Deep Dive
1. Purpose and value proposition
Most decentralized exchanges operate within one blockchain. THORChain is designed to connect supported networks so users can swap their native assets without using a centralized exchange or a wrapped version of an asset. Its documentation describes the service as permissionless: users do not need to register.
2. How swaps work
THORChain uses liquidity pools, which are shared reserves of crypto assets used to complete trades. Its pools pair supported assets with RUNE, enabling the protocol to route swaps between chains. This design aims to avoid the need for a separate trading pair for every asset combination. The network is an independent blockchain built with the Cosmos SDK, according to its technical overview.
3. RUNE’s role
RUNE is THORChain’s native asset. It is used in liquidity pools and is bonded by validator nodes as collateral to help secure the network. Validators are operators that participate in processing transactions. RUNE therefore supports both the swap mechanism and the security model; it is not simply a token users must hold to make a swap.
Conclusion
THORChain is cross chain swap infrastructure, and RUNE is the asset that connects its liquidity and validator security. How well can its pool and validator design support safe swaps as the network connects more assets?
