THORChain

Time factors

	Protocol time	Human readable time
Protocol time 1	Block	6 seconds
Protocol time 2	Churn (= 43,200 blocks)	3 days
First reward delay	1 churn	3 days
Reward frequency	Every churn	3 days
Unbonding period	N/A	-

Lifecycle

Must know before staking

Minimum stake amount	❌
Partial stake changes	❌
Partial reward withdrawal	❌
Compounding	✅
Penalty	✅
Slashing	✅	Equivocation - 5% of stake Unauthorized transaction - 1.5x transaction value

• Limited delegations. The protocol does not support unlimited delegations. Validators can receive delegations from up to 6 addresses. The protocol expects this to only occur between trusted relationships.

Advanced topics

General

• Churn cycle. The validator set can only change at the end of each churn cycle. Up to 1/3 of the active validators can exit and up to 2 new validators can join.

• Mimir governance. The protocol has preset genesis constants that can be overwritten through Mimir governance. Only validators are able to vote on these parameter changes.

Rewards

• Rewards come from the reserve and liquidity fees.

  • Reserve. The protocol maintains a reserve created at genesis that is dedicated to incentivizing liquidity providers and stakers. The reserve also accrues all transaction fees, penalties and slashed amounts. A portion of the reserve is constantly paid as rewards to both

    • $blockRewards = reserve / emissionCurve$ are paid to liquidity providers and stakers. $emissionCurve$ at time of writing is 8.

  • Liquidity fees. Liquidity pools of the protocol accrue liquidity fees that are provided as rewards to liquidity providers and stakers.

  • Rewards coming from the reserve and liquidity fees get split between liquidity providers and stakers using the following formula.

    • $stakerRewards = (1 - shareFactor) * blockRewards$ are paid to stakers. The rest is paid to liquidity providers.

      • $shareFactor = (totalStaked - totalProvidedLiqiudty) / (totalStaked + totalProvidedLiqiudty/incentiveCurve).$ $incentiveCurve$ at time of writing is 100.

• Block units. The protocol keeps track of the number of blocks that a validator has been active for. At the end of each churn, the reward amount is calculated by taking accrued block units into account and is added to a validator’s stake.

• Factors that impact realized rewards.

  • Any penalties incurred will deduct block units and affect rewards received by a validator.

Risks

• Penalty.

  • A validator that fails to observe transactions for all supported chains will have 2 block units deducted.

  • A validator that does not sign outbound transactions when requested will have 600 block units deducted.

• Slashing.

  • A validator that signs two different blocks will be slashed. The slashed validator will lose 5% of their stake.

  • A validator that sends funds without authorization will be slashed. The offending validator will have 1.5x of the value of the funds sent deducted from their stake.

Validators

Total validator cap	✅	120
Validator requirements	✅	300,000 THOR

• Validator cap and bond requirements have been overwritten by the Mimir governance process. The protocol targets to have 100 validators and a 1,000,000 THOR bond requirement in the long run.

• Up to 2 new validators can join every churn period. If multiple validators are waiting to join, the protocol chooses 2 new validators with the most stake.

Resources

• THORChain economic whitepaper: https://github.com/thorchain/Resources/blob/master/Whitepapers/THORChain-Economics-2020-MAY2020-draft.pdf

• THORChain explorer 1: https://thorchain.net/dashboard

• THORChain explorer 2: https://viewblock.io/thorchain