THORChain Liquidity Fees Surge 71% Amid Fee Increase, RUNE Shows Positive Momentum

adminAugust 31, 2024

THORChain, a decentralized liquidity protocol, has recently seen a significant increase in weekly liquidity fees. This notable growth follows a long period of over four months of relatively stagnant fees. However, last week, liquidity fees broke through the $500,000 barrier, reaching an impressive $744,800. This figure represents a 71% increase over the previous week, signaling a significant breakthrough for the protocol.

User engagement continues despite fee increases

One of the most notable aspects of this surge is that it occurred during the first week after the protocol raised the minimum Layer 1 (L1) swap fee to 0.15%. Despite the fee increase, THORChain users have shown remarkable resilience and have actively engaged with the platform. The average daily volume of L1 swaps has remained stable at $30.8 million despite the increased fees. This stability highlights the value that users place on THORChain’s services, as they appear to be unfazed by the higher fees.

Significant revenue growth due to increased fees

The increase in swap fees has had a significant impact on the revenue generated by the protocol. Since the fee increase took effect, the average daily swap fee has increased five-fold, from $9,100 to $47,600. What is particularly noteworthy about this growth is that it has occurred despite the fact that swap volumes have remained stable, indicating that the protocol has made significant profits from the higher fees.

Moreover, in 2024, for the first time, fees generated on the network exceeded the distributed block rewards. As of last week, liquidity fees accounted for 51% of the total incentives distributed on the protocol. This change shows the growing importance of fee revenue in THORChain’s overall financial structure.

Increased user growth and transaction volume

In addition to its impressive financial performance, THORChain has also seen a significant increase in its user base. According to a recent report, the protocol’s user base grew by 41% in 2024, reaching over 510,000 unique users. This growth in the user base is reflected in a corresponding increase in transaction volume, which now exceeds $71 billion. In a particularly notable achievement, the protocol has recorded $3 billion in transaction volume in just a few weeks this year.

Meanwhile, THORChain’s native token, RUNE, was trading at around $4.10 at the time of writing. This price reflects a 4% increase over the past 24 hours, making RUNE one of the top five gainers on CoinMarketCap during that period.

Strengths of THORChain

THORchain, a decentralized liquidity protocol, is designed to facilitate seamless and secure asset swaps across multiple blockchains without relying on a central intermediary. The core of Thorchain’s functionality is its unique use of Continuous Liquidity Pools (CLP) and the Tendermint consensus mechanism, allowing it to function as a multi-chain decentralized exchange (DEX) and liquidity provider. Unlike many other platforms, Thorchain allows users to directly trade underlying assets across multiple blockchains without the need for wrapped tokens or synthetic assets. These direct cross-chain swaps are not only more secure, but also remove the dependency on potentially vulnerable bridges.

One of Thorchain’s most recent innovations is the introduction of streaming swaps. This feature allows users to execute swaps over a period of time rather than instantly. This is especially useful for large trades. Slippage is a common problem in cryptocurrency trading, where large orders can have a significant impact on the price of an asset. Streaming swaps reduce the impact on the market by spreading swaps over time, giving users more control over their trades. This feature further enhances the flexibility and efficiency of the Thorchain protocol, making it an attractive option for traders who handle significant volumes or who prefer a gradual approach to asset swaps.

Thorchain stands out in the crowded Decentralized Finance (DeFi) space due to its commitment to true cross-chain interoperability and continuous innovation. While many DEXs are either confined to a single blockchain or rely on wrapped tokens for cross-chain functionality, Thorchain’s architecture enables native asset swaps across multiple blockchains in a decentralized manner. The platform also incentivizes liquidity providers by providing a portion of the fees generated from swaps, and uses a dynamic fee model to protect against temporary losses. With the addition of features like streaming swaps, Thorchain continues to push the boundaries of decentralized trading, while providing users with more security, flexibility, and control than many other similar projects in the DeFi ecosystem.

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