Will THORChain Become the Next Most Valuable DEX?
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Will THORChain Become the Next Most Valuable DEX?
If you're tired of trading on centralized exchanges, THOR is a great alternative.
Navigating Web3 tides with focused insights
Author: Crypto Johnson
Translation: TechFlow intern
If you're tired of trading on centralized exchanges, THORChain is a solid alternative. THORChain is a decentralized cross-chain exchange that enables native asset swaps across original blockchains. Here, we'll explore whether THORChain can become the most valuable DEX.
THORChain's mission and ideology center around decentralization—taking power away from centralized entities that act as intermediaries in peer-to-peer transactions.
Founded in 2018 by a group of anonymous developers, a small number of whom have now revealed their identities, the project's lead technical figure is Chad Barrafor. Chad believes CEXs monopolize asset transfers between isolated chains.
THORChain was initially built on the Cosmos SDK. Validator nodes on THORChain must stake Rune tokens in THORChain vaults, meaning if a node attempts to steal staked Rune, the tokens will be permanently burned—ultimately securing the protocol.
When it comes to voting on system changes for THORChain, nodes also have governance rights. Each node gets one vote regardless of how much Rune it has staked, and proposals require at least two-thirds support to pass.
THORChain uses an Automated Market Maker (AMM) mechanism for trading. Unlike other DEXs, all cryptocurrencies are paired with Rune, reducing the number of trading pairs and improving the protocol’s capital efficiency.
When a user swaps BTC for ETH, behind the scenes, the protocol sends ETH into THORChain's treasury. Upon detecting this incoming transaction on the Ethereum blockchain, THORChain nodes deposit ETH from THORChain’s Ethereum treasury wallet into the user’s Ethereum wallet, using Rune as a reference price.
Note that because THORChain is maintained by arbitrage traders, it does not require oracles for accurate cryptocurrency pricing.
Last summer, THORChain suffered a hack resulting in $13 million stolen from its protocol—an event that taught developers a lesson about moving too fast. Since then, THORChain completed two audits in November last year to ensure such incidents won’t recur.
Let’s examine the tokenomics of $RUNE:
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Market cap: $767 million
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Max supply: 500M
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Circulating supply: 300M (60%)
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TVL: $161 million
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TDV: $12.7B
Of these 500 million tokens, all were minted at genesis and distributed via different mechanisms as follows:
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5% seed round
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16% IDO
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10% early developers
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24% early network bootstrappers and users
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44% nodes and liquidity providers (LPs)
THORChain also offers staking rewards—you can stake your Rune.
From a technical perspective on the $RUNE token, we’ve dropped approximately 88% from its ATH. If we see further downside during this bear market, I’ll be watching the demand zone near $1.
Since THORChain’s mainnet is live, any $RUNE tokens on Binance (BEP-20) or Ethereum (ERC-20) blockchains need to be migrated to THORChain’s native blockchain. The goal is to eliminate reliance on the Binance Chain and Ethereum networks.
Looking for flaws in THORChain, my only concern is that Thorchain consists of over 200,000 lines of code—significantly more than standard DEXs which typically have only around 200 lines. This complexity deters many developers who might otherwise build on THORChain.
Demand for decentralization in crypto continues to grow. As people seek alternatives to centralized entities, DeFi will provide the answer—and THORChain is poised to play a major role in the future. The THORChain protocol has been successfully established, and the team’s strong commitment to decentralization serves as a powerful driving force, appearing to form the perfect recipe for success. When the right moment comes, I’ll buy more Rune to fill my portfolio.
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