Thorchain RUNE Blockfyre Report

Transcript

1. SENTIVATE REPORT BY BLOCKFYRE | PAGE ‹#› BLOCKFYRE
2. Executive Summary • Thorchain is not only a protocol, but a whole ecosystem that eventually allows for an efficient and decentralized liquidity network • Continuous Liquidity Protocols (CLPs) incentivize token holders for staking and ensure continuous on-chain liquidity • The Bifröst protocol enables a trustless, secure and agnostic way of bridging all exsisting chains with each other ( = Interoperability) • Hardly any competition, while tackling a big market • Strong token use case, whose value is directly correlated with the platform adoption • First DEFI dApp on Binance Chain, going to launch with strong partners already in August 2019 Highlights Risk & Concerns • Highly ambitious project • While the documentation of the Thorchain ecosystem seems highly encouraging, it remains to be seen if the team is capable enough to deliver on their promises • Still in the early stages, long-term investment Ticker RUNE IEO Price $0.032 - 0.038 USD Pre-Sale Price $0.02 - 0.0264 USD Initial Market Cap $2.2 Million Initial Circ Supply 60 Million RUNE Total Supply 1 Billion RUNE Token Type BEP2 Website thorchain.org Thorchain aims to provide a deeply liquid, trustless, secure and decentralized liquidity network, which is highly scalable and interoperable. Eventually, Thorchain will allow for any cross-chain currency swaps and deploy a cross-currency payment network. Overview
3. What problem does it solve? Fundamental Problem: Lack of Liquidity x • It's unquestionable that the current cryptocurrency market is significantly lacking liquidity, especially altcoins that are less known than Bitcoin or Ethereum. • In order to further understand the characteristics of liquid markets, Tonny Lybek and Abdourahmane Sarr sub-divided liquidity into 5 factors: Source: Blockfyre Research | Thorchain Blog, imf.org, Tonny Lybek and Abdourahmane Sarr, 2002 Liquidity Tightness Immediacy Depth Breadth Resiliency low transaction costs, for example bid-ask-spread order execution speed number of orders filling out the book number of larger orders in the book market quality, how justifiable is the current price of an asset • Taking a look at these 5 factors for liquidity, it is safe to say that most of them are hardly concurrent in today’s cryptomarket. The price often does not correlate with the fundamentals of a project, but is based on pure speculation. Besides, especially low market cap altcoins lack both, Depth and Breadth, which does not just lead to a huge bid-ask-spread, but also the order execution speed of limit orders is way to long.
4. What problem does it solve? Consequences of illiquid markets x • The significant illiquidity of the crypto market is also the main reason for its strong volatility. While this might be attractive to several high-risk affine retail investors, as it potentially comes with outstanding returns of investments, this has eventually more of a gambling character than being an investment strategy. Besides, this high volatility does not only come with a high probability of coping with big losses, also it is a sign of the infancy of this market and is dissuasive for the majority of bigger investors and institutional money • Furthermore, the illiquidity and volatility of the crypto market is also one of the main reasons for the lack of adoption. As high liquidity is a prerequisite of economic stability, it is highly unlikely that assets like Bitcoin are going to establish themselves as global transactional currency anytime soon. • As a consequence, many tend to argue that Bitcoin is more of a Store of Value like Gold, than a transactional currency. However, high fluctuations are also not observable with Gold, which would be again deterrent for investors, as they are looking for a Store of Value which is rather stable in price and slowly but surely appreciates in value over time. • In addition, the only places where higher liquidity and a more convenient trading / investment experience is currently given, are the major exchanges like Binance or Coinbase. However, as they are highly centralized, they come with the common security and trust issues. Besides, with centralized exchanges it’s often hard to differentiate between actual liquidity and washtrading. Decentralized exchanges circumvent these issues. However, they significantly lack liquidity and buying or selling crypto assets there is often not just a challenge, but also a torture. Volatility Lack of adoption Risk Centralization ! Source: Blockfyre Research | Thorchain Blog
