unlike centralized exchanges, THORChain is non-custodial, meaning users retain control of their assets at all times during transactions. It operates in a fully decentralized and open-source manner, with all transactions recorded on-chain and executed by anonymous validator nodes, ensuring that swaps are always non-custodial.
- Native Coin Usage: THORChain facilitates the use of native coins directly in its liquidity pools, avoiding the need for wrapped or pegged tokens that depend on centralized parties for pegging. This design mitigates the risk factors introduced by wrapping or bridging tokens, which is common in many other cross-chain solutions.
- Chain Agnostic Design: THORChain's architecture is designed to connect any blockchain, including UTXOs and privacy chains, which broadens its compatibility across the blockchain ecosystem. This feature is facilitated by node operators who begin observing a network to add it to THORChain, hence not limiting the protocol to particular types of chains.
- Support for Bitcoin (BTC): THORChain was the first and remains the only protocol to achieve earning APY on native BTC in a decentralized manner. This feature is a significant milestone as it provides decentralized yield opportunities for BTC holders.
- Automated Market Maker (AMM) and Liquidity Pools: Instead of relying on atomic swaps which necessitate a peer-to-peer exchange, THORChain utilizes liquidity pools and an Automated Market Maker design to facilitate always available peer-to-pool swaps, enhancing the liquidity and efficiency of asset exchanges.
- Economic Design and Security Measures: THORChain has an intricate economic design involving bonded versus pooled RUNE, an incentive pendulum, and up to 100 anonymous and constantly churning validator nodes using a Threshold Signature Scheme to secure users' assets. This structure enhances the trustless nature of the protocol and promotes rational economic behavior to ensure security from all angles.
- Continuous Liquidity Pools and Direct Fund Management: The protocol features continuous liquidity pools for maximized efficiency and manages funds directly in on-chain vaults without pegging or wrapping assets, which is an advantage for liquidity provision and asset management.
- Potential for a Deflationary Economy: THORChain’s lending technology could potentially make RUNE deflationary, creating scarcity and driving up demand for the token, which could have a positive impact on its economic model.
- Offerings Beyond Swaps: THORChain isn't just limited to asset swaps; it is expanding its offerings through THORFi extensions like synthetic assets, single-sided savings, and lending, which could further enrich the protocol's ecosystem and reinforce its concept of a liquidity “blackhole”.
These features collectively contribute to THORChain's uniqueness and its position as a noteworthy protocol in the cross-chain and decentralized finance (DeFi) space.
Why THORChain (RUNE)?
Why THORChain (RUNE)?
- Innovative Technology: THORChain's unique cross-chain liquidity protocol and its focus on enabling native asset swaps across different blockchains without the need for wrapping or pegging are innovative in the DeFi space. Its technology might drive demand for its native token RUNE and the protocol itself.
- Decentralization and Security: The protocol's decentralized and non-custodial nature may appeal to investors looking for projects that prioritize user autonomy and security. Its use of a Threshold Signature Scheme (TSS) with anonymous and constantly churning validator nodes enhances the trustless nature of the protocol.
- Broad Blockchain Compatibility: THORChain's chain-agnostic design allows for the inclusion of a wide variety of blockchains, which might position it well for broader adoption and utility in the growing cross-chain DeFi ecosystem.
- Native Bitcoin Support: Being one of the few protocols that support native Bitcoin liquidity provision and earning yield on BTC in a decentralized manner will likely attract Bitcoin holders and increase the protocol's user base.
- Potential Economic Incentives: THORChain's economic design, which includes mechanisms like the incentive pendulum and potential deflationary aspects of RUNE due to its lending technology, might create a balanced and potentially rewarding economic environment for participants.
- Continuous Development: THORChain has shown a commitment to continuous development with the launch of its multi-chain Chaosnet and upcoming extensions like THORFi which aims to introduce additional financial services. Continuous development might result in an evolving and improving ecosystem, which could be beneficial for long-term investors.
- Liquidity Provision Opportunities: The protocol's use of liquidity pools and Automated Market Maker (AMM) design offer liquidity providers the opportunity to earn yields, which might provide an additional incentive for investment.
- Community and Ecosystem Growth: A strong and active community, along with partnerships and integrations, could contribute to the protocol's ecosystem growth and long-term sustainability.
What is THORChain (RUNE)?
What is THORChain (RUNE)?
THORChain (RUNE) is a decentralized liquidity protocol designed to enable cross-chain trading and liquidity provision in a permissionless and trustless manner.
