Thorchain is a sort of change machine for your crypto. Let's say you want to swap your Bitcoin for Eth without using a centralized exchange. On Thorchain you can do this the DeFi way. Thorchain's token is RUNE. Thorchain is built with Cosmos SDK.
Thorchain makes it possible to swap coins without having to 'wrap' them when they are moved to a different blockchain. In doing so, it gets around the issue that most decentralized exchanges or dexes (Uniswap, Curve etc) have, namely that they run on Ethereum. That means that if you want to swap your Bitcoin on such a dex, you will have to do it as a wrapped token: in the case of BTC, a representation of Bitcoin on the Ethereum blockchain. Ideally, of course, you want to swap real BTC or real ETH. Thorchain makes this possible.
Locking up RUNE
Thorchain makes swaps possible by incentivizing users to deposit to liquidity pools. Every liquidity pool is made up of 50% RUNE and 50% of another coin. So for pooling let's say $1 of ETH, a liquidity provider also has to pool $1 of RUNE. In this way, the launch of new liquidity pools creates new supply sinks. This is because the RUNE deposits remove free floating RUNE supply. In addition, node operators have to bond RUNE: Thorchain nodes must lock up more value than they are securing in the underlying liquidity pools.
All this has the effect that the value of RUNE will go up as Thorchain becomes a more liquid network.
Hacks in 2021 made Thorchain stronger
Thorchain suffered a couple of hacks in 2021, which drew criticism from many outsiders. Looking back, these hacks turned out to be a blessing in disguise, as they fixed a number of vulnerabilities, strengthening the network. It also showed how quickly node operators were to react, ensuring the network was protected. This reassured the Thorchain community and its users that the network could deal with a threat and come out stronger.
Developments in 2022
After several years of intense development, Thorchain has reached a tipping point. The community takes steps to remove certain restrictions that have hampered its organic growth. The expectation of some analysts is that, as these caps are removed, the full growth potential of the network will be unleashed.
Some developments we expect in 2022:
- Wallet integrations will be a priority for developers in 2022. In order to interact with Thorchain, users must use a wallet/UI that has been integrated to Thorchain. Analysts expect all major wallets to eventually integrate with Thorchain.
- More chains: a whole array of chains will be integrated. For example Monero, Cosmos Hub, Avalanche, and many others. With each chain integration, it is likely that the amount of RUNE in pools will go up, and so the RUNE price.
- THORFi: An upcoming milestone is THORFi. This will introduce a number of novel products. For example lending and borrowing without liquidation, and single-sided fixed yields (for example, earn ETH on ETH).