THORChain, a new decentralized exchange protocol, has officially launched. At its core, THORChain is a decentralized exchange that has been designed to function as a large, liquid network that solves usability, compatibility, and security. THORChain is highly optimized multi-chain using pBFT consensus to achieve sub-second block finality.
Tokens are traded on single chains, known as tokenChains with discrete address spaces. Multi-set sharding is proposed to allow byzantine resistant scaling. The native protocol facilitates on-chain trading and order matching at the protocol level, supporting both limit and market orders. Continuous liquidity pools ensure liquidity is always available for any token pair, and double as the source of trustless on-chain price feeds, a cornerstone of the protocol.
The project is actually an entire ecosystem of new developments designed to streamline blockchain asset trades and payments. The different protocols and networks that makeupTHORChain each have their own role in maintaining the mission of THORChain, as well as developing a strong, relatable brand, rooted deep in Norse Cosmology:
- THORCHAIN – multi-chain optimized for lightning-fast Layer 1 digital asset trading.
- YGGDRASIL PROTOCOL – trust-minimized highly scalable sharding solution for THORChain.
- FLASH NETWORK – Layer 2 Network for cross-network instant asset exchange.
- BIFRÖST PROTOCOL – A fully secured cross-chain bridge protocol for THORChain.
- ASGARDEX – fast and secure decentralized exchange built for THORChain.
- ÆSIR PROTOCOL – self-amending forkless governance protocol for THORChain.
THORChain Architecture Highlights
THORChain is a multi-blockchain protocol comprised of side chains “TokenChains” and the master “MerkleChain”. The MerkleChain tracks the entire state of the network, storing the latest hash of the Merkle Tree to prevent double-spending and syncing the state of the network. All side chains in the protocol are “first-class citizens” with no delineation in security, technology or preference in the Validator Set. TokenChains have a genesis account that describes the characteristics of the token, and solely track transactions for that token. Each TokenChain maintains a discrete address space allowing deconfliction of transaction mempools. TokenChains are account-based in a similar manner to Ethereum (as opposed to UTXO-based where unspent transactions are tracked such as Bitcoin). A nonce tracks the latest state of each account, invalidating all previous account states.
The native token of the ecosystem is Rune and is created at the genesis of the protocol, with all Rune transactions tracked on the first side chain, T0. The Rune is unique as it is the settlement currency of the ecosystem and is stored in all on-chain liquidity pools. The genesis block of every sidechain has a continuous liquidity pool (CLP) that defines a price ratio for Rune and that token. Consider CLPs as providing a counterparty to anyone wishing to make a Rune-denominated trade. If two users trade between two non-Rune tokens, one of the tokens is automatically converted to Rune before the transaction is complete.
More detailed information on the THORChain ecosystem can be found on GitHub.
THORChain will debut with incentivized on-chain liquidity, allowing anyone to stake any asset on-chain, contributing to liquidity and earning a return at the same time. Deep liquidity will allow the protocol to support unrestricted trades and payments of any kind.
Additionally, any exchange (decentralized centralized or hybrid) can rebuild on THORChain to access the liquidity and security of the protocol, as well as any such asset it supports. Wallets can also use THORChain technology to allow their users to swap and trade assets directly in a non-custodial fashion.