THORChain FAQ
What is THORChain (RUNE), and what makes it unique in the crypto world?
THORChain is a decentralized liquidity protocol. Its main objective is to provide crypto swaps between different chains without involving any third parties.
How does THORChain achieve cross-chain compatibility?
For this, THORChain employs its native token, RUNE. With its help, the protocol creates liquidity pools for a wide range of crypto assets on various blockchains.
What is the significance of RUNE in the THORChain ecosystem?
RUNE serves on THORChain ecosystem for liquidity provision, governance, and security.
Can I provide liquidity to THORChain and earn rewards?
Yes, you can do this by pairing assets and then adding them to liquidity pools of the protocol. It works like this: you earn a portion of trading fees and may further get rewards in RUNE.
What is the process for swapping assets on THORChain?
Users deposit a chosen cryptocurrency into a liquidity pool, and then the protocol automatically calculates the fees depending on blockchain activity. THORChain faciliates swaps between Bitcoin, Ethereum, BNB Chain, and Avalanche.
Is THORChain secure and trustless?
THORChain employs a unique consensus algorithm called “Bifröst”. This one creates validators randomly, which ensures secure and trustful operations.
What's the role of nodes and validators in THORChain?
Nodes and validators secure the network, validate transactions, and maintain consensus.
How does THORChain address impermanent loss for liquidity providers?
THORChain adds a slip-based fee for every swap, instead of a fixed-rate fee. This ensures that liquidity is boosted where it's needed and reduces risks of impermanent loss.
Can I stake RUNE and earn rewards?
Yes, users can stake RUNE to participate in network governance and earn staking rewards. Just choose a platform, a wallet, deposit and start staking. But still be aware of all the risk associated with this kind of activity.
What's the governance structure of THORChain?
THORChain has a decentralised governance model, with its own Decentralised Autonomus Organisation (DAO). RUNE holders can create their proposals and then vote on the protocol changes, let it be upgrades or any parameter adjustments.
What are "chaosnet" and "mainnet" in the THORChain context?
Chaosnet is THORChain's testnet. Developers test there all the new features before implementing them on the mainnet. Thus, mainnet refers to the live and operational blockchain, where real transactions and other operations take place.
Is THORChain interoperable with other blockchains?
Yes, THORChain is interoperable with such blockchains as Bitcoin, Ethereum, and Binance Smart Chain. It enables users to swap their assets across different networks. The protocol employs a Continuous Liquidity Pools (CLPs) mechanism to provide liquitidy for those swaps.
What challenges does THORChain face in achieving its goals?
THORChain faces challenges connected to security, liquidity, cross-chain integration, regulatory compliance, user experience, and tough competition in the DeFi sector.
How does THORChain handle scalability concerns?
THORChain handles scalability concerns by supporting cross-chain token swaps, decentralised validators, and leveraging layer 1 and 2 solutions.
Can I use THORChain for cross-border payments and remittances?
THORChain is available for cross-border payments and remittances but only if the assets a user wants to exchange are supported and provided with enough liquidity.
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