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Understanding THORChain RUNE: A Beginner's Guide

Published on: Dec 8, 2023
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In Brief

Explore THORChain RUNE in this comprehensive beginner guide. Learn about RUNE token's functionality, its role in DeFi, and how to interact with THORChain using Trust Wallet.

Understanding THORChain RUNE: A Beginner's Guide

What is THORChain?

THORChain is a decentralized liquidity protocol. It primarily enables the exchange of crypto across various blockchain networks. This functionality allows users to swap cryptocurrencies directly, without the need to go through centralized exchanges. THORChain's role in the decentralized finance (DeFi) sector is to provide a solution that simplifies and secures the process of trading diverse cryptocurrencies, contributing to the broader aim of enhancing liquidity and efficiency in the crypto market.

The Functionality of the RUNE Token

RUNE is the native token of the THORChain network. Its primary role is to facilitate transactions within the THORChain ecosystem. Every trade on the network requires the use of RUNE as an intermediary currency, making it a fundamental part of the platform's trading mechanism. Furthermore, RUNE serves several additional purposes: it's used for governance, allowing token holders to participate in decision-making processes, and for network security, as users can stake RUNE to help maintain the stability and integrity of the network.

Interacting with RUNE using Trust Wallet

Interacting with the dApps (decentralized applications) in the THORChain ecosystem such as THORSwap will require RUNE and a secure wallet, such as Trust Wallet.

Trust Wallet can be downloaded as a mobile app, or you can install the Trust Wallet Extension for your desktop browser. For this guide, we'll focus on creating a new wallet using the Trust Wallet mobile app.


Step 1: Get the most updated version of Trust Wallet

Below you’ll see the steps to create a new THORChain wallet, but you could just as easily import an existing Web3 wallet to Trust Wallet, if that’s your preference.


To create a new wallet:


Step 2: Buy crypto using your Trust Wallet


Significance of THORChain in the DeFi Landscape

THORChain's development in the DeFi sector is notable for its approach to solving the challenge of cross-chain trading. By enabling direct swaps of various cryptocurrencies, THORChain addresses common issues like high fees and trading inefficiencies typically associated with decentralized exchanges. Its contribution lies in offering a decentralized platform that not only simplifies trading processes but also promotes a more interconnected and fluid cryptocurrency market.

How Does THORChain Work?

THORChain's primary function is to enable the exchange of different cryptocurrencies across multiple blockchain networks. This is achieved through a process known as cross-chain liquidity pools. In these pools, users can deposit their cryptocurrency, which then becomes available for trading with other digital currencies on the platform. The key feature here is that THORChain allows these exchanges to happen without losing custody of your assets, a common concern in traditional crypto exchanges.

One of the innovative aspects of THORChain is its use of Continuous Liquidity Pools (CLPs), which differ from traditional liquidity pools by adjusting prices according to trade sizes. This method helps in balancing the pool and maintaining price stability. Another important component of THORChain is its consensus mechanism, which relies on nodes that validate transactions and maintain the network’s security.

RUNE's Role in Liquidity and Security

The RUNE token is central to the functioning of THORChain's liquidity pools. When a user wants to trade, say Bitcoin for Ethereum, the Bitcoin is first converted into RUNE, and then RUNE is converted into Ethereum. This two-step process, where RUNE acts as the intermediary, is essential for the cross-chain exchange.

RUNE tokens are also staked by users to participate in the network’s security and governance. By staking RUNE, users essentially become part of the network's security infrastructure, helping to validate transactions and decisions. This staking mechanism aligns with the principles of decentralized finance, where every participant has a role in maintaining the ecosystem's health and integrity.

Conclusion: THORChain’s Place in DeFi’s Future

By providing a platform for efficient and secure cross-chain transactions, it opens up new possibilities for liquidity and accessibility in the crypto market. This is especially important for smaller cryptocurrencies that might not have high liquidity on traditional exchanges. Moreover, THORChain's decentralized nature means that it is not controlled by any single entity, which aligns with the ethos of blockchain technology – promoting a more democratic and transparent financial system.

As Web3 and DeFi continue to grow and evolve, platforms like THORChain play a crucial role in shaping its direction. The ability to trade across different blockchains securely and efficiently is a significant step towards a more interconnected and user-friendly crypto environment. While there are always risks and challenges associated with any blockchain technology, the innovation and potential of THORChain and the RUNE token make them noteworthy contributors to the future of decentralized finance.

Also remember that you can use Trust Wallet to explore the THORChain ecosystem, as well as, buy, store, and manage RUNE.

Frequently Asked Questions

How Does THORChain Differ from Other DeFi Platforms?

THORChain sets itself apart primarily through its cross-chain trading capabilities. While many DeFi platforms are restricted to a single blockchain network, THORChain allows for the exchange of assets across different blockchains, broadening the scope of trading possibilities and accessibility.

Is RUNE Necessary for Every Transaction?

Yes, RUNE plays a central role in every transaction on THORChain. It acts as the intermediary currency for all trades and is essential for the liquidity pools' functioning. This underscores the importance of RUNE within the THORChain ecosystem.

Can THORChain Handle Large Transactions?

THORChain is designed to handle a wide range of transaction sizes. Its Continuous Liquidity Pools (CLPs) adjust prices based on trade sizes, which helps to accommodate larger transactions while maintaining pool balance and price stability.


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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.

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