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Simply Explained

Simply Explained: Thorchain (RUNE)

Updated: Aug 8, 2024
Published: Jan 31, 2022
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Thorchain is a decentralised liquidity network that supports a variety of assets. Thorchain allows users to swap native assets across chains using a series of liquidity pools that are all interconnected by the base asset, RUNE. 

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Liquidity providers can pool their funds to earn a yield (passive income). The yield is based on the trading fees from their chosen pool and THORChain reward emissions. 

THORChain (ticker symbol RUNE), is a project we at Cryptonary have been very bullish on since early 2021. For more details on why, we encourage you to check out our exclusive Pro report here

In this piece, we’ll cover a very basic analogy to help you understand one of the main selling points of this fascinating project.

ThorChain

Let’s dive in and explain THORChain as simply as possible. As in other crypto school pieces, a strong definition and a good analogy is a great way to understand the fundamentals of a project. 

In a simple sentence, THORChain is comparable to any other Decentralised Exchange, for example, Uniswap, except it allows swapping across multiple chains. In essence, anyone can exchange one Layer 1 digital asset for another in a single click. No need for custodians like Binance or Coinbase, and no need for wrapped tokens like wETH and wBTC. 

Users can also earn a yield on their assets by becoming Liquidity Providers. Yield is paid in both RUNE and the other assets in the chosen pool. For more information on providing liquidity, check out this article.

What problem is THORCha

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in fixing? Interoperability is the keyword that comes to mind when discussing THORChain. It essentially means the ability to share information between different, but similar systems. Whether between different products (think Apple and Microsoft), or applications in different ecosystems. In the case of THORChain, the shared information is coins and tokens across blockchains.

For example, regardless of what phone network people use, it’s possible to call anyone on the planet as long as they have a working phone and a signal.

Whether you’re with EE, Vodafone, T-Mobile, Verizon - a phone call is a phone call. Mobile networks have made the process so seamless, that we never even question what network we or our friends are using (except when bragging about how good of a deal we’ve got). 

Now imagine if we could only call people who were on the same network as us! What a mess, right? Cellphone technology would remain so limited and adoption rates would stay low, and if one powerhouse did emerge there would be a big risk of monopoly forming. That’s the problem we are currently facing in crypto right now.

If one friend wants to send us Solana but we only have an Ethereum wallet, they can’t send the SOL to us. The same is true in reverse. 

We did cover sending crypto across chains, but manually doing so is a tedious process that can be expensive and time-consuming. So THORChain is attempting to solve this cross-chain issue with their technology in an attempt to make crypto an interoperable space that is future proof.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

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