Editor’s note: We originally published this piece on May 26, 2021. We’ve since updated it with new information about THORWallet and Flipside Crypto’s THORCHAIN data and bounty program.
A storm more than three years in the making has finally made landfall, and now the rains are pouring down. On Tuesday, April 13, THORChain, and its accompanying token RUNE, finally made their debuts.
No longer an ancient myth or simply a prophecy of a power to come, THORChain had finally arrived. More than 50,000 users accessed the protocol in the first few hours after it debuted.
That excitement was likely triggered by what technical lead Chad Barraford told CoinDesk on the eve of the protocol’s launch was the fulfillment “of the initial promises of the white paper.”
So, what is THORChain exactly?
THORChain: Storming from chain to chain
THORChain is an automated market maker first outlined in a white paper roughly three years ago.
But just like its Norse-God namesake, THORChain offers a rare power that most other protocols simply cannot match. Instead of conjuring powerful bolts of lightning on command, however, it can do something perhaps even more impressive: enable cross-chain trades.
With THORChain, users are able to “swap freely from one chain to another, one asset to another,” Barraford told CoinDesk. That means making cross-chain swaps with real currencies, rather than wrapped coins, while interacting on a decentralized AMM exchange.
So far, THORChain users can make trades with BTC, ETH, LTC, CH, and BNB. Other tokens and more are expected to be added to the protocol in the near future. But unlike most other cross-chain platforms, THORChain allows users to trade the real assets of multiple unconnected blockchains rather than wrapped coins or other imitations.
Reading the RUNE
Those cross-chain trades are enabled by RUNE, the native token offered by THORChain.
Every time a trade happens, the tokens being swapped are matched with an equal value of RUNE. If, for example, a user wants to swap Ether for Bitcoin, he or she would first trade their ETH for RUNE, then trade that RUNE for an equivalent amount of BTC.
Leading up to the debut of THORChain on April 13, RUNE was trading at roughly $12. As of May 24, it was trading at roughly $10.
Impermanent loss slip-sliding away?
Cross-chain trades aren’t the only thing superpower that THORChain offers, however. It also provides an answer to a pair of issues that have plagued exchanges and the liquidity providers that fuel them: slippage and impermanent loss.
When it comes to slippage, THORCHain and RUNE have looked to minimize its impact by allowing users to post an equal amount of any token supported by the platform and immediately start earning trading fees. This encourages more liquidity providers to hop into the pool and participate in the system, helping to decrease price variability.
And, when it comes to impermanent loss, Barraford told CoinDesk that the network “has impermanent loss protection” as long as you stay in it for 90 days.
NEW: A wild THORWallet appears
On July 15, a new storm appeared on the horizon as THORCHAIN took to Twitter to announce the arrival of THORWallet.
What is THORWallet, exactly? According to the team’s announcement, it’s a non-custodial wallet that “enables swaps of Layer 1 tokens in a decentralized way with no middleman.” Crucially, it enables the swap of real assets and tokens, rather than wrapped assets.
THORWallet also allows users to earn interest by investing either in liquidity pools, or a soon-to-come multi-chain savings account. This would allow users to earn yield on Bitcoin. Users can also trade synthetic assets with lower trading fees, and
The goal, according to the THORCHAIN team, is to “users the chance to participate in the DeFi space the easiest way possible, directly from your mobile phone.”
NEW: THORCHAIN breached, promises to make users whole
Just a few days after THORWallet made its debut, THORChain users were left checking their balances after the decentralized exchange suffered a multimillion-dollar breach.
Some early reports speculated that as much as 13k ETH was taken in the exploit. THORCHAIN disputed that notion, however, and said that roughly 4000 ETH was taken — equivalent to roughly $6 million. It also noted that a “recovery plan is in motion” and that it would ensure that anyone who was affected would be made whole. The network, meanwhile, would be “stronger and more resilient.”
To truly understand how these recent events have impacted user behavior — including how many new accounts have signed up, token flow activity, and more — we need on-chain data. Fortunately, we’ll have that data soon, thanks to Flipside Crypto’s community-enabled analytics and on-chain data.
You can also visit the THORCHAIN website to learn more, and access their desktop app.