Thorstarter Review: The Beginning of DeFi 2.0?
During the bull market in cryptocurrencies that emerged in 2021 there’s also been a shift in the way that new protocols and dApps are released in the market. This new model has addressed some of the prior challenges that new projects faced in launching, while also protecting investors from some common risks. This new method is the Initial DEX Offering (IDO) Launchpad, and it has grown massively in the short time it’s been around.
This model is built on the long-standing idea of incubation in the tech startup space. However, the new method and dominance in the crypto industry by the various launchpads is definitely a more recent phenomena. The new launchpad model has already been successful in tackling some of the common issues faced by crypto projects in their early stages when trying to raise funds.
One good example of this is that the new launchpad model allows for far greater diversification in public sales, whereby anyone can participate, even with small amounts of capital. This helps to avoid centralization issues where a handful of well-funded individuals or organizations snap up a majority of the coins being issued during a round of fundraising.
Where the Launchpad Model Stumbles
However, the launchpad model isn’t without its own issues, and several of these have become easily identified. The most glaring and problematic for users is the massive increase in gas fees on parent networks.
While popular automated market makers like Uniswap and SushiSwap made it possible to quickly bootstrap liquidity from the universe of retail investors, rather than raising capital by selling pre-mined tokens, it also led to the increase in Ethereum gas fees. And as the AMM fair-launch model has gained popularity, so too have gas fees continued climbing higher and higher.
In addition, as you might expect from the ever innovating and evolving field of blockchain, once the launchpad model was out of the bottle it quickly spread to other non-Ethereum chains. Launchpads such as DAOMaker, BSCPAD, and Polkastarter weren’t far behind the creation of Uniswap. And since then many other launchpads have emerged. Each chain seems to have seen the creation of a number of launchpads, all with the intent of addressing rising gas fees on the Ethereum chain.
Are Fair Launches the Answer?
Recent upgrades to the launchpad model are making coin allocation fairer, which is good both for users and for the decentralization of the underlying projects. But these fairer launches aren’t solving any problems. Instead they are simply treating the symptom of how launchpads source the necessary liquidity for new projects.
You see, the problem isn’t that the process needs to be fairer. Rather the issue at hand is that all the launchpads are following the same business model of giving away seed funding and private sale allocations to major crypto influencers in return for promoting the new projects on their own social media channels.
And while this model has been excellent in the early stages at providing a solid ROI for investors, more recently it has been succumbing to rapidly diminishing returns. There are simply too many new launchpads and projects, and too few influencers for the method to continue being as effective as it once was when the number of launchpads was far smaller.
Launchpads: Success is their Downfall
There are well over 50 launchpads in existence, and more are being created all the time. With the more popular launchpads launching as many as 10 projects monthly it’s easy to see how crowded the space is becoming.
The crypto audiences on Youtube and Twitter are understandably reaching a level of burnout when it comes to launchpad IDOs. The launchpads have responded by turning to non-crypto influencers on both platforms as a way to continuing promoting their projects, tapping into niches like music, fitness, sports, gaming, and others as a way to find more retail investors to bring into the ecosystem and keep the capital flowing like champagne.
However, even that strategy is reaching its limits. After all, there are only so many audiences that can be tapped to purchase coins from these new projects. And with the number of launchpads and projects continuing to grow it’s become obvious that this model is not going to be sustainable in the long term.
Another related issue is that the newer launchpads seem to have no loyalty to their own blockchains. For example, many launchpads that were created to be Polkadot-centric are now branching out and launching BSC projects. In short, the launchpad model is rapidly devolving into a mish-mash of blockchains and projects, all of which are competing for the same limited pool of retail capital to bootstrap liquidity and provide an acceptable ROI to the seed investors and private sale participants.
Those who wanted a decentralized solution allowing them to easily swap tokens across chains without wrapped or pegged tokens were excited when THORChain launched. The core concept behind THORChain is clearly explained in their whitepaper
“THORChain is a liquidity protocol designed to connect all blockchain assets in a marketplace of liquidity through cross-chain bridges and continuous liquidity pools secured by economically incentivised validators.”
While this is great in theory, in practice THORchain doesn’t connect all blockchain assets together. Instead the number of assets able to pool with its RUNE token and access multi-chain swaps is limited by the protocol. Sure it supports the largest assets like BTC, ETH, and BNB, but the long-tail assets can’t access multichain swaps unless approved by the protocol.
And the problem that causes is that new projects have very little hope of launching on THORChain unless they are able to create massive liquidity through their fundraising. That’s simply not realistic anymore given the aforementioned issue of the growing number of launchpads and projects, combined with the limited amount of available capital flowing into the space. And that’s a shame for these new projects, because gaining access to the cross-chain liquidity offered by THORChain could give them a huge competitive advantage.
It’s increasingly obvious that a solution is needed to support these long-tail cryptoassets with limited liquidity. That solution is Thorstarter. Thorstarter’s XRUNE token was created as a settlement currency between IDOs and the active THORChain pools.
