THORChain (RUNE) Review: Is Worth Investing In?

THORChain (RUNE)

THORChain (RUNE) is an independent blockchain, cryptocurrency, and cross-chain decentralized exchange (DEX). The platform combines a variety of proprietary protocols to accomplish these functions. Notably, ThorChain’s development team created the platform with the goal to power the next generation of cross-chain decentralized exchanges.

History of THORChain (RUNE)

THORChain (RUNE) officially entered the market in 2018. Interestingly, the protocol was created and maintained by a group of eighteen pseudonymous self-organized developers. Notably, the concept for the project emerged as part of the Binance Hackathon in 2018.

Investors were immediately interested in the project. The network secured +2 million during private and seed funding rounds. Additionally, the platform Initial Exchange Offering (IEO) netted another $250,000.

These fees went towards the launch of the Chaosnet in the summer of 2020. This protocol was built to function as the back end for the BepSwap DEX. BepSwap was unique in the market for many reasons. For one, it was the first decentralized application to launch on the Binance Smart Chain. Today, the platform enables the trading of an excellent selection of cryptocurrencies. This task was accomplished through the integration of wrapped BEP2 versions of the coins.

What Problems Does THORChain (RUNE) Solve?

THORChain (RUNE) attempts to tackle one of the biggest problems currently facing crypto investors, compartmentalization. There are so many independent blockchains in operation today. Sadly, these networks operate like islands in that most have no way to communicate data or value between networks.

THORChain operates an independent blockchain that has the capabilities to bridge these external networks with the goal to facilitate cross-chain transfers. As such, users can trade different types of cryptocurrencies without the use of a centralized exchange using the platform. Eliminating the need for exchanges helps to improve efficiency and reduce costs for traders.

Investor Confusion

THORChain (RUNE) helps alleviate some of the technical roadblocks encountered by new DEX users. When a new investor comes from centralized exchanges such as Coinbase, over to a DEX, it can be confusing at first. There are fewer features and more steps required to trade on DEXs.

For example, most DEXs require you to hold the native blockchain coin to even conduct basic transactions. All of these added requirements combined with the fact that DEXs offer fewer features work against adoption. These technical requirements can turn CEX investors away.

THORCHain’s development team focused on removing these barriers. For example, you don’t need any web extensions like MetaMask to utilize ThorSwap, the network’s DEX. The platform offers a built-in non-custodial wallet feature for new users directly on the homepage. This wallet allows you to interact with the THORChain ecosystem safely while retaining custody of your coins.

Benefits of THORChain (RUNE)

THORChain introduces a host of benefits that have helped it gain popularity. The network enables users to instantly swap cryptocurrencies between blockchains in a transparent manner. Notably, this transparency is a core focus of the project. All THORChain users can monitor developments via updates published on the network’s Medium channel weekly.

No Oracles

Unlike most DEXs, THORChain eliminates the use of oracles. Oracles are off-chain sensors. They can monitor communication and monitor data flow such as stocks, weather, or payment balances. They are often centralized, making them a weak link in many decentralized networks.

In the THORChain network, arbitrage traders are used to keep pricing accurate instead of oracles. If a coin is too low in value, these traders will buy it up and resell it on other DEXs. If the coin is valued too high, they will buy from other exchanges and bring the token to THORChain’s DEX. These actions balance the market out automatically without sacrificing decentralization. Arbitrage traders are incentivized to ensure the ratio of RUNE and the other cryptocurrencies in the pool remains accurate.

Liquidity

The structure of THORChain helps avoid LP dilution issues.  Dilution issues occur when there are too many trading pools for a certain coin. Since every pool is paired with RUNE within the DEX, there are far fewer pools needed. This strategy is ideal for investors because it helps concentrate liquidity.

Fee Structure

THORChain (RUNE) users enjoy a low fee structure that is a fraction of Ethereum’s current rate.  The network charges a fixed Outbound Fee and a dynamic Liquidity Fee to users. A percentage of these fees get redistributed as rewards to Validators and LP providers.

There is also a Slip-Based Fee. This fee is designed to help prevent whale manipulation. The Slip-Based Fee is based on how much your investment alters the value of the LP token. Notably, these fees are used to pay LP providers in the form of rewards.

How Does THORChain (RUNE) Work

THORChain (RUNE) was built using the Cosmos SDK. Cosmos SDK allows developers to compose custom blockchain applications using a mix of prebuilt modules and custom modules. The system also allows Devs to increase adoption and liquidity by connecting their networks via IBC to the Cosmos Network. Most notably, the Binance Smart Chain was built using Cosmos SDK.

The THORSwap exchange functions as a decentralized automated market maker (AMM). This structure enables traders to move between different asset pools conveniently. Other top AMMs include Uniswap and SushiSwap. Uniquely, THORChain leverages anonymous nodes to keep the network valid.

THORChain (RUNE) Consensus

THORChain (RUNE) introduces a Tendermint BFT (Byzantine Fault Tolerance) Proof-of-Stake (PoS) variant as its consensus mechanism. This system relies on Validators to secure the network and execute smart contracts. For their efforts, they receive rewards in the form of RUNE tokens. These rewards are paid from the transaction fees.

To become a Validator you will need to stake a minimum of 1 million RUNE. Notably, the validator nodes rotate every three days to enhance the security of the network. In total, THORChain is set up to support 360 validator nodes.

RUNE – THORChain (RUNE)

The native token of the THORChain ecosystem is RUNE. You can send this cryptocurrency globally with ease. It plays multiple roles within the network. All pools are paired with RUNE and all rewards are paid in the token. RUNE is a BEP-20 token that is interoperable within the Binance Smart Chain (BSC) network.

Bottom Line

The rise of Ethereum competitors such as the BSC has helped to fuel more interest in cross-chain systems such as THORChain (RUNE). The platform offers features that users desire when accessing a decentralized network. This strategy helps with new investor onboarding. Consequently, you can expect to hear more from this network as users continue to join the THORChain ecosystem.

THORChain (RUNE)

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