THORChain is a multi-chain decentralised exchange (DEX) that aims to solve one of the largest issues plaguing the blockchain space: fragmented liquidity spread across different chains. THORChain is a Cosmos-based protocol that allows users to exchange and earn a yield on Layer-1 (native) cryptocurrencies across different blockchains (BTC, ETH, LTC, DOGE, BCH, BNB currently) without going through a centralised exchange. Since the protocol is chain-agnostic, any new native asset can be added to the DEX in future upgrades if there is support for its addition to THORChain.
Wrapped assets are less trustworthy than holding native assets. Therefore THORChain does not use wrapped assets. Users can connect a wallet to THORChain without signing up for anything and swap BTC to ETH or a number of other supported assets.
Regarding how a cross-chain swap occurs, the Bifrost protocol is the cross-chain bridge system that connects to different chains allowing for native swapping and liquidity. Anyone can also earn a competitive APY by depositing assets to THORChain as a Liquidity Provider.
XDEFI Wallet has a close partnership with THORChain to build the multi-chain future together. Their multi-chain wallet supports cross-chain swaps natively. Currently, the wallet supports the following chains for cross-chain swapping via THORChain: Terra, THORChain, Binance, Ethereum, Bitcoin, Litecoin and Bitcoin Cash. Polygon is the first supported Layer 2 network, with more chains such as Avalanche and Layer-2s soon to follow.
THORChain implements something called Continuous Liquidity Pools (CLPs) to facilitate the exchange of assets between these chains. The CLP is arguably one of the most important features of THORChain. Simply put, it adds transparency to the asset prices because they are defined by the swap activity instead of an external oracle. CLPs also allow anyone to arbitrage the pool (i.e. regulate the prices by buying low from one exchange and selling high in another), creating more swap fees for all LPs. Of utmost importance to users of the THORChain network is that CLPs reward users for contributing to the liquidity in each pool.
Any DEX will have the ability to integrate with THORChain to utilise its cross-chain swaps and liquidity. End users who are using their favourite DEX like Uniswap wouldn’t even know they are using THORChain.
Native cross-chain swaps are only the beginning.
The future of THORChain includes a full suite of THOR Finance (THORFi) products such as:
- Yield Bearing Synthetics (Single-Asset Savings Accounts).
- Composite Assets (Crypto ETFs).
- Cross Chain Lending and Borrowing.
- Self Repaying Loans.
With these THORFi features, you can effectively become your own bank without the need for a centralised intermediary party like a centralised bank to approve your transactions.