Let’s have a look at how Thorstarter will level the playing field for IDO projects.
Thorstarter’s Major Advantage
With Thorstarter users will be able to safely and efficiently swap even long tail crypto assets. The protocol also allows any blockchain that supports smart contracts to access the liquidity from any THORChain compatible blockchain.
Thorstarter will be a new generation of IDO platforms that can provide any project with deep liquidity right from the start. Existing projects can also use Thorstarter to reach investors across a number of blockchains. This is made possible by creating a liquidity pool on Thorstarter with their native token paired with XRUNE. Thorstarter is a positive compliment to the THORChain ecosystem, extending its utility while also benefitting from its capabilities and liquidity.
Thorstarter allows users to participate in IDOs using native assets on any major blockchain.
In order to access liquidity on THORChain there must be a frictionless onramp to the THOR ecosystem. Thorstarter provides this onramp in the easiest way possible for users, through a common web browser. That’s right, with Thorstarter users can easily (and cheaply) swap any THORChain approved assets right from their browser.
With a simple browser extension, users can:
- Receive, quickly send and store digital assets regardless of the chain
- Connect to their favorite dApps
- Swap easily between protocols
- Integrate other native DeFi features
If you’ve ever used a browser extension before then you know how easy it will be to join in IDOs using Thorstarter. It will also allow you to buy XRUNE and fund new projects cheaply and instantly. In fact, swapping native assets on Thorstarter is less expensive than swapping ERC-20 assets with their wrapped counterparts. As long as Ethereum gas fees remain so high Thorstarter remains extremely attractive.
It should be noted that XRUNE tokens are required as they work as the bridge asset between the IDO projects launching on Thorstarter and all the native, approved assets on THORSwap.
As Thorstarter creates an increasingly deeper pool of liquidity with RUNE-XRUNE the protocol will allow even the smallest new projects to tap into the deep liquidity from major blockchains easily, using a basic web-browser extension.
In Norse mythology “Midgard” is the middle realm, the only visible realm, and the realm inhabited by people. In terms of the visualization of Midgard on the world-tree Yggdrasil, it is at the base of the tree, between the upper branches above and the roots below.
Midgard, as represented in Thorstarter, is the deep liquidity for the long-tail digital assets paired with the XRUNE token. This puts these assets just one step away from the RUNE asset pools, and is equivalent to the position of the Norse Midgard between the roots of the tree and the upper branches.
Liquidity is the key. Without liquidity prices can experience extreme volatility. When that happens, the credibility of the project and its token is impacted negatively. This in turn limits the project’s ability to use its own token as a reliable incentive mechanism for network participants. After all, people want assets that appreciate in value, but not if they have to see price whipsaw up and down by 10% or even 50% in a short period.
When liquidity increases sufficiently volatility becomes less of a problem. Eventually it become irrelevant, once liquidity is great enough. In addition, a project with sufficient liquidity is able to build far more functioning layers on top of the base protocol.
Liquidity Depth and Fair Launches
The launchpad model being used currently focuses almost exclusively on the price action of the token. Very little attention is paid to attracting and maintaining liquidity. The result is extreme volatility in some cases, as early capital flows easily into the project, but soon after it flows out just as easily as investors take their profits and seek out the next great project launch.
Whenever you see a project fundraiser designed in such a way that the founders and private investors are able to exit early, or even immediately, it screams a lack of faith from the team in the long term success of their project. After all, if a project plans on increasing the depth of its liquidity pools why would early investors need an early exit? Despite all the claims of fairness and decentralization, very few launchpads actually exhibit these traits.
In addition, with many of the launches conducted at the end of the DeFi summer, which were typically called “Fair launches”, they were actually anything but fair. When you have a token issued exclusively through liquidity mining incentives it may sound fair, however in reality the new tokens often ended up concentrated in the hands of a small number of whales who staked a substantial amount of liquidity very early on. That’s the opposite of decentralization.
Thorstarter hopes to avoid this by creating a community of strong hands , thus avoiding the token dumping soon after an IDO that’s been so common with current launchpad models.
Thorstarter DAO Governance
The Thorstarter founders brought their project to life with the long-term vision of a fully decentralized DAO that is based on a community voting process. There are four key pillars to the Thorstarter DAO governance model:
- The primary aim is to onboard projects that will launch fairly and then will use and grow THORChain.
- Project selection will be handled by a DAO, with voting weight given to a council of nine members known as the Council of Asgard.
- Council members earn and retain their voting rights based on the number of tokens held, proven experience and support of the THORChain ecosystem, and active participation in voting on and supporting new projects which launch on Thorstarter.
- After launch, the Thorstarter DAO will handle Council member approvals and any changes to the governance structure.
The initial phase of leadership in Thorstarter is provided by a governance council consisting of nine members and known as the Council of Asgard. These nine council members are required to actively participate in the project selection and incubation process. The council is comprised of those with significant XRUNE amounts, Thorstarter developers, node operators, and thought leaders within the Thorstarter community.
