In this series I'll be looking at a cool product or project that I've found interesting. Today I'll be giving an overview of Thorchain, a crypto project with exciting potential.
Nowadays, there are an absolutely insane number of cryptocurrencies and tokens out there wandering around the internet. Each with their own independent ecosystems and each with their own specific use case. When you find yourself in need (or want) of one of these tokens you'll quickly find that discovering how to acquire it can be a massive battle all its own. Usually, you must go to a centralized exchange, buy a base asset to the ecosystem your token resides in then send your asset to a decentralized exchange where you can swap the base asset for the token you want, then you will be free to move that token to a wallet where it will be useful.
Enter Thorchain. Thorchain cleans up this process in a couple ways. Firstly, it provides a way for decentralized exchanges to natively swap base assets for each ecosystem. This means that you no longer must search for a centralized exchange that supports the base asset that you need, if you can get bitcoin then you can swap that native bitcoin for another native asset on a decentralized exchange. Secondly, Thorchain provides liquidity to the decentralized exchanges, so they no longer must rely on market makers to make trades and ensure a supply of tokens for their customers.
That all seems great, but it might leave you wondering "how does a decentralized network acquire and maintain so much liquidity?" Which is a great question and fundamental to Thorchain. The answer is, unsurprisingly, from us and all those crypto speculators you see in the news. If you happen to have a few crypto laying around, you can add it into a Thorchain liquidity pool to help facilitate trades on many of the supported decentralized exchanges and in return you will be paid a portion of the fees collected from the users who trade. Of course, there is always additional risk involved when doing stuff like this, so I'll refer you to the Thorchain documentation here for more details.
I am very excited to see this project succeed as a foundation of decentralized exchange and its bridging together of crypto as a whole.
Please note: Nothing in this article is financial advice and I am not recommending any financial investments.