An Interview With The THORSwap Team About Becoming A Major Cross-Chain DEX
As an early investor, we did an interview with the THORSwap team and talked about the history of THORSwap as well as its future as a cross-chain DEX aggregator, and of course about the upcoming THOR token.
Qi Capital: Hello dear THORSwap team and welcome to this interview in the name of Qi Capital.
THORSwap: Hello. Thank you. Really appreciate this opportunity to share the THORSwap story.
Qi Capital: Today we want to better understand how THORSwap works and also learn about its very ambitious plans for the future. Many of our readers who have already interacted with THORChain in some way have used THORSwap probably either to trade or do swaps or to provide liquidity, but for everybody who hasn’t can you explain a bit the difference of THORSwap in comparison to THORChain and how did it evolve from BEPSwap originally on Binance Chain to what we see today, sitting on top of THORChain’s Multi Chain Chaos Net (MCCN)?
THORSwap: The way to think about it is that THORChain acts as a liquidity protocol, which is really providing access to liquidity pools across multiple blockchains. That’s one layer and then you also have an additional layer on top, which is called the “interfaces,” or another way to think about it is they’re basically DApps. Those are two different layers. You have the interfaces, aka DApps that are sitting on top of the THORChain protocol of pools.
THORSwap is one of those interfaces. There are actually several different interfaces out there, which I’m sure we’ll talk about but THORSwap, you could think of it as Uniswap for THORChain. It’s very similar to other DEXs like Uniswap, SushiSwap, et cetera. You have the basic functionality of a DEX that you would expect — swapping tokens, add liquidity into a pool and you can even create a pool. You could also upgrade your RUNE. Let’s say you have RUNE as an erc20 token, you can upgrade that to native RUNE, and very soon the THORSwap team will also release THORChain synthetics.
Those are some of the core functionality of THORSwap. As you would expect with any DEX, THORSwap is constantly adding more features and more wallet integrations. We currently support Trust Wallet, Ledger, Metamask with new wallet integrations launching in the coming days; and you can connect multiple wallets simultaneously which makes any cross-chain activity much easier.
Some people may not know this but the THORSwap team was also responsible for the THORNames product as well. That, and two new products — the Desktop App and THORChads platform, will be released very soon.
Qi Capital: For everybody who doesn’t know what THORName is, it’s just like the Ethereum name service — aTHORChain Name Service (TNS), and users can have one or more vanity recipients addresses for different blockchains. So, it’s one address to “rule them all”.
THORSwap: Exactly. One address to rule them all is a great way to put it. ENS for THORChain.
Qi Capital: Anyone following the THORChain ecosystem is aware of a string of exploits. How did that affect THORSwap and how have you responded?
THORSwap: We did have to halt trading on THORSwap, but we kept building! We grew our team, started security audits, and built a slew of new product updates which will be rolling out in the coming weeks.
Qi Capital: You mentioned the team. Who is working on THORSwap behind the scenes? How many people are there and what kind of background do they have? Do we know them or do they work anonymously?
THORSwap: Let’s start with the last one. Following the THORChain ethos, the team is anonymous. The team is about 25 people and growing. There are 15 developers including our fearless leader, THORSwap Admin who has been a THORChain developer for around 3 years as well as another one of the lead developers who came from Dapper Labs. We have 3 designers. They’re working on everything from NFTs to graphics, to UI, and we have 5 community admins who are managing our Discord. I must say, the THORSwap Discord is the best-managed discord I have ever seen across any space. A lot of credit goes to the mods.
Qi Capital: Indeed, your community is a real asset. You have several thousands of members and you handle all the support tickets there. So there’s actually real support for a decentralized application.
You have, as mentioned, five admins helping users 24/7. Why do you put so much effort into community management?
THORSwap: We knew from the very beginning that THORSwap has to be a community-driven project. That’s one of the ethos of THORChain: decentralized and community-driven. We really just doubled down on that andthe results speak for themselves. As you mentioned, you can actually submit support tickets through Discord and actually talk to a real person to get help.
The average response time was somewhere around 10 to 15 minutes. I don’t know where else you could talk to a live person and get such a fast response time in the DeFi space. That just speaks to the hard work that the team, especially the community mods, have been putting in.