5. Thorchain’s solution Decentralized Liquidity Network • Thorchain provides not just a protocol, but a whole ecosystem, aiming to solve all aforementioned problems with the current digital asset market place. • By designing the whole ecosystem chain-agnostic, Thorchain will be able to support every existing digital asset. As a result, Thorchain is not competing with the currently existing protocols, but is rather trying to enhance the whole digital asset ecosystem by connecting them all to a big, liquid and decentralized network. • While simply relying on the underlying math of the protocol, Thorchain’s solution could solve liquidity issues without relying on any third parties like centralized exchanges and is thus completely trustless. • The basis of the whole network’s architecture is building on staking and incentivization in order to address liquidity problems. While the idea of liquidity pools is not a particularly innovative or unique idea, there are currently still only a few smaller liquidity pools. In addition, today’s existing solutions like Bancor or Uniswap are not chain-agnostic and only support a single chain. Thorchain’s multi-chain protocol is unprecedented approach, which could ultimately solve the liquidity issue of the whole market by supporting swaps of any existing currencies with each other x • If Thorchain’s solution is going to work and will be adopted by the masses, which is highly incentivized by the protocol, it could eventually remove a significant portion of the volatility of today’s market, which in turn would lead to a more stable price equilibrium. As this significantly favors market adoption or digital currencies as a transactional payment method, Thorchain is aiming to deploy a payment network in the long- term, enabling trustless crypto payments between customers and merchants. Source: Blockfyre Research | Thorchain Blog
6. Thorchain’s ecosystem x Thorchain Protocol pBFT chain optimised for lightning fast Layer 1 digital asset swaps Aesir Protocol forkless governance protocol for the Thorchain ecosystem Asgardex Fast and secure liquidity interface for Thorchain Yggdrasil Protocol highly scalable sharding solution for Thorchain Flash Network Layer 2 network for cross-network instant asset exchange Bifröst Protocol cross-chain bridge protocol for Thorchain Source: Blockfyre Research | Thorchain Website
7. Thorchain protocol Incentivized On-Chain Liquidity • The Thorchain protocol is basically the core of the whole ecosystem, which is aiming to solve the aforementioned liquidity issues. In general, the protocol covers three functions for the ecosystem: 1. Trustless and secure, bi-directional bridging across all chains 2. Incentivizing asset holders for staking in order to ensure liquidity 3. Allowing for instant asset swaps and trans-currency payments, any digital asset with each other x • While the underlying technology and math is highly complex, the basic concept and idea behind it is rather simple: connect all chains and liquidity pools with each other, for ultimate interoperability, significantly improved liquidity and enable mass adoption of crypto by allowing anyone to pay anywhere with any currency • How does it work in principle: Instead of solely holding one’s assets off-chain, the protocol incentivizes holders to stake their assets on-chain in so called Continuous Liquidiy Pools (CLP) for market liquidity. As a return, stakers are provided with the fees on the trades. • In order to achieve this, Thorchain needs to be successful in connecting with as many liquid chains as possible, which are economically active, such as Bitcoin, Ethereum, Monero, Binance Chain etc. Besides, the higher the token distribution, the bigger the incentivization and decentralization on Thorchain. Source: Blockfyre Research | Thorchain Whitepaper
8. Thorchain protocol Technological perspective • The Thorchain protocol consists of the Merklechain and Sidechains. While the Merklechain is basically the governing masterchain of the network, sidechains are generated for each asset class the Thorchain protocol is going to integrate. • The architecture of this approach allows for the settlement of multiple sidechains to root in one single chain, the Merklechain. This masterchain then stores all root hashes of the transactions happening on the side chains • Each asset that is supported by a sidechain in the Thorchain protocol, can be staked and instantly swapped with any other integrated asset. Given the fact that all sidechains are designed in an uniform way, interchain communication is easily enabled, although each sidechain represents a different digital asset. • The core innovation of Thorchain protocol are the Continuous Liquidity Pools, which uses token bonding curves to ensure non-stop liquidity. The CLP is always the Genesis Account of each sidechain, which holds the total supply of the newly minted asset, as well as the staked RUNE tokens. While account owners can not move their tokens, they can only interact with the Genesis Account on chain. • By using a pBFT protocol approach, Thorchain implements the Tendermint consensus approach. Thus, consensus is achieved by a validator set of 21 stakers per cluster, while the probability of being chosen correlates with the amount of tokens being staked. Built-in reward and penalty systems incentivize the the correct behavior of validators. x Source: Blockfyre Research | Thorchain Whitepaper
