What's better than CEX?
And more than just another DEX?
Introducing THORChain:
Discover this innovative DeFi platform where you can swap, save and borrow all in one.
Here's my October 2023 research report on RUNE.
Here's what we'll cover in today's edition:
Overview
Use Case
Adoption
Revenue
Tokenomics
Treasury
Governance
Team & Investors
Competitors
Risks & Audits
Summary
Don't forget to bookmark this post for future reference.
THORChain is a decentralized exchange that enables cross-chain swaps.
Users can easily swap native BTC for native ETH without the need to bridge assets or rely on centralized exchanges.
It was developed using the Tendermint consensus engine & Cosmos-SDK state machine.
THORChain offers a true decentralised alternative to centralised exchanges.
It also provides the following benefits:
Removes bridging risk (Native swaps)
No user-registration or KYC
Transparent & fair prices (no centralised 3rd parties)
Continuous Liquidity Pools
The lending product was launched in August, enabling users to lend their native L1 assets (BTC & ETH) and borrow USD-denominated debt.
Key features:
0% interest
No liquidations
No expiration
A total of 2.06m $RUNE has been deposited as collateral into the protocol.
TVL currently at $119m, range-bound for the past 17 months ($70-$170m).
Lower than the ATH of $500m but has formed a solid foundation during the bear market.
October has seen some very strong trading volumes on THORChain with one day reaching a peak of $350m.
There are 2 ways THORChain accrues fees and rewards:
Liquidity fees
Block rewards
Over the month of September, THORChain generated:
$848k Liquidity fees
$1.5m Block rewards
$2.35m TOTAL
This would put it 3rd amongst DEXs and 16th overall (DeFiLlama).
RUNE is the asset which powers the THORChain ecosystem and has four key roles:
Liquidity
Security
Governance
Incentives
Overall, the price of RUNE is determined by 2 factors:
Deterministic value based on the liquidity within the network
Speculative premium
For every $1 of non-RUNE assets on the network, the network incentivizes $3 of RUNE to be locked (min deterministic value of RUNE).
For example, if you had $1m of non-RUNE tokens staked on THORChain, then the min market cap of RUNE would be $3m.
These are the current supply stats:
Circulating supply = 300m
Max supply = 500m
Market cap = $462m
FDV = $768m
Market cap/ FDV = 0.6
In total, THORChain has approximately $44m USD in their Treasury.
Comprising:
Liquid: $18.3m
Working: $26.3m
Total: $44.6m
They also have approximately $87m in Standby Reserves.
A decentralised governance forum is in place to decide on the following:
Which assets are listed/delisted
Which chains are listed/delisted
When the protocol gets upgraded
The economic limit – how many nodes can participate
Key focus on decentralisation & security.
The project was founded in 2018.
It has no defined organisational structure and is fully community owned. Some significant early contributors include:
@ErikVoorhees
@CBarraford
Investors included Delphi Digital, Multicoin Capital, Zee Prime Capital, & X21 Capital.
THORChain currently holds the 10th position among DEXs in terms of total TVL (DeFi Llama).
It faces tough competition from DeFi giants like Uniswap, PancakeSwap, and Curve.
However, THORChain sets itself apart with its unique ability to perform native cross-chain swaps.
It has shown some impressive growth recently and continues to innovate with their lending platform recently launched along with streaming swaps.
I expect them to continue climbing up the TVL rankings in the near future.
The project has been audited and has been given a security score of 89.75 by CertiK.
However, as with many DeFi projects, there are always risks involved including:
Code vulnerabilities
Hacks & exploits
Liquidity risk
Impermanent loss
Overall, I am quite optimistic on RUNE and the THORChain protocol. There are a number of upcoming bullish catalysts:
Memo less transactions
Order books
Perpetual contracts
THORSwap
Ecosystem & integrations expanding
Overall weighted score = 8.65
Note: I am NOT an ambassador or advisor of THORChain. This is NFA.
Some useful links:
https://dashboards.ninerealms.com/#lending
https://medium.com/thorchain/thorchain-q3-23-ecosystem-report-7c102e41540e
https://flipsidecrypto.xyz/Polaris_9R/thor-chain-network-stats-9hsNPI
Excellent take ! You made a thorchain believer ! Great article ! Fine way to spend a couple of minutes reading. I hate reading too. Lol.