What is THORChain?

THORChain is a decentralized liquidity network designed to let users swap digital assets directly across different blockchains without wrapped tokens or centralized custodians. It uses stateful cross‑chain bridges, liquidity pools, and a native security model to maintain trustless swaps of native assets (for example Bitcoin for Ethereum tokens).

Key components

  • Liquidity Pools: Continuous liquidity pools (CLPs) hold paired assets and enable automated market maker (AMM) style pricing for native asset swaps.
  • Nodes & Observers: A decentralized set of node operators validate cross‑chain events and coordinate swaps.
  • THORChain Protocol: Orchestrates routing, swap settlement, and liquidity incentives.
  • RUNE Token: Native token used for security bonding, gas, and aligning incentives across the network.

How it works — high level

When a user requests a swap, the protocol finds a route through pools with the appropriate liquidity. Nodes observe the deposit on the source chain, create a vault event, and release the corresponding native asset on the destination chain. Liquidity providers are rewarded with trading fees and incentives denominated in the network token.

Example flow: BTC deposit → Node observes → THORChain matches routing → Release ETH to recipient

Tokenomics & incentives

RUNE is central to THORChain’s economics: it secures the network because nodes must bond RUNE to participate; it provides liquidity asymmetry balancing (each pool pairs native asset with RUNE); and node rewards & LP rewards are paid in the native token. This design aligns node and LP incentives to maintain deep liquidity and security.

Use cases

  • Instant cross‑chain swaps of native assets (BTC ↔ ETH ↔ native tokens)
  • Liquidity provisioning for yield from trading fees
  • Permissionless on‑chain routing for dApps that need multi‑chain liquidity

Security & decentralization

The protocol emphasizes decentralization—node operators are distributed and must stake RUNE. That said, cross‑chain systems carry unique risks (e.g., node compromise, economic attacks). Users and LPs should understand impermanent loss, slippage, and smart contract risks before participating.

Getting started — practical steps

  1. Choose a supported wallet that can interact with THORChain or its front‑ends.
  2. Fund the wallet with the native asset you want to swap.
  3. Use a reputable THORChain UI or aggregator to prepare the swap and review fees/slippage.
  4. Provide liquidity by pairing an asset with RUNE to earn fees if you understand LP risks.

Common FAQs

Q: Do I need wrapped tokens?
A: No — THORChain aims to trade native assets directly without wrapping.

Q: What are the main risks?
A: Impermanent loss, node or oracle attack vectors, and liquidity depth limitations for large trades.