How does THORChain work?
THORChain operates by facilitating cross-chain liquidity and decentralized exchange of assets through a network of interconnected nodes and liquidity pools.
Here's a breakdown of how it works:
- THORChain creates a decentralized platform where users can swap assets across different blockchain networks without relying on centralized intermediaries. It achieves this interoperability through the use of proxy or wrapped tokens and cross-chain communication protocols.
- Users can deposit their assets into liquidity pools on THORChain, where they are paired with the native token, RUNE, to facilitate decentralized trading.
- Each liquidity pool facilitates the exchange of one asset for another, with the price determined by the relative supply of each asset in the pool using an Automated Market Maker (AMM) model.
Automated Market Maker (AMM):
- The AMM algorithm calculates the price of assets based on the ratio of assets in a liquidity pool. Unlike traditional order book-based exchanges, AMM provides continuous liquidity regardless of the order size.
- Nodes on THORChain validate transactions, maintain the security of the network, and ensure the accurate execution of cross-chain swaps.
- Nodes are incentivized through block rewards and a portion of the fees generated from the network's operations. They are required to bond RUNE as collateral to ensure honest behavior.
Thorchain Protocol Layers:
- TSS Protocol: Thorchain utilizes Threshold Signature Schemes (TSS) to manage private keys securely, allowing for trustless custody of assets.
- Bifrost Protocol: The Bifrost Protocol enables communication between Thorchain and other blockchains, facilitating cross-chain swaps.
- Liquidity providers earn a portion of the trading fees based on their share of the liquidity pool.
- Node operators earn rewards for validating transactions and maintaining network security.
- When a user initiates a swap, the request is sent to the network and processed by nodes. The AMM determines the price, and the transaction is executed, transferring the swapped assets to the user's wallet.
- The THORChain ecosystem allows for community-driven governance, where RUNE token holders can potentially participate in decision-making processes regarding network upgrades and other key decisions.
Through these mechanisms, THORChain aims to create a decentralized, secure, and interoperable liquidity network that enhances the overall functionality and user experience within the DeFi space.
Primary Use Case:
THORChain's primary use case revolves around providing decentralized liquidity and facilitating cross-chain trades in a secure and permissionless environment.
Here are the core aspects of its primary use case:
- Cross-Chain Asset Swaps: THORchain allows users to trade assets across different blockchains without the need for centralized intermediaries. This is a significant step towards blockchain interoperability, enabling seamless exchanges between distinct blockchain ecosystems such as Bitcoin, Ethereum, Binance Chain, and others.
- Decentralized Liquidity Provision: Users can provide liquidity to the network by depositing their assets into liquidity pools. By doing so, they facilitate trades and earn a portion of the trading fees as a reward for their contribution.
- Automated Market Making (AMM): Unlike traditional exchanges that use order books to match buyers and sellers, THORchain employs an AMM model to provide continuous liquidity and determine asset prices, making the trading process more efficient and accessible.
THORChain's primary use case lies in enabling a more open, interoperable, and user-friendly environment for cross-chain trading and decentralized financial services.
Challenges to Adoption
Challenges to Adoption
While THORChain (RUNE) has been a pioneering force in the decentralized finance (DeFi) and AMM space, it faces several challenges to widespread adoption.
- Technology Adoption: The adoption of new technological features such as streaming swaps could face hurdles. While promising, streaming swaps are noted to be unlikely to see rapid widespread adoption in the near term, as the crypto market is highly competitive with many rivals innovating quickly.
- Transition to Native Blockchain: THORChain activated a "killswitch" to phase out RUNE tokens based on the Ethereum blockchain and BNB Chain in favor of tokens issued on its native blockchain. This transition could present challenges as users and developers need to adapt to the new blockchain standards.
- Security Concerns: RUNE is used to underwrite pooled assets and serves as leverage for THORNodes. If a THORNode breaches protocol or engages in malicious activities, they could lose part or all of their RUNE deposit. This mechanism, while intended to secure the network, could present challenges in attracting and retaining node operators.
- Locked Supply: A significant amount of RUNE is voluntarily locked into bonds and pools on the THORChain network. This locked supply reduces the amount of free-floating, non-useful tokens, which could impact the liquidity and overall market dynamics of RUNE.
Each of these challenges could impact the rate at which THORChain (RUNE) is adopted and integrated within the broader crypto and DeFi ecosystems.
