Tutorial: THORSwap (V2)

THORSwap is a decentralised exchange (DEX) that utilises the THORChain network to support multiple blockchains. In very simple terms, it’s like Uniswap, except it’s multichain. 

This exchange allows users to swap native assets across chains using a series of liquidity pools that are interconnected by the base asset, RUNE (the native utility token of THORChain). THORSwap also has its own native token $THOR, which users can stake.

To find out our thoughts on THORChain, as well as an in-depth explanation of how the network works, you can check out our exclusive pro report here. 

In this tutorial, we’ll go over how to swap, provide liquidity and stake on THORSwap.

 

Tutorial

Getting Started 

First, head to https://thorswap.finance/ and click ‘launch app’.

Next, you’ll need to connect your wallet. For this tutorial, we’ll be going with the XDEFI wallet. This multi-chain wallet allows you to easily manage assets from different chains, which saves you from having to connect multiple wallets to Thorswap. If you don’t already have an XDEFI wallet, you can check out our tutorial that goes through how to set one up.

When connecting your XDEFI wallet, you’ll need to select the chains you want to use.

Once you’ve approved the connection, you should be able to view your wallet by clicking on the ‘wallet’ button in the top right of your screen.

You can also view all of the assets in your XDEFI wallet by clicking on the ‘wallet’ tab. 

 

Swapping 

Start by clicking on the swap tab.

Next, choose the asset you want to swap and the one you want to swap into. Once you enter an amount, the corresponding amount of the other token you can expect to receive will be displayed. 

For more details on the swap, click on the arrow beside the exchange rate.

 

Here you’ll see the price impact that your swap will have on the pool as well as the estimated network fee. This fee will depend on the gas prices of the native chains that you are swapping from and to.

Note that you don’t need any of the outbound asset (i.e. asset you are swapping into) or RUNE to pay the gas (network) fees; you only need asset used to pay gas on the network you are swapping from (in this case BTC). 

You can click on the settings gear icon to adjust details of the transaction. 

The price of the swap is subject to change from the time you are quoted to the time that the transaction is actually processed. The slippage tolerance represents the percentage price difference you are ok with. This is set to 3% by default, which is generally what most people stick with.

You can also choose between normal fast or instant transaction speed. Quicker speeds will require you to pay higher gas fees.

The ‘set custom recipient’ feature allows you to manually enter a recipient address for the tokens you receive from the swap to go to (instead of going to your connected wallet). It’s generally advised to only use this if you are sending it to your own non-custodial wallet.

Click ‘swap’ to proceed. On the following pop-up screen, you’ll need to enter your wallet’s password and confirm the transaction.

 

Providing Liquidity 

An important risk to consider when supplying liquidity is impermanent loss. This is a phenomenon where you, as a liquidity provider (LP), can end up with less value than what could have been realised by simply holding onto your assets (e.g. in a crypto wallet).

It’s essential to have a good understanding of impermanent loss before you provide liquidity to a pool.

Therefore, before continuing with this tutorial, we highly recommend reading our pro article, which provides a more detailed explanation and practical example of impermanent loss.

THORSwap actually provides LPs with impermanent loss protection. LP positions gain 1% protection every day, with 100% protection being granted after 100 days. 

Click on the deposit tab to get started.

You’ll first need to decide what asset you want to provide liquidity for. Thorswap’s pools pair native assets on their native chain (i.e. BTC, ETH) with RUNE. Each deposit must supply an equal proportion of the native asset and native RUNE.

NOTE: The version of RUNE available to purchase on centralised exchanges is the Binance Chain (BEP2) version of RUNE, not the native version. For a step-by-step guide on how to convert RUNE to native RUNE, have a look at our tutorial here.

You can check out the dashboard tab for information on each of the different pools.

This includes the APY (interest earned in fee rewards, which will fluctuate based on swap volume), the total 24-hour swap volume, and the liquidity (depth of the pool. Deeper pools draw higher swap volumes but also decrease your % fee entitlement as an LP). As we always mention, it’s important to do your own research before making a decision. 

LPs can deposit to pools on THORSwap in two ways: Asymmetrically or Symmetrically.

Symmetrical Deposits: users deposit an equal value of the native asset + RUNE and ASSET ( e.g. in this case, RUNE + BTC).

Asymmetrical Deposits: users deposit one of the two assets (i.e. RUNE or BTC) to the pool.

However, asymmetrical deposits will be rebalanced and converted into 50% RUNE and 50% asset, meaning that you are still exposed to both assets.

When your deposit is rebalanced, it will be subject to slippage (price fluctuation). Because of this, the total rebalanced value will not be the exact amount of the total value of your initial deposit. As well as this, the impermanent loss protection only takes into account the symmetrical position. So, for example, if you deposited 100 RUNE, your initial position will be counted as 50 RUNE plus the corresponding amount of BTC when counting towards your 100% protected position.

Once you’ve decided how you want to deposit, enter the amount of the asset(s) you want to provide. 

Same as when swapping, you can click on the settings gear icon to modify the slippage tolerance and transaction speed.

Click ‘add liquidity’ to proceed. On the following screen, you’ll have more details of the transaction, such as the total estimated fees as well as the estimated time to process the transaction. 

Lastly, you’ll need to enter your wallet’s password and click ‘confirm’ to process the transaction. Your position should now be visible in the liquidity tab.

The liquidity tab is also where you can withdraw your position at any time (there’s no lock-up period).

Click on ‘withdraw’ and on the following screen, simply specify the amount you want to withdraw. If you deposited symmetrically, you’ll have the option to withdraw from one (e.g. BTC) or both (BTC and RUNE) sides. LPs who deposited asymmetrically will only be able to withdraw from the side they deposited.

Note that for every withdrawal ( symmetrical or asymmetrical), you will always have to pay a fee. This fee will be in RUNE, unless you are withdrawing a non-RUNE asymmetrical deposit. In this case, the fee will be payable in the asset you are withdrawing. 

  

Staking $THOR

As mentioned, $THOR is THORSwap’s native token. $THOR holders can stake their tokens by heading to the vTHOR tab. If you don’t already have these tokens, you can use the swap tab to exchange.

Here you’ll be able to see the current APY rate for staking $THOR. 75% of all THORSwap fees plus community incentive emissions are allocated to stakers.

In the stake tab, simply enter the amount you would like to stake. Once you do this, the corresponding amount of $vTHOR tokens, which represent your stake position, you will receive will be displayed.

Next, click ‘approve’ and confirm the transaction in your wallet. Because $THOR is an ERC-20 token, you will need ETH to pay the associated gas fee.

Note that staking rewards will be auto-compounded (i.e. automatically reinvested). 

You can easily unstake your $THOR and claim your rewards by selecting the unstake tab, specifying the amount you want to withdraw and clicking ‘unstake’. Again you will need ETH to process this transaction.

 

Disclaimer: THIS IS NOT FINANCIAL OR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results. 

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