This podcast episode features Chad Barraford, a core developer of Thorchain, and Erik Voorhees, founder of ShapeShift, discussing the decentralized exchange (DEX) Thorchain. The conversation explores Thorchain’s unique ability to facilitate cross-chain swapping of layer one assets like Bitcoin, Ethereum, Binance Coin, Dogecoin, and Litecoin without using wrapped tokens. The guests also delve into the technical details of Thorchain’s operation, its economic security model, and its potential impact on the crypto landscape.
Thorchain’s Unique Cross-Chain Swapping Capability
- Decentralized Exchange Innovation: Thorchain is a unique DEX that enables direct transactions between cryptocurrencies like Bitcoin, Ethereum, Binance Coin, Dogecoin, and Litecoin without using wrapped tokens. This is a significant departure from typical Ethereum-based DEXs such as Uniswap.
- Technical Foundation: Thorchain operates on its own blockchain built on Cosmos, with a validator set using threshold signatures to manage wallets and facilitate cross-chain transactions. This design allows Thorchain to be interoperable with various blockchain types, including UTXOs, EVMs, CryptoNote, Polkadot, and Cosmos.
Thorchain’s Economic Security Model
- Asset Security: Thorchain’s economic security model ensures that the value of assets secured by the network is always worth more than the value put at risk by validators. This design prevents profitable attacks on the network.
- Role of Rune: Thorchain’s native asset, Rune, is used for staking and securing the network. The value of Rune is directly tied to the network’s activity, increasing with Thorchain’s adoption and trade volume. This design ensures that every liquidity pool is comprised of an asset paired with Rune, creating organic demand for Rune as trading volumes increase.
Thorchain’s Impact on the Crypto Landscape
- Decentralized Trading of Major Assets: Thorchain enables decentralized trading of major crypto pairs, with approximately 2% of global Bitcoin spot volume now occurring on the platform. This development addresses the issue of centralized trading of a decentralized monetary base.
- Efficiency and Performance: Thorchain has recently become the third-largest DEX by trade volume, surpassing Curve. The network plans to improve efficiency and performance, with upcoming features including the ability to trade from any wallet in the world and the introduction of order books and limit orders.
- Bullish: The podcast expresses a bullish sentiment towards Thorchain, highlighting its unique ability to facilitate cross-chain swapping of layer one assets without using wrapped tokens. The guests also express optimism about Thorchain’s potential to transform the crypto landscape by enabling decentralized trading of major assets like Bitcoin without intermediaries.
- Neutral: While the podcast is generally bullish on Thorchain, it also acknowledges the risks associated with crypto, DeFi, and smart contracts. The hosts remind listeners that these are the frontiers of the future that the community is embracing, suggesting a balanced view of the potential rewards and risks.