9. Bifröst protocol Cross-chain bridging • The Thorchain team themselves described the Bifröst protocol as kind of glue that is holding together the entire ecosystem. The reason for that is that it enables for one of the most important basis of the whole ecosystem: Interoperability. • Bifröst protocol is developed from scratch and focuses solely on the issue of connecting all exsisting chains with each other. The protocol aims to become the go-to ecosystem for all assets, in order to provide a more favourable trading environment, lower fees and staking incentivization, while easily moving digital assets on and off the chain. • How does it work in a simplified way: to ensure security and trust on the network and to avoid errors like double-spending, there is a core validator set consisting of 100 staked validators. This validator set basically governs the multi-sig accounts on Thorchain. Once an external coin is moved into these multi-sig accounts, the validator set has to sign the transaction. After giving green light, a new equivalent of the external coin is minted on Thorchain via CLPs, as described above. It works the same way in the other direction, just that the external coin is unlocked again once the Thorchain equivalent is destroyed. x • Via this approach, bridging is not much simpler, but also much safer and provides more access to instant liquidity than current solutions such as atomic swaps. • The first chains supported by Bifröst will be Bitcoin and Binance Chain, followed by Ethereum and Litecoin. After that, Monero will most likely follow. Source: Blockfyre Research | Bifröst Whitepaper
10. Ecosystem complements Yggdrasil protocol • Just as every other blockchain protocol, Thorchain has to solve the current scalability issues. When aiming for mass adoption, blockchain protocols must not only aim for high- transaction throughput, but at the same time transaction costs must be kept as low as possible. • Yggdrasil introduces a new vertical sharding approach that solves the scalability trilemma for Thorchain, achieving max scalability and decentralization, with a minimum of trust. x • Aesir protocol aims to deploy an economically effective, fair and forkless on-chain governance mechanism. • While validators maintain the network and earn rewards, staking RUNE also comes with voting rights on Thorchain, which includes consensus rules, architecture changes, state changes, token structure changes, on-chain commands or governance changes. Aesir protocol Flash Network • Layer 2 payment networks are bi-directional payment networks that enable trustless and scalable transactions, while the underlying blockchain guarantees defines and secures its value. However, current solutions, like Bitcoins Lightning Network i.e., still lack reliability and liquidity. • Flash Network adds an exchange layer to Thorchain that ultimately enables for instant transactions across all chains. • Asgardex acts as user interface on top of Thorchain, representing the first decentralized liquidity network / interface within the ecosystem. • While Asgardex is aiming to solve all of today’s problems with both, centralized and decentralized exchanges, it is solely developed to demonstrate Thorchain’s capabilities and will be completely fee-free and ran by the community in the long-term. Asgardex Source: Blockfyre Research | Thorchain Website
11. BEP-Swap Thorchain x Binance Chain • On June 25th, Thorchain announced that it will initially launch on Binance Chain. The reasons for that are the compelling ecosystem, the cutting edge technology, the strong community and a common codebase of Binance Chain • Subsequently on July 10th, Thorchain announced BEP-Swap, the first so called DEFI (DEcentralized FInance) dApp on Binance Chain, which is about to be released in August 2019. • BEP-Swap is the first liquidity pool of Thorchain and allows for instant swaps of any BEP2 tokens with each other, comparable to Uniswap for Ethereum. Furthermore, tokens can be staked and thus fees on the respective trades can be earned. In addition, it also gives projects the opportunity to stake their treasury, in order to provide their token with deep liquidity while earning rewards at the same time. x Source: Blockfyre Research | Thorchain Website • BEP-Swap will be limited to Binance Chain assets. However, it uses Thorchain and Asgardex technology, so one can assume that Asgardex is going to be like BEP-Swap, only for all digital assets. • For the launch of BEP-Swap, Thorchain is currently onboarding strong partners, which could lead to the adoption of the dApp and deep liquidity of these assets right out of the gate. So far, Tomochain, Fantom, Ankr Network and Bolt have been announced, with more being expected.