Council of Asgard Members
The Council will be responsible for deciding how to find and onboard the best and fairest projects. It will oversee product iterations and ensure community participation.
Council members conduct their conversations primarily via Discord and Telegram, but when a vote is required they will move to a private members area of the apps to conduct multisig voting on projects. When approved the project will move on to the pending Pools page to await its launch date.
Eventually, the wider community of XRUNE holders will elect Council members and vote on all DAO proposals. This transition will result in what is being called the Valhalla DAO.
The final goal of the Thorstarter DAO is to evolve into on-chain governance structure called the Valhalla DAO. In this later phase, Valhalla DAO members will identify and recommend projects, provide opportunities for liquidity pools, and adjust incentives for liquidity providers. Members of the DAO will be able to pool capital and decide which projects to support.
On-chain governance will allow XRUNE holders to propose and vote on a number of strategies via the DAO. Execution of these strategies will then be provided by Council members. Valhalla DAO will allow democratic voting for protocol upgrades and new features, as well as treasury allocation. Decisions will be made via Discord discussions, community calls, forum discussions, and ultimately Snapshot votes
The Thorstarter Team
The Thorstarter team is quite diversified, consisting of dedicated community members, long-time investors in RUNE, and supporters of individual privacy. Many of the team members were early adopters and supporters of Haven and Monero, and the privacy being introduced across chains by THORChain has been a motivating feature for them.
The team has been working together for several years, and decided on developing Thorstarter on RUNE because they see it as one of the few projects that has adhered to the original principals that led to the development of Bitcoin and other early crypto projects.
Here is a quick intro to the founding team:
Bjørn Svensson — A lover of code, privacy tech and known to occasionally enjoy a glass or two of strong mead. Bjørn is leading the technical team and is a contributor to a number of crypto projects. In a previous life he worked as a security engineer for major CySec firms. Bjørn leads a team of three other developers.
Hafþór Ragnarsson — A crypto enthusiast back from the glory days of bitcoin pizza, Hafþór leaves a long career in enterprise IDaaS to develop Thorstarter’s key integrations and smart contracts.
Tormod Lindström (aka “Compound22” and “AM”) —Tormod is a master of strategy, communication and community for Thorstarter. He is the primary face of the project, and any interviews and communications have come from him.
Note that these are pseudonyms for the project founders, who choose to remain anonymous.
XRUNE Price History
The XRUNE token is pretty new, having launched in early July at a price just below $0.15. A week-long rally more than doubled that price to just over $0.36. However price then began to slide lower and by the end of July was down to the $0.065 level.
Since then the price has recovered dramatically, with the biggest gains being made in the first week of August. As of that time the token is trading at $0.2745, but also has strong upside momentum.
Early investors have done well as the private sale of the tokens was at $0.02 and the strategic sale was at $0.01. With a total of 500 million tokens in the genesis mint, there will be an additional 500 million tokens emitted over the following 10 years for a total supply of 1 billion XRUNE.
Thorstarter development can be broken down into three distinct phases:
Phase 1: dApp Build and Launch DAO
This is the current phase of development for Thorstarter. This phase of the project will include a forked version of THORChain’s ASGARDEX that omits certain features. Once this phase is complete a user will be able to go to the Thorstarter website to access the asset swapping app, find current available IDO projects, access token farms, read FAQs, and eventually participate in community governance. The Aragon DAO contracts will also be launched, and the Council of Asgard will be elected by the DAO. It is estimated that this phase will take roughly 10 weeks.
Phase 2: IDOs and DEX Improvements
The second phase of development for Thorstarter is expected to see improvements in the swapping mechanism and user interface, integration with XDEFI and other chains, and the launch of the first IDOs. Once IDO launches begin there will be an increasing number of features added to the feature suite, and eventually the IDO launch contracts will be able to be upgraded. The team intends to launch IDO functionality with 1-2 IDO projects per month for the initial several months. It is estimated that the second phase will take 3 months to complete.
Phase 3: Ongoing IDOs and Protocol Work
The third phase of Thorstarter development is meant to refine the cross-chain IDO model. In addition, further work will go into attracting existing projects to tap into XRUNE-RUNE liquidity pools, regardless of whether they were an IDO on Thorstarter or not. This will have an added benefit of increasing the buying power for XRUNE. Consideration will also be given to new projects that want access to THORChain liquidity without launching on Thorstarter.
Thorstarter is meant to expand on the THORChain by making it possible to relay liquidity between the long-tail crypto assets and the THORChain network.
New IDOs on Thorstarter will use XRUNE as a settlement currency to access THORChain’s active pools. In this way Thorstarter will bring new users and projects into the THORChain network, thus adding even deeper liquidity in both the RUNE and XRUNE pools. In turn this all helps to strengthen the security of the THORChain network.
If the developer’s plans work as intended the functionality of XRUNE can be extended to include many DeFi applications and potentially user in DeFi 2.0.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.