THORChain Ecosystem Q4`23 Report & 2024 Roadmap
1 October 2023 — 31 December 2023
Summary
THORChain had a record-breaking Q4 in all key performance metrics — notably TVL and swap volume. Affiliates continue to use THORChain to bring revenue to their dApps and wallets. The protocol moves towards the final stages of planned obsolescence with Mimir V2, while removing overhanging liabilities.
Many new features are planned for early 2024 including memoless transactions, batched outbounds, orderbooks (limit orders), & trade accounts. Keep an eye on THORChain community social channels for updates.
A look at Q4`23 network statistics
Dashboard | More Stats | Even More Stats
- Total USD Volume: $12.62b (+530%)
- Highest 24h Volume: $354.93m (+351%)
- Change in Total Liquidity: $128.37m to $339.38m (+264%)
- Change in Savers: $26.74m to $85.41m (+319%)
- Liquidity Fees Collected: $6.53m
- Affiliate Earnings: $1.31m
- LP Earnings Breakdown: 37.6% Liquidity Fees — 62.4% Block Rewards
Top 5 Swap Routes by USD Volume
- BTC <> RUNE — $3,179,106,441
- ETH <> RUNE — $1,886,419,370
- BTC <> ETH — $1,673,713,122
- USDT <> RUNE — $945,278,800
- USDC <> RUNE — $767,301,258
Top 5 Swap Routes by Liquidity Fees (USD)
- BTC <> RUNE — $1,289,209
- BTC <> ETH — $1,042,309
- ETH <> RUNE — $718,185
- BTC <> USDT — $466,171
- USDT <> RUNE — $372,654
Top Affiliate THORNames by USD volume
- “t” — $814,176,227
- “tr” — $380,867,805
- “dx” — $152,517,710
- “ss” — $104,509,261
- “te” — $85,249,601
What’s new to THORChain Q4`23?
Mimir V2
Mimir V2 was implemented but not fully adopted by the network. Mimir V2 is the final item towards planned obsolescence that makes governance around economic and operational constants more decentralized.
Mimirs will be defined as either “operational” or “economic”. Economic constants operate as they do today. It requires a supermajority (66%+) of nodes to change an economic constant. One the constant is changed, a new supermajority must vote again to change it.
Operational mimirs require smaller thresholds to change and allow for nimbleness for the sake of security and network operations. This will include things like chain halts, pausing trading, and anything else that may require swiftness to protect the network. When 3 nodes vote for an operational mimir, that new constant is immediately adopted. Once a constant is adopted (and a chain is halted, for example) it takes a simple majority on the other side to overrule the constant. So if one operator decides to pause something incorrectly, it can be remediated by a simple majority of honest nodes.
Swapper Clout
Swapper Clout is a new feature to enable trades to happen much more quickly on THORChain without significant outbound delays. Every address that interacts with THORChain is given a Clout Score, which is defined as the number of RUNE spent in liquidity fees through their swaps. Pay more in liquidity fees, your clout score increases. When you make a swap, if the swap amount is under your clout score, your outbound delay is sent instantly rather than being delayed for up to an hour. This will increase swap speeds for most people significantly since the network will allow large arbitrageurs to swap very quickly, decreasing the total amount kept in the outbound queue, which makes wait times shorter for everyone else trying to swap. You won’t need a large swapper clout to benefit from this change.
ILP Sunset
Impermanent Loss Protection has been retired permanently. With the addition of Savers, the risk profile of Dual LPs have changed significantly. Dual LPs receive more rewards, but are liable for the impermanent loss experienced by Savers. It was passed by the nodes to reduce the potentially unbounded liability on the network. While the current liability was near zero, meaning that LPs could withdraw at that time with no impermanent loss, they are now responsible for any losses incurred due to impermanent loss in the future.
POL Changes
There were 2 changes made to Protocol Owned Liquidity. First, the thresholds to add and withdraw POL have been changed. The protocol will continue to add POL when the synth utilization for that pool is over 50% until it decreases to below that number. The threshold for removing POL has been decreased to when the synth utilization is below 10% of the pool depth. This means that POL will stay in the pools for much longer and earn more fees, rather than withdrawing and realizing impermanent loss.
The second change to POL is the addition of Stablecoins. Stablecoins have been added to POL, so the Reserve can enter and exit liquidity positions in these pools as necessary.
