The popularity of DeFi has drawn the attention of many users to decentralized exchanges (DEX) and other types of blockchain platforms. Amid the hype around decentralized finance, some DeFi platforms have been overlooked as attention has focused on popularized media such as Uniswap, 1inch, SushiSwap, and the like.
One such underappreciated project was the THORChain protocol, which became the world’s first fully decentralized cryptocurrency exchange with capabilities beyond the usual DEX. In this article, you will learn what THORChain is, how it is structured, and what its value is.
THORChain (RUNE) protocol — how it works. THORChain price prediction
THORChain is a liquidity protocol that connects various crypto-assets across cross chain bridges and continuous liquidity pools managed by validators (node operators). THORChain’s price predictions are quite optimistic. New news about the project is regularly published on letizo.com.
The public sale of RUNE tokens (IDO) on Binance DEX took place in 2019, and the main network (mainnet) of THORChain was launched in January 2021. The platform allows the exchange of assets on different blockchains without third parties — the usual exchanges. The price of assets is formed based on the supply and demand ratio in the liquidity pools. At the same time, users have the right to own the funds at all stages of the exchange transaction, until its completion.
THORChain is developed based on the consensus Tendermint — Byzantine Fault Tolerant or BFT engine used in Cosmos Network. This contributes to the growth of THORChain token prices. The main role in the THORChainecosystem is played by validators, which maintain storage, are responsible for bonding RUNE tokens (blocking in a smart contract), and produce new blocks in the crosschain network.
What makes THORChain unique
The main problem the protocol seeks to solve is the lack of liquidity in decentralized exchanges, leading to the high volatility of crypto assets. Rapidly changing cryptocurrency prices significantly increase risks for traders and investors. Centralized exchanges can provide enough liquidity, but users are forced to trust them.
THORChain incentivizes liquidity providers through stacking and bonding: RUNE token holders can lock their assets into a smart contract, in return for receiving rewards for providing liquidity to the market. As the platform’s liquidity increases, volatility will decrease, thus reducing the risk of volatile losses.
It is the BiFrost protocol that provides THORChain interoperability (communication between blockchains). It allows any blockchain to be connected in decentralized groups, creating a global ecosystem of interacting blockchains. If this all seems too complicated and confusing, we suggest considering Bitcoin SV token price.
The main problem with modern protocols is low bandwidth. Yggdrasil’s solution aims to increase THORChain’s bandwidth.
THORChain (RUNE) outlook for 2023
The THORChain smart contract has undergone security audits by several companies, including Celtic, which conducts blockchain research and aims to increase trust in blockchains. Although the platform is not as popular as the mastodons of the DeFi industry, THORChain competes with them by generating liquidity from multiple sources simultaneously.
According to THORChain’s official website, 25% of the circulating supply of tokens is locked into the protocol. If the platform continues to grow and developers actively develop it, THORChain has every chance of becoming one of the leading protocols in the DeFi industry in the future.
The project has a well-developed ecosystem: developers provide users with various services and SDKs to create their own applications based on the protocol. For example, you can check the THORChain network via Telegram bot notifications or create your own multi-chain wallet using the XChainJS library.
But don’t ignore the competition: developers of some blockchain platforms, such as Cosmos and Polygon (MATIC), are working on solutions that provide interoperability between networks. So far, other protocols are lagging behind in the number of interoperable blockchains, but that could change over time. There is also the Bitcoin SV project. Bitcoin SV price prediction is also quite optimistic; we advise investors to look at this project in parallel.
The prospect of THORChain cryptocurrency depends on how much investors will be interested in holding RUNE tokens. The platform’s economic model is designed to encourage holders to hold assets for as long as possible.