Today, with the rapid development of blockchain technology, decentralized finance (DeFi) platforms are springing up, and THORChain is famous for its unique governance mechanism and the application of RUNE tokens. This article will delve into THORChain’s governance structure, asset listing and delisting processes, and the importance of RUNE tokens in the ecosystem.
THORChain governance mechanism
THORChain's governance design aims to remain simple and mainly determines the following aspects:
Listing and delisting of assets
Chain loading and unloading
Protocol upgrade time
Economic limit — the upper limit on the number of participating nodes
The core of this design is to reduce communication between nodes, thereby improving security and preventing nodes from uniting to control the system. This is critical to protecting your network.
Asset listing and delisting
In THORChain, users can express their demand for a certain asset by staking in a new asset pool. When the system detects a new asset, a new asset pool is created and set into startup mode. At this point, the pool's swap functionality is disabled. Every few days, the network checks all active asset pools and lists the ones with the highest value.
Asset delisting process: Asset delisting mainly occurs when all liquidity providers withdraw assets or their pool depth is too low. The specific logic is as follows:
When a new boot pool is enabled, its depth is compared to the smallest active pool.
If the new pool is deeper, the smallest active pool is reset to startup mode and replaced by the new pool.
This process is repeated to achieve re-listing of the asset.
Chain loading and unloading
When the community wishes to support a new chain, THORChain’s developer community decides whether to approve the chain. If approved, the code is tested and verified by core developers and then added to the THORNode software. The chain will be connected when 67% of the nodes run the new software.
To be delisted, nodes will stop monitoring the chain. When 67% of the nodes no longer monitor the chain, the chain will be removed and begin returning its assets to the owner.
Change Management: THORChain’s developer community submits Architectural Decision Records (ADRs), which are voted on by node operators. Each ADR should provide the following:
Context of the relevant goal and current status: proposed changes to achieve the goal
Emergency changes
Since nodes cannot communicate directly with each other, the process of coordinating emergency changes is relatively difficult. To handle emergencies, nodes should exit the system. When the number of nodes drops below 4, funds will be disbursed and the system can be shut down, a process known as Ragnarök.
Economic Limitations: The number of network participants on THORChain is limited due to the existence of a minimum staking amount and a fixed supply of RUNE. If the system is found to be consistently under-collateralized or over-collateralized, the minimum staking limit can be adjusted.
Mimir function: Mimir is a function that allows changes to the constants of the chain, such as the minimum pledge amount, liquidity change speed, etc. There are two types of Mimir:
Node Mimir: Set by each node. Once 2/3 of the nodes have set Mimir, it will take effect.
The role of RUNE token
The RUNE token plays a central role in the THORChain ecosystem. It not only serves as a medium for liquidity provision, but also a tool for governance voting. Users can participate in governance by staking RUNE, affecting the listing and delisting of assets, as well as the upgrade of the protocol.
Additionally, the supply of RUNE is fixed, meaning its value may rise as the ecosystem grows. As more assets and chains are included in THORChain, demand for RUNE will continue to grow, which is an important consideration for investors.
in conclusion
The governance mechanism of THORChain and its RUNE token demonstrates a decentralized asset management approach that improves the security and efficiency of the system by simplifying the governance structure. As the DeFi ecosystem develops, THORChain's innovative model will undoubtedly continue to attract more users and investors in the future. The value of RUNE tokens will also continue to increase with the expansion of this ecosystem, becoming a shining pearl in the blockchain world.