About THORChain (RUNE)

THORChain Frequently Asked Questions (FAQ)

What is the primary function of THORChain (RUNE)?


The primary function of THORChain (RUNE) is to facilitate cross-chain liquidity pools that allow for decentralized exchange of assets (cryptocurrency) across different blockchains without the need for intermediaries. RUNE is used as the base currency in liquidity pools, ensuring security and governance within the THORChain network.




How does the THORChain protocol enable cross-chain swaps?


THORChain protocol facilitates cross-chain swaps using its Continuous Liquidity Pools (CLPs) and a network of nodes that operate the Byzantine Fault Tolerant protocol. When a user initiates a swap, the protocol selects the relevant liquidity pools to complete the exchange across different blockchain networks. The nodes witness the incoming transaction on one chain, reach consensus, and then execute the corresponding transaction on the target chain, thus enabling seamless asset swaps between otherwise incompatible networks.




What is the role of RUNE in the THORChain ecosystem?


RUNE serves as the base currency and utility token within the THORChain ecosystem. It is used as the settlement asset for swaps, as well as for bonding by network nodes to ensure security and governance. RUNE facilitates liquidity pools, rewards participants, and links THORChain with other networks through a cross-chain connection.




Can you explain the launch process of THORChain and the IDO?


THORChain was launched through an Initial DEX Offering (IDO), which is a type of crowdfunding event where the native RUNE token was offered for the first time via a decentralized exchange. Instead of an Initial Coin Offering (ICO), the IDO allowed for immediate trading of RUNE, providing liquidity and price discovery from day one. The launch aimed to distribute tokens fairly while ensuring an open and transparent process aligned with decentralized principles.




Why does THORChain have an anonymous team, and how does this benefit the project?


THORChain's team is anonymous to ensure the project remains decentralized and resilient against external pressures or regulatory action that could target specific individuals. This anonymity also encapsulates the ethos of blockchain’s foundational principles, promoting a trustless system where the code and network performance take precedence over reliance on known personalities.




What features make THORChain unique compared to other liquidity protocols?


THORChain stands out due to cross-chain compatibility, allowing for decentralized trading across different blockchains without wrapped tokens. It uses Continuous Liquidity Pools (CLPs), providing liquidity directly to users while enabling yield earning for liquidity providers. Furthermore, THORChain operates with an independent blockchain network secured by the Tendermint consensus algorithm, ensuring autonomy and interoperability for a seamless trading experience.




How does THORChain address the issue of impermanent loss for liquidity providers?


THORChain addresses impermanent loss for liquidity providers by implementing continuous liquidity pools (CLPs) that use the Slip-Based Fee and the Incentive Pendulum algorithm. The Slip-Based Fee increases trading fees relative to the size and impact of a trade, discouraging large, disruptive trades and protecting liquidity providers from large impermanent losses. The Incentive Pendulum ensures network rewards are balanced between liquidity providers and validators, motivating an equilibrium that may reduce the impact of impermanent loss.




What incentives are in place for users to provide liquidity in the THORChain network?


Users who provide liquidity in the THORChain network are incentivized with a portion of the trading fees and system income generated from the swap transactions within the network. They also receive liquidity provider (LP) rewards in the form of RUNE, THORChain's native token, distributed proportional to their contribution to the liquidity pools.




How does THORChain's lending protocol differ from other lending platforms?


THORChain's lending protocol differentiates itself by being a cross-chain liquidity protocol rather than a typical lending platform. It allows users to swap assets across different blockchains without wrapping or pegging. Instead of lending and borrowing, users provide liquidity to pools and earn yield through trade fees and liquidity rewards. This sets it apart from other platforms that focus on collateralized loans and interest-based lending models.




What is the total supply of RUNE, and how many coins are currently in circulation?


The total supply of RUNE is capped at 500 million tokens, with the number of coins in circulation varying.




What security measures are implemented in the THORChain network to protect user's assets?


THORChain employs several security measures to protect users' assets, including a Byzantine Fault Tolerant consensus algorithm, a bond system for validators to ensure good behavior, state-of-the-art cryptography, and continuous network monitoring. Additionally, the network undertakes regular third-party audits and code reviews to identify and address vulnerabilities.




How does THORChain's previously used ERC-20 and BEP-2 RUNE compare to the current native RUNE?


Previously, THORChain utilized ERC-20 (Ethereum-based) and BEP-2 (Binance Chain-based) versions of RUNE for compatibility with those networks. The current native RUNE, however, is the only supported token for use within the THORChain ecosystem and operates on the THORChain's standalone blockchain, ensuring optimized security, liquidity, and interoperability tailored to the protocol's specific needs.




Describe the consensus mechanism used by the THORChain network.


THORChain utilizes a Byzantine Fault Tolerance (BFT) consensus mechanism, specifically Tendermint BFT, which allows for quick and secure confirmation of transactions within the network.