Revolutionizing Crypto Borrowing: Cross-Chain Lending is here 💸

0% Interest, No Liquidations, No Expiry — Unlock the full potential of your assets today 🔥

THORSwap Finance
8 min readAug 21

--

A new era has arrived.

With the activation of Lending on THORChain comes a transformative step in decentralized finance — users can now lend their Layer 1 assets like BTC and ETH and borrow 1,000+ assets cross-chain via a USD-denominated debt with unprecedented terms:

0% Interest: goodbye to hefty interest rates.
No Liquidations: your collateral is safe and secure.
No Expiry: keep your loan for as long as you like.

Whether you’re an experienced DeFi user or just starting to explore the exciting world of blockchain, THORChain Lending offers a revolution in ease and security. Visit 👉 https://app.thorswap.finance/lending

To celebrate the launch of Lending: THORSwap’s lending fees will be 100% waived for the first wave of loans. 🔥

The Basics

The amount of debt borrowers receive in proportion to assets provided (collateral) is based on the Collateralization Ratio (CR). Depending on market conditions CR can range from 200% to 500%.

For Example:

If CR = 200%, you must supply $200 worth of $BTC as collateral to borrow $100 USDC.

if CR = 300%, you must supply $300 worth of $BTC as collateral to borrow $100 USDC.

Therefore:

CR 200% = 50% LTV (Loan-to-Value Ratio)
CR 300% = 33.33% LTV (Loan-to-Value Ratio)

and so on.

Higher CR means users need to supply more collateral against the borrowed asset.

Debt is denominated in TOR, a USD equivalent. Debt can be repaid in any THORChain-supported asset, including stablecoins.

Lending is now available for ETH and BTC as collateral, with more options such as BNB, BCH, LTC, ATOM, AVAX, and DOGE coming soon.

You can borrow any asset supported by THORSwap — including 1,000+ ERC-20 tokens on Ethereum and Avalanche via DEX Aggregation. Just like a cross-chain swap, you’ll receive the asset you want to your wallet on the correct chain in one seamless transaction.

How to Open a Loan

Visit 👉 https://app.thorswap.finance/lending

How to Repay a Loan

Visit 👉 https://app.thorswap.finance/lending
Click the My Loans tab

What makes THORFi Lending different?

Stress-free Loans

THORChain’s Lending was designed to be the simplest crypto borrowing experience for users. By removing barriers around collateral (safe with no risk of liquidation), debt (0% interest to worry about), and loan terms (no expiration), the result is a stress-free experience.

0% Interest, No Liquidations, No Expiry — how?

THORFi Lending’s ground-breaking terms are actually part of a strategic design:

When a THORChain loan is opened, the collateral provided is swapped to $RUNE and the difference between the collateral value and the loan value is burned.

More borrowers drives up the collateralization ratio and increases stored equity versus issued debt. By not pressuring borrowers to repay quickly, the system attracts more outside capital, increasing the value and stability of the network, making lending more attractive and beneficial for both borrowers and THORChain. Therefore, there’s no need for interest, liquidations or expiration.

Collateralization Ratio

THORChain uses Layer 1 asset collateral to issue dollar-based debt, holding the collateral as equity. The more collateral added relative to Liquidity Pool depths, the higher the Collateralization Ratio.

Therefore: Early participation is key. The higher the Collateralization Ratio, the safer the system. Since there’s no liquidation or interest, borrowers might be less inclined to repay loans, thus boosting THORChain’s equity value.

TOR Stablecoin: Internal Price Oracle

THORChain’s TOR is a unique internal pricing oracle that remains properly priced even during stablecoin volatility. It can’t be traded or held at this time, and its price is derived from the median price of all stablecoins on THORChain (USDC, USDT, BUSD, LUSD, GUSD, USDP, DAI, etc).

Safety First: Risk Management and Scaling

THORFi Lending was designed to avoid over-leveraging or taking on unjust risks for borrowers and THORChain. Block Science performed a comprehensive report on the risks of THORChain’s lending protocol, complete with economic simulations.

Lending safety mechanisms include:

Throttling

THORChain aims to ensure the collateral is always secure and controls the speed of new debt opening through circuit breakers so it may not exceed network liquidity.

Loan Caps

Lending is capped based on the outstanding RUNE supply, currently consisting of:

  • 500M RUNE hard limit
  • ~15M RUNE already burnt due to non-upgraded BEP2/ERC20 RUNE

To ensure safe scaling, on launch only 1/3rd of the burnt RUNE (~5M) will be available for loans. More RUNE will be burnt when loans are opened/closed in favorable conditions and the internal swap fees across loans permanently burn RUNE, so the gap should continually increase.

As more RUNE is burnt and the gap grows, additional loans can be created.

