Altcoin Spotlight: ThorChain
Although there are many altcoins on our radar, one has recently caught our attention. If you’ve heard of ThorChain, then you know exactly why we are excited to feature this project for out altcoin spotlight.
But what is ThorChain? And what does it do? We will cover all that and more so keep reading!
What is ThorChain?
ThorChain is a special liquidity protocol which was built to solve a problem in the cryptocurrency world. ThorChain allows users to swap the layer-one tokens of a variety of blockchains directly with each other.
Basically, if you hold Ethereum, but want to trade those for Bitcoin, you no longer have to use a roundabout method with several steps to do so, instead you can just use the ThorChain for an instant swap. ThorChain is an automated market maker that can be used without having to worry about the security risks of a using a decentralized exchange.
ThorChain is built on the Cosmos Blockchain, and it is built to make cryptocurrency swaps easier. Currently 13 coins can be swapped using the technology, but the company plans to add more tokens in the future hoping to replace risky DEFI exchanges like Uniswap and SushiSwap.
Related: The Cosmos (ATOM) 101 Cryptocurrency Guide
How Does ThorChain Work?
ThorChain operates via full nodes for each operator on each of the blockchains it supports. This means it has a full node on Bitcoin to support Bitcoin transactions, and a full node on Ethereum to support ETH transactions etc.
On each of these nodes, ThorChain has a liquidity pool of its native liquidity token called RUNE. When an individual wants to convert Bitcoin to Ethereum, they will submit a request on the Bitcoin node, which will set aside an equivalent amount in RUNE. This operator will then contact an Ethereum node with the RUNE, buying the equivalent amount in ETH using RUNE and will send the confirmation of this transaction (aka the purchased ETH) back to the user.
What is so cool about ThorChain, is that although this sounds complicated, it really is simplified for the end user. The person selling Bitcoin for Ethereum won’t have to mess with the RUNE and will submit their BTC only to receive some ETH in their wallet after the transaction has been processed.
The software that ThorChain uses to complete this process is a combination of Cosmos SDK and the Tendermint consensus. Users who wish to use ThorChain will have to choose a compatible wallet. The good news is, there are several compatible wallets available for download on their website.
Some compatible wallets include Edge, Trust, Shapeshift, Rango, Unizen, and Ferz, all in addition to the ThorChain wallet.
Related: All About Decentralized Finance (DeFi) Investing
Who Invented ThorChain?
This is where it gets interesting. ThorChain reportedly has no CEO and no named founders. Rather it is an anonymous community project by Gitlab, giving it a similar origin story to Bitcoin.
So basically, we don’t know who is running ThorChain, and other than in investment or node returns, there is no company which stands to make money off this platform’s success. This makes the ThorChain project truly decentralized.
Not only that, but unlike other projects, the developers of RUNE didn’t set aside massive amounts of tokens for themselves. Rather, RUNE was sold to fundraise and locked in a smart contract for future release. The unnamed team behind ThorChain will only control 1% of the token after all token releases, which is basically nothing.
What is RUNE?
RUNE is ThorChain’s native token which is used to validate and perform the interchain token/crypto swaps. 50% of RUNE was sold in an ICO to raise money for the project initially, but now it is mostly a utility token.
Currently there are 308 million RUNE in circulation with a total supply of 500 million planned. These RUNE tokens already exist but are locked into smart contracts until a later date. Originally, the team had planned to release 20% of available tokens each quarter, but this has slowed as the number of RUNE to release have decreased.
Currently, the creators of RUNE hold about 33% of the RUNE tokens, but these will eventually be released until the team only maintains control of 1% of the total supply of RUNE.
Should You Buy ThorChain (RUNE)?
It’s rare that we review a reputable project in out Altcoin spotlights, but we truly think that ThorChain is one of the good ones! However, we don’t recommend purchasing RUNE.
Why is this? Well, ThorChain is a platform and RUNE is a utility token, rather than an investment vehicle. This means that while you can invest in RUNE, we would much rather suggest you use the platform, as this will be a better use for your money. But RUNE is deflationary, as there is a ceiling for the number of coins that will be made.
Regardless, besides on the platform, we don’t see RUNE as being very useful unless you plan to lock your RUNE in a liquidity pool—which has limited options the longer the platform is available because of the token ceiling.
Plus, while we do believe ThorChain is a good project, it is a little risky because we don’t know the founders behind it. While we don’t think it is a rug-pull scheme, there is always a chance, and you should approach any investment with caution.
Rather we recommend you invest in Bitcoin and Ethereum, and simply use the ThorChain as intended to swap coins. Though if you must insist on purchasing RUNE, it can be bought on the Binance exchange.
What Cryptocurrencies Does ThorChain Support?
As of the writing of this article in October 2023, ThorChain supports swaps between the following cryptocurrencies:
· Bitcoin
· Ethereum
· Litecoin
· Avalanche
· Dogecoin
· Cosmos (ATOM)
· USDC
· USDT
· Wrapped Bitcoin
· DAI
· GUSD
· Bitcoin Cash
Remember that more tokens will be added to the platform in the future.
Overall, we hope you are as excited about the ThorChain project as we are. We think the ThorChain technology is monumental to making cryptocurrencies (especially exchanges) accessible to all. While we still recommend approaching an investment with caution, we are curious to see where this project goes.
