- Thorchain allows decentralized cross-chain trading.
- Users can trade, earn, and bridge assets with Thorchain.
The Thorchain bridge allows users to seamlessly trade between different blockchain assets in a decentralized manner. Thorchain uses automated market makers and liquidity pools to facilitate trades between assets while eliminating the need for a centralized order book. Here is a step-by-step guide on how to use the Thorchain bridge to trade assets:
Getting Started: Setting Up Your Wallet and Acquiring Assets
The first step is to install a wallet that supports Thorchain such as Ledger, MetaMask, or Guarda. This will allow you to connect to the Thorchain network and interact with the protocol. Make sure your wallet is set to the Ethereum network if using ERC20 assets or the Binance Smart Chain network for BEP20 assets.
Next, you need to acquire some native blockchain assets you want to trade such as ETH, BNB, or BUSD. You need these base assets to provide liquidity to pools and get trading in return. Purchase them from an exchange and send them to your Ethereum or BSC wallet address.
Go to the Thorchain web app and connect your wallet by clicking ‘Connect Wallet’ in the top right corner. This will allow Thorchain to interact with your assets. Make sure you are on the right network in your wallet.
Simply navigate to the “Liquidity” menu and then “Add Liquidity” to get the provision of liquidity screen. Here you can select which two assets you want to provide to the liquidity pool and the percentage breakdown. For example, you could provide 50% ETH and 50% BNB. This will mint THORChain Ethereum (ERC20) LP tokens to your wallet as a receipt for your share of the pool. Provide as much liquidity as you are comfortable with to earn trading fees.
Trading and Liquidity Management on Thorchain
You can begin trading on the ‘Swap’ tab when you have provided liquidity. Check the boxes next
to the asset you want to swap out and the asset you want to get in exchange. To see the currency rate in advance, enter the amount. The amount of allowable slippage can also be changed. Confirm the details of the swap are accurate and then press the “Swap” button. After approving the necessary allowances for tokens in your wallet, the trade will go through. Your wallet will soon be credited with the newly acquired asset.
Trades on Thorchain use decentralized on-chain liquidity pools. You earn trading fees proportional to your pool share when other users swap. Fees are automatically reinvested into the pool.
To withdraw your liquidity, go to ‘Liquidity’ and click ‘Remove’. This will redeem your LP tokens and return your original assets plus any accrued fees. Make sure to leave enough to cover the impermanent loss.
In conclusion, the decentralized Thorchain bridge and its liquidity pools offer a seamless way for cryptocurrency users to trade assets across different blockchains. By eliminating the network silos between chains like Ethereum and Binance Smart Chain, Thorchain provides easy interoperability and the movement of assets that would otherwise be fragmented. Traders can swap, earn yields, and bridge tokens across chains instantly and transparently while maintaining full custody through their own wallets.
Everything is facilitated on-chain by automated market makers, removing the need for centralized intermediaries and order books. While users need to supply liquidity to earn fees, the rewards can be worthwhile for active cross-chain traders. Overall, Thorchain delivers the flexibility and decentralization of automated, multi-chain trading in one user-friendly platform. Looking ahead, widening cross-chain interoperability will be key for capturing the benefits of both legacy and emerging blockchain networks. Thorchain provides traders an early window into this more open, connected future of decentralized finance.