12. Market and Growth Potential x Competitors • Although they cannot really be called direct competitors, Thorchain might compare itself best with the DeFi project Coinswap, which is basically the equivalent of BEP-Swap for Ethereum, which currently stakes $20M with a daily trading volume of more than $2M. On the other hand, further competitors like Shapeshift require KYC. • However, Thorchain is not just without competition on Binance Chain, also once their ecosystem goes live and supports cross-chain liquidity, it would be outstanding to current solutions, while targeting the whole cryptocurreny market, valued at $270 billion USD. Source: Blockfyre Research | Thorchain Website 0 50 100 150 200 10M 20M 50M 100M Staking correlation • As the token swaps are not just atomic swaps, but bridged by RUNE tokens, the value of RUNE is directly correlated with the amount of assets staked in pools • Since all assets need be be backed 1:1 by RUNE tokens, one can say that if $100M USD of digital assets are staked on Thorchain, RUNE’s market cap must not be worth less than $100M USD. Given the unlikeliness that all circulating RUNE tokens are staked, it could be potentially much higher. RUNE mcap Value of assets staked in pools All circulating RUNE are staked (unlikely) 50% of all circulating RUNE are staked
13. Tokenomics - RUNE Token Information Symbol RUNE Contract Address bnb1e4q8whcufp6d72w8nwmpuhxd96r4n0fstegyuy Type BEP2 Network Binance Chain RUNE’s utility / purpose x • Network security Proof of Stake of RUNE tokens in order to incentivize holders for validating the network • On-Chain Liquidity Staking on-chain in order to provide liquidity and earn liquidity fees in return • On-Chain Governance RUNE bond holders have voting rights to ensure decentralized protocol governance Token distribution Liquidity Emission & Block Rewards Operational Reserve Marketing Team Advisors Seed Sale Pre - & Private Sale Binance IDO Source: Blockfyre Research | Thorchain Website
14. • As crowdsale format, Thorchain chose to conduct a Initial Decentralized Exchange Offering ( = IDO) on Binance DEX. • 20M RUNE tokens are going to be sold during the IDO, which amounts to 33% of the total initial circulating supply of 60M. • During the IDO, two tranches, 10M RUNE each, are going to be offered on Binance DEX. Both will be further subdivided into 50 sell orders of 200k RUNE each, which can then be bought up by the IDO participants on the exchange • The public IDO price will be 0.032$ for the first tranch, and 0.038$ for the second tranch. In contrast, Private and Presale Investors bought their tokens at 0.020-0.0264$. However, 50% of the private and presale allocations will be locked and not circulating with listing. • In total, the initial market cap will be $1.92M USD at the IDO price of the first tranch, and $2.24M USD at the IDO price of the second tranch. • Given the fact that RUNE will directly be listed on Binance DEX, the initial market cap and the tokenomics in general are really promising. As a reference, the first IDO on Binance DEX was Raven, which was listed for 10x of the public IDO price, and retraced to 3-4x then. RUNE IDO details x Allocation of IEO funds * Initial Decentralized Exchange Offering 20% Marketing Source: Blockfyre Research | Thorchain Blog, Information from the Thorchain team 20% Bootstrapping Liquidity 20% Ecosystem Development * these information is subject to change, as they depend on the outcome of the IDO. The current plan assumes that the IDO is going to be sold out
15. Tokenomics - RUNE x Distribution schedule • In total, 15% of the total supply was sold during all stages like Seed, Private, Pre- and Public Sale, which amounts to an allocation of 150M tokens. However, only 60M RUNE tokens will be circulating at the day of the listing. The circulating supply will increase to 95M RUNE tokens at day 7 after listing. • While 50% of the Pre-Sale allocations are locked for 7 days, 80% of the Private Sale, and the Seed and Team & Advisory tokens are fully locked for at least 3 months. Afterwards, they will slowly be released into circulation with vesting periods of 12-15 months. • The RUNE reserves for operations, marketing and block rewards are slowly be released into circulation over a time period of 3-10 years. Source: Blockfyre Research | Information from the Thorchain team 0 250000000 500000000 750000000 1000000000 0 10 20 30 40 50 60 70 80 90 100 110 Months after listing RUNE in circulation
