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Liquidity Pools (LPs)

An LP pairs equal amounts of a token and RUNE. Imagine two such pools, BTC:RUNE and ETH:RUNE. Each is continuously available so at any time a trader could swap BTC for RUNE or even BTC for ETH, paying fees for such transactions. Depositors into a liquidity pool own a pro-rata share of the pool and the associated swap fees. Also, they are paid RUNE block rewards from the community reserves as additional incentive to deposit funds. Historically, in active LPs, the fees and block rewards have generated annualized returns on LP deposits in excess of 40%. Once borrowing features are added to the LPs, LPs will also receive interest from loans against the LP collateral further enhancing LP economics.

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Impermanent-loss protection
that makes you sleep well.

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Impermanent Loss (IL) Protection

If a depositor adds BTC into the BTC:RUNE LP, the BTC is swapped for LP shares which are 50% BTC and 50% RUNE. If RUNE declines relative to BTC, the value of the deposit declines relative to BTC. Over time, swap fees and block rewards may not exceed any value lost. Thorchain offers an explicit guarantee that value will not be lost. It will cover 100% of lost of any value in BTC terms after 100 days of staking in the LP. If 1 BTC goes in, there is a guarantee that after 100 days, at least 1 BTC comes out. This protection covers 99% of any loss after 99 days, 98% after 98, etc. This value protection guarantee is termed Impermanent Loss Protection. (Note: staking can involve minor swap fees and IL Protection is net of fees.)

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Savings account with the
flexibility to move your assets in
and out of your wallet.




When a depositor acquires shares in an LP, the depositor has collateral that can be used to borrow funds. Thorchain is actively developing the ability for depositors to lock up LP shares and borrow funds. The current plan is:

  • the borrowed funds will be charged a fix rate of interest paid into the pool (boosting the LP economics),
  • the fees / interest / block rewards earned by locked-up LP shares pay down the loan balance,
  • once the debt is paid off, the LP shares are unlocked, and
  • if the value of the LP shares falls to a level near the balance of the loan, Thorchain liquidates the position.

LP borrowers will have the ability to actively manage positions adding or removing LP shares and the ability to actively manage debt outstanding by borrowing more or repaying debt.


Yield-generating. Continually rebalanced.



Composites are an extension of the 1-token:RUNE LP structure into an n-tokens:RUNE LP structure. As with the 1-token LP, in the n-token LP, the value of RUNE must equal the value of all the n-tokens deposited in a Composite LP. Examples would be:

  • THOR.USD LP with the 5 deepest stable coins as the n-token half,
  • THOR.CRYPTO LP with n-token half composed of all 1-token LP tokens,
  • THOR.TEN LP with the n-token half composed of the tokens from the 1-token LP with the deepest liquidity
  • THOR.ALTCOIN LP with the n-token half composed of all LP tokens except BTC

These composite LPs generate fees, interest and block rewards. They are continually rebalanced, limiting performance decay relative to the intended composition. As with all LPs, their pool shares can be locked up as a source of collateral for loans.

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