Overcoming such challenges would likely require strategic efforts from the THORChain developers and community, as well as continued innovation to stay competitive in the rapidly evolving DeFi landscape.
The technology behind THORChain is engineered to facilitate decentralized and cross-chain exchanges. Here's an outline of its core technological components and how they work together:
THORChain employs protocols like the Bifrost Protocol to facilitate communication between different blockchain networks. This cross-chain communication is crucial for enabling asset swaps across various blockchains.
Automated Market Makers (AMMs):
THORChain uses AMMs instead of traditional order books to facilitate asset exchanges. AMMs provide continuous liquidity, and the prices of assets are determined algorithmically based on the relative supply in liquidity pools.
Users can deposit their assets into liquidity pools on THORChain. These pools are crucial for facilitating decentralized trades and determining asset prices through the AMM model.
Threshold Signature Schemes (TSS):
TSS is employed to manage private keys securely, allowing for trustless custody of assets. This is crucial for maintaining the decentralized nature of THORChain and ensuring the security of users’ assets.
Nodes on THORChain validate transactions, maintain the security of the network, and ensure the accurate execution of cross-chain swaps. Nodes are incentivized through block rewards and a portion of the fees generated from network operations.
The Bifrost Protocol in THORChain enables communication with other blockchains, facilitating cross-chain swaps. This protocol is crucial for THORChain's interoperability feature.
THORChain employs an incentive pendulum mechanism to balance the incentives between liquidity providers and node operators. This helps in maintaining a healthy and secure network.
Continuous Liquidity Pools (CLPs):
CLPs are a form of liquidity pool that provides more predictable and stable pricing compared to traditional exchange models. This innovative approach to liquidity could attract more users and liquidity providers to the platform.
THORChain has a community-driven governance model that allows for upgrades and changes to be proposed and voted on by the community, ensuring the network stays adaptable and aligned with user needs.
Transaction fees (gas) on THORChain are used to incentivize node operators and maintain network security. These fees are paid in RUNE and are crucial for the network's economic model.
THORChain has an upgrade mechanism that allows the protocol to be upgraded without network interruptions, ensuring continuous operations while improving the system.
The ecosystem development for THORChain has been quite active and promising, particularly in the recent quarters of 2023. Here's a comprehensive overview of the development within the THORChain ecosystem:
- The ecosystem has experienced significant growth with the inclusion of new features and enhancements. In Q2 2023, Savers experienced substantial growth, especially in the BTC pool, leading to multiple increases in the synth utilization cap.
- Similarly, in Q1 2023, THORChain continued to build despite the bear market, adding several interfaces and witnessing steady growth in trading volume over the previous three months. Additionally, there were website updates and several protocol changes.
- In 2022, THORChain achieved Mainnet status and added four new integration chains: Dogecoin, Terra, Cosmos, and Avalanche, marking a substantial milestone in its development journey.
Diverse Range of Applications:
- The ecosystem boasts a wide array of applications, wallets, and tools created by global developers and contributors. As of now, there are 45 Apps and Services listed under various categories like Wallet, Exchange, Explorer, and more, on the THORChain ecosystem page. Some notable applications include:
- Trust Wallet: A self-custody wallet that supports native RUNE and cross-chain swaps using THORChain.
- THORSwap: A multi-chain DEX aggregator built on THORChain's cross-chain liquidity protocol.
- XDEFI: A multi-chain wallet with native RUNE support allowing secure storage, swap, and sending of Crypto and NFTs across various blockchains.
- ASGARDEX: A no-fee, standalone desktop app implementing THORChain-based decentralized swaps, serving as a reference for many developers building in the ecosystem
Community and Developer Engagement:
The THORChain ecosystem encourages community and developer engagement, which is evident from the diverse teams working towards common goals. Various apps, wallets, tools, and resources have been developed by contributors from around the world, fostering a collaborative and innovative environment.
The continuous development, and integration of new chains, and a growing ecosystem of applications and services underline a positive outlook for THORChain. The commitment to overcoming challenges during bear market conditions and the active community and developer engagement are strong indicators of a thriving and evolving ecosystem.
THORChain's ecosystem development showcases a vibrant and growing community, continuous innovation, and a strong foundation for future growth and sustainability in the decentralized finance (DeFi) space.
Founders, Executive Team & Core Developers
THORChain's development and management structure is quite unique in the sense that it operates under a pseudonymous team, meaning the identities of its core developers and founders are not publicly disclosed.
