Why you should pay attention to THORChain?

My first thread

@thorchain_org

There are 2 ways to own any coin
    A. produce it yourself (money printing)
    B. purchase an already produced coin from someone else

unsuprisingly, %99 of people chose option B

If you buy a coin, you can do that with
    B1. government FIAT money (EUR, USD, GBP etc.) 
    B2. another coin (bitcoin, ether, tether etc.)

    B1 is called On&Off ramp 

On ramp means converting FIAT money to any coin
Off ramp means cashing out a coin back to FIAT

It turns out on/off ramp is a hard problem because
        1. transfer of FIAT money is heavily regulated, requires license to transfer FIAT money around as a business

2. FIAT txns can be reverted (aka. chargeback) whereas coin txns usually can't

Bob has USD, wants BTC. Alice has BTC, wants USD. Bob sends USD to Alice. Alice sends BTC to Bob. Bob can revert his USD txn but Alice's BTC is gone for good. Parties involve need to trust each other

For these reasons centralized "trusted" middlemen are here to stay as gatekeepers between FIAT and crypto worlds.

Until 2018, option B2 (purchasing crypto with crypto) wasn't any different; the only way to exchange coins was under custody of a trusted middlemen

Both options necessarily have terrible UX

Deposit-swap-withdraw means figuring out where the coin is listed, KYC, 6-7 authentication steps, confirmation queues, exposure to service breakdowns, limits, hacks, front running, unexpected slippage all while losing custody of coins

Since 2018, we have another 10x better option called DEX (decentralized exchange)
Parties can now swap coins with ease of 1 click, 7/24,  without KYC, under custody of an open source code on the blockchain. No one NEED to trust each other. The swap is done by immutable code

that being said current solutions are not blockchain agnostic; can service one blockchain

Still, the solution is so convenient that is gave rise to wrapped tokens; centralized 1-to-1 pegged tokens that simulate price of native coin (WBTC for BTC) with security compromises

another solution introduced for cross blockchain swaps was Atomic Swaps which suffer 2 unsolvable problems

1. incentivization problem. how to make sure there will be a counterparty willing to swap at all times?
2. unfairness. one party has a call option before accepting an offer

THORChain wants to be the first cross-blockchain decentralized liquidity network for permissionless, transparent swaps

The idea is to have ~100 anonymous nodes run a separate chain (THORchain) while managing addresses (vaults) on connected chains (Bitcoin, Ethereum, Monero etc.)

When nodes notice an input txn on vault they independently record a witness txn on THORChain, apply business logic then sign&broadcast a txn on related chain all under 100ms

At the core of THORchain lies

1. an economic reward/punishment mechanism which enforces that any bad actor trying to cheat the system is guaranteed to lose

2. TSS (threshold signature schemes) a cryptographic primitive found in 2018. Highly encourage everyone to study

The security of the system relies on 2 assumptions

1. less than 1/3 of actors taking part are working to take down the network for non-financial reasons

2. less than 2/3 of actors taking part are working together to steal assets

What value can THORChain bring

1.securely transform idle native BTC into a yield generating productive asset
2. easy cross-chain swaps
3. reliable oracles (deeper liquidity/transparency)
5. extend capability of one chain to another
6. other crosschain defi products (rUSD, etc)