Research Summary
This report provides a comprehensive analysis of THORChain, a decentralized exchange that enables cross-chain swaps. The report covers various aspects of THORChain, including its use case, adoption, revenue, tokenomics, treasury, governance, team and investors, competitors, risks and audits, and a summary of its overall performance.
Key Takeaways
THORChain’s Unique Offering
- Decentralized Cross-Chain Swaps: THORChain allows users to swap native BTC for native ETH without the need to bridge assets or rely on centralized exchanges. It offers a true decentralized alternative to centralized exchanges, removing bridging risk and providing transparent and fair prices.
- Lending Product: Launched in August, THORChain’s lending product enables users to lend their native L1 assets (BTC & ETH) and borrow USD-denominated debt with 0% interest, no liquidations, and no expiration.
THORChain’s Financial Performance
- Total Value Locked (TVL): THORChain’s TVL is currently at $119m, range-bound for the past 17 months ($70-$170m). Despite being lower than the ATH of $500m, it has formed a solid foundation during the bear market.
- Revenue Generation: THORChain accrues fees and rewards through liquidity fees and block rewards. In September, it generated $848k in liquidity fees and $1.5m in block rewards, totaling $2.35m.
RUNE Tokenomics
- Role of RUNE: RUNE is the asset that powers the THORChain ecosystem, playing key roles in liquidity, security, governance, and incentives. Its price is determined by the liquidity within the network and speculative premium.
- Supply Stats: The current circulating supply of RUNE is 300m, with a max supply of 500m. Its market cap is $462m, and FDV is $768m.
THORChain’s Governance and Team
- Decentralized Governance: THORChain has a decentralized governance forum that decides on asset and chain listings/delistings, protocol upgrades, and the economic limit. The project emphasizes decentralization and security.
- Team and Investors: Founded in 2018, THORChain has no defined organizational structure and is fully community-owned. Significant early contributors include Erik Voorhees and CBarraford, with investors like Delphi Digital, Multicoin Capital, Zee Prime Capital, and X21 Capital.
THORChain’s Competitive Position and Risks
- Competitive Position: THORChain currently ranks 10th among DEXs in terms of total TVL. It faces competition from DeFi giants like Uniswap, PancakeSwap, and Curve but sets itself apart with its ability to perform native cross-chain swaps.
- Risks: Despite a high security score from CertiK, THORChain faces risks common to many DeFi projects, including code vulnerabilities, hacks and exploits, liquidity risk, and impermanent loss.
Actionable Insights
- Investigate the Potential of THORChain: With its unique offering of decentralized cross-chain swaps and a solid financial performance, THORChain presents a compelling case for further investigation.
- Consider the Role of RUNE: As the asset powering the THORChain ecosystem, RUNE’s role in liquidity, security, governance, and incentives could be a key factor in assessing the platform’s potential.
- Assess the Risks: Despite THORChain’s promising features and performance, potential investors should carefully consider the risks associated with code vulnerabilities, hacks and exploits, liquidity risk, and impermanent loss.
