THORChain LP — FAQ
Since the inception of LP University, some questions have had a regular recurrence and we therefore decided to create a small FAQ page to help everyone wanting to provide liquidity in THORChain answer their most pressing questions.
Q: Can I stake RUNE?
A: Yes and no. Providing liquidity in THORChain is not the same thing as Staking because even if you provide only 1 Asset, it will automatically be separated into 2 equal parts: 50% Assets and 50% Rune. The two parts will be managed in such a way that their valuation is always equal, meaning you will have more or less of your asset depending on the price variations of both Asset and Rune.
However, Synthetics are going to be introduced into THORChain very soon and will allow anyone to mint a Synth of their asset (sAsset) which can then be put into a yield bearing vault, providing staking capability.
Q: Will there be a lockup period if I provide liquidity ?
A: There is no minimum or maximum time or amount. Join and leave whenever you wish.
Q: What is the average rate of return that users can expect when providing liquidity?
A: In the high risk pools, upwards of 10% and in the low risk, deep liquidity pools like BNB & BTC expect 3%-8%. However, check http://app.thorswap.finance for current APYs.
Q: I bought BNB.RUNE (or ETH.RUNE) and put them in my Keystore wallet… Why can’t I upgrade them to THOR.RUNE?
A: First of all, congrats for having purchase some RUNE and welcome to the THORChad gang! To upgrade to THOR.RUNE, you will need a very small amount of BNB or ETH in your wallet to cover the tx to upgrade.
Q: How are swap fees calculated?
A: It is important to note the current congestion of the asset you want to swap, as gas fees on ETH and congestion on BTC will affect how much fees you will pay. This will improve when depths of liquidity pools increase and a prediction of gas will also soon be implemented. The other chain’s network fee is out of THORSwap’s control and is due to efficiency of their native network.
i.e to swap Native BTC to Native ETH directly on THORSwap -> You would pay BTC network fee, ETH network fee, and RUNE network fee.
Compare it to a swap from Native BTC -> Wrapped BTC -> Wrapped ETH -> Native ETH. You would pay multiple transaction fees using ETH. When you swap to an L1, you pay the outbound gas fee on that chain with a 3x premium.
We are updating the interface to:
- Give you a quote with this fee added
- Not let you swap an amount below this
- Add more info about fees
In the future, you will be able to swap any small amounts -> BTC/BTC synth (for 10–20c), then redeem all at once in a large amount of BTC.BTC.
For more information: https://docs.thorchain.org/how-it-works/fees#fees and https://twitter.com/THORChain/status/1386128159649587201?s=20
Q: Where does the 3x premium come from?
A: 1x doesn’t work as the system would be at a loss, since it uses 1.5x the advised gas. 1.5x wouldn’t work because the system would barely break even. So it charges 2x what the nodes use (1.5x) and pays the LPs back for ACTUAL gas. The margin, 1.5x, is system income. The fee structure has a fixed component and variable component on the tx size. On those 3x of the gas outbound chain, there is half of that is going to the network and LPs as a “network fee” (1.5x) and the outbound transaction has the other half (1.5x) of that fee to use as gas on the chain, so its up to 1.5x the average current gas to make sure its a fast transaction.
TLDR: Transaction Fee = Inbound fee Network Fee = 3x fee charged by network Total = Sum of both
Q: What assets can you swap and provide liquidity for?
A: Currently — BTC, ETH, LTC, BNB, BCH, ERC-20 (USDT and SUSHI), BEP2 (BUSD and BTCB) Soon — XHV, BSC, DOGE, ZCASH, DOT, KSM, XMR, SOL, LUNA, ATOM, AKASH, SCRT, INJ, SIF, FIL and many more!
Q: Will all ERC20 and BEP20 assets be supported and listed on THORChain by default?
A: No. Only short tail assets with high MarketCap, good velocity and economic activity would have chances to win liquidity competition to get listed.
Q: Can I withdraw LP symmetrically after depositing an asset asymmetrically?
A: No. You cannot withdraw symmetrically. You can withdraw only asymmetrically for LP you deposited asymmetrically.
Q: I entered asymmetrically but received less than anticipated?
A: Yes, because when you pool asymmetrically your asset is converted into 50% rune and 50% asset (this is called rebalancing). When rebalancing you are subject to slippage and fees. Slippage is due to the depth of liquidity pools, the deeper the pools (aka the more liquidity) the less slippage occurs. Slippage also depends on the size of the deposit. Bigger deposits occur more slippage. Until caps are unlimited then account for slippage in your asymmetrical deposits.
There are 3 types charged on asymmetrical deposits:
- The on-chain deposit transaction fee (inbound tx)
- 2. The liquidity fee as a function of slip
- 3. The on-chain redemption transaction fee (outbound tx)
Q: Are there slippage fees for symmetrical deposits?
A: No, there is only the deposit transaction fee.
Q: What ways can I withdraw my asymmetrical deposit?
A: If you deposit asymmetrically you can ONLY withdraw asymmetrically.
Q: What ways can I withdraw my symmetrical deposit?
A: You can withdraw your symmetrically deposit both asymmetrically and symmetrically.
Q: Runeyield is displaying incorrect information?
A: Runeyield is a 3rd party app, sometimes there is a lag between sync, so yes, it may display incorrect information. In this case use Thorswap to see what liquidity you have provided.
Q: Are there withdrawal fees?
A: Yes, for every withdrawal whether it is asymmetrical or symmetrical deposit, there is always a fee to be paid in native RUNE to withdraw funds from the pool. BUT, for NON-RUNE asymmetrical deposit the withdrawal fee will be native to the asset when withdrawing the asset asymmetrically.
I.e to withdrawing an asymmetrical BTC deposit will have a withdrawal fee paid in BTC.
Q: Transaction failed, I can’t add liquidity or make swaps?
A: Make sure you have a sufficient amount of native rune to process transactions.
Q : I deposited liquidity before Ledger and TrustWallet support but I want to migrate to those wallets without removing liquidity.
A: You can use THORChain’s keystore wallet seed phrase for Ledger and TrustWallet once the wallet integration is done. It uses the Standard BIP39 mnemonic phrase, it is compatible with all multi coin wallets and Ledger. Simply input the seed phrase and your wallet should be imported.
Q: Is there a place I can get more information on providing liquidity?
Feel free to hop into the TC University Discord to chat about this, or any other THORChain questions that you may have.
Explore THORChain: Website, X, Telegram, Developer Discord.
Explore Maya Protocol, the first friendly fork of THORChain: Website, X, Discord, Telegram.
Decentralized, permissionless, non-custodial, trust-minimized, open-sourced, economic-secured, non-wrapped, native-to-native cross-chain swaps, savings and soon, lending!
