THORChain (THOR) – All you need to know

What is THORchain?

THORChain is a cryptocurrency network that allows users to swap any cryptocurrency token with another, even if they run on different blockchains. The platform uses liquidity pools, which are individual pools of cryptocurrency token pairs. One of the tokens is always RUNE, THORChain’s native token, so users can easily change any crypto into RUNE and then into their desired cryptocurrency. RUNE is also the platform’s governance token, and it helps power THORChain’s security and incentivisation system.

There are other platforms that offer cryptocurrency swapping services, such as popular crypto exchange, Uniswap, but Uniswap only supports Ethereum-based (ERC20) tokens. THORChain is the first solution of its kind, and it aims to turn the cryptocurrency market into a thriving ecosystem full of liquidity that isn’t constrained by blockchain barriers. Founded in 2018, the platform has gained momentum in recent years, and the price of RUNE has risen as adoption increases.

How does THORChain work?

THORChain works by bonding users’ cryptocurrency with RUNE tokens and allowing them to be swapped via liquidity pools on an exchange known as BEPSwap, though THORChain eventually plans to change over to the Asgardex exchange. Because tokens are always sitting in the liquidity pools, swapping is always possible and there is no need for a conventional order book model. To incentivise individuals who provide liquidity to the pools by lending tokens, THORChain provides rewards in the form of RUNE.

Coins and tokens can be swapped because of THORChain’s unique protocol known as BiFrost. The THORChain team developed this system from scratch, and it allows all of the existing blockchains to connect with each other. It also allows for the integrity and security of the system to be maintained by punishing those who engage in malicious behaviour and validating transactions using nodes: computers connected to the THORChain network. Those who validate transactions are rewarded with RUNE.

In the long-run, THORChain aims to create a better trading environment with lower transaction fees and greater staking rewards. There are potential issues relating to scalability as the platform grows, but THORChain is using a protocol known as Yggdrasil to increase its throughput by using sharding: tearing transactions into smaller, more manageable pieces. The final protocol that powers THORChain is Aesir, and this powers the rewards of the platform and helps to craft strong governance.

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