Qi Capital: I mean, not only in DeFi, I think support from a centralized exchange is even worse. The volumes are on a different scale for now of course, but still having real support processes established seems to be a big advantage of yours.
Speaking of advantages, you mentioned before, there are several DEX interfaces also on top of THORChain. THORSwap is not the only place where you can do cross-chain swaps, and where you can provide liquidity. What’s the difference here or how is your approach perhaps different and from the others?
THORSwap: That’s a great question. There’s a lot of other great interfaces out there and each interface has their own approach. What’s great for the end-user is, over time they can pick and choose one of the interfaces that best meets their needs and so it’s a great win for users.
What THORSwap has done particularly well is shipping quickly. As mentioned, we’re the same team that built BEPSwap over a year ago, the same team that launched THORNames to much fanfare, and the same team that was the first to ship THORChain Synthetics in beta.
Our team of core contributors has just been incredible at shipping quickly. The community mods have been incredible at responding quickly to the community as well. So, shipping quickly, listening to the community, and responding quickly, and lastly, — we’re biased obviously -, but we believe THORSwap is the best place to access all THORChain products and features.
Qi Capital: I think it’s important to state that we are talking about an existing product that’s been out there for many months going into the next phase of development.
Before we focus on the future, let me ask, how satisfied are you with the current adoption of THORSwap? Do you have some numbers you can share with us in terms of how many trades, volume, liquidity, or something like this?
THORSwap: Absolutely. THORSwap launched in mid-April. Within about three months, we got about 50,000 monthly unique visitors which is not bad when you look at DeFi metrics. Within the THORChain universe, THORSwap is currently the vast majority of user swap volume.
That’s something that we’re very proud of and hopefully, we can continue that trend moving forward. As mentioned, the community has been growing and is strong. We’re currently at around, 11,000 total members in our Discord. The engagement is high and the response rates have been very quick.
Qi Capital: The team recently hinted at some major developments and an evolution of what THORSwap is right now into a cross-chain DEX aggregator. Your objective seems to be bringing liquidity together from many, many blockchains and not just two or three EVM-compatible chains. Can you describe what exactly is your new product and how you’re going to build this?
THORSwap: Yes. Let’s break this down.
In the short term, we’re going to continue to serve the THORChads and the overall THORChain community. We’ve built THORSwap to be the primary place for all THORChain functionality and cross-chain liquidity and essentially the go-to exchange for all THORChads out there.
Medium-term, we believe THORSwap’s role in the overall THORChain ecosystem is to aggregate as many transactions and trading volume as possible. In order to do that, the first step is to actually aggregate additional liquidity sources.
Obviously, THORSwap is currently built on top of the THORChain pools and has access to those liquidity sources but in the future, we’re looking into integrating additional liquidity sources.
So, Bancor and Uniswap for ETH assets. Pancake for BSC assets, et cetera. This is to enable the very practical use case of THORChads that may want to swap their Bitcoin into YFI coin if they wanted to.
Over time, as we add additional liquidity sources then the next step is to actually expose that liquidity and THORChain functionality to third-party app developers. The value proposition to those app developers is they can either manually integrate each individual pool, including THORChain pools, themselves, or they could do it all in one step using the THORSwap API.
In some respects, the future THORSwap API brings additional composability to the THORChain ecosystem and we’re very hopeful that it will bring in additional users, and really expand the overall THORChain ecosystem.
Qi Capital: The aggregator space, is a tough one. There are many aggregators existing right now — still limited to just a few blockchains but they also have great ambitions. Do you think there’s enough room for another one?
THORSwap: We think as the overall crypto market grows, there is room for multiple DEX aggregators to be successful. We think one thing that we can hang our hat on, and that we’ve mentioned before, is that this team has been shipping live production code on top of THORChain for over a year.
That’s something that’s a strength and that’s something we’ll continue to double down on. In many ways, you could think of THORSwap as the THORChain-native aggregator, where we started off with THORChain, and then we’re going to strategically add additional pools to provide more trading options and more liquidity to our users.
