THORSwap Revolutionizes DeFi Space with THORChain Streaming Swaps

Updated: 05 August 2023

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In a significant move set to reshape the decentralized finance (DeFi) landscape, THORSwap, a leading decentralized exchange (DEX), has announced the introduction of what they term “a new revolutionary feature”: THORChain Streaming Swaps. According to the release, this novel functionality is designed to significantly enhance the permissionless cross-chain trading experience for users, a commitment THORSwap has staunchly upheld since its inception.

THORSwap’s Background and Need for Streaming Swaps

Underpinning THORSwap is the operational protocol of THORChain, which uses a slip-based fee model for its liquidity pools. In this model, the trade execution fee is directly influenced by the swap size and pool depths. Traders previously had to divide their large trades into several smaller swaps manually to achieve lower slippage. Although effective, this method led to a surge in on-chain gas fees and introduced a cumbersome manual process.

The Advent of Streaming Swaps

THORSwap’s newly introduced Streaming Swaps has streamlined this laborious process to ensure maximum capital efficiency. Users need to send just a single inbound transaction. Internally, THORChain then splits this swap into several sub-swaps executed over time, consolidating them into one outbound transaction directed to the chosen wallet. This innovative approach helps reduce price slippage by permitting arbitrageurs to rebalance the pool intra-swap and to reduce the swap size in comparison to the pool depth.

Streaming Swaps: The User Experience

Imagine slowly savoring a beverage instead of consuming it in one gulp – the experience is often richer and more fulfilling. A similar principle applies to swaps on THORSwap. By being patient and employing Streaming Swaps, users can ensure better price execution, achieving an optimal rate and lower slippage.

Price Optimized vs. Time Optimized: The Power of Choice

According to the announcement, Streaming Swaps has opened up two avenues for THORSwap users

they can optimize for time by employing the regular THORChain swap method, which operates at the speed of each native network’s transaction, or
they can optimize for price by utilizing Streaming Swaps.

The latter method breaks trades down into multiple sub-swaps, potentially yielding a more favorable average price.

Empowering Users with Customization and Security

At launch, Streaming Swaps will automatically split a price-optimized swap depending on the swap size. In future updates, THORSwap plans to roll out additional customization options, enabling users to adjust swap intervals and determine the number of sub-swaps. Crucially, despite these new features, THORSwap will not maintain custody of users’ assets during execution. Instead, these assets will remain securely in THORChain vaults, overseen by an overbonded network of node operators.

THORSwap: A Quick Recap

Founded by a team of pseudonymous developers distributed globally, THORSwap is a non-custodial multi-chain DEX. Launched in April 2021, it facilitates swaps for native assets across a range of blockchains, including Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Binance Smart Chain. It does this without relying on wrapped tokens or bridges that connect different chains, a unique capability that has boosted its appeal among users.

The Bright Future Ahead for THORSwap

Amid fluctuating market conditions, THORSwap has demonstrated impressive resilience. Organic fee revenue, which now forms 44% of node earnings (up from around 5% last year), points to the platform’s economic sustainability. The number of unique addresses executing swaps on THORChain is also increasing steadily, with over 66,000 users expected this month.

THORSwap has made important strides with integrations like TrustWallet and Ledger Live, which will allow the platform to tap into their user bases. In a recent development, OKX Wallet, a prominent Web3 wallet company, announced its integration with THORSwap. Having more and more DeFi wallets integrate with THORChain is great news for both the ecosystem and the users looking to swap assets cross chain safely and with low fees.

Despite a drop in total value locked from a peak of $1.39 billion in April 2022 to $167.5 million today, THORSwap remains committed to innovation and delivering value to its users, thus affirming its mission to continue pushing the boundaries of DeFi.

Questions and answers about the new streaming swaps features are available on the THORSwap blog post.