THORChain (RUNE) is a decentralized cross-chain liquidity protocol that enables the exchange of digital assets across various blockchain networks without relying on centralized parties for custody. Launched in 2021, THORChain facilitates cross-chain swaps, allowing users to trade cryptocurrencies from different blockchains directly and securely.
The native utility token of the THORChain ecosystem is RUNE, utilized within the network for liquidity provision, governance, and security through a unique mechanism known as Continuous Liquidity Pools (CLPs).
RUNE is used as the base currency in liquidity pools, and is paired with other assets to facilitate trades and ensure balanced liquidity across pools. RUNE is also staked by nodes (validators) participating in the network's consensus process, securing the network and earning transaction fees and block rewards. RUNE holders can also participate in governance decisions.
THORChain's consensus mechanism is derived from Tendermint, and its application of Byzantine Fault Tolerance (BFT) principles, ensuring robust network security and high transaction throughput. The protocol employs an Automated Market Maker (AMM) model.
THORChain’s interoperability is achieved through the use of witness-based threshold signatures for cross-chain transactions.
THORChain's CLPs are a foundational component, allowing users to contribute liquidity to the network by depositing assets alongside RUNE into pools. Liquidity providers earn a portion of the trading fees generated by the pool, incentivizing the supply of liquidity and enabling efficient and decentralized asset exchange. This model addresses the liquidity fragmentation and slippage issues prevalent in single-chain AMMs by pooling assets across multiple blockchains.
