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The demand for secure and efficient decentralized financial (DeFi) platforms grows as the cryptocurrency market matures and expands. THORChain, a decentralized liquidity network, has stepped up to the plate to meet this need, offering the unique ability to perform cross-chain swaps directly between native assets. THORChain is poised to play an instrumental role in an increasingly interconnected world of blockchain ecosystems.
Revenue Model: Impressive and Sustainable
The revenue model of THORChain is twofold, consisting of block rewards and swap fees. The protocol charges a fixed network fee and a dynamic slip-based fee for each swap. This smart system design curbs the possibility of denial-of-service or sandwich attacks, ensuring the safety of transactions.
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Currently, rewards for liquidity providers and node operators hover around 40-50K RUNE daily, roughly equating to $50K USD. The trading fees range from 10-15k RUNE daily, bringing an additional $20k USD. THORChain’s impressive revenue would place it among the top 25 protocols if ranked.
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Treasury: Prudent and Decentralized
The Treasury of THORChain boasts robust assets. The collective value of RUNE and non-RUNE wallets and various Liquidity Provider (LP) wallets total about $34.9m USD. Moreover, the protocol has around 60m RUNE in standby reserves and approximately 100m RUNE in deployed reserves, equating to $220m USD.
Importantly, THORChain plans to transition to full decentralization. Once key milestones such as the mainnet launch, the rollout of 100+ nodes, and THORFi have been reached, the Treasury plans to hand over control to the community, further enhancing the protocol’s security and trust.
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Tokenomics: Calculated and Strategic
The initial supply of 1 billion RUNE tokens was distributed through various means, including sales, liquidity provision rewards, and direct allocations to early contributors. The THORChain team has strategically burned 50% of this supply, putting the total at 500 million tokens.
The price of RUNE is calculated by considering both the liquidity within the network and speculative premiums. For every $1 of non-RUNE assets in the network, $3 of RUNE is incentivized to be locked. This clever mechanism helps maintain the value of RUNE.
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Token Lockup and Emission: Fair and Balanced
By early 2022, all tokens had been unlocked for investors, the team, and operational reserves. The remaining tokens (roughly 40% of the supply) are slated for liquidity incentives and THORNode rewards. This ensures a steady emission of tokens, promoting stability and fair distribution.
Use Case: Revolutionary and Crucial
The core value proposition of THORChain lies in its decentralized nature. It allows for cross-chain swaps of native assets without user registration, KYC, wrapped assets, or third-party pricing mechanisms. Moreover, it leverages Continuous Liquidity Pools for efficiency.
RUNE, the native currency of THORChain, plays four key roles within the ecosystem: Settlement Asset, Network Security, Governance, and Incentives. Demand for RUNE is driven by Total Value Locked (TVL), currently at $97m, showcasing its vital role in the network.
The year 2022 has served as a stern reminder of the necessity for decentralized exchanges, making THORChain an integral part of the future of DeFi.
Team and Funding: Anonymous and Resilient
In the spirit of decentralization, the team behind THORChain largely remains anonymous. Known as the “THORChads,” this community continues to contribute significantly to the project. Between 2018 and 2019, THORChain received funding from several sources, including Delphi Digital, Multicoin Capital, X21 Capital, and Zee Prime Capital.
The Road Ahead
THORChain’s roadmap for 2023 includes developing Order Books, integrating Binance Smart Chain and Haven Protocol, and introducing THORFi, allowing users to save and lend assets.
THORChain is more than just a platform; it represents the future of DeFi. Through its unique value propositions, robust Treasury, calculated tokenomics, and forward-thinking use cases, THORChain is carving a path for itself in the cryptocurrency realm. As it marches toward complete decentralization, the future looks bright for this pioneering project.
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