16. Roadmap Sep 2018 Testnet deployed x Q1 2019 Exchange & Trading modules built Q2 2019 Ethereum 1-way bridge Q1 2020 Mainnet launch with Bitcoin and Binance Chain bridges Q3-Q4 2019 Ethereum 2-way bridge and BEPSWAP Q2 2020 Launch with Ethereum, Litecoin Mainnet Bridge Q3 2020 Launch with Monero, Loki Mainnet Bridge Q4 2020 Launch with Developer Tooling for any Altcoin bridge Q1 2021 Launch of the Flash Network Q2 2021 Thorpayments Ecosystem Source: Blockfyre Research | Thorchain Website
17. Team Kai Ansaari • Project Lead of Thorchain • Masters degree in Project Management from RMIT University Melbourne • Formerly Project Manager of CanYa • 17 years of working experience in Project Management, in both, traditional as well as blockchain businesses x Matthew Nguyen • Manager at Thorchain • BA from University of Berkely • After several years of working experience as Software engineer, Matthew started his career as Entrepreneur and successfully founded several Startups such as Instamargin, Chainfuel and Telefuel Jazear Brooks • Blockchain Architect at Thorchain • Graduated at Yale University, BA in Computer Science and Economics • 8 years of working experience as Programer and Engineer at well known companies such as Microsoft, Gigster and Swish Jon Carr-Harris • Advisor for Thorchain • Graduated at Stanford University, Entrepreneurship and User Experience • Several years of working experience as Advisor to successful Startups such as Kik, lovely, Venio etc • Extensive track record as Founder and CEO of various companies such as Cred and Swish Source: Blockfyre Research | Thorchain Website, LinkedIn Currently the Thorchain team consists of 13 team members and advisors, covering all necessary business areas such as management, programing, research and strategy.
18. Thorchain IDO Rating Total score: 46 / 57 = excellent short-term, good long-term investment x Product 13/15 Whitepaper Competition Value Roadmap Token Sale 13/18 Community 10/12 Team 10/12 Business Team Development Team Advisors Partnerships Twitter Telegram Influencers Exchange (2x) Initial Mcap (2x) Presale Bonuses Presale Lockups Website State of Development 81%
19. Unique selling point Upside potential Thorchain is working on a solution which could solve most of the problems the cryptocurrency market currently displays. While there are projects that partially work on solutions for particular problems, Thorchains USP is that it would unify all these solutions like decentralization, interoperability, deep liquidity, scalability etc, in one big ecosystem. ! The fact that they are tackling several issues of a promising, emerging and still ever-growing market which is valued in the hundreds of billions, a significant upside potential is definitely existing for Thorchain, even if they will just get a tiny share of the overall market size. In addition to this, there is hardly any competition for Thorchain, which would favor the probability of getting a bigger share of the market. Short / Long Term Investment Thorchain has potential both in the short and in the long-term. Due to thorough marketing efforts from the team and solid fundamentals, Thorchain has currently solid hype and awareness. In combination with launching their crowdsale on Binance DEX, we expect the IDO to sell out immediately. The high demand combined with an initial low market cap displays a promising short term investment for IDO participants. But also long-term Thorchain could highly appreciate in value, if they achieve their goals, as the RUNE value directly correlates with the platforms adoption. Risks & Concerns Realistically spoken, Thorchain is highly ambitious and given the fact that their roadmap goes until 2021, definitely also a long-term investment. While the team seems to know what they are doing, it remains to be seen if they can deliver on their high promises. Given the uncertainty and volatility of the overall crypto market, investing long-term in Thorchain is a high risk / high reward investment. Conclusion x
20. Blockfyre Jonathan Habicht Simon Dedic Disclaimer We have been compensated in RUNE for this report. We have been in contact with the team If you like this review, don't forget to share it! Follow Blockfyre x