Qi Capital: You hinted at this API or third-party services that you offer. Let’s say, like, ShapeShift could have done the integration on THORChain from your API much easier and then get also access to other liquidity sources on top of that. Is that correct?
THORSwap: Exactly. The idea is that whatever liquidity sources THORSwap integrates will be included in the API. It just makes everything easier for third-party developers, right? If the THORSwap API existed today, then ShapeShift could have used it and it probably would have saved them a lot of development time if that was available.
Qi Capital: This means any wallet out there that can hold your crypto assets could integrate with this API and then allow completely decentralized non-custodial trading or swapping?
THORSwap: Yes. Wallets are a natural partner for using this THORSwap API but we’re actually really excited to see what kinds of new applications and new products are built on top. We really think that, especially with some of the new THORChain and THORFi products coming out, the design space for new products and new use cases can really expand.
For example, there could be an NFT fantasy sports app, that’s built on top of the THORSwap API where all the transactions and settlement are happening through the THORSwap API, but from the user’s perspective, it’s just like a fun fantasy sports game. These kinds of applications and use cases are possible with the THORSwap API.
Qi Capital: So, it goes both ways, right? Providing the interface and all the THORFi features, like synths, for example, we are all waiting for it and they will be accessible through THORSwap, through your interface and then you’ve also got the API where you can enable it for third parties to leverage this cross-chain liquidity and the other features.
There’s been talk on Twitter that there will be a THORSwap token called THOR. Why do you need your own token when there is already RUNE?
THORSwap: Great question. RUNE, the native token for THORChain, is designed to optimize liquidity on THORChain pools. Whereas the THOR token, which is the native token for THORSwap is specifically designed and optimized for trading. As some of you might know, the RUNE token is used to incentivize the “liquidity black hole.” That’s the base pool layer. The THOR token is intended to incentivize what we’re calling the “trading black hole.” That’s the layer above the pool layer. We do see these as very complimentary tokens. RUNE is for the base pool liquidity layer and THOR is for the trading layer above that.
Qi Capital: You mentioned a “trading black hole”. What do you mean? Could you explain it in more detail?
THORSwap: We view the THOR token as a way to incentivize as much trading and transaction volume as possible. That’s the role of THORSwap in the THORChain ecosystem. Just imagine a flywheel network effect where the more trading you have, then there are more revenues which leads to more value accrual, which leads to more trading discounts. As there are more trading discounts, that leads to more trading, and then the flywheel repeats. What we’re trying to do is tighten that network effect and really accelerate that flywheel, hence the name “trading black hole.”
Qi Capital: The tokenomics of THOR, short-term, long-term — Can you tell us a bit about that? Not the specifics of distribution, but just an overall objective behind it?
THORSwap: Short term, it’s a governance token that is used to decentralize and distribute the ownership of THORSwap to the community. It’s also being used as an internal payments token as well as a way to provide some fun rewards for the community.
It’s also proof of membership. Holders will be able to enjoy some fun benefits like NFT airdrops and the like. At a very high level, the overall strategy and approach are to think of this as an incentive race to the top. What we’re trying to avoid is a fee race to the bottom that’s incumbent with most DEX aggregators. The whole idea around how we’re designing the tokenomics is to really encourage this incentive race to the top instead.
Qi Capital: You’re providing swaps and strive to generate a lot of trading volume which will then again potentially generate fees. How are you going to capture the value?
THORSwap: Right now there’s a couple of different revenue streams. The first and most obvious revenue stream is, THORChain pays an affiliate fee to interfaces that bring volume, so that’s revenue stream number one. The second revenue stream is additional liquidity sources that also pay a referral fee. For example, 1inch pays a referral fee when you utilize the 1inch API. Then a third revenue stream is new products that are built on top of THORChain. As mentioned before, the THORSwap team built THORNames. If we had turned that revenue stream on, that could have been a source of revenue as well.
Another thing that we’re super excited about is THORFi. In the future, you could have yield-bearing synths where a small performance fee could also be charged there. In the future, we could get really fun with gamification-type features and products where people pay for premium features like notifications or other types of gamification features.
Qi Capital: Interesting. You really plan to do more than what happens on Uniswap, for example.
