We hosted our first Crypto Tech event dedicated to Thorchain, welcoming 30+ attendees in the center of Amsterdam at Blend XL to discuss, learn more about a cross chain liquidity pool.

We welcomed to the stage Luc, a community contributor in THORChain and THORSwap projects. In a lightning talk he explained the key components of the THORChain ecosystem, its history and the core principles by which the protocol runs.

Luc’s presentation gave the audience a brief but complete walkthrough of the project. Next, a quick recap of the talk:

  • THORChain is a decentralized liquidity network that facilitates cross-chain liquidity pools with no pegged or wrapped tokens. For anyone who does not know DEXs (Decentralized Exchanges), they make it possible to swap tokens within a blockchain. By using THORChain, users can swap tokens from one blockchain to another, e.g., BTC for ETH. 
  • Swaps may occur as a Swap or Doubble-Swap. The first one exchanges any accepted cryptocurrency for Rune (BTC → RUNE), and the second one uses RUNE as a vehicle to arrive at any other crypto asset (BTC → RUNE → ETH).
  • THORChain native token is paired with each of the accepted tokens in liquidity pools where any user can provide liquidity. Liquidity providers lock value and capture one third of block rewards plus swap fees. The other two thirds of the block rewards are received by the nodes.
  • When depositing the tokens in the pool the user can choose to deposit 50%/50% of each asset or 100% of one of them: 50% RUNE/ 50% BTC, or 100% RUNE or 100%BTC. The symmetrical deposit is flexible and has no slippage fees, while the asymmetrical rebalances to a 50%/50% composition, has slippage fees and only lets the user withdraw 100% of the deposited asset.
  • As a consequence of the protocol design, a deterministic pricing model considers the value of Rune at least 3 times the value of assets staked in its vaults. This is a consequence of nodes bonding ⅔ of Rune and liquidity pools bonding ⅓ of Rune, and taking into account that the pools constantly rebalance.

      Some questions from the audience during the Q&A brought out interesting aspects of the protocol regarding security, end user experience, and pricing.

      • Considering the recent exploit of the Wormhole bridge, security has become one of the main concerns: Thorchain is addressing it with a bug bounty program. It is important to remark that the protocol is still running in Chaos mode, that is, it is still not on mainnet.
      • The time a swap takes to be executed in THORChain depends on which is the starting blockchain, the internal Thorchain swap, and the ending blockchain. Because each blockchain has its own technology and different time for block confirmation, the user experience may differ substantially for any given asset swap.
      • Setting up and running a node is expensive -from USD 3M to USD 5M- considering it involves bonding RUNE, running different blockchain clients -Bitcoin, Ethereum, BSC, Terra, etc- and extensive technical knowledge.
      • At the moment there are 77 nodes, and the project is evaluating the creation of light nodes -lower requirements for running a node- to grow in decentralization. After the Q&A, people gathered in small groups, kept on networking, drinking and having a good time.

      Join our upcoming IRL events:

      Crypto Drinks – 23rd of February – Duke of Tokyo

      Crypto Tech – all about ETH 101 – 10th of March – BlendXL 

      Devconnect: 18th – 25th of April 

      ETH DAY – 18th of April – Beurs Van Berlage – early bird tickets 🐣

      DEFI DAY – 25th April – Pakhuis de Zwijger – early bird tickets 

      By Federico Rava

      DeFi and Web3 enthusiast and researcher. Improving my solidity and DApp development skills.

      Twitter @feder_eth  |  Github federava  |  LinkedIn Federico Rava