THORChain pooling: Symmetrical and asymmetrical pooling

Symmetrical and asymmetrical pooling

Recall that Liquidity Pools (LP) on THORChain (TC) are always rebalanced to 50:50 of the value of the two assets in the pool, and one of the assets is always native RUNE.

Therefore, the natural way to deposit liquidity into an LP is via a Symmetrical deposit, where a liquidity provider deposits both assets at 50:50 value. In this case, TC will record both the provider’s native RUNE address and also the other “Asset” address as linked to their LP position. Thus, when they choose to withdraw, they can either withdraw both assets symmetrically or asymmetrically in either of the assets.

Asymmetrical deposit on THORChain

THORChain also offers the option for Asymmetrical deposit where users only deposit one single asset into the LP. For example, let’s say an intending provider does not hold any native RUNE but still wishes to deposit their BTC into the BTC pool. They can do just this. In the transaction of adding BTC to the BTC:RUNE pool, TC will then auto-swap half the BTC into native RUNE (with a slip fee dependent on the depth of the pool vs volume of the deposit). This liquidity provider will have price exposure to both assets and Impermanent Loss Protection is based on the value of both assets after the 50% swap. Additionally, since TC only records the user’s BTC address, this user can only withdraw the same asset asymmetrically. At that point of withdrawal, TC will reverse-auto swap the other asset (native RUNE, in this example) back to BTC before executing the withdrawal back to the (former) liquidity provider’s wallet.