THORChain Launches THORSynths for Synthetic Assets Minting, Swaps, and More

THORChain (RUNE) has announced on March 9, 2022, that THORSynths, its native synthetic assets feature is now live, offering THORChads instant settlement, low gas fees on swaps, and minting, as well as zero risk of impermanent loss.

THORChain Roll Out THORSynths 

THORChain (RUNE), a multi-chain blockchain network that supports native bitcoin (BTC), ether (ETH), litecoin (LTC), BNB (BNB) assets, and more, has launched its synthetic assets feature dubbed THORSynths. 

Per a blog post by the team, THORSynths will make it possible for members of the THORChain ecosystem to mint, redeem, and swap synthetic assets in a superfast, secure, and cost-efficient manner, without having to worry about the risk of impermanent loss.

For the uninitiated, Synthetic Assets, also known as Synths, are a collateralized representation of an asset on THORChain. These derivatives (assets whose values are derived from a different asset) of established cryptocurrencies like bitcoin, ether, and others, will always have the same value as the original asset.

“THORChain synthetic assets are primitives for both higher-order financial features, as well as fully-secured, fully-backed synthetic assets that can be sent anywhere in the Cosmos IBC ecosystem and they will always retain the guarantee they can be redeemed for the underlying asset,” explains THORChain. 

THORChain Synths are backed by THORChain Liquidity Pools, which often contain 50 percent RUNE tokens and 50 percent of the original asset. THORChain Liquidity Pools are designed to ensure that the price of Synths always stands at 1:1 with the price of the native token.

“Synths have great utility for traders and arbitrageurs, as they can be transacted nearly instantly and at a fraction of the cost compared to native layer-1 swaps. This is due to the fact that synths solely live on the highly scalable THORChain network (so no need to worry about chain difference, gas prices, and wallets),” explains the team.

Minting Redeeming and Swapping Synths 

According to the THORChain team, when users mint Synthetic assets such as sETH or sBTC, RUNE is automatically added to a liquidity pool for a Synthetic Asset of that Pool. 

To redeem a Synthetic Asset, a user simply needs to swap it for $RUNE and the Synth will automatically get burned.

“A synth can be redeemed for RUNE at any time on THORSwap. Synths Assets are pared with real assets holding the same value and can be redeemed 1:1. For example, a user can swap BTC for RUNE then mint Synthetic BTC to get 1 sBTC. The Synthetic BTC can later be redeemed by swapping to RUNE and swapping for 1 BTC,” the team wrote.

Notably, the team has made it clear that Synth holders will not experience any gain or loss caused by price changes (impermanent loss) when minting or redeeming a synthetic asset, however, they will pay a slip-based fee when they enter or exit a position, plus standard low THORChain transaction fees.

What’s more, it is now possible for THORSwap users to directly mint and redeem Synths from L1 assets like BTC in a fast and seamless process.

The price of RUNE token is up by 6.52 percent in the past 24-hours, trading around $5.01, with a market cap of $1.66 billion, according to CoinMarketCap.