Typically, DeFi projects seek to provide some sort of decentralized financial infrastructure, or to create an ecosystem of decentralized financial services. Over the last two years, the decentralized finance sector has seen significant development and funding, leading to both the rise of real projects with achievable roadmaps and legitimate use and to the parabolic adoption of decentralized financial services.
THORChain, whose testnet recently opened and which enables “true cross-chain decentralized finance where there are no admin keys or whitelisted accounts,” is one such project. I recently had a chance to chat with several key members of the team at THORChain, who wish to remain pseudo-anonymous, with no founders or executives, in order to protect the project’s mission and vision. Enjoy!
THORChain is a “decentralized liquidity network.” Why does the cryptocurrency industry need THORChain and how do communities benefit?
“Currently all (significantly most) liquidity is in centralized exchanges, where assets can be stolen, reserves can be fractionalized, markets can be manipulated and trade data can be faked. A decentralized liquidity network will ensure assets cannot be stolen, reserves are fully-auditable, markets are resistant to manipulation, and trade data can not be faked.”
THORChain facilitates cross-chain liquidity pools with no pegged or wrapped tokens. Why is this an important differentiator? What’s the significance?
“Pegged or wrapped tokens shift the trust-model to a centralized gateway or trusted federation. They are not real assets, just IOUs. THORChain only uses real-assets that are fully auditable and there is no trusted gateway.”
What’s the differentiator that makes THORChain a leader long-term? What makes THORChain special, different, unique?
“THORChain is tackling cross-chain properly, with liquidity pools, decentralized multi-party computation protocol, bonded anonymous nodes with high-churn rates, and a wide distribution of $RUNE. Further, THORChain is improving leaderless multi-party computation routines, as well as challenging the idea that nodes should be public and delegated. Finally, THORChain’s token model is also quite innovative, combining liquidity and security – THORChain uses a variant of the Automatedmarket-maker (AMM) algorithm to prevent manipulation of prices.”
What does THORChain look like in 5 years?
“In five years, THORChain will be the dominant liquidity network, connected to over five chains, powering a stablecoin, and having secured over $10bn in capital. THORChain is the future of exchanges, where everyone can participate and nobody can manipulate.”
Information provided by the THORChain team – STRENGTHS: Strong treasury, team and roadmap. WEAKNESSES: Small team, with large industry to tackle. OPPORTUNITIES: Nimble team who are experts in their field, pre-mainnet so can iterate fast. THREATS: Centralized exchanges copying the THORChain model and deploying faster