It's been over a month since I started using Thorchain. Meanwhile, there have been important developments on the Thorchain front. On this occasion, I wanted to write a new article on Thorchain.
Thorchain is a decentralized & autonomous cross-chain liquidity network. Thorchain users can exchange cryptocurrencies on their native blockchains. Liquidity pools have been created for this purpose in Thorswap. In these liquidity pools, Rune, the coin of Thorchain, is positioned opposite each cryptocurrency. So all swaps are made against Rune. Rune thus becomes a tool for exchanging cryptocurrencies on different blockchains.
Photo by Ravi Palwe on Unsplash
Although it is possible to transact through various wallets on Thorchain, I preferred Keystore. Keystore ensures that we have an account on all major blockchains, just like on centralized exchanges.
When we connect with our Keystore wallet to Thorswap, we can see all our accounts. We cannot buy Rune from any central exchange, which we must have to use in transactions. We buy BNB from Binance and send it to our Keystore Binance account and convert that BNB to Rune on Thorswap. For transactions on Thorswap, we pay fees to both the respective blockchain and Thorchain. Thorchain transaction fees are around 10 cents, so this is not a big issue.
Thorchain's native coin, Rune, is used both as gas and distributed as a reward for investments in liquidity pools. Asymmetric investments can be made in the liquidity pools of Thorswap. In this case, the system adjusts our investment to be 50% Rune and 50% corresponding coin. However, asymmetric investment has an upper limit and this limit is not very high.
The performance of liquidity pool investments is monitored on the website Thoryield. We can see the profit and loss situation very clearly. For example, I invested in the Rune-BNB pool. The APR of this pool is still at 20%. Rewards are earned in both assets in the pool and no manual compounding is required. Rewards were higher a month ago, yields have dropped slightly due to demand.
There have been two major developments on the Thorchain front in the past month. One of them is Thorswap's new front. I liked the old one too, but this latest version is much better. Another development was the introduction of synthetic coins called synths. Synths are derivatives of cryptocurrencies that Thorchian supports in their native form. In each liquidity pool, 15% of the capacity is reserved for synths. We can get the same amount of the corresponding synths in exchange for the native coin. Thus, we can use them entirely on Thorchain. This is an advantage for networks such as Bitcoin and Ethereum, where transaction fees are expensive. Synths are converted back to native coins when desired. A small amount of slippage occurs during these conversions.
Investing in a liquidity pool in Thorswap means investing in Rune as well. Because, as I mentioned above, every coin is positioned against Rune. So is it attractive to invest in Rune?
Rune's inflation is still at 11.5%. Half of the investment in Thorchain pools is Rune, a factor that prevents the value created from leaking out of the network. Therefore, as the use of Thorchain becomes more widespread, this will be reflected in the price.
When we look at the Rune price on a logarithmic scale, we see that the price consolidates for a while after every 10-fold increase. The consolidation of around $10 took longer than the previous one, but if it exceeds this level, it seems theoretically possible to do another 10x and reach $100.
Rune's roadmap includes important projects such as protocol-owned liquidity, protocol insurance fund, lite nodes, and fixed-interest collateralized lending. In addition, routine projects such as listing new coins and blockchains can also have a positive impact on the Rune price. You can reach the details of upcoming features from here.
I am not a financial advisor. Please do your own due diligence before inventing in any crypto asset.
Thank you for reading.
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