Thread by @THORSwap

Why THOR Synth is a game changer? 👀

THORChain synth design is very unique and solves many problems for multi-chain Defi.

1/ cont👇

Cross-chain L1 swap has never been possible in Defi until THORChain launched MCCN 2 months ago (April 13th).

Though It's a great innovation, Users need to pay high gas fees to swap L1 assets.

But, why does it matter?

2/

Capital efficiency is one of the biggest problems in DEXs since most of the volume and fees are made by arbitrageurs.

That's why Uniswap introduced V3 protocol to increase capital efficiency by active LPing mechanism.

But, it can't also avoid paying high gas fees.

3/

THOR Synth will allow Traders to swap assets in a few seconds, and paying <$1 gas fee.

How?

1. Add L1 asset to liquidity -> Mint Synth asset
2. Trade with Synth asset
3. Redeem Synth asset -> L1 asset

4/

Previous Cycle:
LP -> Trade -> Fee -> Yield -> More LP -> Less Slip -> More Trades -> More Fee -> Higher Yield

New Cycle:
LP -> Synth -> More LP -> Much More Trades -> More Fee -> Higher Yield -> More LP, Synth

It's obvious that new cycle will be repeated more frequently.

5/

But it's important to know Synth is backed by Liquidity but doesn't generate yield.

More liquidity (LP + Synth) -> More trades -> Higher yield -> Shared to LPers (not Synth holders)

It will lead to a higher yield for LPers 🙌

6/

Conclusion: THOR Synth solves

- Capital efficiency for traders
- Higher yield for LPers
- Fixed Interest lending
- Leverage (coming soon)
- Stable Coin (coming soon)
- Composite (coming soon)
...much more

e/