Here are the key points regarding the team behind THORChain:
THORChain was initiated by a group of developers during the Binance Dexathon in 2018. The developers met at a Binance hackathon in the same year.
The founders and developers have largely chosen to remain anonymous. There are no listed CEOs, founders, or directors for THORChain. The structure is such that none of the self-organized developers carry formal titles.
Due to the anonymity of the core team, much of the public-facing image and development of THORChain is driven by its community. The project utilizes GitLab for organizing all future development, indicating a decentralized and open-source approach to building and improving the protocol.
Initial DEX Offering (IDO):
The project successfully raised $1.5 million in an Initial DEX Offering (IDO) in July 2019, which was a significant milestone that likely helped fuel further development and community growth.
Protocol Revenue Distribution:
It's noted that the fees generated by the protocol are directed back to the users, reinforcing the community-centric and user-focused approach of THORChain's development model.
The pseudonymous nature and community-driven approach of THORChain align with the ethos of decentralization prevalent in the broader cryptocurrency and DeFi (Decentralized Finance) spaces. This structure fosters a collaborative environment where the community plays a significant role in the project's development and governance.
Circulating supply: 339,372,709 RUNE | Max supply: 500,000,000 RUNE
How Many Tokens Are in Circulation?
The current circulating supply of Thorchain (RUNE) tokens is 339,372,709 RUNE.
Below is an outline of the tokenomics surrounding Thorchain (RUNE):
- Thorchain has a fixed supply of RUNE tokens (500M), which can create a scarcity factor, potentially driving value as the demand for RUNE increases with network usage.
- Liquidity Provision: RUNE is used to provide liquidity in the network's pools alongside other assets to facilitate trading.
- Security: Node operators bond RUNE as collateral to ensure honest behavior and network security.
- Governance: RUNE holders may participate in governance decisions, which can influence the development and operations of Thorchain.
- Transaction Fees: RUNE is used to pay transaction fees on the network, driving utility and demand for the token.
- Liquidity Rewards: Liquidity providers earn a portion of the trading fees generated from the liquidity pools based on their share of the provided liquidity.
- Node Rewards: Node operators earn rewards for validating transactions and maintaining network security.
Bonding and Slashing:
- Node operators are required to bond RUNE as collateral. If a node acts maliciously or fails to fulfill its duties, a portion or all of its bonded RUNE can be slashed as a penalty.
- The value of liquidity pools on THORChain is partially denominated in RUNE, impacting the token's price dynamics based on the level of liquidity and trading activity on the network.
- THORChain has a community treasury funded by a portion of the network's fees, used to finance development projects and other initiatives beneficial to the network.
- A significant amount of RUNE is locked in liquidity pools and node bonds, reducing the free-float supply, which can impact price dynamics.
THORChain's token economics are meticulously designed to balance the incentives of various network participants, ensuring long-term sustainability and growth of the ecosystem.
The Initial token distribution of RUNE is as follows:
- 50.00% is allocated to Liquidity Emission
- 5.00% is allocated to Private Sale
- 13.00% is allocated to Operational Reserve
- 12.00% is allocated to the Community Reserve
- 10.00% is allocated to Team & Advisors
- 6.00% is allocated to Seed
Supply Schedule for THORChain (RUNE)
The initial supply of 1 billion RUNE tokens was pre-minted by THORChain in 2018. THORChain chose to burn all of the unused reserve RUNE in October 2019, which amounted to 50% of the initial maximum supply when combined with the burns on Project Surtr. The supply reduction did not impact the tokens already distributed to Pre-Sale and Initial DEX Offering (IDO) investors. The maximum supply of THORChain (RUNE) is now 500,000,000 tokens.
What were the funding rounds for THORChain?
- $3.75m was raised in the Funding Round on Oct 2021
- $224,000 was raised in the Public Sale (July 2019), with an average price of $0.032
- $1.61m was raised in the Private Sale (July 2019), with an average price of $0.023
- $600,000 was raised in the Seed Sale (Dec 2019), with an average price of $0.02
Over the last few weeks, THORChain (RUNE) has experienced a significant uptick in its price. Here are the key points regarding its recent price performance:
- Bull Run: THORChain (RUNE) saw a substantial bull run, surging to a high of $2.86, which marked its highest level since August 8th. The token's price increased by more than 49% within the last 30 days, demonstrating a remarkable bullish momentum.
- Weekly Performance: In a span of 7 days, the price of RUNE appreciated by approximately 32%. On a daily basis, price fluctuations were observed, with the token's price increasing by 8% over 24 hours at a particular point.