THORSwap: Yeah. It’s all about the community, right? We want to build products that engage the community as much as possible.
Qi Capital: There are THORChads and some of them are obviously heavily invested in RUNE. How will THOR benefit them even if they decide not to hold?
THORSwap: Probably the most obvious one is that if you’re a liquidity provider on a THORChain pool, you’ll get an airdrop so that’s probably the most obvious one. Thinking bigger picture, we view THORSwap’s role in the ecosystem is to bring in more transactions and more trading volume on top of THORChain pools. As more trades and more transactions happen, that trickles down to any THORChain user, holder, liquidity provider, or even node operator as well.
Qi Capital: You mentioned an airdrop. Can you summarize why you are going to do it and who will receive it?
THORSwap: We just want to reward the early users and the people who have been contributing and using the product. A quick thank you to those early users. As far as who will receive the airdrop, it basically breaks down into three high-level categories. One is if you’re a liquidity provider on THORChain pools, regardless of the interface. The second category is if you’ve ever used THORSwap to trade or swap, and the third is active community members within the THORSwap Discord. Airdrop details will be announced shortly.
Qi Capital: Speaking of rewards, what is the new THORChads rewards platform?
THORSwap: If airdrops are a one-time reward to community members, then the new THORChads platform is our way to continuously reward Thor Chads. It’s similar to a gamified frequent flyers program. It’ll be the Metaverse home for all Thor Chads to enjoy NFT airdrops, games, community projects, etc.
Qi Capital: On the other side, are you going to work with private investors, too?
THORSwap: As a decentralized project, this was a decision that we did not take lightly and spent a lot of time thinking about. At the end of the day, we did feel there was a shortlist of strategic investors who can help accelerate THORSwap to the next level.
Qi Capital: Regarding timelines, both for the product itself, the cross-chain DEX aggregation, but also the token. Can you tell when we will see that?
THORSwap: There’s a number of factors that are not totally in our control so, of course, any of these timeline projections may not be completely accurate but what we’re shooting for is October for the TGE events. This obviously has a couple of dependencies, but so far, we seem to be on track for that.
Qi Capital: Are you going to work with THORStarter for your IDO?
THORSwap: Yes. We’ll be launching our IDO in October on THORStarter. We also have a strategic collaboration with XDEFI as well, and, frankly, we’d love to work with any and all THORChain ecosystem projects. Our perspective is that the whole really is greater than the sum of the parts when we work together and so, very much open to working with everyone within the THORChain community.
Qi Capital: I think for everybody in the THORChain communities it’s great to hear, that these different products are not only competing with each other but leverage their synergies. It brings the space forward but also cooperating for a greater good to improve the adoption of THORChain itself.
THORSwap: Healthy competition is great and healthy collaboration is great as well.
Qi Capital: I also wanted to cover the underlying THORChain protocol itself. How do you see it right now? And how do you see the future of the ecosystem of the protocol and what are you currently most excited about?
THORSwap: Long-term, it really can become the settlement asset for all of crypto. That would essentially make THORChain one of the most important pieces of crypto infrastructure out there. The future is very, very bright for THORChain.
Right now, THORSwap is arguably the most popular interface and Dapp on top of THORChain. We feel that we’re very well-positioned for the multi-chain future.
Qi Capital: Thank you, guys. that’s a great statement to wrap up this session. Thank you so much for your time.
THORSwap: Thank you, Archon. This was very fun and appreciate it.
About Qi Capital
Qi Capital is a group of like-minded and experienced individuals from around the globe, sharing two common objectives: providing insights about crypto and DeFi, and proactively working with ambitious teams on the future of decentralized finance. Our core principle is to promote and foster individual creativity, growing not only as a group but also as creative thinkers and builders. To learn more about us, check out our website www.qicapital.org and our “Qi Podcast” via www.buzzsprout.com/1729379/ or engage with us on Twitter: @QiCapital.
Qi Capital is an early investor in THORSwap. This statement is intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token or participate in any farms. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice. All market prices, data, and other information are not warranted as to completeness or accuracy, are based upon selected public market data, and reflect prevailing conditions and the author’s own views as of this date, all of which are accordingly subject to change without notice.