Bridge Arena — Episode 2: THORChain vs OpenSwap

We’ve recently deployed the OpenSwap Bridge on ETH Kovan, AVAX Fuji C Chains, and BSC testnet for our community members to try and submit their feedback to us. We have been and still are in the process of gathering valuable and constructive feedback from our community members. Through some of the feedback we received so far, the OpenSwap team is now feeling confident that our project is going in the right direction!

Our target is to have OpenSwap Bridge successfully deployed on mainnet sometime in Q2-Q3 this year, as such, we’ve introduced a new series called Bridge Arena. A comparison series designed to assist our community members understand how our bridge differentiates from other traditional crosschain bridges.

For Episode 2, we will be comparing the OpenSwap Bridge against THORChain, an OG crosschain bridge used and trusted by many.

What is THORChain?

THORChain is a protocol that tries to make trades between native crypto-assets possible by using its token, Rune, as a median. This is different from the conventional lock and mint method used by Ren, a project that we covered last week, as it does not involve any synthetic tokens initially.

Its betanet, ChaosNet went live in April 2021. Right now, it supports native BTC, ETH, BNB, doge, etc., and the tokens on those chains like XRUNE on ETH or BUSD on BNB. It has plans to support more features such as Lending, composite and synthetic assets.

How Does THORChain Work?

Above is a graphical representation of how THORChain works. Users send assets like Ethereum by interacting with THORChain’s DApp like THORSwap, along with its address on the target chain. Chaosnet, powered by THORNodes, will verify and send the corresponding asset to the address provided by the user from the vault.

On the other hand, the vaults drawing and sending funds are balanced by Liquidity Pools with pairs such as ETH/RUNE, BTC/RUNE, etc. These actions are done by the nodes controlling the flow of the assets. It is worth mentioning that THORChain itself does not use any oracles, meaning that it relies on people acting on arbitrages.

THORChain’s Possible Limitations

While THORChain has been around for a while now and has helped DeFi community members with their crosschain needs, we have identified a few limitations related to THORChain’s way of crosschain bridging.

• Limited Chains

Right now THORChain supports 7 chains, some of them support EVM and the others do not. Unlike ren, THORChain also supports transactions on the same chain, functioning as a normal AMM like Uniswap or PancakeSwap

• Exploits

Safety remains one of the biggest concerns for Defi users. However, for THORChain, one of the biggest deterrents stopping people from using/investing in Rune is the 2 exploits records. During last Summer, specifically July, THORChain was exploited twice. Losing around $13 million in total. Even though the team has been working hard on security afterward, these 2 exploits certainly left stains.

• Impermanent Loss for liquidity provider

THORChain supports conventional 2-asset liquidity providing and asymmetrical liquidity providing. Both options would likely result in impairment loss for the investor.

• Complex Structure

THORChain is said to have more than 200k lines of code. This makes it very hard to develop and audit. Its complexity also means that it would require more effort to spot bugs and preempt potential exploits.

How is OpenSwap Bridge Different?

• Seamless Navigation between EVM chains

While the focus is not on non-EVM-related crosschain activities, OpenSwap will excel at bringing EVM chains together. Given the similar nature of EVM chains, once OpenSwap Bridge is successfully deployed on 2 EVM chains, OpenSwap can quickly scale up and connect more EVM chains. This means that we can complement other projects’ synthetic assets too!

• Instant Listing

Since our bridge works very closely with our Hybrid Smart Router, as long as a token has a liquidity pool on any of the DEXes that we have integrated, users will be able to conduct crosschain swaps for those tokens. This makes the selection of tokens limitless.

• No Impermanent Loss

OpenSwap’s bridge runs on single-asset vaults, unlike Rune’s pool. This mitigates all issues of Impermanent loss. At the same time, you are earning fees so the balance can only go up in normal cases. Stable coins and project tokens are expected to be supported.

• Simpler, Open-Sourced, and Audited

The infrastructure of our bridge is simpler than one of THORChain’s, relying on a network of Trolls (bots) and single asset vaults. Our codes for the Mean Trolls (Txn creators) and Green Troll (validators) and the programs that they will be running would all be open-sourced. The smart contracts for the vaults will all be audited before leaving beta, providing extra assurance to the users.

WAGMI

In this episode of Bridge Arena, we have looked into the basics of what THORChain is and how THORChain’s bridging mechanism works, as well as identifying some of their possible limitations such as THORChain only supporting limited chains, how they have encountered 2 exploits, impermanent loss for investors, as well as how their structure can be complex and hard to maintain.

With OpenSwap Bridge, DeFi swappers of our supported chains can be relieved from these pain points as not only do we support crosschain activities between any EVM to any EVM chains, protect users from impermanent loss, but also have a simple, open-sourced, and audited structure. Of course, there have also been no exploits recorded (Because we have yet to launch on mainnet!). THORChain is a respected leader in the crosschain space and we look forward to joining THORChain in providing the DeFi community with more crosschain options.

About OpenSwap

OpenSwap is the world’s first DEX providing on-chain swaps at zero slippage with hybrid smart routing, and a single asset crosschain bridge. As the DeFi universe continues to expand, liquidity becomes increasingly scattered across multiple chains and the situation is poised to get worse as new chains emerge with individual DEXs on each chain. The OpenSwap team has been working for the past several months on building up a vision of a greater OpenSwap ecosystem that will become every crypto project’s BFF through a set of key offerings that will empower teams to establish funding and sustained token health, allowing teams to focus on what they do best — BUIDL.

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