Protection against $RUNE Inflation

If RUNE price falls drastically against collateral assets, then net inflation of RUNE could occur due to excessive minting of RUNE from total loan closures vs loan openings.

THORFi Lending has a built-in circuit breaker to pause new loans and disable lending if minting causes total supply to exceed 500M RUNE. In such a scenario, THORChain Reserves will step in to cover the remaining collateral payouts. You can learn more here.

Frequently Asked Questions

Q. Can I partially repay my loan?
Debt can be partially repaid, but a borrower will only receive their collateral back when the debt is paid in full.

Q. What happens if I overpay my debt?
Overpayments are credited towards the next loan the borrower opens.

Q. Is there a best time to open or close a loan?
Yes, it is best to open and close loans during times of low volatility. To protect the network from price manipulation, virtual pool depths for lending shrink during times of increased volatility (liquidity fees can greatly increase). Managing loans during times of low price volatility on THORChain will yield the most desirable results. Patient borrowers pay the least fees.

Q. Will I always receive my full collateral back?
You will receive your full collateral back upon repayment minus slippage fees incurred from the loan opening and closing process. During low volatility, fees will be lower. During times of high volatility, fees will be higher as outlined above. Patient borrowers pay the least fees.

Q. Who provides the assets for me to borrow?
RUNE is swapped to the borrowed asset via the liquidity pools, then sent to the borrower. Therefore, as long as THORChain pools are available, there are always assets available to be borrowed. The deeper the pool depth, the less slippage incurred.

Q. Where is my collateral stored?
The collateral is swapped to RUNE via the pools. Thus, nobody “stores” the collateral in custody. As long as THORChain pools are healthy and functioning, any collateral which is deposited will be swapped to RUNE, followed by arbitrageurs rebalancing the pools as usual.

Q. What happens if my collateral value drops?
As per above, the collateral has already been swapped to RUNE at the moment of loan opening. Therefore borrowers are not under any risk if collateral value drops. This is how THORFi Lending’s zero liquidation design is achieved.

Q. Who is the counterparty to my loan?
The THORChain protocol and all RUNE holders are the counterparty to each loan. The RUNE burn/mint mechanism means RUNE concentrates/dilutes (among all RUNE holders) as loans are opened and closed. Liquidity providers and Savers (Earn) are not directly lending their assets to borrowers. The pools are just the conduit to swap between collateral and debt.

Q. Which assets can I pay down my debt with?
Debt can be repaid with any THORChain-supported asset. Assets used to repay loans will be sold for TOR to repay the debt, since debt is denominated in TOR.

Q. Can I borrow more if my collateral increases in value?
No, When a loan is opened, the full debt (based on current Collateralization Ratio) will be issued. There is no option to request additional debt, unless the borrower repays the original debt, fully redeems the collateral, then reopens a fresh loan.

Q. Can I open another loan if I have existing ones?
Yes, the wallets with existing loan positions can open a new loan by depositing fresh collateral — new debt will be issued based on the new collateral and current Collateralization Ratio.

Q. Can I open another loan if I have existing ones?
Yes, the wallets with existing loan positions can open a new loan by depositing fresh collateral — new debt will be issued based on the new collateral and current Collateralization Ratio.

Q. Can I open another loan if I have existing ones?
Yes, the wallets with existing loan positions can open a new loan by depositing fresh collateral — new debt will be issued based on the new collateral and current Collaterization Ratio.

Q. When will lending be available for more collateral options?
The lending protocol is initially supporting BTC and ETH. The functionality to support lending on all Layer 1 gas assets on THORChain — BNB, LTC, BCH, ATOM, AVAX, and DOGE — is already available and simply needs to be turned on by the validators through mimir.

Q. Is lending compatible with Streaming Swaps?
No. Debt issuance and loan repayment is subject to traditional time-optimized slippage. Use THORSwap interface for accurate estimates.

Documentation and Community Education

The best place to deep dive into THORFi Lending is the THORChain Docs and the Architecture Design Record (ADR).

The THORChain community has also created a treasure trove of resources to help borrowers understand Lending Mechanics (Note: some of the following may be referencing outdated proposed designs):

A new era in DeFi Lending

THORFi Lending is not just an evolution but a revolution for decentralized finance. By eliminating interest, liquidations, and expirations, borrowing becomes a much more accessible and stress-free experience.

Visit THORSwap to explore Lending for yourself, and experience the future of decentralized finance, today.

Onwards! 💪

About THORSwap

THORSwap is the leading multi-chain decentralized exchange (DEX) aggregator powered by THORChain. Perform cross-chain swaps in a permissionless, trustless, and non-custodial manner.

Web | Twitter | Discord | Docs | Youtube | Telegram | Merch | DeBank

--

--