Custom refund addresses
Custom refund addresses can now be added on EVM Chains. This change will allow smart contracts to better interact with THORChain on a user’s behalf. In one example, a smart contract could initiate a swap for a user, but specify the user’s address as a custom refund address so that if the swap fails, the user receives their funds back rather than it going to the smart contract and potentially becoming lost funds.
In the Pipeline — What to expect early 2024
A number of new features are being worked on by the devs to be completed early 2024. These features will improve upon the scalability, security, and UX of THORChain. Several features will require governance to signal consensus from nodes before being developed.
Gitlab 2024 Roadmap Epic
Memoless Transactions
Memoless transactions will be a new way to “register” a memo before a swap is made, so that a swap or any other action can be done without sending a memo.
This will enable a new kind of swap interface where a user does not need to connect a specific wallet before swapping. The wallet interface can be completely abstracted away from the swap process. A user can register their swap intent on an interface, the interface can register the memo on behalf of the user, and then the user can simply send the exact amount specified to the inbound vault address and execute their swap on any wallet. QR codes can also be used to simplify this process and make it extremely accessible to swap with any wallet, even if that wallet has no relationship with THORChain frontends.
Mimir V1 -> V2 Migration
Mimir V2 has been added to THORChain, but it is not yet fully adopted. Progress will be made to transition to Mimir V2 for the increased decentralization and security, finally culminating in the burning of the admin-mimir keys which will complete planned obsolescence.
Batched Outbounds
Allows bifrost to send multiple outbounds in one single transaction. This change will increase TSS throughput significantly and also decrease user gas costs, since significantly less transactions will need to be sent. Centralized exchanges use similar logic today to save on fees, rather than sending 1 transaction for every single withdrawal. This will be rolled out slowly after being implemented for testing and security.
Incentive Pendulum Changes
The hard cap for liquidity will be tweaked to swing off of the “effective bond” rather than the total bond of all nodes. The effective bond is the total bond of the 66% of nodes, since that is the threshold that would be needed to sybil attack the network. This change will have the incentive pendulum also use the effective bond, rather than the total bond to adjust incentives to align with the network security posture.
Limit Orders (Orderbooks)
Limit orders on THORChain will allow users to place orders that will automatically execute with the AMM as the counterparty once a certain price target is reached. This is not a traditional CLOB where orders are executed against other orders and takers, but is a hybrid with the AMM design.
Trade Accounts
Trade accounts grant professional traders (mostly arb bots) a methodology to execute instant trades on THORChain, without involving Layer1 transactions on external blockchains. This creates a new type of asset, backed by the network security rather than the liquidity in a pool (synths), or by the rune asset (derived assets).
Arb bots can now arb the pools faster and with more capital efficiency than synths do today. This is because a synth adds or removes from one side of the pool depth but not the other, causing the pool to move half the distance in terms of price. For example a $100 RUNE → BTC swap requires $200 of BTC synths to be burned to correct the price. Trade accounts have twice the efficiency so $100 RUNE → BTC swap would require $100 from trade accounts to correct the price.
Minimum Swap Fee
The network will begin to charge a minimum swap fee of 5 basis points for every trade, no matter the size. This will increase network profitability, especially for smaller swaps which are a majority of the network’s volume.
Pending Upcoming Changes (Requires Governance)
These changes are in the design phase and will require node governance (ADR) to determine whether they will be adopted or not. These changes may or not be adopted or changed based on feedback from the community.
Additional proposed changes may come through the GitLab or Discord channels
Lending CR Changes
If adopted, this will change the collateralization ratio of lending to always be 200% (50% LTV)
Derived Asset Hard Cap
If adopted, this will create a hard cap on the Derived Asset liability. If adopted, this change will limit the liability that derived assets bring to the network, moving the risk of derived asset liability to derived asset holders.
POL Savers Match
If adopted, this change will have Protocol Owned Liquidity match Savers deposits. When a saver deposits into the vaults, POL will add the equivalent amount of liquidity. This will increase the rate at which POL is deployed, and deploy to more pools without needing to reach a specific synth cap
Where to get more information?
- Twitter Spaces — held most weeks, subscribe on RSS or wherever you get your podcasts
- THORChain University — monthly posts & discord server
- GrassRoots Crypto — update videos
Community
To keep up to date, please monitor community channels, particularly Telegram and Twitter:
Website | Documentation | Twitter | Telegram Community | Telegram Alerts | Community Discord | Developer Discord | Explorer | Viewblock | Reddit | Github | Gitlab | Medium | Linktree | Thorcharts