- Daily Fluctuations: In one of the weeks, the daily exchange rate of RUNE to USD experienced fluctuations between a high of $2.81 and a low of $2.15. The largest 24-hour price movement within this week was noted on a Tuesday, with a price change of $0.316294 (17.3%).
- Historical Highs and Lows: Over a 7-day period, RUNE's price fluctuated between $2.25 and $1.50, and over a 30-day period, the price ranged between $2.27 and $1.50.
At the time of writing (October 31st, 2023), the price of RUNE is at $2.89, with a market capitalization of $979M (USD).
Price Since All-Time-High (ATH)
THORChain's (RUNE) all-time high was $21.26 on May 18, 2021 (2 years ago) and it is currently trading at -86% of this price, at $2.89.
Last 30 Days
THORChain has increased by 49% in just the last 30 days and during this surge has displayed a consistent pattern of achieving higher highs and higher lows, indicative of a bullish trend.
Current Price & History
(The chart above is only viewable via the website)
Should You Invest in THORChain (RUNE) Now?
The indicator below is provided by Trading View and is an algorithm that includes many commonly used technical indicators such as trendlines, moving averages, and momentum indicators, aggregated into an all-in-one "Buy or Sell" indicator for this project.
The indicator below can help to identify the optimal time to buy in.
This is the current buy/sell sentiment based on technical analysis:
(The indicator above is only viewable via the website)
Where to Buy:
Thorchain (RUNE) can be purchased on the following exchanges:
How to Store THORChain (RUNE)
Storing THORChain (RUNE) securely can be achieved through various means depending on individual preferences and technical expertise.
Here are the most popular methods and platforms:
Ledger Hardware Wallet:
THORChain has a dedicated application on Ledger devices which can be accessed via Ledger Live. This method provides a secure offline storage solution for RUNE tokens.
TrustWallet and xDefi:
THORChain's keystore wallet seed phrase is compatible with TrustWallet and xDefi. By using the standard BIP39 mnemonic phrase, users can import their wallets into these platforms. TrustWallet and xDefi provide a more user-friendly interface while also ensuring the security of your RUNE tokens.
Multi-Chain Wallets (e.g., XDEFI):
XDEFI is a multichain wallet with native RUNE support, allowing secure storage, swapping, and sending of crypto assets across multiple blockchains.
Wallets Supporting BEP-2 or ERC-20 Tokens:
Since RUNE is available on multiple blockchains including Binance Chain and Ethereum, it can be stored in wallets that support BEP-2 or ERC-20 tokens. This flexibility allows for a broader range of wallet options.
For individuals with a higher security preference, cold storage solutions like Ledger or Trezor hardware wallets are recommended. These wallets provide offline storage and backup, ensuring the utmost security for your RUNE tokens.
ETH Compatible Wallets:
RUNE, being on the Ethereum network as an ERC-20 token, can be stored using any ETH-compatible wallet, which may be convenient for individuals already using Ethereum-based wallets.
THORChain (RUNE) Project Links
- Website: https://thorchain.org/
- Twitter: https://twitter.com/THORChain (218k followers)
- Reddit: https://www.reddit.com/r/thorchain (12k members)
- GitHub: https://github.com/thorchain
- Whitepaper: https://github.com/thorchain/Resources/tree/master/Whitepapers
The project has excellent fundamentals and early-stage adoption.
The future outlook for market adoption is excellent and the technology utilized is relevant to the market. The project has already shown signs of early-stage adoption. The project has a strong executive team, core developers, and a history of achieving its strategic objectives.
While adoption at scale has not yet occurred, it has had a strong track record of achieving its milestones. The risk associated with the attainment of future milestones is low.
While there still are factors present and mitigating factors inherent in future growth, at present the path toward full-scale adoption is considered to be low risk.
THORChain (RUNE) stands out for its decentralized liquidity provision, cross-chain trading capabilities, and innovative Continuous Liquidity Pools (CLPs). Its robust technology, active development, and growing community also contribute to its appeal. By operating nodes, technically inclined investors can earn rewards, bolstering network security.
While THORChain's unique features make it a compelling project in the cryptocurrency space, like all crypto investments, it entails risk, necessitating thorough due diligence and consideration of individual financial circumstances before investing.
Given these factors, THORChain is considered to be a solid investment with significant upside potential and a solid long-term 'blue-chip' DeFi crypto project and an excellent way to diversify your portfolio with DeFi.